The steel industry is vital to the success of the US economy. Over the past decade, many steel companies have struggled to remain profitable. While last year’s steel tariffs left the fate of the industry uncertain, 2018 definitely ended on a high note.
Going into 2018, the average cost of steel was $685 per ton. By the end of the year, the cost of steel was over 33 percent higher than the beginning of the year. This increase in price was a massive boost for steel companies.
Higher Prices
Despite higher prices, steel demand from companies did not decrease in 2018. In most industries, rising prices resulted in lower demand from customers. However, steel is vital to the construction industry. In many cities, the construction industry was booming last year. Customers were willing to pay additional costs for the steel to construct homes and buildings.
Going into the new year, some people were worried that prices could drop. Prices are already much lower than the peak achieved last year. If prices fall too quickly, many steel companies will struggle financially. Numerous companies invested in additional production to meet the demands of customers.
Global Demand
Another significant factor influencing the price of steel is global demand. Many world leaders are worried that global economic growth will decline. China recently reported the lowest level of economic growth in decades.
If the economic growth in China continues falling, some people worry that worldwide steel demand will drop drastically. China is one of the world’s largest producers of steel.
Europe is another area of the world with economic growth issues. Various nations in Europe are reducing the amount of steel imported in 2019.
Tariffs
The United States placed a massive tariff on Chinese steel last year. Although the duties impacted the price of steel initially, prices are now settling at a lower level. Some economic experts speculate that President Trump could levy additional tariffs against Chinese steel.
However, other people believe that the government could ultimately take away any tariffs on Chinese products. Until the tariff issue is resolved, it will be tough for steel manufactures to plan production for 2019.
Oil
Few people realize that oil prices can impact the steel industry. Oil drilling companies buy a substantial amount of steel in the US. Although oil prices have risen in recent weeks, oil drilling companies have little incentive to drill for new oil while the price is around $50 per barrel.
If oil prices rise, it could signal an increase in demand for steel in the coming months. Many people in the steel industry believe that oil prices will remain constant this year, and few executives expect a drastic increase in demand from oil companies.
Hiring
The vast majority of steel companies in the United States have open positions available. Few people are willing to work hard in steel mills. Although the work pays well, the vast majority of young people would rather work in another industry.
With steel production expected to increase in the coming years, gaining experience in the steel industry is an excellent way for people to build a solid career.
