In both Europe and the United States, the prices of most flat steel products have pushed to record highs in the weeks to Monday March 22. They remain slightly below their mid-2008 peaks in China, but are at multi-year highs there too.

This illustrates in part the heavier consequences of the Covid-19 pandemic for steelmakers in Europe and the US, which rushed to shut down their facilities about a year ago when the pandemic began to spread rapidly in these regions, causing widespread concern about the demand outlook.

The lighter effects in China, and indeed much of Asia, meant that fewer steelmaking facilities were fired-down in that region relative to overall capacity.

The importance of this is that steelmaking facilities – particularly those that produce via the blast furnace method – cannot easily and quickly be turned on and off. They have been in the process of being fired-up again over the past few months – a process that continues – but it is also true that other factors have been at play in Europe and the US.

With regard to Europe, specific issues affecting key sites run by ArcelorMittal and the Liberty Group have come to the fore over the past couple of months, and these are delaying the ramp-up in production in this region.

US capacity utilization also remains low by historical standards and a number of large producers are undertaking maintenance work.

We continue to expect that the market will rebalance somewhat during the second half of the year, and that prices will thus adjust downward.

With record price levels have come notably improved margins for steelmakers, although they are still below previous highs. The incentives to ramp-up output are growing as a consequence.

Particular to the US market, new steelmaking works will begin to operate later this year. That cannot come soon enough for consumers, which continue to struggle to find available material on the spot market.

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