Vast steelmaking capacity idled during the heights of the pandemic could not be brought on line quickly enough to meet recovering steel demand and restocking, leading to the rapid rise in prices, credit rating agency Fitch Ratings says.

Up to 30% of global steelmaking capacity (excluding China) was idled or production at mills significantly reduced in response to a pandemic-induced drop in demand.

However, the recovery in automotive production and white goods manufacturing was quicker than expected when the strictest lockdown measures were lifted. The construction sector was less affected, as it was supported by government stimulus schemes in many regions.

The restarting of steel plants was not sufficiently quick to meet growing demand, while inventory levels reduced to historical lows, with restocking across the steel value chain in Europe and the US creating additional demand. Steel prices rallied in all regions in late 2020 as a result.