2018 STEEL PRICE FORECAST
When should you lock your building price?
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 hundreds of factors including:
The strength of the American dollar
The general condition of the world economy
While some factors that influence the cost of your metal building like the size and the components added to create a custom metal building are within your control, many of the ingredients that go into the current price of steel are external forces. This is why we continually review the world’s most authoritative sources on steel prices and publish our forecast. Knowing the current facts will help you determine the right time to lock your steel building price.
In the fourth quarter of 2016 The World Steel Association predicted a small increase (0.5%) in global steel demand for 2017. That projection proved to be far too conservative as the same report (above) in October 2017 anticipates an 8% increase in the price of steel in 2018. The forecast is a reaction in large part to China’s 9.3-percent increase in demand, but also the AIA’s projection that the pace of construction will accelerate through 2019. This increase followed suit in North America, where the price of steel is expected to climb 4.9 percent.
There was an almost 100% increase in the price of steel globally from May 2017 to December 2017.
As demand increased, so too did supply as improving economic conditions worldwide contributed to a better-than-expected year for the steel industry. Those conditions contributed to higher steel prices globally (above), although prices stayed relatively stable in the United States (below) over the full year.
2018 Steel Price Forecast
As the world’s leader in steel production, China has a strong influence on the steel industry as a whole. Two years ago, China’s massive steel output tanked steel prices as supply greatly outweighed demand. As we noted last year, Chinese production was set to decelerate as the Chinese economy shifts away from manufacturing and infrastructure and toward services. This trend is expected to continue as Chinese officials announced last year that the country will decrease steel production by more than 165 million tons by 2020.
Why does this matter? As the world’s leading steel supplier decreases production, demand in the United States continues to rise. As T.V. Narendan, Chairman of the Economics Committee at the World Steel Association, echos: “We expect global growth to moderate in 2018, mainly due to slower growth in China, while in the rest of the world, steel demand will continue to maintain its current momentum.”
Will Steel Prices Increase?
The current momentum in steel demand is great for steel manufacturers, but if steel production decelerates in 2018, the consumer is likely to pay more as steel prices in the United States continue to rise.
Seth Rosenfeld, an analyst at global investment banking firm Jefferies, notes in this Financial Times article, “Chinese steel exports plunged 30 percent in 2017, reversing years of export growth that painfully took share from western steelmakers.” Rosenfeld goes on to say that as China’s steel exports decline, we can expect “robust” western steel prices. That prediction is also supported by a nearly 100-percent increase in steel prices in the United States from May 2017 to December 2017.
When Should You Lock Your Steel Building Price?
If you’re looking to invest in a steel building, it’s important to take notice of these factors as they will greatly affect the price of your building. Steel prices, despite the recovery in the latter half of 2017, are still historically low. 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.
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 your steel building kit for up to 90 days. 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.