Steel prices have been rebounding during the last few weeks, in what could be a potential sign of recovery for the struggling steel industry.
The price of hot-rolled steel coil, one of the main products to come out of Gary Works and other big integrated mills in Northwest Indiana, has jumped by $90 a ton after bottoming out at around $350 a ton last year, said Charles Bradford, a steel industry analyst with New York City-based Bradford Research Inc.
That $350 figure is roughly what hot-rolled steel coil had been selling for in the 1980s, according to the Organization for Economic Co-operation and Development.
Hot-rolled coil is now selling for around $440 a ton, and could rise to $450 a ton if the upward trend continues. Bradford said it’s too soon to tell if a real recovery is taking place, but said turnarounds in the notoriously boom-bust industry can be sudden and unexpected.
“There were 300 million tons of excess capacity in the early 2000s,” he said. “Then in 2004, it was a new world. It was the biggest boom the steel industry has ever had.”
Prices plunged last year as a glut of foreign-made steel flooded into the United States, snatching a record 29 percent market share, according to the American Iron and Steel Institute. That made it difficult for domestic steelmakers to turn a profit, and they in turn idled mills and laid off workers, including more than 1,000 in Northwest Indiana.
But the United States imposed tariffs and passed tough new trade laws. More importantly, the dollar has gotten weaker relative to international currencies, so imports aren’t as cheap as they had been last year, Bradford said.
Overall, steel imports have sunk by more than 40 percent this year, according to the American Iron and Steel Institute.
Congress also passed a new highway bill that's expected to strengthen longer-term demand for steel, Bradford said.
However, prices have already risen as this year's construction season gets underway because buyers are afraid to hold out, fearing they’ll only increase even more, Bradford said.
“What we don’t know is if it’s seasonal,” he said.
Currently, only 73 percent of America’s steelmaking capacity is being used, according to the American Iron and Steel Institute. Mills like East Chicago Tin and Granite Works in Illinois have been sitting idle.