DEARBORN, Mich. Market demand for galvanized products in the United States will not need a kickstart or new capacity until the construction market recovers.
While executives of steel coating companies expressed greater confidence in other markets using galvanized products, they continue to view the construction industry as depressed and cant predict when it will rebound.
"Two months do not a trend make," one participant said at AMMs Galvanized and Coated Steel Conference in Dearborn, Mich., referring to such indicators as the Architectural Billings Index, which rose in March.
"I believe 20 percent of all mortgages are under water," Jerry Richardson, general manager of Terre Haute, Ind.-based CSN LLC, said in referring to homeowners who owe more than their homes current appraised value. CSN is a subsidiary of Brazilian steelmaker Cia. Siderúrgica Nacional.
Previous efforts to get more single-family residential properties built with steel framing rather than wood have hit roadblocks: Standards for steel framing havent been written into local building codes "and construction is always a local market," and because building contractors arent familiar with using a screw gun to attach studs instead of using a hammer and nails, according to Frank Goodwin, director of technology and market development at the International Zinc Association.
"Residential steel framing never went above 10 percent of any market," even in states that wrote mandates on hurricane-resistant products into their building codes, Richardson said. "I dont see it climbing to more than 5 percent of the market."
Goodwin agreed. "There are people marketing it, but they have barely scratched the surface," he said.
That hasnt prevented steelmakers and coating suppliers from looking toward the future.
"You want to be the low-cost provider in every market you serve," Thomas M. Marchak, vice president of commercial for Dearborn, Mich.-based steelmaker Severstal North America Inc., said.
Severstal NA parent company OAO Severstal, Moscow, is exploring the installation of color-coating lines in Russia, Marchak said, adding that OAO Severstal chief executive officer Alexei Mordashov is also interested in installing color-coating lines at Severstal Columbus LLC in Mississippi and at Dearborn.
But until construction activity begins growing substantially, "there is overcapacity," Marchak said.
Richardson agreed that, given the right conditions, "it makes sense to incorporate paint lines" into galvanizing operations.
Companies also want to be able to improve the quality proposition. "Exposed automotive quality is like making jewelry. You have to be on it all the time," Goodwin said.
Randall Brent, director of product management at PPG Industrial Coatings, said products must be long-lasting. "We have 20- to 30-year warranties on roofing" made with coated steel, he said.
In the near term, "The effort to reduce carbon dioxide emissions is a driver of innovation, and innovation has to focus on sustainability," Brent said.
Goodwin concurs. "We have the studies on life-cycle analysis," he said. "Sustainability must be part of our strategy."