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Steel, US on mend but obstacles linger: CMC

Keywords: Tags  Joe Alvarado, CMC, steel, AIST, Chris Prentice

ATLANTA — The outlook for the U.S. steel industry is steadily improving in 2012, though long-term strength remains to be seen, according to Commercial Metals Co. president and chief executive officer Joseph Alvarado.

"While there is no doubt that we’ve gone through one of the worst recessions since the early 1900s, there is a light at the end of the tunnel and it is getting brighter," Alvarado said during his keynote address at the Association for Iron and Steel Technology’s 2012 President’s Award Breakfast in Atlanta.

Alvarado cited positive signs in certain leading indicators, including the relaxation of lending standards within the commercial industrial credit markets—which will provide companies with the capital necessary for growth—as well as strength in the Architecture Billings Index and Dow Jones Industrial Average. He also pointed to job creation that has been "oscillating" around the 200,000-jobs-per-month level, the number needed to keep the U.S. economy recovering, with the exception of April, when the economy added just 115,000 jobs.

"Are there signs that a full recovery is nearing?" Alvarado said. "I think so."

But while this underlying improvement is increasingly clear and measurable, there are some challenges ahead for the domestic steel sector, Alvarado told AMM in the sidelines of the event.

"Right now, we see strength in our order book and backlog," Alvarado told AMM. "Our greatest concern? What happens after this year."

Domestic steel producers have been seeing operating rates at roughly 75 percent and there is growing demand, he said. But the industry might not log further improvement without efforts from outside the industry as well, Alvarado said.

"We can’t do this alone. We can only change the things we control," Alvarado said during his address. "We’ve shown that given the opportunity and level playing field with the technology and process improvements we’ve made over the last century that we’ve positioned our industry to compete globally. . . . Still, we need help from our leadership in Washington."

Alvarado cited the need for enforcement of trade legislation, collaboration to create and protect manufacturing jobs, and the passage of a long-term transportation funding bill.

U.S. infrastructure "has fallen behind even third-world countries," Alvarado said.

But despite the challenges facing the industry, the overall outlook for steel is once again becoming positive, Alvarado reiterated during his address.

"As history has shown, it’s tough conditions that drive us to become a stronger industry, and I have confidence that the future will be no different," he said.

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