【ferro-alloys.com】

  When US President Joe Biden announced a $2-trillion Bill on March 31, becoming known as his infrastructure plan, it made commodity research company Fast markets, for one, excited about the opportunities it may hold for metals.

  The Bill has been dubbed the American Jobs Plan, despite a political debate that ensued for a few days about what “infrastructure investment” should include beyond bridges and roads.

  Central to this plan is its focus on the environment and the technologies of the future, while it has the transition to a lower carbon economy at its heart.

  Fast markets pricing director Alex Harrison explains in a statement that the White House has been explicit about its intention to out-compete China, about its electric grid being vulnerable, its roads crumbling and how the US has fallen behind on research and development.

  “When passed, the plan will be a big deal for the commodities markets, its producers, consumers, traders and end-users, with strong effects on steel through copper to other materials such as cobalt and lithium, which are integral to the moves towards cleaner power and lower carbon emissions.

  “Take steel first. According to estimates from the American Iron & Steel Institute, every $1-billion of investment in infrastructure creates 50 000 t of steel demand.

  “US hot-rolled coil prices indexed daily by Fast markets are at all-time highs and US rebar prices are at almost ten-year highs on tight supply, long lead times for delivery and resurgent demand,” Harrison explains.

  He continues that the positive implications for steel demand from the successful passage of an infrastructure Bill are immense, with increases in steel consumption generated from greater investment in both traditional infrastructure as well as green infrastructure initiatives.

  While traditional infrastructure spending will support the consumption of rebar and other long products in particular, development of wind energy infrastructure, for example, will see elevated demand for steel plate in wind turbine structures.

  Demand growth is coinciding with a period of domestic steel supply shortage, as US steelmakers opt to focus on value over volumes, prompting the record-high prices in the US market.

  Harrison believes the viability of new electric-arc furnace steelmaking capacity expected to come on stream in the US over the next several years is no longer in question, with both current and expected future market conditions demonstrating both the need for new US steelmaking capacity, as well as the likely profitability of such investments.

  “While US steel prices are not forecast to remain at all-time highs indefinitely, positive underlying supply and demand fundamentals will prevent prices from collapsing as we have seen in numerous previous market cycles, and instead, we are forecasting annual average steel prices to remain well above long-term historical averages in the coming years.”

• [Editor:Catherine Ren]