The boom in shale oil contributed to the growth of the U.S. economy during the final quarter of this year. It also created an initial spike in the need for metal product manufacturer imports. However, the tariffs imposed on imports have not gone unnoticed by the industry. Companies, both domestic and foreign, are looking for ways to alleviate the tariff burdens while remaining cost-competitive.
Steel producers in the U.S. have managed to weather most of the storm. Yet, manufacturing reduced for the second month in a row in September 2019. The Supply Management manufacturing index dropped to its lowest level in September, registering only 47.8. This was due to a reduction in demand most likely because of tariffs imposed on imports.
Where the Offshore Metal Product Manufacturers Market is Headed
For companies that use steel and aluminum in their manufacturing process, we have news. The impact that tariffs have on the U.S. industry can run as high as $10 million over the next five years. Some whispers on the grapevine suggest the automotive industry may receive relief in the form of a Trump administration exemption. However, this has not been confirmed as of yet. Therefore, companies like GM and Ford expect an excess total expenditure of $1 billion for their non-US based operations.
Chinese Methods to Mitigate Import Tariffs
The Chinese government has implemented policies to reduce the effects of import tariffs on its steel manufacturing industries. One resulted in crude steel consumption growing by 8.9% for the first nine months of 2019. This was due to new property construction projects. China also increased its crude steel production capacity with facilities expected to come into operation over the next 3-4 years. Overall, this could lead to a rise of 13.56 million mt per year.
Analysts expected a ramp-up in domestic production. Yet, the actual year-on-year numbers indicate a reduction of more than 300,000 tons for September 2019. Although companies feel the pinch under the current circumstances, industry leaders remain positive. They’re hoping that a resolution between the U.S. and Chinese governments can lead to a positive and mutually beneficial future relationship.
Keeping Prices Stable in the Current Economic Climate
The IMF has cut the growth forecast for the U.S. steel industry, while prices continue to fall for a range of different metal products. Although this benefits the manufacturing industry, it does indicate demand is slowing across the globe. What remains clear is that while China navigates the current set of import tariffs, they’re ramping up capacity in the medium-term to capitalize on future demand they expect from the global economy.
For expert advice and guidance with offshore metal product manufacturers, reach out by phone today at 888-574-6823.