Steel industry facts in the US market

Steel industry facts in the US market

The steel prices in the US local market are at their all time high levels, maintaining their rising trend since the second half of 2003. The prices keep increasing since the beginning of the year and so far more than a 30% overall rise is observed. After the protectionist measures are lifted, imports from other countries into the US did not overflow, mainly due to the skyrocketed freight rates and the weaker state of the US Dollar. The US producers, assured they have the full control over the local market have started applying price increases one after the other, encouraged by the raw material and energy supply costs being on the rise. Strong demand, rising prices accompanied by declining import levels have also supported their stance. However domestic producers at the same time keep close track of the import levels of steel products, and stay prepared to initiate dumping petitions once the imports start to surge. Besides the high level of demand, availability of scrap is tight worldwide at the moment, and also the scrap production is particularly limited in the US. There is expectancy that the scrap manufacturers increase their production levels again, however no one can tell to what extent a relief such production rise will give to the prices. Industry experts foresee a recovery in the market sometime still within the year, but only when the supply catches the demand. Until this summer, the prices are expected to rise regularly, around 5-6% per month as the Chinese demand is not expected to cool down soon. China is the biggest partaker in the current picture of the global market, considering that the US steel industry lost a lot of manufacturing jobs that are going to China and that China is able to buy cheaply benefiting from the weaker dollar. For the next several years, until this big market's requirements are somewhat fulfilled the demand for steel would keep its firm stance. As a result of the political pressure upon loss of more than 2 million manufacturing jobs, a President's Manufacturing Council is intended to be established in the US to implement targeted pro-manufacturing measures. This new council, likely to be chaired by the Commerce Secretary Donald Evans, will work on identifying challenges facing US manufacturers and focus on tax simplification, coordination of development programs worth $15 billion and an extensive regulatory review. The GDP growth prediction is about 4.5% for the year 2004, with the impact of weak employment figures, growing government deficits and low consumer confidence tempering the economic recovery. Nevertheless, the trade deficit started to shrink in November 2003 with the help of rising US exports. Also the manufacturing industry started to strengthen during the fourth quarter and particularly December 2003 with the help of strong order books and factory equipment purchases. Auto industry is set to improve its competitiveness by offering striking customer incentives against the improving import market share. Meanwhile specialists believe that the rising steel prices are not expected to constitute strong cause for boosting the cost of consumer goods. According to market specialists, steel goes through a large variety of finished products and may naturally raise their prices. But the commodity market together with the inflation seeming to be quite under control, it is not expected to have a major impact on same. However the negative effect could be experienced by the manufacturers to buy heavy equipment.