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Commodity Coverage - Metals

Steel Price Forecast and Market Outlook

Steel price forecast for 2021

The spike in steel prices is extraordinary. Many products are up 50–100% since late summer 2020, with the bulk of the increases occurring in November and December 2020. Sheet price in the United States has more than doubled since mid-2020 and just set a new all-time-record high.

Looking at some global prices, Chinese hot-rolled coil (HRC) averaged $465 per metric ton in the fourth quarter of 2019 (pre-COVID-19). It dropped to $440 for the second quarter and briefly approached $420. By late December 2020, Chinese HRC price reached $775 (an 85% increase) but quickly retreated 10%. European HRC was at $506 in the fourth quarter of 2019, stayed below $450 over much of the summer in 2020, then shot up to $840 in January 2021. This is an increase of more than 90%. The United States was at $505 in August; now in mid-January, there are unofficial reports at $1,240, a 146% increase.

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Prices are spiking to unsustainable peaks in 2021

Steel prices will spike in the first quarter but fall rapidly over the following months. All products are rising rapidly. Rapid construction and industrial recovery from COVID-19 lockdowns outpaced sluggish capacity restarts, so supply is temporarily tight. Mills have restarted in most regions, so shortages will not last and prices will retreat quickly over the second quarter.

Sheet prices are spiking in the United States at one of the fastest rates in history, despite ample (but idle) capacity. Despite the high prices, buyers should worry more about supply than price for the first quarter of 2021, but should avoid locking prices for the remainder of the year. Other products and regions have high prices for the first quarter of 2021 but are not experiencing shortages.

  • The buying advice for steel is “wait.” Prices spiked in the fourth quarter of 2020 and are carrying over into January. Prices are above fundamentals and will fall back in the second and third quarters. The exception is sheet, which is on allocation in the United States. Ensuring availability is more of a concern than price. Furnace restarts will alleviate supply and then price by the second quarter. Lead times are long in Europe but there is no allocation so far.
  • Downside risk is high if the second wave of COVID-19 grows worse. However, if manufacturing and construction are idled, then steel demand and prices will fall.
  • Upside risk from Australian cyclones is worth watching. Ore mines are at full capacity, so any disruption would be magnified. If cyclones disrupt delivery, ore would spike and with it, steel prices.

Bottom line: Steel forecast for 2021

We continue to hold that steel prices will peak globally in the first quarter of 2021 and then retreat. Sheet is on allocation in the United States and tight in Europe, so work to ensure supply even if you have to pay too much in first quarter 2021. 

Global hot rolled steel prices

Experts

Mark Ulmer

The group specializes in monitoring global commodity, wage, output and other related indicators by sector. Their focus spans across ferrous and nonferrous metals, machinery and equipment, electronic components, chemicals, paper, packaging materials, health care and more. He has authored two articles that appeared in the Monthly Labor Review. ​Mr. Ulmer received his Bachelor of Science degree from State University of New York,  Albany, N.Y., U.S. He is a member of the Bureau of Labor Statistics Business Research Advisory Committee (BRAC)​.​

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Laura Hodges

Ms. Hodges is responsible for the management and operations of the Pricing and Purchasing Research team. Ms. Hodges has managed several projects on global cost analysis, including projects in Asia and South America, where the objective was to recommend the most cost-effective and efficient action in the procurement of key materials and services. She has spoken extensively on the topic of procurement pricing strategies and the global cost environment, including a presentation at the Institute of Supply Management titled, "Has China Lost Its Low-Cost Edge?" She has made presentations on the "Economic Risks to Consider Before Bidding Your Next Contract," and "Understanding and Estimating the Skilled Labor Shortage," at a conference of the Association for the Advancement of Cost Engineering. Ms. Laura Hodges holds a Bachelor of Arts in Economics from the George Washington University, U.S., and a Master of Arts in Health and Labor Economics from Duke University, U.S. She also earned an MBA from Rutgers University, Beijing, China.

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John Anton

Mr. Anton has expertise in the ferrous metals industry, he is responsible for evaluating the outlook for steel. He also specializes in forecasting commodities and works closely with the Automotive, Construction, Energy and Economics teams at IHS Markit. Steel demand is linked to outlooks from these key sectors. In turn, the profitability of these sectors can rise or fall depending on the price and availability of steel.Prior to joining IHS Markit, now IHS Markit, in 1995, he was in the private practice of law as well as an economist and statistician for the United States Department of Labor in the Bureau of Labor Statistics (BLS). Mr. John Anton received a Bachelor of Science in Economics from Florida State University, US, and a Juris Doctor from the Marshall-Wythe School of Law at the College of William and Mary, US.

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Amanda Eglinton

Ms. Eglinton has been a part of the Pricing and Purchasing metals team since 2015. She is the lead analyst covering steel pipe, stainless steel, nickel and the ferroalloys markets. She is responsible for tracking market conditions in the carbon and stainless steel markets and producing quarterly price forecasts and supply and demand outlooks. In addition, Ms. Eglinton participates in IHS Markit consulting projects for oil and gas clients as a steel subject matter expert. She holds a masters of arts in applied economics from the University of Houston, and a bachelor of science in finance and economics from Saint Louis University.

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