Demand Or Supply To Be The Main Driver Of Steel Price Trends In 2022?

Demand, rather than supply, will be the main driver of steel price trends in 2022, Ugur Dalbeler, vice president of the Turkish Steel Exporters’ Union (CIB) and CEO of major Turkish steel producer Colakoglu, told S&P Global Platts, adding that his expectation for the coming year is positive.

“I am expecting growth-intended policies to continue in the first half of 2022. Although interest rate hikes could be seen in the second half of the year, particularly in the US, cheap money could continue to support demand for a while further,” Dalbeler said, adding that he is not expecting any change in policy by China.

Highlighting that supply issues drove the direction of prices in global markets in 2021, the CEO said demand would be the determining factor in price direction this year instead of supply, which will be the big difference compared to 2021.

S&P Global Platts’ daily Northern Europe hot-rolled coil assessment reached a record high of Eur1,190/mt EXW Ruhr in June, but prices have fallen since to Eur925/mt on Dec. 23.

“While steel production will return to pre-pandemic levels in 2022, energy bottleneck and input prices, however, could pull down mills’ profitability,” Dalbeler observed.

Significant increases in energy costs arising from the huge currency depreciation in Turkey have restricted Turkish mills’ competitiveness in domestic and export markets, especially in the second half of 2021, as energy is one of their major input costs. Turkey is largely dependent on imports of energy, particularly natural gas.

Turkey’s Energy and Natural Resources Ministry ordered some Turkish electric arc furnace steel mills paused melt shop production temporarily for three days on Dec. 21, due to some energy supply issues arising from a natural gas shortage.

Protectionism rollback

Noting that protectionism has been prevalent in steel markets in recent years, Dalbeler said he is expecting this to be gradually rolled back.

“As the US and EU reached a deal on Section 232 duties, around 80% of the US steel imports became exempted. Negotiations with Japan and the UK are also ongoing. Only Turkey left in these circumstances,” the CEO said, highlighting that the EU also recently started the safeguard review period two months before the normal period.

The European Commission formally initiated a periodic review into its steel import safeguard measures on Dec. 17, which will also assess how changes to be introduced Jan. 1 to the US Section 232 import tariffs may affect steel trade flows, as reported.

“As the US and EU mills have made serious profits in recent years amid protection measures, there isn’t any strong base left for protectionist measures,” Dalbeler said.

Source_https://eurometal.net/demand-to-drive-steel-prices-in-2022-colakoglu-ceo/