The Fall In Steel Prices - Buying Locally
The production of steel from iron ore is losing mega money due to the low price of imports, along with too much supply with not enough demand. With cheap imports entering the U.S., domestic mills have been less desirable. Between 2000 and 2014, Chinese steel productions increased 540% while U.S. production decreased by 13% leaving China with an overcapacity, creating a surge in foreign material, allowing for cheaper, subsidized imports that resulted in replacing U.S. material; decreasing many U.S. jobs. Even though China’s own demand has declined, they have still been able sell their surplus on foreign markets for profit. Due to this, domestic shipments decreased almost 12% from 2014 to 2015. If American steel manufactures are to compete in this situation, they would be forced to cut prices at an unprofitable level. There has been debate over whether or not the states should provide incentives to protect the industry from unfair competition but the stronger hope is that the market can rescue its self and find its own balance.
Domestic steel is now gaining strength but is still uncertain. With 50% of global steel use being construction and building, the markets are starting to see a recovery in construction activity. Another key player is the U.S. Military, requiring large quantities of steel for Military aircrafts, armor plates, submarines, armored tanks, etc., but perhaps the silver lining is China’s steel demand is expected to decline 2% by 2018 as the government tries to retighten its real estate policies.
With many other factors considered - oil production, automotive supply and demand, etc., it’s hard to get a clear picture as to where the steel market will rest at the end of 2017 and with the “all mighty dollar” being key, we’re not exactly on an even playing field.
One thing is a fact - By buying local, supporting our own communities and contributing to the “little man” in our own back yards - Our surroundings are guaranteed to become more successful.