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State of Steel: 2021 Market Update

2020 has been a year like no other. As we write this, the coronavirus pandemic is affecting all areas of the economy and the November election results are still being disputed. This makes looking far into the future with any degree of confidence very difficult. Having said that, we offer the following observations about the steel industry and where we may be headed in 2021. 

Looking Ahead to 2021

The majority of market indicators are forecasting strong numbers compared to 2020. With preliminary vaccine tests looking so promising, we are cautiously hopeful the current pandemic will not be a major problem for the steel industry once the new year gets underway.

Regardless of the next presidential administration, wdo not anticipate any swift changes to tariffs or import restrictions. The World Steel Association says it expects steel demand to recover in 2021 to 1,717 million metric tons, an increase of 3.8 percent compared with 2020. 

With this in mind, Boyd Metals has been proactively anticipating a return to normalcy, and we are currently in a great position to continue supporting our customers in the first quarter and beyond. We are managing our business assuming there will be NO government shutdown and 2021 will be a solid year for the industry. 

Market Outlooks

Hot Rolled Carbon Steel Coil 

Carbon coil is currently in a short supply as we see the US market come back to life. We have seen strong cost increases in all carbon coil-related products (flat roll, structural & mechanical tube, etc).

The shortage was due primarily to:

  • Metal service centers' on-hand sheet and plate inventories being historically low
  • Overall weak demand
  • Mills running a lower capacity
Boyd Metals believes the shortage on carbon coil will ease in Q1 and pricing will level out. 
Aluminum 

The aluminum market is also tight due primarily to anti-dumping suits filed against 18 countries. The anti-dumping laws provide American businesses and workers with an internationally accepted mechanism to seek relief from the harmful effects of unfair pricing on imports into the United States.

Boyd Metals is watching all of this carefully; we are in the process of switching our 3003 H22 Brite-Tread inventory to 4017 H22 which has similar properties and better availability. 

Stainless Steel

Steady and incremental price increases for stainless steel products (flat roll, tubing, and shapes) are in the works. Stainless producers scaled back production in 2020; it will take some time to “fill the pipeline” as demand slowly ramps up.

Flat roll mills are quoting February/March availability and there is a growing backlog at the polishing facilities. The price of Nickel is trending up and so are the surcharges.

Bottom-line: no one expects stainless steel prices to decline in the next two quarters. 

Transportation

One 2021 wild card is the situation concerning domestic trucking capacity. Steel competes for trucks-for-hire with other commodities. Right now, and for a variety of reasons, we are facing significant delays from our vendors due to a lack of over-the-road trucks.

Some reasons include:

  • Lumber and other building materials are in great demand
  • ATV’s, boats, and jet skis are flying off the shelf
  • Trucking's firm hold on recruiting, hiring, and training when COVID first hit

These variables are helping create a “perfect storm” in the industry – good for the trucking companies, but hard on the rest of us. 

The Bottom Line for Boyd Metals

Boyd Metals learned a long time ago never to bet the ranch when looking too far down the road. We are in contact with our key vendors every day to ensure a reliable source of materials at the most competitive pricing available. 2021 will be a challenge, but if there's one thing you can bet on, it's that we'll have your back come hell or high water.


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Tags: Metal Industry and Product Knowledge