Category: COMMODITY Steel

Steel is an alloy used in construction projects for its properties like high tensile strength and low costs. It can be found in the largest constructions like skyscrapers, bridges, rail tracks, aeroplanes, space crafts, military equipment and even, in some of the smallest items like paper clips. It was first tested in the laboratory, in 1856, by Henry Bessemer, where he used oxygen to reduce the carbon content in iron. In the 19th century, Britain dominated in steel production, but in the early 20th century, America became the largest maker, while, the Soviet Union took over in 1970 and in the 21st century, China became the largest producer. 

The trade war between US and China created a supply imbalance leading to stockpiling build-up of commodities like steel, leading to price deflation. Trump said tariffs are essential to protect the domestic steel industry, which could be supplied for military needs. The disagreement between the major economies increased various other risks. The price of Japan’s hot-rolled steel coil declined to $550 per ton from $600 in 2018, and this drop in price was linked to China’s hot-rolled steel coil price drop by 20 percent to $467 per ton in January 2019. The extra 25 per cent tariffs on steel from China and other parts of the world resulted in a decline in exports from China to the US by 14 per cent, from January to November 2018. 

The World Steel Association estimates the global consumption in 2019 will grow 1.4 per cent to 1.68 billion tons, where the domestic demand in China is declining and is closing down major capacities to balance supply and demand, while, the gap continues to grow.