According to S and P Global Platts Iron Ore & Steel Outlook, iron ore prices were tipped to continue rising which can be seen to be the case in the chart from Trading Economics.

In December 2020 we wrote an article on why steel price was increasing, which at this point iron ore was at $137, with the chart displayed showing only four months later (April 2021) a further increase of 40.9% to $193.

The same can be seen with the price of Steel HRC FOB China Futures, where in the previous article in December 2020 the price was at $612, compared to the time of writing this article (April 2021) it is now $864.

Source: Trading Economics

According to S&P Global Platts a majority 65% of participants expect iron ore requirements to be higher in Q2 than in Q1, with 22% thinking they would be lower; 61% of respondents predicted crude steel production to increase in Q2 with this rise in crude steel output to be offset by declining inventories as the Outlook found 91% of participants expected steel stocks to decline.

A study by the SMU (Steel Market Update) found that during February the benchmark price for hot rolled steel hit a record high of $1,180 per tonne, an increase of 168% from August 2020 when it was $440 a tonne.

There may be better news towards the back end of 2021, as analysts at the CRU Group forecast Hot Rolled prices will peak in Q2 and decline for the rest of 2021. They predict that as supply and demand meet more of an “equilibrium”, prices should fall below $600 a tonne – with supply expected to increase quicker than demand in the second half of the year. CRU Group said in a recent report “While global prices and costs are high, domestic prices are unsustainable at their current level. We believe the primary catalyst for prices to reverse will be a dramatic increase in available supply. This supply increase has already started to come about with increased domestic production, rising import arrivals and soon, a substantial increase in supply from new steel mills starting up this summer. While end demand growth will remain strong, the startup of 7 Mt of new supply this summer and an additional 4 Mt in 2021 Q4 will likely overwhelm demand and drive prices back down towards more sustainable levels.”

This said though, there were predictions which stated the price would begin coming down in Q1 2021 which has not happened – we will continue to update on this.

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