The Steel Industry has become the latest unwitting victim of a slowing Chinese economy and domestic market oversupply driven by the continuing trade war with the Trump Administration. The accelerated decline in demand for steel products is directly affecting critical global industries including automotive, industrial, oil and gas, machinery and importantly – construction.
A sustained increase in Chinese crude steel production, which experienced a year-on-year increase of 10% between May 2018 and May 2019, masks the stark reality for this economic powerhouse. A marked decrease in infrastructure spending in the country’s regions has led to a significant oversupply of steel, which has driven prices down considerably.
The picture is a similar one in the United States. The 25% tariff on steel imports imposed by the Trump Administration in 2018 lead to the reopening of a number of mills, artificially boosting U.S. steel production with no actual increase in demand from domestic end-markets. This oversupply has led to a substantial drop in prices for those steel producers, just like in China. Consequently this decrease in price is having a negative effect on the stock value of some major market players.
This downward trend has been highlighted in the recently released outlook from the leading investment research firm, Zacks.com. Their team have placed the industry in the bottom third of their list of more than 250 sectors. They estimate that earning potential for the current year has dramatically dropped by more than 60%, with the basic materials sector stock price slashed by 36.5%.
Notwithstanding the pressures currently being experienced by steel producers – there is a silver lining. For metal builders there has never been a better time to launch construction projects. Whether you are involved in building aircraft hangers, warehouses, retail units or private dwellings the depressed price for steel coupled with the shift toward more sustainable methods of construction make this an opportune moment.
The advantages of using structural steel are many and varied. It enables builders to complete projects in a shorter time-frame, which can be important when their clients demand that projects are to come in ahead of time. It’s lightweight and environmentally friendly nature allows users to become innovative with their construction techniques, while reducing energy use and saving money in a variety of different ways.
Whether it is the incredible high-quality, prefabricated steel parts which ensure a comfortable internal environment, the cool metal roofing products which dramatically decrease solar heat gain, the obvious cost-savings or the sizeable design enhancements which are possible when choosing this fantastic material, it is clear – now is the perfect time for metal-based construction!