While the US import tariff is boosting local prices, the global price slump elsewhere looks set to continue.
US president Donald Trump shook up the steel industry with a 25% import tax, adding to the woes of global oversupply and the after-effects of the great recession.
Canada and Mexico are clear, but the UK and EU will have to comply with exemption criteria as yet to be firmed up by the US.
Trade body UK Steel says last year’s exports to the US were worth £360m. “It’s the last thing we need coming out of the worst recession in well over a generation,” UK Steel director Gareth Stace told the BBC’s Today programme. “This steel issue is a global problem with global overcapacity that requires a global solution through the G20.”
The UK has lost thousands of jobs in the steel industry in recent years, with firms going bust and plants changing hands in the face of falling demand, the cost of green regulations and Chinese dumping.
The UK supplies specialist steel, said Stace, making 7.5m tonnes a year, and costing a third more than “bog standard” steel. “It can’t be made everywhere. That’s why they import it from the UK,” he said.
Globally, crude steel production rose by 5.3% in 2017 to 1,691.2m tonnes, says the World Steel Association.
China, by far the biggest producer – 831.7m tonnes in 2017 – has pledged to cut production by 30m tonnes this year to stem overproduction, Verisk Maplecroft reported. But that could still leave 25m tonnes of steel looking for a new home post US tariffs, depressing prices further, said Stace.
Last year, European hot rolled coil steel prices averaged $523.3 a tonne, and are projected by Statista to drop for the next three years.
And in the US prices are predicted to rise above $900 a tonne as a result of the tariffs, said John Anton, associate director, steel analytics, pricing and purchasing at IHS Markit. “If you are a buyer you should be very unhappy,” he said in March.