Three associations involved in the off-road equipment manufacturing and retail industry have conducted a study that examines the causes of steel price increases, both cyclical and permanent, and the impact of these factors on agricultural and construction related machinery makers and dealers.
The study, “Steel Markets: Causes and Factors Affecting Steel Prices in the Near and Medium Term,” was recently released to members of the three trade groups: the Association of Equipment Manufacturers (AEM), the Farm Equipment Manufacturers Association (FEMA) and the North American Equipment Dealers Association (NAEDA).
The study was prepared by the economics consulting firm Global Insight Inc., headquartered in Boston.
The off-road equipment manufacturing industry is a major steel consumer, and in 2004, prices of almost every type of steel doubled, with several recording price increases of more than 250 percent.
The AEM-FEMA-NAEDA steel study highlights several principal reasons for the rapid increase in steel prices. The most important factor identified was the explosive growth in the Chinese steel industry. The depreciation of the U.S. dollar, tariffs on imported steel and increased prices for scrap were also singled out as contributing factors.
In addition to China, the study also examined other global short-and medium-term factors that could affect future steel prices, including growth in India.