With the changes COVID-19 created, we are seeing steel prices rise dramatically as production underperforms alongside high iron ore costs and low inventory. The most dramatic increase has been the almost doubling in price for Hot Rolled Coil Steel which, especially for industrial developers, can put projects at risk of being over budget if not properly adjusted for. Many US steel mills are currently working on expansions to ease the undersupplied market which should lead to prices decreasing through 2021. Last month IPG noted in our blog that Insiders believe it will be important to watch for a significant price correction if the market oversupplies. The current price rise is reminiscent of the 2008 steel market that overproduced and caused prices to drop dramatically. Some experts note the situation may be different but it will require the continuation of strong construction activity to keep distributors from raising demand past end-users' needs as they did in 2008. Predictions that the steel market is beginning price corrections, alongside the increased demand for industrial space in Salt Lake, means that now may not be a bad time to begin planning development projects.
