Steel prices could increase in the near future

Global steel prices could rise again, which is bad news for construction and commercial real estate, especially in asset classes such as industrial, retail and more multi-family buildings. important.

Narendran TV, CEO of Indian producer Tata Steel, Recount CNBC that material prices could be “much higher” – over $ 600 per metric tonne – in the near future.

“I expect it to be in this space and this range – fluctuating of course, but fluctuating at a higher level than we’ve seen in the past,” he told Street Signs Asia of program at the end of last week.

“The impact on property development has already started to be felt as subcontractors, who use everything from rebar to beams, see price differentials on existing contracts,” Jonathan told GlobeSt. Lee, Director and Managing Director of George Smith Partners. .com. “This caused costs to escalate at the project level, which was exacerbated by the supply chain issues we saw. The bottom line is that project yields get slimmer and thinner until inflation hits real rents. “

US Bureau of Labor Statistics data shows a sharp increase in the prices of cold-rolled steel and strip, rising from 2018 highs of $ 252 to nearly $ 702 in October 2021. According to Builders and associated contractors, “The prices of steel products have increased 141.6% since October 2020, while the prices of iron and steel have increased by 101.5%.”

China has been a major driver of lower steel prices for years. In the past the country offered a 30% subsidy through free land, free electricity and loans that did not have to be repaid, Usha Haley, professor of management and director of the Center for International Business Advancement of Wichita State University and co-author of Subsidies to Chinese industry, Recount Fortune in 2019.

Haley, who has closely studied China’s steel production, said the country adds the equivalent of production each year from Japan, which was the second-largest producer. The Ministry of Commerce has accuses China of dumping steel several times.

Corn China’s steel exports tend to decline since 2016, according to the US International Trade Administration. They have fallen by more than half and will likely continue to decline as China tries to focus on reducing carbon emissions.

Demand is increasing all over the world, including North America, according to the World Steel Association, where usage increased 13.7% from 2020 to 2021 and is expected to increase 5.4% in 2022.

The rise in prices has led some to wonder if there had been a market bubble. But JLL chief economist Ryan Severino told in October things did not look like a bubble. “It looks like a case of demand growing faster than supply, which is a widespread problem right now,” Severino said. “The demand for inputs and finished products returned faster than the supply, not only by restoring old capacity, but by investing in new capacity. “