Steel Prices Spike As Manufacturing Recovers
The cost of steel to build towboats and barges has been going up in the past few months and will likely continue to do so for the near future.
A global manufacturing revival that was already well underway is accelerating as China’s recovery continues and drives up global demand. Former President Donald Trump’s steel tariffs remain in place unless and until the Biden administration addresses them. Supply is constrained due to earlier shutdowns of facilities because of COVID-19. Metals markets are anticipating stimulus measures from President Biden’s administration.
As consumers avoided companies providing face-to-face services due to the virus, they spent instead on cars, hard goods and products for the home, contributing to a manufacturing revival that began in October, according to the Institute for Supply Management.
In its December 14 outlook for steel prices in 2021, Leeco Steel said a continued strong economic recovery in China could pull world plate steel prices upward by 8 percent. It estimated that U.S. domestic demand for plate steel could rise by 6.7 percent, unless a new surge in coronavirus cases dampens demand again. During the past six months of China’s recovery, world prices for iron ore have risen to a nine-year high.
The Fabricator, a steel industry publication, reported in early January that December steel prices reached $1,080 a ton, levels not seen since 2008, when steel hit $1,070 a ton. Steel Market Update reports that in a five-month period, the average price for hot-rolled coil jumped by 2-1/2 times, from $440 a ton to nearly $1,100 a ton.
According to the Wall Street Journal, manufacturers of home appliances are reporting supply chain slowdowns and wait times that are extending to weeks due to difficulties getting raw materials, including steel. The Fabricator said steel prices should remain high for the next six months, until new capacity comes online.