As we enter into the last quarter of 2015 many members of the steel industry are wondering where it is all heading. Some steel makers are considering temporarily idling some facilities in order to adjust to challenging global market conditions.
The Strong Dollar, China’s own internal economic problems, the oil industry being in a holding pattern, Imports continuing to come into the US at very competitive prices, according to some, at prices below the costs to produce here in the US. These are just a few factors that affect the current economic conditions within the steel industry.
Some construction related sectors that utilize long products are helping mills produce more tons over last year, however the increase of imported long products keep the transaction prices lower.
In speaking with many construction companies throughout the northeast it appears that several of the contractors currently have a respectable backlog. There is speculation that this may carry over into 2016. In addition there are numerous projects being designed and will be put out to bid in early 2016 for construction in the 2016 construction season.
In the past two months scrap prices have dropped approximately 20 percent. Some of the contributing factors include lower capacity utilization rates at the mill level, the slowdown in China’s economy, as well as the stronger US dollar.
Paired with the upcoming and seasonally slower fourth quarter, 2015 is proving to be the most challenging year for the scrap industry since 2009; some speculate that the perfect storm will be here until the dollar weakens.
U.S. Raw Steel Production
In the week ending October 3, 2015 mills produced 1,727,000 net tons down 0.5 percent from the previous week of 1,735,000 tons. Mills have produced 67,819,000 tons year to date in comparison to 73,727,000 tons down 8 percent from same period in 2014.
As always we will attempt to keep our customers up to date on the latest developments within the steel industry. If we can help explain what’s currently going on in our industry, give our HarMac office a call: 207-935-3531