Steel is one of the most traded commodities in the world, and the price of it has a large impact on many industries around the world. The most comprehensive tracker of steel pricing in the Global Market is the CRU.

What is the CRU Index?

The CRU or Commodities Research Unit is a world-renowned price reporting agency that tracks, analyses and reports on global steel prices, trends and more. The CRU as an organization also analyzes the prices of many other commodities including copper, ores and fertilizer.

“The CRU Index” is a term often used to describe a price index used as a benchmark for steel prices in the Global Market, specifically HRC, or Hot-Rolled Coil prices.

How is the CRU calculated?

In order to set a figure for the CRU index, many factors are considered, mainly revolving around the supply and demand of the steel supply chain. This means studying exactly how much steel is made available to the market, and how much is being bought, in any given time period.

This information combined with the current and historical steel prices – measured in $/ton – allows the CRU to formulate both a current index value, and to make predictions for the future of the steel market.

How does the market affect the CRU index?

The current market conditions heavily affect the CRU index values for the near future. This is because supply and demand tend to be cyclical in nature, meaning it repeats regular patterns.

These patterns are created by the fact that suppliers are constantly trying to match the level of consumption of both raw and manufactured materials, to avoid both overproduction or lack of supply.

Low production rates cause a rise in the price, as the supply is limited, this encourages producers to increase production, which unless matched exactly by demand, creates a surplus, driving down prices.

What else affects the CRU index?

If you’re in the steel industry, or buy products made from steel, you’ll be well aware that geo and sociopolitical events have just as big an impact on steel prices as general market trends do.

Events such as wars, recessions and trade embargos all affect the price to a large extent. Whilst, this too can be boiled down to supply and demand, many of these are not happening on US soil, making the need for the CRU index data even more apparent.

CRU Prices and News

Volatility in the steel market has been commonplace for the last 15 years. With the market just about recovering from the 2008 global financial crisis, when the COVID pandemic affected both supply and demand. The war in Ukraine has also affected the market significantly, although mainly in Europe.

Disturbances from the Ukraine war have mostly settled now, with prices slowly falling into the latter quarter of 2023. Below is a chart of the CRU Index since its inception. To find out the latest prices estimated by the HRC, check the CRU website here.

It’s clear from the chart below, that the CRU index fluctuates greatly based on socioeconomic conditions. The boom in China’s production – from stimulus programs introduced in 2008 is apparent in violent price changes around that time.

Source: CRU

The Future of Steel Prices

For anyone planning significant business activities in the coming years then, would be well served to take stock of the CRU’s figures and analysis. Whilst “the CRU Index” focuses on the US market, CRU as an organization publishes data on worldwide markets and trends.

It’s not a bold prediction to say there will be further price fluctuations of the index in the coming years. With big events firmly on the calendar such as presidential/prime ministerial elections to be held in the US, UK and Japan in 2024 and 2025, and the war in Russia/Ukraine showing no signs of abating, expect volatility for some time.