U.S. Steelmakers Press Their Luck With Price Increases

FOXNEWS -- U.S. steelmakers moved fast to raise prices after new tariffs were levied on some foreign competitors last year, but the quick increase has alienated some buyers and threatens to short-circuit a steel-market rebound.

Domestic steel companies have raised prices by as much as 50% on popular types of steel in recent months. That has boosted their profits, but troubled customers who say they can't afford the higher cost. Steel users say they are looking for cheaper alternatives from countries unaffected by the tariffs.

"We can't pass along this kind of increase to our customers," said Stuart Speyer, president of Tennsco Corp. a Tennessee-based manufacturer of steel shelves and file cabinets. He said his suppliers have raised steel prices seven times since October, adding about $180 to the cost of a ton of steel.

The U.S. government imposed duties on dozens of foreign steel producers found to be receiving unfair state aid or setting prices below the cost of production. Tariffs of more than 500% were levied on some products from China, the world's largest steel producer.

A big increase in steel production capacity overseas disrupted the U.S. steel market. When demand weakened in major foreign markets, such as China, steelmakers maintained production by accelerating exports to the U.S. and cutting prices on the steel to attract customers. While steel customers benefited, domestic steel producers idled plants and laid off workers amid the sliding prices. But when the tariffs negated cut-rate supplies, U.S. steel producers bounced back. Imports' share of the steel market in the U.S. fell to 25% last year from 29% in 2015.

Domestic producers have used their improved leverage to increase their prices. Ohio-based AK Steel Holding Corp. , for instance, has announced three price increases for its carbon steel products this year following on nine in 2016. Other producers in the U.S., including U.S. Steel Corp., ArcelorMittal SA and Nucor Corp., have raised prices too, according to analysts. AK Steel, U.S. Steel and ArcelorMittal declined to discuss their pricing strategy.

Courtesy : www.foxbusiness.com