The steel industry is a crucial piece of the American economy, providing jobs for more than 1 million people. It provides the materials for our vehicles, infrastructure, technology, and home appliances.
A healthy steel industry is a sign of good things to come. Here’s what to expect from the American steel industry in 2015:
Growth
The recent banking crisis of 2008 sent America’s economy into a downward spiral. When huge financial institutions failed, citizens were charged with bailing them out. In addition to putting stress on the tax base, this economic recession also resulted in less available credit at higher interest rates than before.
The result of the damaged economy was that steel demand plummeted from 110.3 MMT (Million Metric Tons) in 2008 to just 65.4 MMT a short year later in 2009. Almost half of U.S. steel production came to a halt. But looking forward to 2015 tells a different story.
As the American economy has recovered, steel has also seen a big boost. Since 2009, the steel industry has shown positive growth year over year. In 2014, U.S. steel demand boomed to 131 MMT and 2015 is expected to see a growthof at least 2% on that figure, up to 132.8 MMT.
Steel Growth Factors
There a number of factors affecting the industry that will likely play out in 2015.
Infrastructure – There is a greater infrastructure for energy production. Productivity has continued to rise in the creation of more adequate facilities.
Housing – After the recent housing bubble in 2009, the demand for mortgages and raw materials to build new homes fell promptly. However, the housing supply is currently advantageous and under market value. This frees up additional cash and liquidity to support a growing market.
Automobiles – Vehicles and parts are outperforming other industries year in and year out. The high level of steel in these products continue to provide a demand for the market.
Medical – As more people retire, demand for medical equipment continues to rise. Baby Boomers are one of the largest generations of America, and many have additional income and medicare to cover medical expenses.
Aerospace – Banking firms have predicted a rise in steel use by aerospace applications, and that the industry will be one of fastest growing sectors in the world as a result.
Competition
Increased efficiency in the U.S. and decreased efficiency for America’s rival – China – has led to a competitive edge. Factories in around Beijing are suffering from bureaucratic entanglements that have reduced their total steel output and confidence in investment, leading to gains for American Steel in the next year.
Steel has long played a major role in the lives of Americans and citizens everywhere. While there were struggles with steel production and outlook in the recent past, it seems that optimism is appropriate. Looking forward to 2015, expect to see consistent growth and investment in steel production and manufacturing.
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