Forklift News - New study examines impact of steel price on US industry

A study by Global Insight Inc, Steel Markets: Causes and Factors Affecting Steel Prices in the Near and Medium Term, has been released to members of three trade groups.

The trade groups involved in the off-road equipment manufacturing and retail industries, the Association of Equipment Manufacturers (AEM), the Farm Equipment Manufacturers’ Association (FEMA), and the North American Equipment Dealers’ Association (NAEDA), worked together on the study prepared by economics consulting firm Global Insight.

The study examined in detail the causes of price increases, both cyclical and permanent, and the impact of those factors on agricultural and construction industry machinery makers and dealers.

The off-road equipment manufacturing industry is a major steel consumer. In 2004, prices of almost every steel type doubled, with several increasing more than 250 per cent.

The associations said:"The steel problems our industry currently face are the result of a ‘perfect storm’ of issues. The boom in China, the lack of raw materials, a weak US dollar, and the 2002 Section 201 steel tariffs have combined to greatly strain the steel industry."

The study cited several main reasons for the rapid increase in steel prices. It identified explosive growth in the Chinese steel industry that strained global supply and lifted prices worldwide for steel-making raw materials as the most important factor.

Another factor the study singled out was a decline in steel prices over the two previous decades that led to US under-investment in mill maintenance and new mines/facilities for raw materials.

Other factors were the depreciation of the US dollar, tariffs on imported steel, increased prices for scrap and stronger industrial production in the US, Europe and Japan.

The study also examined global short and medium term factors that could affect future steel prices, including probable growth in India.

For more information about the study, go to the websites below:

FEMA website: www.farmequip.org
NAEDA website: www.naeda.com
AEM website: www.aem.org

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