Italian re-roller chief Antonio Marcegaglia expects some downward price adjustment in the coming months, but levels will remain elevated.
“When and how much is not yet clear; I believe it may happen, but not overnight – it will take a few more months,” he said at the Kallanish Europe Steel Markets 2020 virtual conference on Wednesday. Even if prices soften, they will not go back to pre-Covid-19 levels, particularly as raw materials are forecast to remain high.
After a sudden and unsustainable price drop in the second quarter, prices of steel products, particularly hot rolled coil, have grown significantly since Q3. They have spiked in Q4 as a result of a material shortage and long lead times, both in Europe and internationally. This has been caused by a demand recovery and simultaneous production cut by many players, who aim to keep output low for some time, Marcegaglia continued.
Protectionist measures will continue to play an important role in the future, and steel prices will settle to sustainable levels in the coming years. A partial recovery in global trade is possible under the incoming Biden administration. However, imports are falling substantially as markets will remain more regionalised, with prices differing significantly from country to country.
Raw material costs remain high, with iron ore spiking again. China will meanwhile continue to grow and demand huge quantities of raw materials and semi-finished products, Marcegaglia concluded.
