The steel market all over the world has gone crazy: we have not faced such a situation for many years. Demand is huge, and factories have a full backlog of orders until at least the end of the second quarter. For some materials, for example, for the production of household appliances, the earliest orders are currently at the beginning of 2022, - says President of the Polish Stainless Steel Association Andrzej Michalski-Stempkowski.
The reason for this state of affairs is, on the one hand, the demand generated by European and global industry, as well as speculative purchases, since distributors, fearing a shortage, increase their purchases. Prices for all metals rise along with demand.
The second reason is the limited supply - in recent years, many European mills have reduced their production capacity. Strong demand for steel in Asia has resulted in the prices of Asian goods, which are still very competitive, are currently higher than in Europe, and we need to add to these the freight prices, which have recently risen by several hundred percent. .
The Asian industry is recovering very dynamically from the lockdown. In many countries, the industry has been idle for months and is now making up for lost time. Steel producers do not want to export, because it is more profitable to sell it locally, says Andrzej Michalski-Stempkowski.
However, this situation is fraught with certain dangers. This is a ready-made speculative bubble scenario. Breaking this rule can be fatal for many companies that currently buy steel in reserve. We dealt with a similar situation in 2008 and 2009, when, after a long period of good economic conditions, a period of recession suddenly began, - said Andrzej Michalski-Stempkowski.
