Commodity Price Risk in 2022: Steel
Lost Wax Casting Process
2022-08-25
What is HDG Process?
2022-10-17
The price of steel has been fluctuating a lot lately, here’s an article I read last month about the trend of steel pricing by Laukik Patil Aranca and I’d like to share with you guys.
The prices of steel witnessed a steep incline of 2.5x for hot rolled coil (HRC), reaching >USD2,100/MT in 4Q21, while those of cold rolled coil (CRC) and hot dipped galvanized (HDG) coil steel went up 2.3x and 2.8x. This can be largely ascribed to limited supply, sharp rise in raw material and energy costs, increasing ocean freight costs, and growing demand across end-use industries, in particular mobility, industrials, and construction. Prices are expected to remain at high levels throughout 2022, with the average price projected to increase 5–7% until 4Q22 vis-à-vis 1Q22.
Drivers of price hike
· Surge in raw material price
· Rising cost of energy
· Increase in logistics cost
· Potential surge in demand with improving economic scenario
Conclusion
Pressure on the steel supply market is not expected to ease in the next six months, wherein the rising cost of energy, raw materials, and logistics would support the elevated steel prices globally. Furthermore, continued focus on energy conservation, government targets for curbing carbon emission, and the need for implementation of efficient steel production techniques would keep pushing the prices higher. Regional developments such as the Chinese government’s cap on annual production, together with escalating geopolitical issues such as the Russia-Ukraine war, would worsen the situation.
Demand for specific grades of steel that has high strength/ ultra-high strength across end-use industries, such as construction and automotive, would also drive the prices. Therefore, prices are projected to cross the USD2,300/MT mark for HRC, USD2,500/MT for CRC, and USD3,200/MT for HDG coil steel until 4Q22.
