Q4 2022 Steel Report Overview

HRC prices fell globally amid looming recession (US and EU PMI slumped to two-year low); US and EU HRC are down 11% Q-o-Q, while China HRC is down 6% over the same period. 

• US HRC prices have fallen by 11% Q-o-Q, in response to weakened demand, new capacity coming online, and lower input prices coupled with the Fed’s conviction to rein in inflation via further interest rate hikes. HRC price in the US will likely find a new floor during Q4’22.
• EU HRC prices have dropped by 11% Q-o-Q in Oct’22, as the market began to correct from the precautionary overstocking that was observed with the breakout of the Russia-Ukraine conflict. Imports from APAC (excl China) have also ramped up 65% Q-o-Q, weighing on local prices. However, with elevated energy costs (now 33% of BOF Total Production Costs) and a weakening Euro negatively affecting both demand outlook and Steel Mill profitability, many Mills have started to idle capacity in efforts to protect their margins, which should bring some stability to market prices. 
• CN HRC prices have declined by 6% Q-o-Q along with a slumping property market and a debt crisis for developers. The global economic environment is also taking a toll on demand for Chinese steel as Net Exports have started to turn downwards, although they remain at historically elevated levels. Production volume is expected to remain at low levels through the rest of the year.