Steel Prices to Blame for Low-Cost US Construction Bids From China?

by Stuart Burns on June 25, 2013

Style:    Category: Anti-Dumping, Ferrous Metals, Imports, Manufacturing

When it comes to building bridges, can the US compete with the Chinese (as we wrote about in Part One of this article) on flat-decked design?

“The Chinese are building many more of these kinds of bridges, so they have more fabricators,” Bill McEleney of the National Steel Bridge Alliance told the International Business Times.

The bridgework is one of the reasons Chinese steel shipments to the U.S. have been surging. The steel import problem could get even worse as infrastructure spending finally relates to dollars spent.

RELATED: The latest Monthly MMI® Report – covering the Steel/Iron Ore markets.

“There’s usually a year-or-more lag,” said Daniel Meckstroth, chief economist of the Manufacturers Alliance for Productivity and Innovation, quoted by the WSJ. Consumption of non-residential construction steel – for projects ranging from bridges and highways to schools and hospitals – is expected to increase 1% this year and 6% in 2014.

Verrazano Not Alone

The Verrazano-Narrows Bridge project is, sadly, not an isolated incident.

Anshan Iron & Steel and the China Railway Shanhaiguan Bridge Group worked together on Alaska’s Tanana River Bridge and Chinese steel was used in the repair of the San Francisco-Oakland Bay Bridge.

The ability of Chinese steel companies to compete with US steel companies after shipping their product halfway around the world is one issue and has been the subject of anti-dumping cases on several occasions in the past. Yet here we have a case of not just subsidized steel, but the construction skills needed to effectively participate in such technically demanding projects of this type.

One US firm is said to have the expertise, but their quote on the Verrazano-Narrows Bridge project was twice as expensive as the winning bid.

It seems implausible that the US does not have the skills to effectively compete in this field – after all, US engineering has been world-leading in so many fields.

RELATED: MetalMiner’s interview with Roger Ferch, head of the National Steel Bridge Alliance, on the topic.

The Bottom Line

today's metal prices - MetalMiner IndXDoes a potentially 25% lower steel cost translate into a final bid at half the price of a US supplier?

This trend of Chinese engineering firms winning US construction projects raises the question, to what extent are firms like the China Railway Shanhaiguan Bridge Group taking high-profile projects at any price simply to establish their credibility as global constructors?

Is this seen as a loss leader, necessary to make their move onto the world stage?

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