Market Demand and Economic Uncertainty

The current picture of steel manufacturing the world over is driven by two countries. The United States is importing large amounts of raw and finished steel products. China is meeting and exceeding these demands, while also continuing to import large amounts of iron ore in their steel manufacturing industry. Conflicts and agreements between these two countries has created a situation where prices continue to fall and production continues to rise. More products have to be made, or imported, to meet economic demands.

China has garnered a lot of attention lately with their expansion of steel exports. Currently the largest exporter in the world, Chinese production is still increasing, driving prices down globally and making Chinese steel products cost- and time-effective.

The United States has imported over 10 million metric tons of steel in the first quarter of 2014. Demands in the auto industry and energy drilling have increased and although American steelmakers have filed trade cases arguing for an increase in tariffs, most of those cases are unresolved at present and the market remains open.

Many US steel mills are supporting tariffs against imported finished steel, but are also big importers of raw steel that they use to make finished products. This has created a market that the steel industry is trying to exploit for specific gains, while hurting foreign steel makers for producing the same products for a cheaper price.

Internationally, the price of iron ore is primarily determined by Chinese demand. China is the largest consumer of iron ore in the world, even with the current economic slowdown. This slowdown has resulted in lowering factory output and slowing retail sales. Continuing this trend will result in a depression of the world market for iron ore as less is used and inventory builds up in Chinese ports.

These two factors, increased Chinese manufacture and a looming tariff on importing steel to the US has created the perfect moment for importing steel for your industry or business. Locking in low import prices, now, before the tariff laws raise them will ensure a steady supply of raw or finished steel from China while avoiding the uncertainty that will follow the US tariff decisions.

Good business sense suggests that you buy while prices are low. It is unlikely that production will continue at this level much longer. The economic and manufacturing changes occurring in Chinese steel suppliers will slow production down. If the tariffs go into effect in the US, the prices for imported steel will necessarily rise. Now is the time to buy steel.



Source by Alfred Clark