Steel building pricing is more complicated than you might assume. Steel is a global commodity, and that means the price of steel varies on a daily basis. Prices can be influenced by several factors, including natural disasters, the strength of the American dollar, and the general condition of the world economy. All of which equate to one of the most basic economic rules: supply and demand – the single most important factor in determining the current price of a commodity like steel.
However, as we mentioned, steel prices are not as simple as your first macroeconomics class. That’s why we review the world’s most authoritative sources on steel prices and present our forecast. The overall goal is to inform our customers with reliable research and provide a timeline for you to lock your steel building price at the best time.
2017 Steel Price Forecast
Our predictions for 2016 proved too optimistic for the steel industry, as we’ve seen yet another drop in steel prices. This drop comes after most steel forecasts labeled 2015 as the “bottoming-out” point for steel prices. So where do we expect things go from here?
The Fourth Quarter of 2016
The end of 2016 foreshadows what’s in store in 2017.
According to the most recent release from the World Steel Association, global steel demand will decrease by 0.8 percent by the end of 2016. That follows a 3-percent decrease in 2015. Those global predictions have caused record low prices over the past 18 months and are in a stark contrast to the American Institute of Architect’s (A.I.A.) prediction that non-residential construction will experience 6.7 percent increase in the United States in 2017.
Steel prices reached an all-time low in March 2016, but as you can see in the graph, prices have increased steadily starting in June and before leveling off in October.
Ask An Expert: Where Will Prices Go From Here?
As seen above, the last time prices leveled out in October of 2015 there was a significant drop in steel prices in March of 2016. Can we expect to see the same trend in 2017? Most economists say another drop is very unlikely as you will see in our 2017 forecast below.
2017 Steel Price Forecast
What price increasing factors you should keep an eye on in 2017.
Much of the current state of the steel industry can be tied to the rate of Chinese production. Because of China’s massive infrastructure needs, it has significantly ramped up production for the past decade or longer. The increased production and resulting low prices have hurt the steel industry in other parts of the world, including the United States, the U.K. and Japan. But Chinese officials have stated that they will decrease steel production by more than 165 million tons by 2020. That’s a 20% decrease in production for the world’s leading steel producer! This decrease coincides with a “severe depression in construction activity” as well as an overall economic slowdown in China.
2017-2020 Steel Price Forecast Infographic
Production is not keeping up with demand
Cheap steel from China has been distorting global markets for decades. At its peak, China produced 822 million tons of steel in 2014 compared to 803 million tons in 2015, a 3% drop in production. At this rate, China seems well on its way to reducing its output by 20% by 2020.
Cheap steel is good for consumers whether it’s from China or elsewhere. In fact, Chinese steel output over the past two decades has more often than not, kept global supply higher than global demand resulting in lower steel prices. Supply is not expected to outweigh demand for much longer. In fact, with China dropping its steel output so dramitically, global steel supply is expected to be less than demand resulting in higher steel prices without releif in the years to come.
China Reduces Production + Increase in Global Demand = Higher Steel Prices
What’s Good for Steel Manufacturers Means Higher Prices for Consumers
The changes in Chinese steel production stand to benefit the steel markets in other parts of the world, and the global outlook remains positive for steel manufacturers. The World Steel Association is once again as they did in 2016, labeling this point in time as a “bottoming-out” point for steel prices. The World Steel Association is predicting world steel demand will grow by 0.4 percent as steel demand in every market will offset the losses of China, including a 5.9-percent growth from 2016 to 2017 in the United States (in harmony with the A.I.A.’s prediction).
What Does this Mean for Steel Building Shoppers?
Locking your price is more important than ever.
These numbers show that while the world’s leading steel producer is backing off, the strength of the other major markets is enough to produce steady growth in the overall global market. This is especially true in the United States, where a relatively strong economy and the strength of the dollar support the recovery of the steel industry.
While that recovery is good for steel manufacturers, but it points to increasing steel prices in the coming months and years for consumers. It harkens back to the economic principle of supply and demand:
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Our team is available to help whether you end up becoming one of our customers or not.
If you’re looking to invest in a steel building kit, we stress that the time is right. Locking a price in at the current low steel prices is a great way to capitalize on the market and maximize the value of your steel building. We also can’t stress enough that you need to be sure your steel building supplier is not cutting corners to maintain profit margins as steel prices increase.
How to Lock Your Steel Price
Let us evaluate your project and when to lock your steel price.
When we talk about locking a price in, we are referring to an advantage General Steel offers to potential buyers. Upon signing a contract to buy one of our steel buildings, General Steel allows you to lock the price of steel you’re paying for. Locking your price allows you to avoid the big swings in steel pricing and a surprising price tag on delivery day. As a successful business for more than two decades, General Steel has the stability and buying power to offer the highest quality product at a price you can afford.
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If you have questions about our 90 day price lock promise or where we expect steel prices to go over the next year, completing one of the forms on our website is the easiest way to get in touch with a member of our team. You can also give us a call at 1-800-745-2685, Tweet us @gensteel or find us on Facebook to speak with one of our experts.