In the months since the economy
collapsed, it's become something of a bittersweet parlor game
to try to pinpoint exactly when the overwhelming confidence of
the financial boom tipped over into something closer to
The bank executives who spent their days on
the golf course or at the card table while their companies
collapsed? The condo in Florida that was flipped so many times
it doubled in value without ever being lived in? The college
graduates who earned more in their first year on Wall Street
than their parents made in a decade for doing-what exactly?
The metals sector wasn't part of that
particular bubble. This industry isn't in the business of
hawking sub-prime mortgages or collateralizing debt; we make,
consume and trade things, from copper concentrate to hot-rolled
coil to aluminum extrusions, and a lot in between. No bailouts
But with the benefit of a healthy dose of
hindsight, it's easy to see that metals had its share of hubris
Here's one. At a conference early last
year, a steel analyst was presenting his outlook for the
industry. An audience of mainly mill executives watched as the
analyst traced an unbroken path of strong growth in demand that
over the next decade would double global steel output to almost
2.5 billion tons a year. In the coming years, $1,000 a ton
would emerge as a solid floor for hot band prices. The BRIC
nations would keep on building, construction sites in the
Middle East would light up the desert nights and developing
countries like Vietnam would emerge as the next drivers of
sustainable steel demand.
It wasn't just analysts who got it wrong.
Many of us operated on the assumption, reinforced by order
books and opinionators, that the only way was up. At
AMM's Steel Success Strategies conference in June last
year, a top industry executive told attendees that the cycle of
boom and bust was over-less than three months before the
biggest bust in our lifetimes.
We don't mean to be wise after the event,
either. The cover of AMM's July 2008 declared boldly
Steel Stands Tall. We didn't see this coming, any more than
anyone else did.
Many a beautiful theory has been destroyed
by an ugly fact, as a scientist once said. The inconvenient
truths that got in the way of this kind of scenario are well
known. The repercussions are still being felt throughout the
There are plenty of metal consumers who are
still smarting at having had to pay $1,000-plus for a ton of
plate or $4 for a pound of copper at the market's peak; and
plenty of producers who have since had to lay off staff or ask
hard-working employees to make cutbacks as a result of bad
decisions made in Detroit, Washington or New York.
This isn't about apportioning blame. As
summer gets underway, there are indications in the media, the
markets and even in some of those industries that continue to
make real things that conditions might be improving-or at least
not getting any worse.
What's also emerging, slowly and painfully,
are the first signs of optimism. It might take three, five or
10 years, but the North American metals industry will recover.
What shape the industry will take, and how bumpy the road will
be getting there, remains to be seen. After all, if the events
of the past year have taught us anything, it's not to pay too
much attention to anyone who says they know what the future
will look like.