2021 Steel Industry Review
It's been an eventful year to say the least hasn't it? January feels like it was just yesterday, yet at the same time feels like a lifetime ago.
We began 2020, reflecting on the amazing contribution the manufacturing sector had made in the fight against covid-19, providing vital equipment during the more intense phases of the pandemic. This was something we could all take great pride in, and I am proud to say that Cooper and Jackson played our part in that effort.
The sector, however, would soon face its own challenges when demand for raw materials began to rise, as economies opened up and prices began to soar. As you know, this was particularly acute in the steel sector.
At the start of the pandemic, over 35MT of global steel capacity was removed. This capacity could not be replaced at the rate required to meet rising demand, to the extent that China, the world's largest producer and consumer of steel, became a net importer. Lead times from European Mills extended to 6-months, and the import quota system meant that the supply of Non-European material was limited.
Concerns over shortages and soaring prices were a hot topic of conversation. In March, prices for finished products broke through the £1,000 per ton barrier in both hot dipped galvanized and cold reduced.
The pressure on the manufacturing supply chain was severe - a situation that Cooper and Jackson were not immune to. Consequently, our focus remained firmly on maintaining the supply of material for our customers by leveraging our independent status and sourcing material from our network of global partners.
This was far from easy. Options were limited by import quotas and difficulties obtaining firm commitments on pricing and supply, but, I am extremely proud of how hard our team worked to meet customer needs. Many customers will not have realised the efforts that were put in, to ensure supply chains were maintained.
Fortunately, we were supported by a network of suppliers with the same focus on service, meaning we were able to pull together to anticipate problems and find Solutions. This was important, with prices rising throughout the summer to levels never seen before.
Concerns over supply persisted, but we noticed an optimism around UK manufacturing and the opportunities for reshoring that had emerged during the pandemic.
By late summer, price increases were slowing - an encouraging sign for buyers that had been struggling to manage price increases, material shortages and increasingly squeezed credit limits. MEPS was now predicting a quarter four decrease in prices for orders placed then.
With real demand in the automotive sector unclear, because of the production problems caused by the shortage of semiconductors, questions over labour shortages and quotas, it became very difficult to predict exactly what would happen next.
In fact, it appeared to me that there were more questions than answers as our attention turned to 2022 and what would happen next.
It is now being reported that the supply of semiconductors will resume in early spring. Automotive schedules look strong but they are dependent upon semiconductors. Should they arrive with OEMs as planned, then prices look set to increase – Mills will invariably focus their attention on satisfying the record backlog of Automotive demand.
The emergence of the Omicron variant and the threat of further lockdowns has created further uncertainty, but one thing we can be sure of is that the UK’s manufacturing sector will continue to be of vital strategic importance, and a source of incredible innovation and creativity.
From all of us at Cooper and Jackson, I would like to thank you for reading and wish you a Merry Christmas and a prosperous New Year.