Steel prices may go higher in the next 10 years

Last weekend, sharing on a program of  CNBC, Mr. T.V. Narendran, CEO of Indian steel group Tata Steel, said that over the past seven or eight years, the average price of hot rolled coil (HRC) has been around $400-450/ton.

Mr. Narendran predicts, in the long-term, the  steel price HRC can reach an average of more than 600 USD/ton. The CEO added that in the trading session on December 3, steel prices in China fluctuated around $750/ton and in Southeast Asia around $850/ton.

"I expect the price of steel in the long-term to rise to the threshold of $ 600 / ton, of course the price can be more volatile and volatile than we have seen in the past," Mr. Narendran emphasized.

The CEO of Tata Steel explained that the steel market is going through a number of structural changes, including rising production costs and the increasingly unconventional role of China.

"For the past 10 years, the steel market has been dominated by China's exports. Now, the world steel trade is much more stable," Mr. Narendran said.

According to the CEO, at its peak, China exported more steel than India produced. But later, steel exports of the world's second largest economy have halved to 60 million tons/year and may fall further as Beijing pursues a strategy to reduce greenhouse gas emissions.

Moreover, for the first time in years, global steel demand will no longer depend on China, Mr. Narendran said. He noted that the World Steel Association had predicted this year's growth in steel consumption to come from countries other than China.

"In the context of the West stepping up investment in infrastructure, steel demand may go higher," emphasized CEO of Tata Steel - the world's 12th largest steel company by production in 2020.

Last week, US President Joe Biden signed into law an infrastructure investment bill worth more than 1 trillion USD. This ambitious plan could boost the steel consumption of the world's number one superpower.

On the  supply side, input costs for steelmaking are at "historical highs" due to hot coal prices. However, it is worth noting that iron ore prices have weakened and will trade in the range of 100 - 120 USD/ton in the long term.

In addition, steel prices may also be dragged higher as Europe, a major steel production market in the world, is increasingly focused on reducing carbon emissions, Mr. Narendran added.

"Overall, I predict that in the next 10 years, steel prices will be much higher than the 10-year average," said Tata Steel CEO.

Vietnambiz