Severe coil shortages in Europe and the United States have driven up steel prices to their highest levels since 2008 and attracted interest from Asian mills, and that seems unlikely to change until steel production picks up in the second half of the year, meaning the second quarter will be a good time for exports.

Factory prices for hot-rolled coils in the Midwest and Northern Europe have soared since the start of the year.Delivery dates in both markets are full, and many customers are unable to get steel supplies in time.

A shortage of semiconductors has cut U.S. auto production.As a result, automakers argue that much of the steep rise in U.S. steel prices is being driven by a lack of supply rather than demand.In Europe, downstream demand is firmer, with big steelmakers such as ArcelorMittal already lining up deliveries until October.Steel prices in Europe and the United States are expected to continue to rise in the second quarter due to supply shortages and support from the Coronavirus vaccine, which should help further economic recovery.

South Korea is exempt from a 25 per cent tariff imposed by the US government on steel imports and has been increasing shipments to the US.Japan is affected by the tariffs, but has longstanding ties to U.S. automakers and other high-end steel consumers.

China's steel exports have grown this year as overseas demand and prices have recovered to make Chinese steel competitive again.But China's finished steel exports plunged 33.9% in May from the previous month to 5.271 million tons.China's steel exports are expected to grow significantly in 2021 compared with the same period last year.

Domestic steel prices in China have been rising since the start of the year, reaching an all-time peak in mid-May, further supported by firm demand and production cuts in Tangshan due to environmental concerns.However, the recent downstream industry "fear of high" and the impact of increased national supervision, steel prices have fallen.

Chinese mills are reluctant to cut production, driven by rising profit margins this year.China's total steel production is not expected to fall sharply this year.Steel demand will start to slow in the second half of the year as the Chinese government's monetary tightening measures start to take effect, particularly in the real estate sector.

India continues to play a bigger role in the international steel trade.India's steel exports from April 2020 to February this year rose 49.5 per cent year-on-year to 15.5 million tonnes, according to the Joint Factories Committee.Last year, when the economy was still recovering from the outbreak, India exported large quantities of steel to China and Vietnam.India has shifted the focus of its exports to Europe this year amid widening price differentials between Indian and European hot-rolled coils and a shortage of coils in Europe.

The high volume of exports is tightening domestic steel supplies and the planned overhaul of JSW Steel, Tata Steel and the Steel Authority of India will exacerbate this situation.The imbalance between supply and demand led to further increases in domestic hot rolled coil prices in April-May.However, this will start to ease with the monsoon season, when downstream industry activity slows.