January 21, 2022



Market Update: January 2022

The imbalance between supply and demand was without a doubt the main driver of the US steel price increases in 2021. With limited capacity—both planned and unplanned—the scales were firmly tipped in the mills’ favor. However, lead times, service center inventories and mill production capacity have recently returned to normal levels adding downward pressure on steel prices. There is broad uncertainty around what 2022 holds and whether those factors that fueled demand last year will continue.

In this Market Update, we highlight some of the key factors impacting steel prices today and what to watch in the future.


Demand for steel will be more fluid than supply due to variability in key macroeconomic factors such as interest rates, consumer sentiment and disposable income. These factors will be influenced by inflation, supply chain challenges, geopolitical instability, labor shortages, transportation and of course, COVID-19.

  • Steel supply is anticipated to increase as domestic production improves and imports arrive in significant quantities.
  • Increases in steel supply are likely to result in decreased steel costs in the first half of 2022.
  • The global labor shortage is expected to challenge production and delivery costs for steel mills and fabricators throughout 2022 and 2023.
  • Attempts to control inflation by the Fed may provide relief later in the year, but uncertainty remains in the face of geopolitical uncertainty and rising oil prices.

The COVID-19 pandemic will most likely continue to impact volatility in supply and demand.


Import Steel

Tariff concessions for the EU are putting downward pressure on steel costs. 

As of January 2022, the Section 232 Tariffs on steel imported from the EU were replaced by a Tariff Rate Quota system. Under the new system, the first 3.6M tons of steel imported from the EU will be exempt from any tariffs, but not all steel qualifies for the exemption.

Steel imports are at a six-year high, increasing now four months in a row. As tariffs are dropped and international supply puts pressure on domestic supply, we expect an impact on steel prices over the next several months.

Mill Capacity

Domestic mill capacity utilization rates are impacted by import volume.

Mills are facing high input costs in a declining price market, after posting record-breaking sales numbers in 2021. Because of the influx of imported steel mentioned above, there is uncertainty around capacity utilization and the potential that prices will adjust downward.

  • Steel production has returned closer to normal levels and has increased the availability of hot rolled steel.
  • Cold rolled steel has not increased in capacity as mills have not expanded their cold reducing capacity, a process which converts heavier gauge material to lighter gauge material
  • Additionally, zinc and aluminum, which are both used in the production of cold rolled steel requiring additional labor, are at an all-time high. The price of hot rolled steel has decreased at twice the rate of cold rolled steel. Manufacturers with a higher mix of cold rolled steel will see consolidated costs drop at a slower rate.
  • The industry may see lead time and pricing pressures through 2022 due to increasing input costs for raw materials such as iron ore, scrap metal, coke, aluminum and zinc.

Material Inflation 

Steel faces deflationary pressure but other inputs costs are rising. 

The commercial construction outlook for 2022 is positive despite facing the highest rate of inflation since 1982. In December, the PPI for inputs to nonresidential construction was up 23% year over year and generally prices continue to march higher. This includes prices for key building products like bar joist, clips, fasteners, as well as insulation and paint where supply constraints are still prevalent.

Labor Shortages

A tight labor market persists across sectors, slowing the return to “normal” prices.

Labor shortages are now recognized as the biggest challenge businesses are facing, and it doesn’t seem to be going away anytime soon. The availability of labor to produce goods will directly impact production capacities, keeping prices high despite declines in raw material costs.


A shortage of qualified drivers will remain a challenge for transportation industry. 

The American Trucking Associations (ATA) estimates the current driver shortage at 80,000 and believes it will double by 2030. The shortage stems from high driver turnover, an aging workforce and barriers around regulation. This, combined with already high shipping rates (up 14% year over year) and infrastructure challenges, are leading logistics companies to project double-digit growth in contract rates in 2022.


Interest Rates

The Fed has announced that it will likely increase interest rates to tame inflation. 

Based on the announcements made in January by Fed Chief Powell, money won’t come as cheaply as it did in 2021. The US government will attempt to reverse the spiking inflation rate, increasing rates for the first time since the pandemic started. While the specifics about execution were left undecided, the intent was clear: efforts will be taken to slow rising inflation and over time, prices should drop.

Geopolitical Tension & Oil Prices 

Conflict between Russia and Ukraine hints at future oil supply disruptions. 

January ended with a Brent crude barrel close to $90 and some analysts forecast summer prices at $100 or more, the highest we’ve seen since 2014. The most notable contributing factors to the price hikes are low inventory levels and production combined with increasing energy demand as the worldwide economies reopen despite Omicron. Relief from OPEC and its cooperators is questionable, and if tensions at the Ukrainian border do not de-escalate, we could see major supply disruptions and even higher energy prices, impacting both inflation and discretionary spending.


MBCI’s Market Updates are brought to you by Cornerstone Building Brands subject matter experts and are curated for the purpose of creating awareness of economic factors that may potentially impact pricing, supply and demand affecting our customers. Any forward-looking statements are based on reasonable assumptions; these statements are not guarantees and undue reliance should not be placed on them. All views or opinions herein are solely those of the author(s) as of the date of this communication and are not to be relied upon as authoritative. Nothing in this communication should be considered to constitute investment, legal, accounting, or tax advice or other advice of any kind.

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