In anticipation of continued high raw-material costs, steelmakers are trying to boost their own prices to offset more expensive raw materials.
The world’s second-largest steelmaker, China’s Baoshan Iron & Steel Co., has already announced price increases of 3% to 7% for some of its key products.
More price-increase announcements are expected, but whether they hold will depend on demand and supply in a particular region. In Brazil and China, the price increases are expected to stick because demand remains relatively strong for steel products. But in places like South Korea and North America, the price increases are likely to be less successful.
In the U.S., mills are running at about 70% to 75% capacity utilization, a profitable level, but not indicative of very strong demand. “The sustainability of such steel hikes is highly questionable,” said Barclay’s Capital analyst Leonardo Correa in his research report earlier this month.