As we move further into Q3 of 2021, steel prices are yet to show any signs of re-tracing to early 2020 prices anytime soon. That said, with the global steel supply improving it is likely the sharp price increases we have been witnessing have come to a slowdown and may begin dropping by the end of 2021/start of 2022.

Steel prices are again higher than when we published our article Steel Price as of Q2 2021 in April, with the momentum seemingly showing an upward trend, albeit slower than the back end of 2020 and the start of 2021.

With the help of stimulus packages, which created a sharp rebound in global demand, the demand-supply gap widened causing an upsurge in steel prices. CARE Ratings state the current up-cycle witnessed in steel prices over the last year is likely to show a period of rest due to the improving supply side situation.

They report global steel production grew 15 per cent year-on-year during the first five months of calendar year 2021 (albeit at a lower base effect), this being led by China and India with this aiding in the improved supply-side situation.

It is, however, unlikely that global steel prices are likely to witness any steep correction from their peak levels. There is an argument to suggest current steel prices are unsustainable but we are unlikely to see an immediate decline.

The iron ore prices we have witnessed are not due to increased demand, as this has not drastically increased this year to last (although the prices have more than tripled during this period), instead being largely down to lower mining output.

During the back end of 2021, we may see an increased supply coming in from miners in Australia and Brazil, which should result in the rationalisation of iron ore prices. Dalian iron ore has witnessed its steepest weekly drop in 17 months as China works to lower its steel output to avoid sanctions and to fall in line with its carbon emission reduction goal. That said, in the first half of 2021 Chinese mills produced 12% more steel than during the same period in 2020 so bringing the overall figure down to 2020 figures is highly unlikely.  Attempting to limit steel production may again push up steel prices, too.

Thorsten Schier, a metals expert at Fastmarkets, spoke to Fortune and said “I don’t think we’ve hit the peak for steel prices. Most people in the market see strength through the third quarter, and some don’t see it getting better on the buying side until 2022 sometime. It is just that the supply is that tight. People are scrambling for material.”

Price at 05-08-21: Source
Price as at 05-08-21: source