The note that follows considers near-term steel price forecasts - that is, the outlook for world steel prices in 2023 and beyond.The price cycle - MCI view
A notable characteristic of world steel prices is that they are highly cyclical. As can be seen in the chart below, prices move from peak to trough every few years. Looking at pricing for typical steel products such as hot rolled coil (HRC) or reinforcing bar, the latest prominent peaks occurred in August 2011, April 2018 and September 2021; with price troughs occurring in May 2009, February 2016 and June 2020. Across these products, the average peak-to-peak or trough-to-trough time over the last 25 or so years works out at ~3-4 years. In our view, the next price peak can be expected around mid-2028 and the next pricing trough will occur in mid-2025.
It is MCI's view that - at the time of writing (July 2023) - international steel prices appear to be declining, dropping from a September 2021 high. Other independent observations appear to agree with this view, as discussed below.Near term steel prices - analyst view
Looking at the coming months, many analysts also consider that prices are currently on a falling trend.
Another way to consider the pricing outlook is to consider future prospects for the global steel supply-demand balance. In this respect, it is noteworthy that:
On this basis, we judge that year 2024 capacity utilisation is likely to fall below 2023 levels, leading to reductions in steel prices globally.Market outlook and 2024 steel price forecasts
Taken together, MCI's assessment of the current level of steel prices in the context of the longer-term price cycle; with our assessment of expected changes to the steel supply demand balance in 2024; and our review of the near-term outlook for iron ore and coke prices – all point to a declining steel price as years 2023 and 2024 unfold. The MCI assessment therefore is that steel prices will gradually fall in H2 2023 and during year 2024, reaching a trough around mid-2025. After that point - especially as ETS allowances are fully withdrawn in Europe and as the cost impact of CBAM kicks in, steel prices are likely to resume their return to higher levels.
For projected monthly steel prices in H2 2023 and beyond, see our our steel price projections page.Metals Consulting International Limited