Monday, August 31, 2015

How the Steel Industry is Directly Related to the Bronze Industry

I am relatively new to the metals industry.  Now 10 years in an industry might not seem “new”…until you factor some folks have been in the industry for 30+ years…I’m new!  That being said, since joining the metals industry, I have heard repeatedly – If you want to see where copper prices are going, follow the oil prices.  Which I of course have been doing! But over the past few years, I have found that following after global steel consumption and loss has been equally valuable! 

Steel is an alloy of iron and carbon containing less than 2% carbon and 1% manganese and small amounts of silicon, phosphorus, sulfur and oxygen. Steel is the world's most important engineering and construction material, according to the World Steel Association, a trade group that includes steelmakers from 65 nations.

Steel has played a monumental role in the daily function of society, contributing to the cars that we drive the houses in which we live, the buildings that we work in and the infrastructure of the cities and towns around us. Its ability to be easily welded, resistance to heat and corrosion, and suitable machinability have made steel incredibly valuable – until recently. 

Although the nation’s economy is gradually improving across many industries, the steel industry is still waiting to feel any sort of economic lift as imports push steel prices down and the oil and gas industry cut orders in response to low energy prices. For the first half of 2015 ending in June, steel production in the United States has declined 6.5%, compared with the same period last year.


This decline is not specific to the United States; rather, it is a global concern. According to a report by Industry Week at the end of July 2015, China’s raw steel production was 68.9 million metric tons, down 1.4% from the previous month and down 0.8% compared to June 2014. Japan, the world’s second-largest steelmaking nation, produced 8.6 million metric tons of raw steel during June 2015, 3.9% less than during May and 6.2% less than during June 2014. Germany, the largest steelmaker in the European Union, produced 3.8 million metric tons of raw steel during June, increasing its output by 1.6% from May and 5.8% compared to June 2014. Despite the improvements, Germany’s year-to-date steel output is down 1.49% compared to the same period of last year.

The decline in bronze consumption in the US, and possibly across the globe, is directly related to a decline in steel consumption. Copper production fell more than 1% and, even worse, tin fell as much as 4.9%. Bronze, an alloy that is most commonly made with these two metals, has thus felt the impact in this slowed production. 

In a Bloomberg article titled, “Gold Rout Spreads to Copper, Tin and Zinc,” Daniel Brieseman, an analyst at a bank in Germany, stated, “Commodities are not in vogue. The weakness of the precious metals is spilling over to the base metals.” So as each of us watch oil & gas prices to gauge future Bronze usage…truly we should be watching oil & gas and steel. 

13 comments:

  1. The availability of cheap steel allowed for large bridges, railroads, skyscrapers, and ships. Other major steel products were steel cable, steel rod, and sheet steel, which enabled large, high-pressure boilers and high-stress steel for machinery. The iron and steel industry is called the primary industry for the following reasons: All heavy, medium, or light industries for machinery depend on it. As such, it provides a base for other industries. Steel is required to manufacture a variety of engineering, construction, and defense equipment. In the United States, and possibly around the world, the decline in bronze consumption is directly related to the decline in steel consumption.
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