Posted on 22 Apr 2021
Record-high steel prices will continue at least for the rest of the year, presenters said at the Kallanish Asia Steel Markets 2021 virtual conference on Wednesday.
Extremely strong Chinese steel demand, potential cuts in the Chinese export rebate and large cutbacks in Chinese steel production bode well for the steel industry, said Harold Quek, senior vice-president of Nu Steel. Other positive signs are firm freight rates and strong demand from the home appliances sector. Quek is confident the current strong market will continue till the end of this year. But he said it was hard to predict beyond this year because much will depend on the world economy and control of Covid-19 infections.
Hot rolled coil prices have surged because of a large supply shortage. Nu Steel's forecast that HRC prices would reach $1,050/tonne in the third quarter has already been realised, since offers from Japanese mills are currently at around $1,050/t. Quek said HRC prices of $1,000-1,050/t are “healthy levels for all integrated mills”. He did not see prices being sustainable at $1,100-1,200/t because it would be difficult to pass on this cost to end users. This includes the building and construction industry which is undergoing a difficult situation compounded by the Covid-19 pandemic, he notes.
Sachin Shetty, managing partner of Quescrow, said that major infrastructure projects in India will drive demand for steel, which remains buoyant. While there would be volatility, the uptick in demand will last for another 2-3 years. Supply constraints are supporting current high HRC prices, he adds.
Vietnamese segments for construction steel and coated steel, which performed well last year, are expected to continue to perform well this year, said Tu Pham, steel analyst of Viet Dragon Securities. For this year, North America and the EU would remain key export markets for Vietnamese coated steel. Construction steel demand in ASEAN will be strong amid the influx of infrastructure projects to boost economies after the pandemic. These would provide export opportunities for Vietnamese construction steel.
The main reasons for the sharp spike in HRC prices in Q1 were disruption in the production supply chain, hiked freight costs and reduced iron ore supply from Brazil, Tu said. As these are short-term factors, he expects prices to stabilise in late-2021.
Source:Kallanish
