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market | IST

Expect steel prices to cool off before recovering in Q2CY22: S&P Global Platts

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Paul Bartholomew, Senior Managing Editor, S&P Global Platts, expects steel prices to potentially go down before recovering in Q2 of next calendar year.

Paul Bartholomew, Senior Managing Editor, S&P Global Platts, expects steel prices to potentially go down before recovering in Q2 of next calendar year. He believes the slowdown in steel production will have an impact on iron ore prices as well, going into Q1. However, he is hopeful that the resolution of the semiconductor shortage issue could positively influence steel prices in the US and Europe.
Bartholomew mentioned, “China has taken off a lot of aluminium, steel production and has got shortages in copper, because of energy shortage. However, a lot of the Asian countries are finding customers in countries they hadn't really exported to before, like Vietnam exporting to the US and India exporting to Turkey etc. Probably, China is still going to export about 68-70 million tonne of steel this year, which is what it was in 2018 but I don't think China is suddenly going to start putting a lot of steel and other metals into Asian markets, which is putting price pressure.”
“However, there is no doubt that slowdown in terms of steel production is going to have an impact on iron ore prices, and so we expect pretty flat iron ore prices going into Q1 of next year. With regard to steel, it is very distinctive now between what you might call the Western markets, Europe and the US and eastern markets, China, India, etc., they have sort of decoupled in some respect; the easing of the semiconductor shortage situation could have a very positive effect on flat steel prices in the US and Europe because a lot of production has come off,” he said.
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“Steel prices have been rising so quickly and hitting record levels in many different markets. There comes a point where the end-user or the customer just can't absorb those continued price rises, so it is natural, there is going to be a slight pause. There would still be an upward momentum in the US and Europe with an infrastructure bill in the US being signed off but not to the extent that we have seen over the last 12 months or so,” he mentioned.
“In China, it is a little bit different because there, the big takeaway is that the downstream demand is very slow- property consumption, manufacturing has now come off the boil, that infrastructure is still pretty flat in terms of growth. There is no doubt that the Chinese government is happy with a more slow, sustainable growth and they are not going to pump in stimulus to the extent that they have in the past. So, anybody expecting China to suddenly take off again next year is going to have a bit of a rude awakening,” said Bartholomew.
For the full discussion, watch the accompanying video