2021 is a time when the global economy is recovering from the turmoil caused by the coronavirus pandemic. This is also noticeable in the construction industry. Let’s see what the current prices of steel are on the Polish and global markets and what experts predict in this respect.
Steel prices are going up
The last few months have been a time of intense increases in steel prices. Currently, they have reached a record high. It is enough to compare current prices with prices from 2019, i.e. before the pandemic. For example, at the end of 2019, a tonne of ST3S steel sheet cost PLN 2188, and at the beginning of this year – PLN 3247. Also, the price comparison from October 2020 and June 2021 indicates increases of up to 36-84%, especially for products used in the automotive industry, such as cold-rolled sheet metal. Steel scrap prices have also soared. A comparison of the rates from the end of 2020 and the first months of this year shows an increase in scrap prices of around 60%. Of course, the increase in the price of raw material is also inherently associated with an increase in the prices of final products, such as steel systems or fittings.
The charts below show the changes in steel prices in Poland over the last year. We can see that the price of 2 mm cold-rolled sheet is currently PLN 17.18, and in the corresponding period of 2020 it was only PLN 8.84, so there has been an increase of as much as 94.34%. The situation is similar in the case of the prices of the drawn rod h9 fi12 – currently, it costs PLN 15.55, and in August 2020 it cost PLN 10.27, i.e. there has been a 51.41% price increase. The price of 42.4 x 2 mm HF welded pipe has also increased by 36.56% – the current price is PLN 28.5, and a year ago it was PLN 20.87.
What is the reason for the increase in steel prices?
The increase in prices is mainly because during the pandemic there was a break in the continuity of steel production. A smaller influx of orders meant that steel mills were forced to extinguish furnaces. It was only in the second half of 2020 that the demand for steel began to return to normal, but the then reduced production capacity of the steel mills was not sufficient to cover the entire demand. The shortage was also compounded by the lack of Turkish or Chinese steel in the European market. When demand exceeds supply, prices tend to increase. Other sources say that the surge in steel prices seen since the end of 2020 is also related to Brazilian iron ore mines. As part of the lockdown, some of them were completely closed, and some limited mining.
The increase in steel prices is observed not only in Poland. In the USA, prices even broke the record prices quoted 13 years ago. This is due not only to the situation in the world markets but also to the customs duties on imported steel. Their goal is to limit imports from China. However, the impact of the US tariff policy is also being felt in European countries such as France, Germany, Italy, Sweden and the Netherlands, as the European Union has imposed a 25% duty on the volume of imported steel products above the average of the last 3 years. The EU hopes that thanks to this, the steel that was supposed to reach the USA will be redirected to the EU in smaller quantities. These duties will apply for at least until 2024.
According to experts, there is no sign that steel prices will fall in the coming months, on the contrary – specialists say that it portends a very good period for companies operating in the steel industry. Indeed, steel prices are forecast to continue to rise. Forecasts also predict a significant increase in steel consumption in the world. According to the World Steel Association, consumption can increase by up to 50% in 30 years.