The Impact of Foreign Steel Production on Domestic Steel Prices

November 2, 2022 | Categorized in:

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If you’re involved in the automotive, construction, manufacturing, or other related industries, you’ve probably heard a lot about fluctuating steel prices over the last few years. There have been a huge amount of changes to nearly every aspect of our lives through the COVID pandemic, with the economy being a big example of this. But a global pandemic doesn’t just impact the United States’ economy, it affects supply and demand worldwide, especially in service and manufacturing industries.

Structure of the global steel industry

Before we can understand why COVID regulations in China and bad weather in Brazil can change the prices you pay for steel, we have to take a step back and understand how the global steel industry is structured and how things are interconnected.

Of the top 10 global producers of steel, none are from the U.S., and nine of them are in Asia. The remaining company, ArcelorMittal, is actually the top producer on the planet and is based out of Luxembourg. Nucor, the top U.S.-based steel producer, is ranked 12th in the world in terms of gross tonnage produced. Couple this with the fact that iron (the primary element of steel) is sourced from huge mining companies such as Rio Tinto in Australia, Vale in Brazil, and Kumba Iron Ore in South Africa and you start to get a picture of how internationally connected and dependant steel production has become.

What this means for steel prices

This means that you get the best quality product — whether it’s from next door or the other side of the globe — for a competitive price. However, the downside is that global events far from home can have a serious impact on what you pay for your next construction project. Not only that, but something as wide-reaching as a global pandemic affects every piece of the supply chain. This leads to higher input costs, which is sometimes passed to the final buyer by increasing final prices. Except in this situation, global economies have also essentially come to a halt, meaning significantly less demand for projects requiring steel. This conflict between increasing prices to offset higher costs and lowering prices to combat decreased demand leads to immense fluctuations in the prices you see as the end user.

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Which countries have the largest influence on global steel supply & prices?

Several nations around the world contribute heavily to the global steel supply chain, and therefore have an immense amount of influence (whether intentional or not) over the rest of the world’s steel use. The biggest players, depending on who you ask, are usually China, India, Japan, and the United States:


We mentioned earlier that nine of the top 10 global producers of steel are in Asia. Of those nine, five are located in China (with the other four being divided between Japan, South Korea, and India). This is why it shouldn’t be a surprise that China accounts for a whopping 57% of all world steel production (as of 2020). This equates to over a billion metric tons of steel each year, which is nearly double what the entire European Union, India, Japan, United States, and Russia produced combined.

While China primarily produces steel for domestic uses, this incredibly high rate of production, coupled with declining demand as China’s economy slows means that they have begun exporting more to other markets. This sounds great to buyers, as it means the price of steel drops due to the lower labor costs (and industry subsidization) in China, but it can also result in lower-quality steel that isn’t subject to the same regulations as domestic products.


In the last eight years or so, India has leapfrogged both the United States and Japan to become the second-largest country producer of steel worldwide. Despite this, India is much further down the list of steel exporters, meaning that the vast majority of their production stays within the country for domestic uses, which lessens its impact on global markets.


Due to the prevalence of massive automotive manufacturers in Japan (Toyota, Honda, Mazda, Nissan, and Subaru to name a few), it’s no surprise that the country has a large focus on steel manufacturing as well. Unlike India, Japan exported nearly a quarter of all the steel it produced in 2021, and is the second-largest exporter of steel in the world — only behind China.

United States

Coming in as the fourth-largest producer of steel in the world, the steel produced in the United States probably has the largest influence on what you pay for beams, tubing, and other steel products. Like other parts of the world, American steel manufacturers were hit hard by the pandemic and slowed production through 2021 to align with falling demand. With the potential for a recession now looming over the economy, some mills are hesitant to bring all of their furnaces fully back online, only for demand to crumble again. However, many analysts are optimistic about the next few years for the steel industry (both its sellers, as well as its buyers) and expect strong gains to be made post-pandemic.

What other external factors affect prices?

While we’re not qualified to discuss the finer details of supply and demand economics, we can point out a few examples of factors across the globe that have had an impact (and will likely again in the future) on the prices you pay for steel. These include:

  • The Chinese real estate market struggling means a lack of demand for new houses and buildings, leading to Chinese production (and therefore exports) decreasing and raising the average price of steel.
  • Russia’s invasion of Ukraine resulted in not just gas prices soaring, but steel prices too because of Ukraine’s abundant supply of iron ore and minerals in its soil and history as a huge steel exporter. Not only this, but the sanctions imposed against Russia have reduced the amount of capital spent on steel-intensive projects.
  • The energy crisis and increasing input costs in Europe have raised prices for manufacturers who buy from/operate in European countries (such as ArcelorMittal).
  • Even weather in countries like Brazil, where huge amounts of iron and aluminum ore are mined, can have a drastic impact on shipment volumes — and therefore prices — worldwide.

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