Red Hot Steel Market Cools

Prices for steel have fallen from last year’s record levels as expanding supplies exceed demand for the first time in more than a year, according to steel-industry analysts and company executives.

Steel production in the U.S. rose by 19 percent last year from 2020.
Though prices remain high, executives say the drop is a relief for manufacturers and construction firms after months of panic buying and low inventories made U.S. steel the most expensive in the world last year.

For U.S. steelmakers, though, sliding prices pose a risk with new steel plants under construction, potentially adding millions of tons of annual steel production over the next two years.

Since late September, when the spot-market price for hot-rolled sheet steel reached a record $1,960 a ton, prices have fallen by more than one-third, according to S&P Global Platts. The decline has accelerated since the start of December, falling by $480 to a recent $1,270 a ton, a level last seen in March 2021.

Lower prices will likely take months to flow through supply chains, since many manufacturers purchase steel through fixed-price contracts, while other costs like semiconductors, transportation and labor remain high.

Source: Wall Street Journal