Steel prices are up 50% since January. Why?

Old US mills have been shuttered and replaced by more efficient EAC (Electric arc furnaces) which consume scrap. Twenty new EACs have driven up the price of scrap (about 60% of the total cost of the product).

Russia has curtailed scrap shipments to Turkey, the world’s largest scrap consumer. Turkey turns to the US scrap market bidding up the price of scrap further.

Big oil money is financing a building boom in the Middle East, especially in Dubai, which may have as many as one fourth of all the construction cranes in the world. Check out the incredible structures in Dubai here and here.

China is trying to clean up their air for the Olympics and is temporarilly closing down steel mills in Bejing and Shanghai. This reduction is output with the big Middle East demand for structural long products like beams is driving up demand for a newly limited supply.
So both the supply of raw material and the demand for the finished product is being squeezed by global growth from China to Dubai. It was hard to predict what was happening when we were far more parochial; now it is impossible. This will only get more interesting.
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