Global steel prices have seen a spectacular run since the second half of FY21, especially in the US and Europe. The HRC (hot rolled coil) prices in the US have spiked up from the levels of around $550 per tonne to around $1,500 per tonne since September 2020. Similarly, the HRC prices in Europe have spiked up from $500 per tonne to $1,050 per tonne.
This astonishing rally was primarily driven by the supply-demand mismatch created in the market post the first COVID-19 wave. While the steel mills took time to resume operations, bounce back in demand was faster-than-expected. It created a demand-supply mismatch across the globe. The container crisis further impacted the global supply chain. It spiked up the delivery times. Shortage of supply against the high demand led the steel prices to the decadal highs during this period.
However, the world has moved on since then, and the situation of supply gut has eased considerably. It can be further confirmed from April's preliminary data. The delivery time has eased from March levels.
With supply chains getting restored, the demand-supply mismatch is also likely to abate soon. It puts further rally in steel prices at risk.