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This year will be the last of higher steel prices for a while, says Fitch Solutions

steel prices
December 01, 2021

by nfdeklerk 0 comment

This year will be the last of higher steel prices for a while, says Fitch Solutions

Research agency Fitch Solutions Country Risk & Industry Research maintains its average steel price forecast for 2022 at $750/t, but has revised upward its forecast for 2021 to $950/t.

The agency initially anticipated the steel price to average $920/t this year.

Fitch Solutions explains that its lower steel price forecast for next year is owing to the price rally globally coming to an end, but says US prices will still see some upside in coming months once President Joe Biden’s Infrastructure Bill comes into effect.

However, the agency points out that Chinese steel demand from the construction industry will continue to weaken over 2022 to 2025 as project pipelines taper down and risks mount on the country’s property sector, bringing down the global average along with European prices.

The outlook for steel demand in the US is more upbeat, with policy poised to bolster building materials demand, including steel, while Europe should also record an increase in demand following a collapse in demand in 2020.

The agency adds that global steel prices will remain on a downward trend, particularly as the market is seeing a paradigm shift to ‘green’ steel, at the expense of traditional steel produced with a blast furnace.

Fitch Solutions has set its 2023 to 2025 average steel price forecast at $535/t.


On the supply side, Fitch Solutions expects a rebound in Chinese steel production in 2022, following significant declines in 2021 as a result of an energy crisis that put a dent in industrial production.

The agency has revised downward its Chinese steel production growth forecast from 9% to 2.5% year-on-year in 2021, and from 7% to 5% year-on-year in 2022.

In Europe, steel production remains disrupted at several mills owing to plant upgrades or financial issues, while transport bottlenecks continue to persist with Covid-19 mitigation measures – such as quarantine requirements for drivers – still in place.

Nevertheless, distributors and service centres hold sufficient stocks and can delay buying decisions, which will result in lacklustre steel price growth in the region for the upcoming months.

US prices, however, have soared significantly in the year-to-date and Fitch believes this trend will persist for a while longer. Rallying prices in the US are largely a product of sparse service centre inventories, tight mill order books and a lack of imports since the fourth quarter of 2020 owing to high import tariffs.

While the rest of the world is largely back to pre-Covid-19 steel production levels, the US has significantly lagged behind global peers in restarting capacity. This is despite scrap prices going at a discount.

Going forward, Fitch Solutions expects more US supply to come back online and imports to improve over coming months.

According to Bloomberg, 2021 will see a 5.4-million-tonne net increase in US electric arc furnace capacity, further hinting at a stabilisation of the US steel price rally, which started in the fourth quarter of 2020.