Will Winter Save The U.S. Steel Industry?

Steelmakers in the United States are more than willing to battle each other for territory, customers and money. It’s a fair battle and part of what makes America great. However, what the steelmakers in the U.S. cannot fight is steel from China being imported into the United States at a price much cheaper than the metal costs to be produced in China. This past year has seen a large increase in the illegal “dumping” of subsidized “finished” metal products from China including reinforcing bars, steel plate in coil form, hot galvanized coated sheets and strip and cold rolled sheet products because of slowing demand and their need to export excess capacity.  This has drastically hurt the price of similar American produced products. And it’s not just China as India, Japan and South Korea are in the mix as well.

If the USA market is flooded with steel products by a foreign country that are unfairly sold at a much cheaper prices than what it cost them to actually produce domestically, American steel mills will struggle to stay competitive. However, there could be hope on the horizon:

    • Winter Spike: The demand for steel used in the auto industry appears to be increasing going into winter as consumers continue the upsurge in record automobile purchases they have been delaying since the recent lengthy recession. Farmers benefiting from reduced oil and fuel expense for example are buying steel buildings to store grain that currently has depressed prices and to protect machinery and livestock from the cold.
    • Commercial Construction Rises: In many regions throughout the US new commercial and residential construction is on the upswing causing increasing consumption of metal rebar for concrete and steel studs for both single family homes, commercial projects and apartment buildings. Demand for steel construction related products is predicted to increase for Spring deliveries.
    • Is China’s Recession Bottoming?: Many leading economists feel that China’ economy is turning the corner and commercial and infrastructure construction will be helped by the recent interest rate cut leading to increases in domestic Chinese steel consumption and lessening the dumping trend.
    • Government Tariffs: There’s a strong chance that the government could step in and protect domestic manufacturers by putting tariffs in place which will make prices more competitive. Many domestic manufacturers feel that if the prices are more competitive they can win any head to head competition with foreign steel based on public bias as well as quality of product. If the prices are close, American’s want American made products especially pre-engineered steel building manufacturers.

There will no doubt be an increase in the demand of metal buildings and other products using steel this winter. However, if a few things go right for the steel industry this could be one of the most profitable winters the U.S. Steelmakers industry has seen in years as it could finally compete with China’s prices as well as underbid concrete and lumber on construction costs.