US Steel Industry on the Global Stage

US steel production has left something to be desired over the past couple decades. Falling to the number three producer in the world- behind China and Japan- since the 1970’s, US steel factories across the country have been shuttered by the hundreds from Maine to California. And though it is tough competition, there are signs of new life on the domestic front.

 

With global steel production up over 1% in 2012 from the previous year to 1.5billion tons, the world is hungry for steel. Of this production, US companies only contributed a measly 89 million tons. And booming cities across the globe, a majority without access to domestic steel, are increasingly looking to China steel.  That’s because developers are most attracted to the cheaper prices of China steel, which averages 10% cheaper than the US counterpart.

 

Another massive hurdle to US steel- the booming cities in China can’t build with their metal. That’s because the Chinese government restricts the sale of 100% of US steel, so there is one market the US is unlikely to tap anytime soon. This is a paradox in that the US imports massive amounts of Chinese steel, of something to the tune of 1.7 million tons annually. This is why the US is shifting more and more focus to the auto industry.

 

With global production up 1.2% for the year, US production in the same year was actually up 2.5%. This is thanks in great part to global automobile production and the Detroit resurgence, where 20% of US steel is shipped. The shale gas industry and the need for miles and miles of pipeline are also consuming tons of US steel. This may not seem like it would compete with auto makers, but it actually consumes about 21% of US steel output.

 

There are promising signs of increased US steel output and exporting.  The global auto industry is constantly booming with an ever increasing appetite for material. But in 2012, US steel mills declined to only 77% of their capacity producing less than 6% of the world’s total steel output. And until the Chinese government can lift bans on US steel exporting, US steel may be fighting a losing battle.

 

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