The last few weeks have been characterised by a general slow-down of steel and raw material prices globally. Some areas, such as North America, continue to hold firm at very high levels, but most regions of the world saw prices correcting from the record levels registered earlier this year. Going forward the rating agency Moody's expects this correction of prices to continue.

A worldwide supply/demand imbalance for steel will return through 2022, and steel prices will gradually decline towards their historical averages from the unusual highs of 2021, says Moody’s.

“Steel demand will ebb as buyers replenish inventories, stimulus spending wanes, and consumers return more widely to spending on experiences as vaccinations become more widespread,” the credit rating agency says in a report. “Steel supplies will continue to increase as well, with productivity improving and new capacity coming online in certain parts of the world.”

Steel prices will settle higher than their historical levels in 2021-22 as demand increases for scrap and metallics, and as the steel sector's competitive dynamics improve with consolidation in some regions.

A quicker-than-expected economic recovery and the replenishment of inventories in 2021 created a temporary dislocation of supply and demand. Meanwhile, consumers used stimulus funds, unemployment payments and discretionary dollars to purchase goods rather than pay for experiences that the coronavirus and pandemic measures made largely unavailable, Moody’s points out.