Recession in Canada leads to a sharp drop in US steel exports

US statistics showed that steel exports from the country fell to 813.053 tons in July this year, down 8.1 percent from a month earlier and 20 percent from the previous year.

Most of the steel products from the United States of America (USA) are exported to Canada and Mexico, where steel is mainly used by automakers. Canada, the US's largest trading partner, bought 10 percent less steel in July than in June and 25 percent less than last year, according to the American Steel Institute.

“The sharp drop in exports to Canada this year is certainly due to the country's recession,” the American Steel Institute said in a statement. “Canada, one of the most developed countries in the world, contracted its economy in the first two quarters of 2015, due in large part to the fall in oil prices. Although some economists are talking about signs of recovery, predicting 3% growth in the third quarter of 2015. "

Exports of US-made steel to Mexico fell 8 percent from June to July and 15 percent from last July. In the first half of the year, exports to Mexico fell 3 percent to 2.35 million tons. Low oil prices have also slowed the Mexican economy, although growth is expected to reach 2.34 percent this year, higher than Canada's.

A statement from the American Steel Institute further explains that the Mexican government has decided to cut its 2016 budget by 1.5 percent. Oil prices are forecast to rise slightly in 2016, which will help both Canada and Mexico. But it is far from clear whether this will be enough to significantly increase the demand for steel in these countries.

Total US exports reached 6.11 million tons in the first seven months of this year, falling 13.5 percent on an annualized basis. During this period, exports to Canada fell 21 percent, which is the main reason for the drop in US steel exports.