MEPS: Steel Prices Expected to Rise through 2017

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Johannesburg, South Africa)--A report from MEPS (Sheffield, England) predicts that global steel demand will grow as economic activity recovers and expands over the next five years. The lowest point in the latest steel price cycle is expected to have been in 2013.

Investment in new steelmaking capacity is expected to be restricted over the next five years, resulting in higher plant utilization rates, according to the report.

For related information, see January 17, 2014, article - World Enters 2014 with 542 Million Tons of Excess Steel Production Capacity.

The cost of iron ore is forecast to decline as a result of over-investment in mine capacity in Australia and Brazil. Coking coal costs are expected to increase steadily in the period to 2017.

Significant growth in the cost of scrap is forecast in all the major regions over the next five years. With increased demand for steel and higher costs of input material for the steelmakers, average steel prices should expand up to 2016.

The current oversupply in steel manufacturing is likely to decline in the coming years, says the report. This will provide opportunities for the mills to lift their selling prices, despite the likelihood of declining iron ore costs for the mills.

After peaking at about $900 per ton in 2008 and then dropping to about $600 per ton, the global average carbon steel price in 2016-17 is forecast to be about $750 per ton.

For more information, see November 1, 2013, article - Protective Trade Movement in World Steel Market Grows as Crude Steel Production Increases.

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