Record-breaking steel prices eat away at Michigan manufacturers
High spot prices are a bargaining chip for steelmakers as they strike direct supply deals for next year, analysts say. As a result, prices are expected to remain high at least until the end of the year.
“I think factories are doing their best right now to try to support prices because they are trying to get better contracts for 2022,” Gibbs said.
The current shortage of microchips has not dampened demand for steel either. Suppliers continue to fulfill their contracts with automakers, which foresee an increase in production next year.
Despite this, Gibbs said he believes steel prices have reached a breaking point. He predicts a much more competitive market in the coming months. Just as lumber prices have gone up and down, steel will also stabilize, he said.
“Some of that inflation will come down, especially that related to commodity prices,” Gibbs said.
The Biden administration has also indicated its desire to ease the burden of commodity costs on businesses, but it’s a delicate dance for a president who has played his roots in coal and steel to conquer the collar. blue. US Secretary of Commerce Gina Raimondo called steel tariffs effective in saving jobs in the United States
Gonçalves said he was not against removing Section 232, but removing protections altogether would be a death sentence for domestic steel. The solution, he said, is to adopt a tariff rate quota to regulate imports.
“I think Section 232 has run its course, so there is no reason to continue to insist on retaining Section 232,” he said. “On the other hand, it would be between naive and stupid to just delete section 232 and say, ‘OK, now it’s free for everyone. You are welcome here and destroy our market. “”
At AlphaUSA, Dardas said financial losses forced the company to cut costs. He said his automaker customers are “working with us” on the costs of steel, “but not to the extent that we are incurring.”
The company has avoided layoffs but is striving to remain “barely profitable,” Dardas said. He is holding his breath for cheaper prices and contracts next year.
“The continuation of this situation is very damaging,” he said. “You cannot resist it forever.”