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In Q4 2021, everyone was under the assumption that Steel pricing would start trending lower, and it did from a high of $1,932 a ton to $1,123 (February).
February’s index indicated a downward trend settling in the $900’s for the rest of the year. However, when this month’s report came out, it shows the trend making an About-Face and moving up 45% to $1,375, in just 30 days!
You guessed it, it’s partially due to the Ukrainian / Russia conflict and production capacity limitations.
This is an excerpt from one of the Steel publications we receive.
Today's problems are vastly different from those that existed during the pandemic. The pandemic was solely fueled by consumer demand. Today's problems are being driven by the Inputs to the steelmaking process are disrupted. Region of Russia and Ukraine produce the majority of the world's iron ore Russia also contributes. The European steel-producing countries receive approximately 100 percent of the power. In Italy, power costs have risen to the point where mills have sut down their order books, till they can figure out if and how much steel they can make and for how much.
To cut a long story short, the world’s steel-making capacity has shrunk. These costs will be here for a while because of the war. Sanctions would have to be lifted and the information infrastructure reconstructed even if it ended tomorrow. This year appears to have a lot in common with 2021.
The issues that all of us will face this year are compounded by the rising steel costs, today’s fuel prices, labor rates, and simply insane inflation.
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