The US is the worlds third top producer of steel and the industry is worth around $130 billion annually. That being said there are some challenges in this area with new tariffs being introduced and a potential global trade war that could potentially damage this industry. Many different industries rely on a credible steel industry to be cost-effective. The primary sector impacted by this is the construction business where steel is a commodity that they heavily rely upon. Importing this from other countries could prove to be pretty expensive therefore ensuring that the internal price of steel remains at a reasonable rate is even more critical for the construction industry.
Where is Steel used in the US?
When buildings are being constructed, it would be scarce for there not to be an element of steel associated with it. If you look at companies such as Armstrong Steel that do their full business out of this, then the negative impact of steel prices would severely hit this company and potentially put them out of business. Armstrong Steel uses steel to erect all types of different building from annexes of homes to large steel buildings.
Over Production
Specifically, in places like China where there is a lot of steel business, there is evidence of over-production which then reduces the prices of steel significantly. This then directly impact the cost of US steel as people will import it from China. The tariffs then applied by the US to try and offset this is significant enough to make an impact. China has then responded with similar taxes on other goods, and a trade war erupts. Where does excess steel that cannot be sold go? It then gets sold for a loss which apparently has a negative impact on the whole industry.
Low Steel Prices Risk
This is probably the most significant risk for the US steel industry however with the recent global tariffs this is likely to affect this and bring a level of control internally in the US (although the taxes will have other impacts). Getting the balance correct as to when this becomes an issue is quite tricky. Clearly, consumers are looking to purchase steel at the lowest price possible however it all needs to be a viable sustained business that is healthy for all.
US Steel Companies
Internally in the US, there are many big players to the steel industry that are overseeing the government responses regarding tariffs. There seems to be a positive response to the latest government action regarding business viability and share prices. Although this helps the US steel business internally, it can affect any exports that they make where other countries may get involved in the trade war. There are some problematic steel companies with some financial difficulties however overall there is a period of growth in this area and forecasters are predicting that this continues in the years to come.
