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Transportation, energy spearhead steel growth

Keywords: Tags  steel, outlook, AISTech, U.S. Steel, Deutsche Bank Securities, Gerdau, ArcelorMittal, Nucor ThyssenKrupp Steel

NEW YORK — While the U.S. construction market is unlikely to see a sudden rebound, steel producers are seeing spikes in demand from the automotive and transportation sectors, as well as the energy and exploration industries, a panel of industry executives said at AISTech 2012, the Iron and Steel Technology Conference and Exposition in Atlanta.

"It’s good news for our steel industry that the auto industry is recovering very well, at a very solid pace," Michael S. Williams, senior vice president of North American flat-rolled operations at Pittsburgh-based U.S. Steel Corp., said during the AISTech Town Hall Forum.

The U.S. automotive sector’s rebound has surpassed expectations, according to Dieter Hoeppli, managing director of New York-based Deutsche Bank Securities Inc.’s natural resources group.

The pickup has been "a bright spot for the (steel) industry," he said. "It has been bouncing back much faster than expected."

But the growth goes beyond the automotive sector, with the transportation market at large booming, the panel agreed.

"It’s transportation," according to André B. Gerdau Johannpeter, chief executive officer of Porto Alegre, Brazil-based Gerdau SA. "Bus, underground rail, ships or whatever . . . it’s broader than (simply owning) your own car."

The other executives agreed.

"The rail transportation business is looking attractive in the medium-term," P.S. Venkataramanan, chief executive officer of Luxembourg-based ArcelorMittal’s Long Carbon North America operations, said. "I think rail is proving to be one of the cheaper forms of transportation."

In addition to transportation, the energy and exploration industries—and their suppliers—have been doing well, the executives said, citing investments companies have recently made catering to the natural gas industry.

"Any increase in this exploration for natural gas will help the construction market," according to David Sumoski, vice president and general manager of Charlotte, N.C.-based Nucor Corp.’s Marion, Ohio, steel mill. "We’re very focused on that market."

And the natural gas boom doesn’t simply benefit domestic steel producers by reducing costs (AMM, May 10). The oil country tubular goods (OCTG) market is also a major steel consumer.

"We’re a big player in the energy market in the sense that we supply a lot of steel to OCTG market," Venkataramanan said, noting increased activity at drilling platforms and the strength of the mining sector globally.

The exploration boom has also led to an increase in demand from equipment manufacturers, the executives said.

"If you look at equipment manufacturers like Caterpillar, they’re extremely successful," Christian Dohr, president and chief executive officer of Calvert, Ala.-based ThyssenKrupp Steel USA LLC, said. "Energy and exploration is a key worldwide."

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