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2017 Might Just Be the Springboard the Steel Market is Looking For

2017 Might Just Be the Springboard the Steel Market is Looking For

2017 Might Just Be the Springboard the Steel Market is Looking For
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The year was 2010.

The price of steel per ton in the US was a healthy $646.7.

In 2011 it rose to $749.6.

But the ensuing period instead of being the golden era of steel production turned out to be a bitter slump that has spiraled despite assurances of stability.

The World Steel Association had predicted that the fall in demand of 2015 had led to a “bottoming out” of steel prices. So the only way to go was up.

But the US steel market sank lower in 2016.

This has been a disturbing trend for well over 6 years now.

So what does 2017 have in store for steel manufacturers?

Let’s take a look at the drivers and the possible outcome.

The Trump Presidency:

“Making America Great Again” has been the cornerstone of the Trump campaign. And the President Elect has focused heavily on improving trade ties, protecting domestic markets and uplifting national manufacturing.

In fact, after his win was officially declared, the Down Jones Steel Index registered a steep rise, the highest in two years.

In short, investors are on board with a more optimistic evaluation of the steel market.

The Slowing Down of the Chinese Economic Engine: 

For almost a decade now China has led the global economy as the most prolific producer of steel. It certainly has the manufacturing advantage of inexpensive labor and a strong domestic demand. However the juggernaut is now cutting back in terms of its export expansion. Quality conscious buyers are turning to alternative channels to procure affordable and robust goods. And with this shift China has decided to bring down its steel output by almost 20% over the coming three years.

Right now the production of steel outpaces its demand. But the move will turn the tide ensuring that the consumption of steel takes the edge again, bolstering prices across the board.

Increase in Non-Residential Construction Activities:

The American Institute of Architects has good news. It is estimating a spike in non-residential construction efforts of almost 6.7%. This increase is not inconsequential and will positively impact steel demand as well as prices.

Based on these projections it looks like 2017 will springboard the steel market. Even if the rise in prices isn’t significant right away, there is optimism for the future.

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