February 14, 2021

Steel Price Bubble

Trade & Tariff Update

Feb. 14, 2021

by Lewis Leibowitz

The Price Bubble

Steel price levels are in uncharted territory these days. The current prices, especially in an economy where interest rates are near zero and inflation remains low are truly remarkable. How did this happen and when will it end?

The short answer is that nobody really knows—but we can analyze the events surrounding the spike and predict with some reliability some of the consequences.

First, as everyone knows, prices are a function of supply and demand. There are short- and long-term factors that caused supply of steel in the US market to drop and demand to increase.

Supply has diminished in the United States for several reasons. Some steel mills are down for maintenance or closed during the pandemic because of pandemic demand. Supply is constricted but only for a little while. Because demand for steel is on the rise now, the plants that closed because of the pandemic should reopen in the next few months. We also know new construction (primarily electric arc furnace production) will go online in the next couple of years, further increasing supply. In anticipation of new supply of steel, buyers will tend to reduce inventories, thereby decreasing demand. The supply of steel did drop, but not extraordinarily, and supply constraints do not explain $1200 per ton hot rolled steel.

One major cause of reduced supply is US restrictions on imported steel. These stem from three primary sources: Section 232 tariffs and quotas on steel imports from most countries; antidumping and countervailing duty orders on numerous products from many countries; and the China Section 301 tariffs, affecting imports from the country that produces half the world’s steel. Imports in 2020 were down 20 percent of those in 2017, leading to shortages of many products, including semifinished steel.

On the demand side, there are also short- and long-term causes as well. Steel-using manufacturers were knocked flat by the pandemic from early last year until last fall, causing a fall in prices and quantities purchased. Then demand picked up as businesses reopened. It seemed that buyers large and small needed to beef up their purchases to prepare for increased productions.

That is short-term. A longer-term consequence is that downstream demand for the products made from steel (automotive, construction, machinery) is increasing as the economy in general emerges from the pandemic-induced slowdown.

Why prices spiked so badly in the last few months is more mysterious. The trends I’ve just noted are not a surprise and one would have expected a short-term increase followed by more normal price trends. But, since September 2020 prices in the US have continued to skyrocket: Metalminer scores the increase (for cold rolled coil) from $660 per ton to $1300, nearly doubling in five months. Other price indices show similar results for cold rolled and similar products. When is the last time that happened?

As prices explode in the United States, they have not kept pace elsewhere in the world. While cold rolled coil prices (again according to Metalminer) in China and the United States were about the same in September 2020, they flattened out in China from September-December and declined since then, currently coming in at about $800 per ton for cold rolled coil in February 2021.

The spread between Chinese cold rolled prices (remember that China produces half the world’s steel, even though Chinese steel per se is basically locked out of the US market). The difference between global prices and those in the US mean a major competitive threat for US manufacturers that use steel. We heard this month from steel using manufacturers (those who attended the virtual Tampa Steel Conference heard it too) that their market share has been hit hard, with steel prices in the US exceeding finished product prices from foreign sources in many cases.

If this trend keeps up, the demand for steel from US manufacturers will inevitably decline and decline substantially. The decline will start with loss of US market share to imports of downstream products. Over time, exports by US steel using manufacturers will dry up too. Manufacturers will explore alternative materials, like substituting aluminum for steel in car and truck manufacturing, or composite materials for other applications. Even military requirements are retooling toward high technology materials, such as composites for body armor and helmets for the military and police.

The worst situation for both US steel producers and users is for the US to be an island of high steel prices. That is where we are now. Both sellers and buyers will be harmed seriously if this keeps up because manufacturing will increase the speed of its flight from our shores.

Steel producers and their customers need to fight less and work together more. Downstream manufacturers need more reliable pricing for their products, where steel prices often are the majority of their material costs. If steel producers are stockpiling profits through the good times, as many are, they will inevitably face for bad times when the situation is reversed, as it surely will be. Government policy must be responsive to both steel producers and steel users.

The current price spike may help steel companies in the short run but it hurts everyone else. If steel companies cannot keep up with demand, import restrictions must be relaxed for the duration of the market disruption. Otherwise, there could be permanent damage to steel consuming industries, the backbone of steel’s customer base, and the producers themselves, who will find themselves with fewer domestic customers and shrinking markets overseas. 

 Lewis Leibowitz

The Law Office of Lewis E. Leibowitz

1400 16th Street, N.W., Suite 350, Washington, D.C. 20036 

E-mail: lewis.leibowitz@lellawoffice.com

Website: www.lellawoffice.com

November 9, 2016

16" OD x .500W Carbon Steel Casing

Howdy from El Paso, Texas. Alamo Pipe Inc. (API) has 11 pieces/440' of 16" OD x .500W XH ASTM/ASME A/SA53/API 5L  Grade B PSL1 ERW BPE Steel Pipe - Surplus - on the ground ready to ship anywhere from El Paso, Texas. Total weight is 36454 pounds.

Subject to prior sale.

Call Dave at 915-203-4342 or email djstrasser@gmail.com for more information.

Thank you.

August 18, 2016

Fusion Bond Epoxy Coating

Alamo Pipe Inc. (API)  offers a wide range of field-proven protective coatings for pipe, fittings, risers, vessels and fabricated steel. Our coating material and workmanship meet or exceed industry standards as established by The American Petroleum Institute. We also provide a wide range of internal / external corrosion and abrasion protection in quantities from one to thousands with quick turnaround for short runs and emergency coating projects.

Fusion Bond Epoxy Coating (FBE)
  • API offers Fusion-Bonded Epoxy (FBE) coatings that exceed all industry pipe coating standards. This protective coating is a one-part, heat curable, thermosetting epoxy powder designed for corrosion protection of pipe. FBE coated pipe is in service worldwide.
Abrasion Resistant Overcoating (ARO)
  • API can provide additional protection to FBE coated pipe with the application of Abrasion Resistant Overcoating (ARO). This durable 2-Layer system is ideal for tough installations, such as directional drilling and exposed river crossings.
  • API also offers a tough 3-layer protective coating that can be applied to risers and main line pipe ranging in diameters from 2” to 48”. These innovative systems begin with a layer of Fusion Bonded Epoxy (FBE) to provide excellent adhesion to steel. This initial coating is followed by multi-layers of Polyethylene, which can then be built up to a wide range of thicknesses.
  • TRIPLUS provides high mechanical resistance and protection throughout all stages of the coating lifecycle from handling and transportation to laying and in-service use.
Internal Coating
  • Fusion Bonded Epoxy is an ideal protective coating when gritty material, such as dirt, rocks and sand, is flowing through pipelines.
Multi-Component Liquid Epoxy Coatings
  • Ideal for Valves and fittings, Line Pipe and Bends
  • Standard service temperature resistance (up to 185°F)
  • Service temperatures up to 250°F (121°C)
  • High build (up to 50 mils in one coat)
  • Excellent adhesion (compliments FBE coated pipe)
  • High abrasion resistance for Drilling applications
  • Safe and environmentally friendly
  • Does not shield Cathodic Protection
  • Sacrificial coating for directional drill and road bore pipe
Coating Lines
  • Induction Lines:
    FBE, FBE + ARO: 2” – 74”
  • 3 Layer Polyethylene: 2″-48″
    FBE, FBE + ARO: 3/8″ – 1.5″
  • Internal Coating Line:
    FBE – SRL: 2″-6″ DRL: 8″- 54″
  • Oven Line:
    Internal FBE, External FBE, FBE+ARO, and 3LPE (fittings and spools)
  • Liquid Epoxies:
    Line Pipe and Fittings: 2″ – 54″
Fabricated Products Equipment
  • Automated Pipe Coating
  • Proprietary Induction Heating Units
  • Gas Fired Ovens
  • Pipe Rotating Stations
  • Internal Pipe Blasting and Coating
  • Powder Spray Booth
  • Plural Component Liquid Spray Equipment 100HP Air Compressors and Drying Equipment Heavy Duty Forklifts
  • 10 Ton Overhead Crane (our pipe handling equipment has a lift capacity up to 30,000 lbs.)
Contact API today for more information.

Thank you.


July 28, 2016

Water, Wastewater, and Industrial Technology Line Card

AUMA Electric Actuators and Gearboxes from the World's Leading Actuator Manufacturer

AMERICAN MARSH Focuses on the Industrial, Municipal, Commercial, and Fire Protection Pump Systems

ATLAS COPCO Energy Efficient Screw Type Blowers

AMT PUMP End Suction, Self-Priming, Mag-Drive, Engine Driven and Dewatering Pumps

BELZONA Industrial Protective Coatings and Repair Composites

BLUE-WHITE INDUSTRIES LTD Peristaltic Tube & Diaphragm Pumps, Flow Meters and Tank Systems

CAT PUMPS High Pressure Positive Displacement Triplex Piston and Plunger Pumps

DAKOTA PUMP Package Wastewater Lift Stations and Booster Stations

FAIRBANKS MORSE Submersible and Dry Pit Solids Handling, Vertical Turbine Solid Handling (VTSH), Vertical and Horizontal Split Case Pumps

FMC PUMPS For High Pressure Industrial Pump Applications

EIM Measurement and Analytical Devices, Valves and Final Control Elements, and Systems and Software Electric, Pneumatic and Manual Actuators and Network Controls

F.E. MYERS Submersible Grinder and Non-Clog Pumps, commercial Effluent Sump Packaged Lift Stations

GOULDS Pumps for a Wid Range of Industrial and Commercial Applications

GE WATER and POWER Develops Advanced Technologies to Help Solve The World's Most Complex Challenges Related to Water

THE FORD METER BOX CO. Water Supply Distribution Equipment Manufacturer

FLUID DYNAMICS Liquid Filtration Solutions

FLOMATIC Water Valves, Checks, Control, Gate, Air Release

HARMSCO FILTRATION Liquid Filtration Solutions

KENNEDY VALVE Fire Hydrants, Indicator Posts, Check Valves, Gate Valves, and Butterfly Valves

MARCH PUMPS Centrifugal Sealless Magnetic Drive Pumps

MCWANE INTERNATIONAL Ductile Iron/Cast Iron Pipe Fittings, Valves, Hydrants, Drainage and Waste Water Products

MCI Pump Motor Control Solutions Danfoss/ABB

M and H VALVE CO. Fire Hydrants, Resilient Wedge Gate Valves, Butterfly Valves, and Check Valves

MERRICK Omega Volumetric and Loss of Weight Dry Chemical Feeders, Lime Slakers

MORRIS PUMP Grit Pump, Recessed Cup Impeller, Dry Pit Pumps, Engineered Products

MOYNO Progressive Cavity, Sludge, and Metering Pumps

NEOTECH Energy Saving UV Systems

PHILADELPHIA MIXERS Mixers and Flocculators, Oxidation Ditch Technologies

PIONEER PUMPS High Flow Centrifugal and Self-Priming Pumps

PRECISION SYSTEMS Packaged Standby Power Generator Systems Above and Below Grade Packaged Pumping Stations

SCHLOSS ENGINEERED EQUIPMENT Screw Conveyors, Vortex Grit Removal Systems, Grit Washers, Bar Screens, Rotary Fine Screens

STATIFLO Dynamic Leaders in Static Mixers and Motionless Mixing

TAYLOR POWER Industrial Diesel and Natural Gas/LP Generators

TEKLEEN Well and Booster Self Cleaning Water Filters

TOYO PUMP NORTH AMERICA High Pressure, Line Shaft, Horizontal, Cantilever and Submersible Pumps

TSURMI AMERICA INC. Submersible Pumps, Engine Driven Pumps, and Utility Pumps

UNITED BLOWERS Packaged Discharge and Regenerative Blower Packages

VERSA-MATIC Diaphragm Pumps, Submersible Pumps

VERTIFLO Vertical, Horizontal and Self-Priming Pumps

WEMCO/WINDPOWER Portable, Emergency Standby, Mobile Diesel, WINPOWER Diesel, Two Bearing and PTO Generators

YEOMANS/CHICAGO PUMP Dry Pit Solids Handling, Vertically Suspended Sump Pumps, Shone Pneumatic Ejector Systems, Easy Lift Package Lift Stations, Comminutors, Dry Pit Solids Handling, Scru-Peller Sludge Pumps, Vortex and Ni-Hard Vortex Grit Pumps, Flush-Kleen Sewage Pumping Systems

ZZ TECHNOLOGY Surge Control Systems and Analysis

Call or Text
or email

June 24, 2016

48" x .500 Wall API 5L X52 DSAW - Two 7' Drops with MTR's

We've got two pieces of 48" x .500 Wall API 5L X52 DSAW Pipe available for sale. These are 7' drops from double random lengths, Bevel x Plain end. This is New Pipe made by ArcelorMittal Tubular Products in Romania. We have Mill Test Reports on hand. Price is $1400.00 each FOB El Paso, Texas.

Call 915-203-4342 or email djstrasser@gmail.com if any interest. Subject to prior sale.

Thank you.


The Penalty of Leadership

In every field of human endeavor, he that is first must perpetually live in the white light of publicity. Whether the leadership be vested in a man or in a manufactured product, emulation and envy are ever at work. In art, in literature, in music, in industry, the reward and the punishment are always the same. The reward is widespread recognition; the punishment, fierce denial and detraction. When a man’s work becomes a standard for the whole world, it also becomes a target for the shafts of the envious few. If his work be mediocre, he will be left severely alone – if he achieve a masterpiece, it will set a million tongues a -wagging. Jealousy does not protrude its forked tongue at the artist who produces a commonplace painting. Whatsoever you write, or paint, or play, or sing, or build, no one will strive to surpass or to slander you unless your work be stamped with the seal of genius. Long, long after a great work or a good work has been done, those who are disappointed or envious, continue to cry out that it cannot be done. Spiteful little voices in the domain of art were raised against our own Whistler as a mountebank, long after the big world had acclaimed him its greatest artistic genius. Multitudes flocked to Bayreuth to worship at the musical shrine of Wagner, while the little group of those whom he had dethroned and displaced argued angrily that he was no musician at all. The little world continued to protest that Fulton could never build a steamboat, while the big world flocked to the river banks to see his boat steam by. The leader is assailed because he is a leader, and the effort to equal him is merely added proof of that leadership. Failing to equal or to excel, the follower seeks to depreciate and to destroy – but only confirms once more the superiority of that which he strives to supplant. There is nothing new in this. It is as old as the world and as old as human passions – envy, fear, greed, ambition, and the desire to surpass. And it all avails nothing. If the leader truly leads, he remains – the leader. Master-poet, master-painter, master-workman, each in his turn is assailed, and each holds his laurels through the ages. That which is good or great makes itself known, no matter how loud the clamor of denial. That which deserves to live — lives.
written by Theodore F. MacManus

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Native Texan · Navy Veteran · Various Scars and Tattoos · No Talent yet a Character