The Resurgence of the Steel Industry in the U.S.

Nick Soncrant - Business Development Specialist


As someone who has worked in the steel industry, witnessing 2015 was nothing less than difficult. The industry was confronted with the largest increase in Chinese steel imports in our history. Over 100 million metric tons were exported throughout the year—6 million greater than the previous year.

U.S. steel firms were hit with as much as 60% market capitalization loss in 2015 according to marketrealist. This triggered a decrease in sales, prices, production, and jobs across the states.

China’s actions to devalue the yuan and divert their focus from industrial production to consumption needs such as improving living standards and environmental issues has resulted in a decline in World steel prices.  The lack of incentive for construction has generated an excess of steel production within the nation, forcing Chinese steelmakers to look outside the country for customers. Flooding steel imports consequently had a price range of anywhere from 20-50% cheaper than any other country according to Forbes.

In support, the United States has imposed a 236% tariff plan and new trade laws in an attempt to slow down the dumping of steel into U.S. markets. Other factors that will play a role in the resurgence of the U.S. steel market are the decline of the value of the dollar, construction spending in U.S. & China as well as automotive manufacturing.

As shown below, the Chinese construction market has moved into brighter territory. U.S. construction and automotive manufacturing industries continue to increase, and  as a result, the steel market can begin to control the excess supply, creating normalcy in the U.S. market. Over the past month, steel prices have been on the rise.

1605-chart-Nick-624

It is too early to say, but with recent indicators pointing in the right direction, we may see the market begin to stabilize and move upward throughout 2016.  I am looking forward to tracking how the industry develops in 2016 and to seeing those in the steel industry continue to push on, focusing on strategic relationships, cutting operational costs, and diversifying to create an edge and growth within their businesses.

Questions or comments? Please contact Nick Soncrant at nsoncrant@teamCOACT.com