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Steel is a major input to critical sectors of the U.S. economy, like construction and manufacturing. COVID-19 created economic disruptions to both supply and demand that rattled the steel sector. One way to gauge the impact of these disruptions is by analyzing the changes in steel prices from the beginning of the pandemic in March 2020 through May 2023, when the health emergency ended.
The Producer Price Index (PPI) for steel mill products tracks the price changes of domestically produced steel, such as hot- and cold-rolled steel, steel wire, and steel pipe and tube. These products are used as inputs for building construction, vehicle manufacturing, oil and gas extraction, and many other industries. As a vital input across the U.S. economy, analysts often turn to data on steel usage, output, and prices as indicators of economic health.
The COVID-19 pandemic significantly impacted the world economy, causing global gross domestic product (GDP) to fall 2.9 percent in 2020.1 The U.S. economy experienced a similar retreat, with GDP falling 2.2 percent over the same period.2 The economic downturn was worse in the first half of 2020, which saw U.S. GDP decrease at an annualized rate of 19.2 percent.3 The economic contraction resulted in supply disruptions that impacted steel prices. Prices of steel increased 85.3 percent from February 2020 to May 2023, as reflected by the PPI for steel mill products. This Beyond the Numbers article will examine the price movement of steel in three phases: March 2020–August 2020, when the pandemic shock set in and steel prices fell; September 2020–December 2021, when the economy began to rebuild and steel prices surged; and January 2022–May 2023, when economic activity expanded but steel prices generally moved lower. (See chart 1.)
The COVID-19 pandemic that began in March 2020 and the consequent economic shock from the ensuing lockdowns dramatically affected steel-intensive industries. As an example, the automobile industry, which uses almost 900 kilos (1,984 pounds) of steel in an average vehicle, saw several manufacturers temporarily halt production.4 This led to lower demand for steel, which caused domestic steel mill and blast furnace closures and reduced steel imports by 35.5 percent in the second quarter of 2020.5
The decline in economic activity and steel usage dramatically affected steel producers, both domestically and abroad. India, for instance, cut steel production by 70 percent amid a 21-day production shutdown. 6 Reduced steel output in turn created supply-chain issues, which affected those industries that rely on steel.7 During this initial phase of the pandemic, the impact of the economic decline on domestic steel can be illustrated by lower domestic production, which fell 16.9 percent. This led to lower revenues; even large producers lost millions of dollars in the second quarter of 2020.8 During this phase, the PPI for steel mill products declined 5.9 percent. (See chart 2.)
The world economy began gradually reopening after shutdowns of varying lengths over the spring and summer of 2020.9 World GDP increased 13.4 percent in 2021—annual growth that almost doubled that of 2018 and 2019 combined.10 The United States also experienced a jump in GDP, rising 5.7 percent in 2021.11
As economic activity began ramping up, demand for steel also rose quickly, due to rebounds in the construction, oil and gas, and automobile industries.12 This resurgent demand, coupled with the lack of supply caused by the collapse of production during the onset of the pandemic, left steel manufacturers struggling to keep pace with demand. This led to a steep increase in steel prices.13 From August 2020 to December 2021, the index for steel mill products rose 153.2 percent, advancing for 16 months consecutively. (See chart 3.)
As prices rose, domestic steel producers began increasing production to maximize profits and diversifying holdings to survive in a volatile market. Several firms reopened shuttered production facilities or looked to vertically integrate to secure input supplies.14 Other companies sought to mitigate economic risks by diversifying their production to serve new markets.15
This phase of the recovery provided the opportunity to observe the efforts made by producers to maximize production in a constrained market with sustained increases in steel prices. Responding to price signals, firms flooded the market with new steel, setting the stage for phase three.
With steel prices rising during phase 2, steel producers moved to increase production. However, beginning in 2022 new supply chain breakdowns resulted in downward pressure on the demand for steel. 16
As automakers ended their self-imposed quarantines, vehicle production returned to pre-pandemic levels. However, before long, producers were hit by another supply-chain disruption for a key input—microchips.17 Supplies of microchips dwindled due to strict lockdown procedures in areas of the world that specialize in microchip production. This slowed the ability of value-adding producers to manufacture goods that require microchips, such as automobiles, consumer and commercial electronics, household appliances, and medical devices. Once again, steel demand began to decline.
In the first quarter of 2022, manufacturers often delayed vehicle completions, awaiting the receipt of the necessary microchips. Some vehicle manufacturers, unwilling to wait for the microchip shortage to resolve, began shipping vehicles without microchips for certain optional vehicle features, such as those that allowed for certain climate control features or for wheel-specific tire pressure monitoring.18 Another steel-intensive industry severely impacted by the microchip shortage was major household-appliance manufacturing, leading to substantial delays in appliance deliveries.19
The inability of companies to complete products placed downward pressure on the demand for steel.20 The combination of increased steel production and lower steel demand left steel producers with warehouses filled with unsold product. Inventory accumulation occurred both in the United States and across the globe. For example, steel inventories in China hit a 13-month high in April 2022.21 The eventual recovery in microchip supply, and unusual adaptive measures, such as rewriting processing code to use microchips with less memory, slowly provided relief to both automobile and appliance manufacturers in late 2022. Increased downstream production began to alleviate some of the steel surplus. 22
Early in phase 3, the onset of the Russia-Ukraine war in February 2022 caused another shock to the international steel market. The combined steel output of Russia and Ukraine was equivalent to the third largest producer in the world, so the conflict disrupted the world steel supply. The destruction and shuttering of production facilities in eastern Ukraine, in combination with Russian blockades of Ukrainian ports, hampered Ukrainian steel production and its ability to export products, reducing international supplies.23 In addition, sanctions and import bans levied against Russia by the European Union and the United States applied further pressure to global steel supplies, forcing Russian steel to be rerouted to Asian markets.24 After initially maintaining their downward trajectory in the first month post invasion, prices began to rise as the war continued. These disruptions led to a steel price increase of 13.5 percent from March to May 2022.
By May 2022, steel prices returned to their downward trend, which continued through January 2023. The abundance of worldwide steel supply that originally sent the market into decline overcame the short-term panic caused by the onset of the Russia-Ukraine war. The surge in production during phase 2 coupled with lackluster demand in phase 3 led to a 31.5-percent decline for the period covering 2022 and January 2023. The decline over the full phase 3 period was 22.8 percent. (See chart 4). At the close of phase 3, steel prices appeared to be rebounding. However, after a brief advance in steel prices, the index for steel mill products continued its downward trend for the remainder of 2023 and all of 2024.25
The COVID-19 pandemic and subsequent worldwide events were unprecedented, but their effect on steel prices has been clear. Through three phases, practical evidence demonstrated that the market behaved according to the economic theory of supply and demand. Production shutdowns during phase 1 led to a lack of supply in phase 2, and soaring demand during that period pushed prices upward. Once resources were shifted to increase production, supply increased and caused prices to collapse. These changes in supply and demand, along with the geopolitical crisis, contributed to additional price volatility in phase 3, which was reflected in steep declines in the PPI for steel mill products.
This Beyond the Numbers article was prepared by Joshua Grimes, Supervisory Economist from the Office of Prices and Living Conditions (OPLC), U.S. Bureau of Labor Statistics. E-mail: grimes.joshua@bls.gov; telephone: (202) 691-7022.
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Joshua Grimes, “The impact of COVID on the price of steel in three phases,” Beyond the Numbers: Prices & Spending, vol. 14, no. 4 (U.S. Bureau of Labor Statistics, May 2025), https://www.bls.gov/opub/btn/volume-14/the-impact-of-covid-on-the-price-of-steel-in-three-phases.htm
1 For more information see, “World GDP 1960–2022,” Macrotrends, https://www.macrotrends.net/countries/WLD/world/gdp-gross-domestic-product.
2 For more information see, “U.S. GDP 1960–2022,” Macrotrends, https://www.macrotrends.net/countries/USA/united-states/gdp-gross-domestic-product.
3 Lucia Mutikani, “U.S. economy contracted 19.2% during COVID-19 pandemic recession,” Reuters, July 29, 2021, https://www.reuters.com/business/us-economy-contracted-192-during-covid-19-pandemic-recession-2021-07-29/.
4 “Steel in Automotive,” World Steel Association, https://worldsteel.org/steel-topics/automotive/ and
Colin Beresford, “Details of increasing plant shutdowns amid COVID-19 pandemic,” Car and Driver, March 25, 2020, https://www.caranddriver.com/news/a31753194/ford-gm-honda-shutdown-us-plants/.
5 “East Chicago steel plant announces nearly 900 layoffs, citing decreased demand amid coronavirus pandemic,” ABC 7 Chicago, August 1, 2020, https://abc7chicago.com/arcelormittal-layoffs-coronavirus-indiana-east-chicago-steel-plant-covid-19/6347697/, and
Rye Druzin, “Coronavirus forces US Steel to idle blast furnaces,” Argus Media, March 27, 2020, https://www.argusmedia.com/en/news-and-insights/latest-market-news/2091252-coronavirus-forces-us-steel-to-idle-blast-furnaces, and
Anindya Barman, “U.S. steel imports drop sharply in May amid Coronvirus, down YTD,” Zacks, June 29, 2020, https://www.zacks.com/stock/news/994341/us-steel-imports-drop-sharply-in-may-amid-coronavirus-down-ytd?art_rec=blog-analyst_blog-up_next-ID01-img-994341.
6 Ashima Tyagi, “India lockdown: Private steel mills cut output by nearly 70%,” S&P Global, March 26, 2020, https://www.spglobal.com/commodity-insights/en/news-research/latest-news/metals/032520-india-lockdown-private-steel-mills-cut-output-nearly-70.
7 Shawn Donnan, Christoph Rauwald, Joe Deaux, and Ian King, “A Covid-19 supply chain shock born in China is going global,” Bloomberg, March 20, 2020, https://www.bloomberg.com/news/articles/2020-03-20/a-covid-19-supply-chain-shock-born-in-china-is-going-global.
8 Joseph S. Pete, “Steel production has plummeted 16.9% this year,” NWITimes, June 9, 2020, https://www.nwitimes.com/business/steel/steel-production-has-plummeted-16-9-this-year/article_8e7c3460-9a81-5628-925f-fa1b808d18ed.html.
9 Gita Gopinath, “Reopening from the Great Lockdown: Uneven and uncertain recovery,” International Monetary Fund, June 24, 2020, https://www.imf.org/en/Blogs/Articles/2020/06/24/blog-weo-update-reopening-from-the-great-lockdown-uneven-and-uncertain-recovery.
10 For more information see, “World GDP 1960–2022,” Macrotrends, https://www.macrotrends.net/countries/WLD/world/gdp-gross-domestic-product.
11 “Gross Domestic Product, fourth quarter and year 2021,”(Bureau of Economic Analysis, February 24, 2022), https://www.bea.gov/news/blog/2022-02-24/gross-domestic-product-fourth-quarter-and-year-2021.
12 Justine Coyne, “Despite demand uptick, U.S. steel market faces global pressure: S&P Global Ratings,” S&P Global, December 1, 2020, https://www.spglobal.com/commodity-insights/en/news-research/latest-news/metals/120120-despite-demand-uptick-us-steel-market-faces-global-pressure-sampp-global-ratings.
13 Bob Tita and Ben Foldy, “Steel orders jump after Covid-19 slowdown,” The Wall Street Journal, December 14, 2020, https://www.wsj.com/articles/steel-orders-jump-after-covid-19-slowdown-11607947200, and
Rajesh Kumar Singh, “U.S. manufacturers grapple with steel shortages, soaring prices,” Reuter, February 23, 2021, https://www.reuters.com/article/business/us-manufacturers-grapple-with-steel-shortages-soaring-prices-idUSKBN2AN130/, and
Sandeep Sinha, “Steel price spike due to unanticipated demand: S&P Global Platts,” Money Control, February 3, 2021, https://www.moneycontrol.com/news/business/commodities/steel-price-spike-due-to-unanticipated-rise-in-demand-sp-global-platts-6441171.html.
14 Rye. Druzin “US Steel to restart Gary works blast furnace,” Argus Media, December 1, 2020, https://www.argusmedia.com/en/news-and-insights/latest-market-news/2165052-us-steel-to-restart-gary-works-blast-furnace, and
Ryan Secard, “Cleveland-Cliffs latest move in vertical integration: scrap metal,” Industry Week, October 11, 2021, https://www.industryweek.com/leadership/growth-strategies/article/21178039/cleveland-cliffs-latest-move-in-vertical-integration-is-scrap-metal.
15 Brooke Sutherland, “What does Nucor see in garage doors? An opening,” Bloomberg, May 23, 2022, https://www.bloomberg.com/opinion/articles/2022-05-23/what-does-nucor-see-in-garage-doors-an-opening.
16 “Supply chain issues and autos: How long will the chip shortage end?” J.P. Morgan, April 18, 2023, https://www.jpmorgan.com/insights/global-research/supply-chain/chip-shortage.
17 John Irwin, “The latest numbers on the microchip shortage: Automakers begin cutting 2023 production,” Automotive News, October 16, 2022, https://www.autonews.com/manufacturing/latest-numbers-automotive-microchip-shortage-56/.
18 Phoebe Wall Howard, “Ford to start shipping Explorer SUVs with missing semiconductor chips,” Detroit Free Press, March 13, 2022, https://www.freep.com/story/money/cars/ford/2022/03/13/ford-explorer-suvs-missing-semiconductor-chips-supply-chain-bronco-f-150/7022209001/.
19 Paula Gardner, “Michigan appliance customers find delay and frustration. It won’t end soon,” Bridge Michigan, August 30, 2021, https://www.bridgemi.com/business-watch/michigan-appliance-customers-find-delay-and-frustration-it-wont-end-soon.
20 Jordan Yadoo, “U.S. manufacturing declines for third straight month with covid surge,” Boston Globe, February 1, 2022, https://www.bostonglobe.com/2022/02/01/business/us-manufacturing-declines-for-a-third-straight-month-with-covid-surge/.
21 “China’s steel inventories hit 13-month high amid COVID-19 resurgence,” S&P Globa, April 27, 2022, https://www.spglobal.com/commodity-insights/en/news-research/latest-news/metals/042722-chinas-steel-inventories-hit-13-month-high-amid-covid-19-resurgence.
22 John Irwin, “Chip shortage getting better all the time…but not for everybody,” Automotive News, February 16, 2023, https://www.autonews.com/automakers-suppliers/chip-shortage-easing-unevenly-automakers/, and
Will Knight, “Companies are hacking their way around the chip shortage,” Wired, May 30, 2022, https://www.wired.com/story/chip-shortage-hacks/.
23 Jason Beaubien, “Russia’s war in Ukraine pushes Ukrainian steel production to the brink,” NPR, August 12, 2022, https://www.npr.org/2022/08/12/1116312634/russia-ukraine-war-steel-iron-industry.
24 Jacopo Barigazzi and Leonie Kijewski, “E.U. to hit Russian steel, IT industry with sanctions, but spare diamonds,” Politico, September 28, 2022, https://www.politico.eu/article/eu-hit-russia-steel-it-industry-sanction-spare-diamond/, and
“How steel cools: The war with Ukraine has destroyed Russian steel exports and will lead to a gradual degradation of the industry,” Re: Russia, January 29, 2024, https://re-russia.net/en/analytics/0124/.
25 For the index history of the PPI for steel mill products dating back to 1982, see https://data.bls.gov/timeseries/wpu1017?from_year=1982 then selecting the “more formatting options,” followed by then selecting “all years” as that will provide the full index history for this PPI, which goes back to January 1939.
Publish Date: Tuesday, May 13, 2025