Home / Main / Analysts predict sharp drop in US steel prices in 2022 - Platts

Analysts predict sharp drop in US steel prices in 2022 - Platts

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After 2021, when US hot rolled coil prices hit an all-time high, steel analysts expect 2022 to be a year of "aggressive price normalization" and "tough conditions for distributors" as increased supply and shorter delivery times will improve availability for buyers.

Analysts predict sharp drop in US steel prices in 2022 - Platts

Hot rolled coil spot prices in the United States will be sharply lower in 2022 compared to peaks in 2021, when steel sheet prices were three times the 10-year average from 2010 to 2019. Platts writes about this on Tuesday referring to a survey of market analysts.

At the same time, as noted by John Anton, director of pricing and purchasing at IHS Markit, despite the projected decline in US steel prices, they are expected to remain above the historical average in 2022.

“Prices are going down and they are falling sharply, but we still believe that the average annual indicators will be 75% higher than the 10-year average,” Anton said.

IHS Markit expects spot prices for cold-rolled coils to fall, two to three months behind hot-rolled coils, after which prices will fall just as sharply.

One of the reasons for the expected drop is that the lead time in the US domestic market has decreased due to increased production and stabilization of demand, which is expected to continue in 2022, as analysts at BofA Securities noted in their report. of the company "Forecast of the development of the metallurgical and mining industry for 2022".

Average lead time for hot rolled steel in the United States was 3.9 weeks as of December 29, the lowest since May 2020, up from an average of 8.5 weeks in July 2021.

According to Gibbs, the shortage in early 2021, when US steel mills were slowly restoring capacity as the economy recovered from the first effects of the pandemic, caused mania and panic among steel consumers.

US imports also increased at the end of 2021, further influencing domestic pricing.

Falling plant prices will have an extremely negative impact on steel sellers, who, according to Platts, will face tough conditions in 2022 as they have to sell steel purchased at higher prices.

“It will be difficult for Distributors to deal with this, especially since they have tons of hot rolled steel, simply because no one ever thought they would see such an increase in inventory in the last few months,” Gibbs said. /p>

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