Q1 2022 Steel Report Overview

Global Steel prices largely declined in Q4 2021, marking the end of a period in which US HRC prices regularly set new all-time highs. In both the US and EU, production continued to rebound from COVID-19 shutdowns, with US Mill utilization remaining above 80% throughout Q4 and EU crude steel production reaching multi-month highs. In China, the Central Bank’s decision to cut RRR by 50 bps will in turn release $188B in stimulated construction demand, driving CN domestic steel prices upward. Globally, recovery in auto demand, increased trade volumes brought on by policy change, rising M&A activity, and corporate sustainability targets, along with more traditional market drivers, will continue to influence price movement in the new year.

• US HRC prices have dropped by 39% since peaking in Sep ’21; the current price of $1,321/MT is expected to steadily decline throughout 2022, with lead-times finally normalizing. Primary downward price drivers include rebounding domestic production and surging imports. That being said, resurgent auto steel demand & impact from Biden’s infrastructure bill could put upward pressure on the market later this year.
• EU HRC price also declined in Q4 ’21, with prices dropping by 5% to 943 EU/MT; higher production volumes, stagnant purchasing activity, and fierce import competition will likely remain in place during ‘22, with EU production expected to recover to pre-pandemic levels. Overall sentiment though remains relatively bullish, with solid demand across the board.
• CN HRC and coated prices showed signs of a rebound after dropping sharply during Q4 ‘21, with prices recovering to $792/MT and $902/MT respectively as of Feb ’22; CN HRC prices are expected to rebound gradually as automakers stock up on material and production increases.