Industrial metals have extended their 2020 rally into the new year, with finished steel prices trading near a record, iron ore, a feedstock for steel, holding ground near a nine-year high, and prices for copper at their highest since 2013.
Those metals have recovered to pre-pandemic levels and “so far, there are no signs of wear to the commodities rally so we expect prices to increase at least throughout the first quarter of the year,” said Maria Rosa Gobitz, senior research analyst at MetalMiner, which provides sourcing and trading intelligence for global metals markets.
The prospects for some of the metals further out, however, look brighter than others.
U.S. finished steel prices traded near their all-time highs, with the daily Platts U.S. hot-rolled coil price at $1,112.23 per metric ton on Jan. 5, not far from the record of $1,184 seen in July 2008, according to data from S&P Global Platts.
For steel, “it is Economics 101 at this point, not enough supply and too much demand,” said Michael Fitzgerald, managing editor, ferrous metals U.S., at S&P Global Platts. Overall U.S. steel production in 2020, year to date as of the week ended Dec. 26, was down by an estimated 17.7% from the 2019 year to date period, he said, citing data from the American Iron and Steel Institute.
Despite economic woes from the pandemic, steel prices rebounded quickly given the “speed at which the steel producers reduced capacity, which reduced supply, while at the same time demand” from the auto industry, building and construction, “rebounded much more quickly,” said Greg Bassuk, a co-founder and liquid alternatives manager at AXS Investments, which provides the AXS Sustainable Income fund AXSKX,.
Global steel demand this year is expected to climb by 4.1% from the 2020 level, according to the World Steel Association.
Steel producers showed “discipline,” avoiding overproduction and the industry has continued to consolidate, which furthers that supply constraint, Bassuk said. Last year, Cleveland-Cliffs Inc. CLF, +2.09% acquired AK Steel and ArcelorMittal USA.
Steel prices could continue to rise into at least the first quarter of the year, but prices may “stall” as new production capacity comes online as planned, and mill capacity utilization rates continue to increase throughout 2021, said MetalMiner’s Gobitz.
Fonte: Market Watch
