Steel prices have soared globally since their recent lows in early 2020. Limited domestic supply, expensive imports and strong growth in demand have fuelled the rally in US steel prices. But with supply set to improve, at a time of softer growth in demand, prices should fall, Caroline Bain, Chief Commodities Economist at Capital Economics, reports.
“A tariff of 25% was levied on most steel imports by the Trump administration in 2018 and imports have been broadly in decline since, although they have ticked up recently. That said, it now looks likely that the tariff will be at least lowered if not removed in the coming months, which should take some of the heat out of US steel prices. In addition, we expect further gains in domestic supply, in large part incentivised by current high prices. Pre-announced plans for capacity additions also suggest that potential domestic output could rise by about 5% this year and 7% in 2022.”
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