N3C Steel Price Index is used to view the trends for the steel price. This index is defined as an input price index which measures changes in the transaction price of steel reinforcement input to the construction process.

In Q3 2020, steel prices fall at 7% due to lockdowns and a sharp decline in end-use demand. However, the recovery begins in the subsequent quarter. Restocking and pent-up demand combined with recovering underlying demand drove Malaysia’s market into undersupply.

In Q4 2020 to Q3 2021, steel prices have soared by 35% as a result of a lack of supply compared to demand from end users and supply chain restocking. The Covid-19 issue had a significant impact on China’s steel production, and while it gradually recovered, the increase in perceived demand exceeded it. The economic stimulus in China made the undersupply in Malaysia worse. The infrastructure and construction sectors received incentive from the stimulus plan. Because of this, China’s exports of steel were insufficient due to the country’s high domestic demand. This has an impact on Malaysia because it imports steel from China the most especially long products.

Restocking and pent-up demand slowdown in Q4 2021, which causes the price of steel to fall by 8% until Q1 2022.

The price of steel soared to its highest level since 2020 at the Q2 2022 which record an increase of 14% from previous quarter. By that time, it was obvious that the war in Ukraine would not end quickly, and steel prices would react accordingly. Shortly after, restrictions were imposed on Russian goods and Ukrainian output slowed down. Due to supply shortages, this forced importers of pig iron to look outside of Ukraine and Russia for suppliers.

China’s implementation of the zero-COVID policy in Q3 2022 led to a decrease in the demand for steel prices in the construction industry.

So, what’s next for the market?

Being the world’s largest user and producer of metals, China’s economic expansion will boost the demand for industrial metals. However, the ongoing war between Russia and Ukraine will keep this market uncertain. Russian metal might also flood the markets and effect the prices if the war ends. If this condition persists, it is expected that the price of steel will continue to decline by 7% at the end of Q2 2023.

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