The star of the year 2021, the exponential rise in steel prices
During a crisis, especially the current one involving health and the economy, cyclical stocks are the ones that suffer the most from uncontrolled and unannounced variations. The large steel companies have held their ground in the Ibex 35 with strength, but the evolution of the pandemic year has caused a drop in raw material stocks, which has a direct impact on demand, causing exorbitant price rises that are difficult to assume for limited production due to the drop in orders, since the population’s movements and social relations are limited.
Analysts have faith in the new year, given that is demand is likely to recover by the end of 2021 faster than production. But Why is the price of steel rising no deadline?
Broadly speaking, the determining factor de of these movements in the price of steel is the domestic market revival in the United States and China. The slow recovery of production capacity in the global steel sector is further slowed down by the effects of the pandemic, which continues to influence the principles of supply and demand. It should be recalled that during the first wave of Covid-19, blast furnaces were forced to suspend one cproduction capacity of around 31 million tons, according to UBS data. However, only 25% of this production was restarted in September.
It appears that supply shortages will continue for a season, as the extra capacity of the blast furnaces that are back in operation will be offset by delayed maintenance work and
and decommissioning at many steel plants.
. Thus, it is essential to recover pre-crisis production levels, as the reduction in production will only push up the price of steel and hurt the processing industries.
Ultimately, 2021 will be a year to get throughhe consequences of the pandemic for all the sectoris at the international level, that market disruptions, caution over Chinese policies and a price spike out of control.
