Peak Price in US Steel Industry Is Hard to Continue

Peak Price in US Steel Industry Is Hard to Continue

US President Trump’s steel tariffs have brought the US steel industry to a high-light moment in the past 10 years in 2018. Steel prices have remained at a high level, and corporates profitabilites have set records. However, as the market gradually returned to rationality, US steel prices have declined significantly since the beginning of the year, and steel companies’ earnings in the second quarter were lower than expected. Glory Steel could offer 30x 50 hot rolled steel square bar for crane manufacturers or users. Even with the protection of taxes, high-cost producers are feeling the pressure on the market, and US Steel has announced a cut in production. At the same time, driven by good earnings in 2018, US steel producers have restarted their previous idle capacity and made new investments. Some analysts believe that US steel production capacity will increase significantly in the next two years, and new pressure on market prices. The prospects are not optimistic.   30x 50 hot rolled steel square bar could be used as crane rail.

From the data point of view, 2018 is a record year for the US steel industry. However, in 2019, the situation began to change, mainly reflected in the decline in steel prices. Some analysts believe that the Trump administration announced a 25% tariff on imported steel in March 2018, and US steel producers raised prices. Downstream customers are worried that tariffs will have a big impact on supply, so they increase their purchasing power, which further pushes up prices. With the rise in steel prices and corporate profits, the idle capacity of domestic steel mills has resumed production. After the introduction of steel tariffs, the US steel supply was not affected much, and downstream customers began to process inventory and reduce steel purchases. At the same time, the slowdown in the growth of the automotive, energy and construction industries has also had an impact on demand. The drop in demand coupled with the increase in US steel production has led to a sharp oversupply of steel and a sharp fall in prices since the beginning of the year.

US Steel Corporation announced on June 18 that company’s second-quarter profit is expected to be lower than expected due to falling steel prices and weak demand. It will idle two blast furnaces in the US and a blast furnace in Europe to make its steel production consistent with orders worldwide. The concentration of the US steel industry is high, but the production efficiency is clearly differentiated. Comparing with per capita crude steel production, the US steel company is the lowest. The high production cost of US steel companies is an important reason for companies to be more susceptible to falling market prices.

In general, the suspend production will result in US steel companies starting at least 320,000 tons per month from July, accounting for 22% of their 2018 crude steel monthly average production. The US Steel Company said that it will partially or completely resume production in the later period depending on market conditions. Analysts believe that a year ago, Trump imposed a 25% tariff on steel imports on the grounds of national security, hoping to protect the domestic steel industry and promote US steel prices. However, after the economic situation in the United States improved, it also prompted steel companies to restart their previously idle capacity. Low-cost steel producers such as Steel Power and Nucor Steel also took the opportunity to expand production capacity. Domestic steel supply increased substantially, which may lead to future steel product prices decline.

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