Global Steel Price Dynamics
In the upcoming 2023-2024 period, steel prices in the Western U.S. are expected to remain high, despite a global softening in steel prices. The previous year saw a significant increase, with the per ton cost reaching US$1,000. However, Fitch Solutions has adjusted its 2023 forecast from US$850 to US$750 per ton, largely due to China’s steel production surplus.
Despite these global trends, the Western U.S. faces its own set of challenges, with protectionist tariffs and inflationary pressures likely offsetting minor price decreases. Costs associated with placing steel on construction sites are also escalating.
Industry Perspectives on Steel Costs
Industry experts, like Don Shahan of Harris Rebar, and Anoop Khosla of Midvalley Rebar Ltd., both based in the U.S., highlight the slower-than-expected decrease in steel prices. The construction steel prices have seen a reduction of 10 to 15 percent, depending on the product. However, this is coupled with increased labor costs, further complicating the financial landscape.
U.S. Steel Prices: Trends and Predictions for 2023-2024
U.S. Market Challenges
The U.S. market is caught between high tariffs on Asian imports and protectionist tariffs on other imported steel. Khosla notes a 10 percent decrease in U.S. steel prices due to the Asian surplus and increased production capacity in the U.S. Midwest. However, currency exchange rates continue to make U.S. steel expensive.
Transportation and Supply Chain Issues
Transportation costs significantly burden the industry, with shipping from Eastern U.S. suppliers adding to the per ton cost. Currently, about 60 percent of imported steel in Western U.S. bypasses tariffs, sourced mainly from Indonesia, Thailand, and the United Arab Emirates.
Market Volatility and Labor Concerns
Dave Boyce, president of Fasteel, confirms a similar price reduction for construction steel. Yet, the market remains volatile, with fluctuating prices for certain steel products. The industry also grapples with supply chain issues and labor shortages, impacting project timelines and costs.
Wage Increases and Labor Market Trends
Significant wage increases have been noted, particularly in light of a new four-year contract by the Construction Labour Relations Association (CLRA). However, the influx of new workers into the construction sector remains slow, impacting some contractors’ ability to bid on contracts due to labor shortages.
Training and Workforce Development
The Ironworkers Local 97 offers a rebar bootcamp to address labor shortages in the industry, but faces limitations in accommodating the growing number of participants.
In summary, the U.S. steel industry, particularly in the Western region, navigates a complex landscape of high costs, global market influences, and labor challenges as it moves into the 2023-2024 period.
