As we saw in 2023, volatility continued within the steel market. Factors such as economic uncertainty and softening manufacturing activity placed pressure on steel prices and demand in varying degrees by product throughout the year.

Now, with 2023 coming to an end, we are all trying to determine which market forces will continue impacting the steel industry in the new year. I wanted to take a moment to share with you some of the topics I am monitoring that could influence steel pricing and demand in 2024.

2024 Steel Plate Pricing & Demand Outlooks

Steel plate prices, as measured by various industry indexes, had cycles of growth, stability and decline over the course of 2023. We saw prices rise in early 2023 and stabilize in the middle of the year. We then saw prices begin to decrease in September 2023 before rebounding again in early December following a recent mill price increase announcement. This pricing momentum could continue through Q1 2024, but outlooks are clouded for Q2 2024 and beyond.

According to the World Steel Association’s October 2023 Short Range Outlook Report, we can expect to see global steel demand grow 1.9% year-over-year in 2024 to reach 1,849.1 Mt, up from 1,814.5 Mt in 2023. This marks an upgrade from World Steel’s April 2023 Short Range Outlook Report, which predicted global steel demand to rise 1.7% in 2024.

World Steel’s report states that high interest rates and softening manufacturing activity will impact steel demand in the U.S. However, the potential for further weakening of the dollar exists as the Fed eventually takes on more of a dovish stance. This could provide some stimulus to US manufacturing as imported components become relatively more expensive. These are all factors that I am watching and will discuss later in this article.

Interest Rates & Fiscal Policy

The U.S. Federal Reserve continued its tight monetary policy throughout 2023, bringing the benchmark interest rate to a target range of 5.25%-5.50% and holding rates there to end the year.

However, with inflation continuing to cool, many analysts expect the Fed to enact interest rate cuts next year. Analysts at Bank of America and Deutsch Bank predict that we will see interest rate cuts starting in mid-2024. In their final policy meeting of the year on December 13, central bankers left rates flat for the third straight time.  While he was careful not to dismiss the possibility of further increases in the future, Fed Chair Powell sent his most compelling message yet that additional hikes will not be necessary, and the next move will likely be a cut sometime in 2024.

Interest rates and fiscal policy have a significant impact on consumer and business demand – and, therefore, the overall economy – which is why this is an area I will closely watch in 2024.

Economic Uncertainty

We have all heard concerns about economic uncertainty for the past couple years, and it appears that these concerns will continue through 2024.

Analysts at major banks expect economic growth in the U.S. to slow down in 2024 as compared to 2023. Analysts increasingly expect a soft landing for the U.S. economy but say that uncertainty around the Fed’s monetary tightening path clouds outlooks and that the possibility of a recession next year cannot be entirely ruled out. As of now, 2024 real GDP growth forecasts for the U.S. range from 0.6% to 2.10%.

As for the global economy, analysts expect growth to ease further in 2024 due to factors such as elevated interest rates, high energy prices and slowdowns in large economies. However, most economists say that we can expect the global economy to avoid a recession.  

Economic health, whether on a global or domestic scale, impacts demand in all industries, including steel. I will be closely watching economic activity metrics this year to determine which direction the economy will turn, both domestically and abroad.

Manufacturing Activity

Throughout 2023, we saw manufacturing activity soften and maintain a level of contraction, according to the ISM Manufacturing PMI.

This trend of softening manufacturing activity is expected to continue into 2024. Manufacturers surveyed by PMI described their inventories as bloated, suggesting that supply continues to outweigh demand. Many manufacturers also cited the need to reduce inventory levels in anticipation of an economic slowdown and reduced consumer spending. This means that we could see production slow over the next several months. From a steel plate perspective, inventories have fallen a bit recently, which will likely provide pricing strength in the near-term in the absence of any unpredictable and significant decline in demand. 

While slowing activity will place downward pressure on the manufacturing sector, funding from the Inflation Reduction Act (IRA) could increase demand for manufacturers who work within the infrastructure sector, both directly and indirectly.

Residential/non-residential construction and manufacturing have an incredibly direct correlation to overall steel demand.  For this reason, it will be imperative to monitor the metrics that affect these sectors very carefully, especially during this period of uncertainty.

Monitoring Steel Market Trends

It is important to observe market forces that impact the steel industry to ensure you are making strategic sourcing decisions, particularly during volatile markets. However, it can be time consuming and difficult to determine which economic and manufacturing metrics are the most important to watch.

To keep customers informed about key market forces, Leeco Steel publishes a monthly report that provides a high-level overview of the news and metrics shaping the steel industry. Sign up below to receive this report directly to your inbox each month.