The big question for most of 2021 was “How high can steel prices rise?” The big question for 2022 is “How low can they fall?”
Steel Market Update (SMU) checked the market the week of Jan. 10 and it showed the benchmark price for hot-rolled steel dipping below $1,500/ton ($75/cwt) for the first time since April 2021. It should be noted that last April the hot-rolled price was on an upward trajectory that eventually would take it to a record high of $1,955/ton in early September.
Since then, the price has been plunging rapidly back to earth. Where and when it will land is anyone’s guess. As of the second week in January, the hot-rolled price had declined $475/ton, or nearly 25%, from its peak to $1,480/ton. By all indications, that downtrend is likely to continue for months as supply and demand seek equilibrium.
As Wolfe Research Managing Director Timna Tanners told SMU in a Community Chat webinar, “The trajectory of prices in 2022 will depend on the pace of destocking, the new capacity ramping up, and demand.” SMU survey data offers some insights into those three factors.
