With worldwide demand for steel growing quickly, it's no surprise that prices also are climbing and that some types of steel have been in short supply. All of this has made it more expensive for storage terminals to add new tank capacity.
Global steel consumption is at record levels, and the mills are hard pressed to keep up with the market, according to Daniel L Miksta, vice-president and general sales manager for steel products at IPSCO Inc. Miksta spoke during the International Liquid Terminals Association's 28th Annual International Operating Conference in Houston, Texas.
Mills are scrambling to meet surging market demand for virtually all types of steel. Global steel production is growing at the same rate as global gross domestic product, which is at a historic high of 3.6%. Miksta predicted that worldwide steel production could reach 1.8 billion tons in just a few years.
Demand for steel plate, which is the primary material used in storage tanks, is growing faster than other types of the metal. In fact, demand for steel plate has grown 9.3% since 2000, and plate demand in North America increased 25% from 2003 to 2008. The three North American countries — Canada, Mexico, and the United States — used 16 million tons of steel plate in 2007.
“We're now in a global market for all types of steel, and steel plate is the basic building material in most economies,” Miksta said. “At the same time, we are seeing more consolidation among plate manufacturers. There has been a lot of rationalization in the industry. The top three producers now account for 75% of the steel plate used in the United States. Prices certainly have been affected, and plate prices are running around $1,100 per ton in the United States.”
Beyond consolidation, a range of factors are affecting steel plate price and availability. For one, the materials used in the production of steel are more expensive today. Iron ore prices have been rising rapidly since 2004, and iron scrap prices also have increased sharply.
Fewer steel imports are coming to the United States. This country's steel imports are expected to drop by about 1.2 million tons in 2008. Additionally, US exports have surged due to higher world prices and a sinking dollar.