The US economy continues to recover as more people are getting back to work and as COVID restrictions are lifted across much of the country. The economic expansion has been driven in part by rising industrial production and manufacturing output. According to the Federal Reserve, US industrial production rose 9.8% from June 2020 to June 2021.
Domestic steel production and scrap demand have been on the increase as well. The American Iron and Steel Institute reports that the US steel mill capacity utilization rate reached 83% in early July, up from 58.3% one year ago. Meanwhile, US stainless steel production rose 9.7% in the first quarter of 2021 as compared to the fourth quarter of 2020, according to figures from the International Stainless Steel Forum.
However, US manufacturers and scrap processors continue to be hampered by significant challenges including, but not limited to, supply chain disruptions, widening raw material lead times, shortages of basic materials, difficulties hiring new employees and exorbitant transportation costs. As one example, a major US stainless steel producer declared force majeure on its stainless steel deliveries owing to a shortage of industrial gases used in its production process. Although port congestion on the West Coast has shown signs of improvement, US stainless steel scrap exports were still down more than 30% during the first five months of 2021 owing to shipping bottlenecks.
Despite these challenges, rising carbon steel and nickel prices have provided support for stainless scrap prices, and the continued expansion of manufacturing output at home and abroad should bode well for future demand.