Challenges in the US Steel Industry and its Impact on the Domestic Prices

The US steel market continues to be plagued by a variety of challenges, from overcapacity to a slow recovery in demand. As a result, in 2013, steel producers will continue to have limited power to support the weak steel prices. Slowdown in the US economy and the sluggish growth in Chinese economy have impacted the US steel market and the US steel mills. This whitepaper aims to highlight the impact of these factors on the US steel market and its implications for consumers in the coming months. The surplus in the US steel market is set to continue for the next 9-12 months. From a procurement standpoint, steel consumers will continue to hold upper hand in terms of price, as the transactions in the US market will be dictated by the consumers. With shorter lead times and uncertain demand outlook, consumers are recommended to minimize their inventory levels and purchase only for their immediate requirements in the next 3-6 months. Steel mills will continue to roll out periodic price hikes, however under the weak market conditions, these price hikes will be ineffective and steel mills will have minimal leverage in terms of controlling the steel prices.

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