RESEARCH: Sharp moves up in coated steel spot markets

It was only a couple of months ago that contract buyers of coated steels – represented in large part by market participants from the automotive sector – were grudgingly resigned to paying as much as €100 ($120) per tonne more for their contracted shipments in 2021 compared with in 2020. Increases in contract prices of some 10% were also being pushed through to large buyers of tinplate for shipments this year.

Recent moves in the spot markets for all types of coated steels will have perhaps alleviated some of that pain, however, with the pricing moves in the past month alone outstripping those mentioned above. Better the certainty of a 10% price increase than being exposed to the weekly volatility in spot markets at present.

For example, on galvanized steel, spot market prices of HDG in Europe and the United States are up by about 20% since our previous tracker in early December. The spot market for tinplate, while smaller and more concentrated in China than other markets where contract business dominates, has also seen price moves of a similar magnitude.

The scale and speed of these upward pricing moves has not been seen since early 2008. Steelmakers’ margins are likewise on a similarly sharp upward path. It will not last, of course, with most of our focus now on attempting to call the turning point.

For the time being, we continue to look toward late in the second quarter for prices to head back down in a sustained fashion. Steel output is now increasing again in Europe and the US and, as we note in our Asia analysis this month, price movements in China are starting to appear less speculative in nature.

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