A recession in Canada has contributed to a huge drop in U.S. steel exports.
U.S. Census Bureau data showed that exports fell to 813,053 tons in July, down 8.1 percent from a month earlier and 20 percent from the previous year.
Most of the steel America exports goes to either Canada or Mexico, where it's often used by auto factories. Canada, America's biggest trading partner, bought 10 percent less steel in July than in June and 25 percent less than last year, according to the American Institute for International Steel.
"The sharp drop in exports to Canada this year is surely related to that nation's recession, its second in seven years," the American Institute for International Steel said in a statement. "Canada, the world's fifth-largest oil producing country, saw its economy shrink in both of the first two quarters of 2015, in large part due to falling oil prices. There are signs of recovery, though, and some economists are projecting growth of 3 percent in the third quarter."
Exports to Mexico fell 8 percent from June to July, and 15 percent when compared to July 2015. Year-to-date exports to Mexico have fallen by 3 percent to 2.35 million net tons.
"Low oil prices have also slowed the Mexican economy, although growth there is expected to reach 2.34 percent this year, mediocre, but well above Canada's 1 percent projection and about equal to the United States' recent performance," the AIIS said.
The AIIS statement further explained that fiscal strains have led the Mexican government to reduce its 2016 budget by about 1.5 percent of the nation's GDP. Oil prices are projected to rise slightly to the mid-to-high $50s range in 2016, which may help both Canada and Mexico. But it is far from clear that will be enough to drive substantially increased demand for steel.
Total U.S. exports have reached 6.11 million net tons through the first seven months of the year, a 13.5 percent decline. Year-to-date exports to Canada have plunged by 21 percent, accounting for most of that decline.
source: Nw Times
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