Transformative structural changes are on the horizon which could rapidly invigorate UK steel demand and drive steel prices upwards, says UK-based trader All Steels’ managing director, Laurence McDougall.
The comments were made in the firm’s UK steel market evaluation sent to customers and shared on social media earlier this week, Kallanish learns.
It notes this year has been one of the most challenging in recent memory, with a “perfect storm of weak demand, plunging prices, soaring operating costs, and a wave of business failures across the supply chain.”
Pessimism lingers looking ahead to early 2025, although long product prices seem to have plateaued, as inventory levels are very low.
The company adds it is closely monitoring several key developments which it believes could have a profound impact on the industry’s future.
These include planned UK infrastructure spending, as indicted in a recent speech by UK Prime Minister Keir Starmer, who expressed deep frustration with current planning laws and obstructions which delay major projects. He plans to streamline approvals processes and triple the number of major infrastructure projects during this parliamentary term.
McDougall notes the introduction of the EU’s Carbon Border Adjustment Mechanism (CBAM) on 1 January 2026, followed by the UK’s on 1 January 2027 marks one of the most significant structural shifts in the industry, with substantial pricing implications.
“Logically, we can anticipate a surge in steel purchases ahead of the steep tax on imported steel,” he observes. “Domestic producers are likely to capitalise on this opportunity, increasing prices as imported steel becomes significantly more expensive under the new tax regime.”
He also notes there is a CBAM administration cost to be recovered, with only accredited verifiers allowed to authorise figures in the EU transitional phase, requiring all manufacturers to go through a full auditing process, adding an expense. This is in addition to importers into the EU having to declare reports via authorised CBAM declarants.
“The substantial impact of CBAM will likely trigger a buying surge well before its implementation dates, requiring the entire supply chain to stay attuned to the onset of the price rally. For those holding healthy pre-CBAM stock prior to implementation, this presents a once-in-a-lifetime windfall opportunity,” McDougall says.
Elsewhere, the high cost of borrowing is pinpointed as a major factor in slowing down the economy. However, as borrowing becomes more affordable, it is expected to stimulate spending, boost construction activity, and drive higher demand for steel.
McDougall concludes there are clearly many factors that should drive increased demand and influence steel price rises moving forward. While it is unlikely the market will see any immediate changes at the start of the new year, the positive changes outlined are expected to take shape in 2025.
Carrie Bone UK
