The steel industry is one of the largest emitters of CO2, and an increasing number of countries have announced long‐term goals to achieve net‐zero greenhouse gas emissions in the coming decades. US and UK are the leading countries with highest number of companies that have set goals to reduce GHG across their supply chain and there is a variety of technologies being explored with potential to reduce the overall emissions of the steel making process.

Major partnerships are being formed within value chain to secure inputs of green steel, however The US Green Steel market is likely to face a demand squeeze, as additional planned capacity only currently only meets half of the forecasted US demand.

There will be large investments to transition to and/or build new Green Steel capacity meaning that buyers will have to expect a premium embedded in production costs to procure steel from green sources.

HRC prices fell globally amid looming recession (US and EU PMI slumped to two-year low); US and EU HRC are down 11% Q-o-Q, while China HRC is down 6% over the same period. 

• US HRC prices have fallen by 11% Q-o-Q, in response to weakened demand, new capacity coming online, and lower input prices coupled with the Fed’s conviction to rein in inflation via further interest rate hikes. HRC price in the US will likely find a new floor during Q4’22.
• EU HRC prices have dropped by 11% Q-o-Q in Oct’22, as the market began to correct from the precautionary overstocking that was observed with the breakout of the Russia-Ukraine conflict. Imports from APAC (excl China) have also ramped up 65% Q-o-Q, weighing on local prices. However, with elevated energy costs (now 33% of BOF Total Production Costs) and a weakening Euro negatively affecting both demand outlook and Steel Mill profitability, many Mills have started to idle capacity in efforts to protect their margins, which should bring some stability to market prices. 
• CN HRC prices have declined by 6% Q-o-Q along with a slumping property market and a debt crisis for developers. The global economic environment is also taking a toll on demand for Chinese steel as Net Exports have started to turn downwards, although they remain at historically elevated levels. Production volume is expected to remain at low levels through the rest of the year.

Regional HRC price trends diverged globally in Q2 with US drop 34% Q-o-Q, EU plummeted 39% and China down 25% over the same period. HRC prices fell globally under the backdrop of the Fed’s interest raise. Steel market brushed off the latest disruptions and swung back into full correction.

• US HRC prices fell by 34% Q-o-Q as the Fed sought to curb the economy to combat inflation. Weakened demand, high import volume, lower scrap and pig iron prices coupled with the Fed’s conviction to rein in inflation via further interest rate hikes, HRC price in the US will likely slip further in the near-term.
• EU HRC prices have plummeted by 39% Q-o-Q to €851/MT in Jul’22, the lowest in 16 months. The price downturn was mainly the making of market correction following overstocking for the Russia-Ukraine War. While EU mills have begun to cut output due to thin margin, high energy prices as well as a weak Euro will likely provide support for EU HRC price in the coming quarter.
• CN HRC fell by 25% in Q2’22 with a weak prospect due to COVID uncertainties. Cool down of the real estate sector and concern over China’s pandemic measures will likely continue to pressure CN HRC downwards. The market reacted tepidly to Beijing’s ~$60 billion stimulus package when announced in late May.

US HRC prices rebounded 5% Q-o-Q, primarily as a result of a severe shortage of Pig Iron. Forecast: sideways

Although the market is facing a pig iron shortage and rising scrap prices, new capacity ramping up combined with ~72% Y-o-Y growth in import volumes, largely driven by the pull-back of Section 232 tariffs, are likely to correct the market.

EU HRC prices surged 44% Q-o-Q, driven by sanctions on Russia energy and steel products. Forecast: Increase

Due to high energy and input costs, EU steelmakers are cutting production, coupled with lower import volume from Russia and Ukraine (together account for one-third of Europe’s steel imports), EU steel market is facing tight supply and extremely high production costs. 

CN HRC price went up by 5% Q-o-Q, driven by multi-year low production levels. Forecast: sideways

CN HRC price is likely to remain at the current level, given that both supply and demand are constrained by the latest COVID restrictions in various parts of the country; environmental restrictions and increased M&A activity will support the price level.

US & EU Steel Prices touched new all-time highs in Q2 2021, rising 24% and 30% Q-o-Q, respectively. Relative to other global commodities, the US & EU HRC spot markets are outliers in their meteoric rise over the last 12 months. 

Meanwhile in China, prices cooled by 2% Q-o-Q as record-breaking production levels continue to be the norm and strategic actions taken by the Chinese Government were effective in curbing exports. 

As a result of these trends, the regional price gaps in HRC have reached staggering levels, inviting increased import activity from US & EU buyers. Between February and April 2021, US steel imports were up 21% relative to the same period last year. In the EU, steel imports were up 42% over the same period. 

With all regions now kicking into higher gears of production, Raw Materials have continued to trend upward. US & EU scrap prices were up 11% and 20% Q-o-Q, respectively. Global Iron Ore rose another 18% over the same period. Despite the rise of input costs, Mill profitability has turned skyward as the market price vastly outpaces the price of inputs.

Global Steel prices largely declined in Q4 2021, marking the end of a period in which US HRC prices regularly set new all-time highs. In both the US and EU, production continued to rebound from COVID-19 shutdowns, with US Mill utilization remaining above 80% throughout Q4 and EU crude steel production reaching multi-month highs. In China, the Central Bank’s decision to cut RRR by 50 bps will in turn release $188B in stimulated construction demand, driving CN domestic steel prices upward. Globally, recovery in auto demand, increased trade volumes brought on by policy change, rising M&A activity, and corporate sustainability targets, along with more traditional market drivers, will continue to influence price movement in the new year.

• US HRC prices have dropped by 39% since peaking in Sep ’21; the current price of $1,321/MT is expected to steadily decline throughout 2022, with lead-times finally normalizing. Primary downward price drivers include rebounding domestic production and surging imports. That being said, resurgent auto steel demand & impact from Biden’s infrastructure bill could put upward pressure on the market later this year.
• EU HRC price also declined in Q4 ’21, with prices dropping by 5% to 943 EU/MT; higher production volumes, stagnant purchasing activity, and fierce import competition will likely remain in place during ‘22, with EU production expected to recover to pre-pandemic levels. Overall sentiment though remains relatively bullish, with solid demand across the board.
• CN HRC and coated prices showed signs of a rebound after dropping sharply during Q4 ‘21, with prices recovering to $792/MT and $902/MT respectively as of Feb ’22; CN HRC prices are expected to rebound gradually as automakers stock up on material and production increases.

Global Steel Prices continued their astonishing rise in Q1 2021, with global HRC prices soaring 18-21% to multi-year highs across all regions. Over the last twelve months, the US has proven to be a significant outlier with its domestic HRC prices up 162% relative to the 79% rise in China and 68% rise in Europe over the same period. This growing chasm in regional market prices could aid in bringing a market recovery to the US, however key issues like persistent supply constraints and rising scrap prices are extending the timeline.

Rising scrap prices are a particularly important trend for buyers to monitor in both the short and long term, with prices reaching record levels in all regions and additional upward drivers on the horizon. Scrap prices are up 51% in the US, 28% in EU and 22% in China Q-o-Q. The recent removal of China’s import ban is already increasing demand for both US & EU scrap, with expectations of further increases as China continues its ongoing efforts to transition to more high-scrap-consuming EAF production. Additional scrap demand can also be expected from US mills’ plans to increase capacity of EAF production by ~13.5mMT over the next 3-4 years.

• US HRC prices recorded multi-year highs at $1,469/MT in April 2021, up another 21% Q-o-Q on constrained supply & sustained by expensive inputs.
• EU HRC prices rose another 18% Q-o-Q in the first quarter of 2021 on further increases in manufacturing activity and constrained supply.
• CN HRC prices increased 20% to $831/MT in April, on domestic demand and anticipation of Government mandated production cuts expected late 2021.
• Raw Material prices continue to etch upwards, driven mainly by higher-than-normal demand from China and additional upward drivers on the horizon.

US & EU Steel Prices touched new all-time highs in Q2 2021, rising 24% and 30% Q-o-Q, respectively. Relative to other global commodities, the US & EU HRC spot markets are outliers in their meteoric rise over the last 12 months. 

Meanwhile in China, prices cooled by 2% Q-o-Q as record-breaking production levels continue to be the norm and strategic actions taken by the Chinese Government were effective in curbing exports. 

As a result of these trends, the regional price gaps in HRC have reached staggering levels, inviting increased import activity from US & EU buyers. Between February and April 2021, US steel imports were up 21% relative to the same period last year. In the EU, steel imports were up 42% over the same period. 

With all regions now kicking into higher gears of production, Raw Materials have continued to trend upward. US & EU scrap prices were up 11% and 20% Q-o-Q, respectively. Global Iron Ore rose another 18% over the same period. Despite the rise of input costs, Mill profitability has turned skyward as the market price vastly outpaces the price of inputs.

Global steel commodities were on the rebound in Q3 2020 as economic activity continued to pick back up from the pandemic related shutdowns. Crude steel production has been slow to come back online in the US and EU, creating supply constraints and additional upward momentum. In China, crude steel production has already surpassed pre-pandemic levels, contributing to oversupply and a now cooling market.

• US flat prices are back to pre-pandemic levels, with HRC at ~$690/MT in October, supported by the sluggish return of mill utilization. The recent announcements of Cleveland-Cliffs’ acquisitions of AK Steel and now Arcelor US operations (except for AM/NS-Calvert) could create some additional upward momentum in the near term.
• EU HR prices spiked in Q3 amid rising input costs, demand resurgence and import limitations, stabilizing at ~475 EUR/MT in October. With manufacturing activity rising above pre-pandemic levels in October, the upward momentum in Europe should continue through Q4 2020. 
• China HR prices continued to soar in Q3, hitting ~$575/MT in October, but have started to cool off as high production levels contribute to oversupply. China has so far seen the fastest and largest recovery from the pandemic shutdown.
• Scrap prices fell by -6% in the US, but rose by +6% in Europe, and +14% China, while Iron Ore prices skyrocketed by +24% to multi-year highs in Q3. Coking Coal prices improved by +4% QoQ but still sit well below the historical average.