Time-traveling Steel Makes Strides in Yesteryear's Industry
Steel Prices Plummeting: A Regionalized Market by 2025
The steel market is currently experiencing a drop in export prices, reminiscent of the 2022 crisis, affecting both semi-finished and finished products. Experts forecast a continuous decline due to heightened trade tensions and steel oversupply. By 2025, regionalization in steel pricing is expected, with significant price discrepancies for the same type of rolled steel across Asia, Europe, and the US.
As of May 4, Russian steel billet is priced at $34,710 per tonne FOB Black Sea, reaching the lowest levels since late December 2022. Hot-rolled coil and cold-rolled coil prices also hit record lows for the period, at $37,700 and $47,800 per tonne, respectively. These prices are significantly below the cost of production for non-integrated steel producers, according to experts.
NRА predicts a further 5% drop in global steel prices by summer. The agency estimates the current global steelmaking capacity surplus at around 640 million tonnes, which could grow to 720 million tonnes by 2027. The global steel capacity utilization rate is around 76%, indicating that current global capacities are not fully utilized.
The decline in steel prices is attributed to trade wars, escalating geopolitical conflicts, and expectations of a significant global economic slowdown. Experts have also highlighted the increased risks of dividing global trade into blocks, citing tensions between India and Pakistan as an example. In addition, the expected decrease in demand in China, due to decreasing exports and low activity in the real estate sector, is impacting steel prices.
By 2025, experts expect price differences for the same brand of rolled products to reach hundreds of dollars across Asia, Europe, and the USA. For instance, the further decline in European steel exports to the USA could lead to a 25% increase in prices in the USA due to a shortage of special steel marks. However, this may have a lesser impact on other markets or may lead to opposite results if European supplies are redirected.
The domestic market is becoming increasingly lucrative for metallurgists as premium European markets remain inaccessible. Prices on the domestic market are currently $100 or more higher than export prices, making it more profitable to sell domestically, despite a lack of capacity to handle all the volumes.
In Asia, prices for stainless steel, particularly the 304 cold-rolled coil, are expected to moderate due to nickel supply constraints. China's stainless steel output, which is 60% of global production, is forecast to decrease by 10-12% to address oversupply and losses. In Europe, the stainless steel market faces weak demand from construction and consumer goods sectors, leading to price reductions. Import competition is pressuring EU producers, while a potential EU trade measure to support local producers could slow down any limited price increase in Q2 2025. In the US, the market is shaped by domestic policies and trade dynamics, with the potential for fewer EV incentives increasing stainless steel demand for traditional vehicles and rising housing starts boosting demand for appliances and HVAC systems.
- By 2025, the regionalization in steel pricing will result in significant price discrepancies for the same type of rolled steel, with prices reaching hundreds of dollars apart across Asia, Europe, and the US.
- Krasnoyezenov, a Russian steel producer, might benefit from the domestic market becoming increasingly lucrative, as prices on the domestic market could be $100 or more higher than export prices.
- In the steelmaking industry, regionalization is expected by 2025 due to various factors such as trade wars, geopolitical conflicts, and global economic slowdown, leading to a continuous decline in steel prices.
- Energy consumption in the steelmaking process will play a crucial role in the industry's finance, as reduced demand in China could lead to a significant decrease in steel prices, but increased demand in the US due to infrastructure projects and EV incentives could have the opposite effect.
