Although Canadian construction is still one of the top two consumers of steel in this country, COVID-19 has reduced the industry’s appetite for the material in 2020, says Alex Carrick, chief economist at ConstructConnect.

“It could have been a lot worse,” he said. “Warehouse and light industry construction projects were not as affected as, say, office towers. “

The other major user of steel in Canada, motor vehicle manufacturing, has been much more affected, Carrick says.

“The demand for cars, and therefore for the steel to make them, has dropped dramatically,” he said.

Things are starting to improve, however.

“In 2021, the price of steel increased, as did the price of steel inputs, such as iron ore and scrap and scrap,” Carrick said.

In the United States, in July 2021, he said, prices for steel bars, plates and structural profiles were up 45% from July 2020.

The price of scrap metal, which is used in electric arc steelmaking furnaces, increased 104% over the same period.

And the price of used cars and trucks, which eventually become a source of scrap metal, has increased by 40%.

Some observers have taken the decline in lumber prices this year as a sign of the looming drop in the prices of other commodities, including steel.

“But not all forest products have come down in price,” Carrick said. “Some wood products have gone up in price. In fact, I think all the commodities are on the verge of significant price increases. “

Canada is not only good at consuming steel, it also produces it quite well.

Members of the Canadian Steel Producers Association (ACPA) manufacture approximately 14 million tonnes of steel, pipe and tubing products per year at 30 steel plants in five provinces.

About half of their production is used in Canada and the rest is exported to foreign markets, notably the United States.

Catherine Cobden, President and CEO of CSGA, says Canadian steel producers face an uncertain future.

“COVID-19 has had a devastating impact on steel producers,” she said. “Although we were identified as a core industry, we saw significant production cuts in the second and third quarters of 2020.”

Beginning in late 2020, however, Canadian steel producers began to experience a recovery in several product categories.

“But the recovery has been patchy, and given the impact of COVID-19, we don’t know what effect it will have in the future,” she said. “Although steel prices have been high in North America, these levels are not expected to continue. “

In addition to the disruption caused by COVID-19, there is the uncertainty caused by changing international market conditions.

“At the onset of the pandemic, we saw North American steel producers cut back on production, while other producers around the world, such as China and the ASEAN (Association of Asian Nations) region Southeast), have not slowed production, ”said Cobden.

“This has exacerbated an already difficult global steel overcapacity and exposes the North American market to increased risk of unfair trading practices,” she said. “The situation underscores the importance of ensuring that Canada maintains the strongest possible trade remedy and import monitoring systems. “

According to a government report on the ability of Canada’s steel industry to compete internationally, between 1996 and 2016, global crude steel production more than doubled from 751.0 million metric tons (mmt) at 1,629.6 mmt, with China accounting for almost all of the increase. .

Canadian crude steel production, on the other hand, increased from 14.7 mmt in 1996 to 12.5 mmt in 2015.

Demand has not kept pace with this increase in global supply, as several countries are still recovering from the economic and financial crisis of 2008-2009.

This excess capacity – an imbalance between supply and demand – in world markets is detrimental to the financial health of the Canadian steel industry.

According to the report, this creates downward pressure on world steel prices, undermining competition in open markets like Canada.

Specifically, he said that excess steel production drives down prices in manufacturing supply chains and that Canadian steel producers can lose contracts for infrastructure projects to competitors using gas. dumped steel that was used to make an imported manufactured product.