Simon Benbow from Benbow Steels puts forward his views for the upcoming year for the colour coated steel industry
Predicting trends in the steel industry comes with one certainty: your predictions will never be 100% correct, it’s just a question of how inaccurate they are. So it is with some trepidation that I put my views for the next 12 months forward…
A reflection on 2022
In 2022 the demand for pre-painted steel fell from the dizzy heights of 2021 due to a combination of inflation, reduced business confidence and supply chain constraints. There is no doubt that demand in 2021 was artificially boosted by steel shortages which encouraged excessive ordering, but underlying consumption and demand was similar to pre-pandemic (2019) levels; it’s just that excessive levels of stock in the supply chain masked this.
2023 demand outlook for colour coated steel
The initial few days of trading of 2023 have produced a mixed picture of demand: it seems that some construction sites are flooded which is delaying the start of many projects. The outlook for the year ahead is much brighter, however. There appears to be a strong project pipeline for 2023 for prepainted steel in most sectors but particularly in applications such as warehouses and modular buildings. (The modular building sector is being driven by government infrastructure projects such as HS2 and Hinckley Point C nuclear power station; availability of warehouse and logistics storage capacity remains tight throughout the country and, with the continuing growth of e-commerce, this will drive new builds in this sector).
There are macro-economic upsides to be seen as well. The global inflation wave may have peaked, allowing central banks to take a less aggressive attitude to raising interest rates. The economic powerhouses of the United States and Germany appear to be avoiding a significant recession. Most significant to the steel industry is the ending of Covid restrictions in China (which accounts for over 50% of the world’s production and consumption of steel). Once their current Omicron wave has been overcome, domestic demand in China will recover, as will the global supply chains which are so heavily reliant upon Chinese manufacturing.
I feel that demand for pre-painted steel will, overall, be no worse in 2023 than in 2022, and we may see an up-tick in requirements in the second half of the year.
2023 pricing outlook for colour coated steel
So what will this mean for prices? There is no doubt that all steel mills are desperate to increase prices. Increased manufacturing costs (especially energy) combined with falling prices during the second half of 2022 pushed many mills into loss making positions which are unsustainable. Since Christmas we have already seen mills raise prices for Hot Rolled and Hot Dipped Galvanised coils. These recent increases – some in excess of £125 per tonne already – have yet to work their way through our supply chains but they will inevitably do so. If these increases hold, it is likely that those of pre-painted steel will follow.
So in summary I believe that UK and Irish demand for pre-painted steel will be no worse than 2022 and will probably improve as the year goes on. Prices have definitely reached the bottom of the curve and will almost certainly increase during the year.