Whalesbook
Steel Prices Climb Globally
Global steel prices rose in April and early May 2026, driven by strong demand and varied supply conditions in different regions. Brazil led the gains, with its hot rolled coil (HRC) prices jumping 10 percent from March to April. Year-to-date, Brazil's HRC prices are up 21 percent. Japan and the United States also saw significant year-to-date increases, rising 6.5 percent and 15 percent respectively. Long steel products also performed well, with Brazil's rebar prices climbing 12 percent in April alone. This price strength in Brazil coincides with industrial production growth exceeding 5 percent year-on-year in April, boosting local demand for steel.
China's Production Cuts Delayed
Despite global price increases, China's steel industry faces production pressures. Output fell 3.2 percent year-on-year in the first half of May, as long-planned capacity reduction targets are being implemented slowly. Goldman Sachs observed that China's efforts to control capacity and production are behind schedule this year. This ongoing supply situation, even with official goals, puts underlying pressure on global markets. Meanwhile, China's infrastructure investment (excluding water and power) grew 8.9 percent year-on-year in Q1 2026, showing resilience despite a weaker property market. Manufacturing activity improved in March, but construction demand was mixed.
India's Strong Growth, US Steady
India remains a high-growth market for steel. Crude steel production there rose 11 percent year-on-year in March, continuing recent expansion. This strong domestic activity makes India a major contributor to global steel demand. In Europe, crude steel production increased 16 percent month-on-month in March, but it is still down year-on-year and year-to-date, indicating a difficult recovery. The United States showed steady performance, with average weekly steel production up 3 percent in April and operating at 79.6 percent capacity, supported by domestic manufacturing and infrastructure projects.
Investor Caution Amid Price Strength
Even with current price strength, investors show mixed views on the steel sector. ArcelorMittal trades at a low P/E of about 5x, suggesting caution, while Nucor trades around 12x, likely due to stronger domestic demand outlooks. US Steel, awaiting acquisition by Nippon Steel, has a P/E of about 8x, affected by acquisition uncertainties and regulatory reviews. Past price rallies driven by supply issues have shown sustainability but can correct sharply if demand weakens or China unexpectedly increases capacity. The slow progress on Chinese capacity cuts remains a significant concern, potentially limiting long-term price gains and risking oversupply if global demand slows. Input cost fluctuations and geopolitical factors also add caution.
Outlook for Stable Prices
Goldman Sachs expects steel prices to remain relatively stable across major global markets for the rest of 2026. The U.S. is predicted to keep a price advantage over Europe, China, and Brazil, backed by strong domestic demand. Although infrastructure spending provides support, the industry is monitoring potential economic slowdowns, possible changes in China's export policies, and rising input costs. Analysts are cautiously optimistic, expecting steady demand from infrastructure projects while watching global oversupply risks.