Economy
New Infrastructure Spending Bill Could Add 3% to Steel Demand
Written by Tim Triplett
August 13, 2021
What does the infrastructure spending plan passed this week by the Senate mean for steel?
On Tuesday, in a bipartisan vote, the Senate passed a $1 trillion infrastructure package that includes $550 billion in new federal spending. That measure now moves on to the House for consideration.
Around 44% of total U.S. steel demand is for construction-related spending. Therefore, if the deal passed by the Senate gets House approval, it has the potential to increase steel demand by around 3% or 3.0 million tons per year for five years, estimates the CRU Economics Team. Demand for that steel would be front-loaded, as steel is often used early in construction projects.
CRU Principal Analyst Josh Spoores noted that the increase could be as high as 4 million tons. “It all depends on the price of steel. Higher price equals less volume, and the vast majority of this is longs products and plate. Sheet demand here is limited,” he said.
There is bipartisan support for investing in the nation’s crumbling infrastructure, though much disagreement over the appropriate scale and source of the funding. The American Society of Civil Engineers estimates the infrastructure funding gap could reach $2.6 trillion by 2029. Continued underinvestment could mean a loss of $10 trillion in GDP and 3 million jobs by 2039, CRU estimates.
Also passed by the Senate this week was the Biden administration’s $3.5 trillion budget blueprint that calls for further spending on healthcare, climate and education, which is expected to face strong Republican opposition.
By Tim Triplett, Tim@SteelMarketUpdate.com
Tim Triplett
Read more from Tim TriplettLatest in Economy
Rising US construction spending levels off in March
Construction spending in the US in March was basically steady from the previous month but showed notable year-on-year (y/y) growth.
ISM: Manufacturing sector contracted in April
The Index had briefly showed expansion in March, but has indicated a contracting manufacturing sector for 17 of the last 18 months.
Chicago Business Barometer falls to 16-month low
The Chicago Business Barometer slipped further in April, now at the lowest measure recorded since November 2022.
Leading nonres indicator falls to more than three-year low
An important economic indicator for the nonresidential construction industry declined in March to its lowest point in more than three years.
Fed Beige Book: Economy improves, but manufacturing weak
While general economic conditions across the US improved slightly over the last six weeks, activity in the manufacturing sector was weak, according to the Fed’s latest Beige Book report.