NEW YORK The U.S.
construction markets slow and unsteady rebound has
prevented domestic steel mills from returning to high capacity
utilization rates, and theres no relief on the horizon,
steel executives said during the Town Hall Forum at AISTech
2012, the Iron and Steel Technology Conference and
Exposition in Atlanta.
While certain areas of the steel-consuming economy are back and
booming, the construction sector remains a laggard, with
serious negative effects on steel producers.
"That consumption needs to come
back if were ever going to see our utilization rates get
back above 85 to 90 percent," Michael S. Williams,
Pittsburgh-based U.S. Steel Corp.s senior vice president
of North American flat-rolled operations, said.
David Sumoski, vice president
and general manager of Nucor Corp.s Marion, Ohio, steel
mill, had harsher words. The building market is "pathetic," he
said. "Now, it is improving, but improving from pathetic is
The building sector is coming
back unevenly across the country, the executives said.
"In the U.S. market, weve
seen different markets in different situations," according to
André B. Gerdau Johannpeter, chief executive officer of
Porto Alegre, Brazil-based Gerdau SA. He said the
nonresidential construction was most robust, followed by
infrastructural development, which he described as "lagging,"
and then, finally, by residential construction.
And while it might seem like a
distant possibility now, Johannpeter said the industry had to
be cautious about overheating in the future. "We have to think:
Are we going to get back to those levels that were not real or
too high at a certain point?" he asked.
Meanwhile, U.S. producers have
been helped somewhat by an unusually warm winter. "Weve
seen a little uptick in activity earlier than we would normally
from a seasonality standpoint," Williams said.
Still, he described the market
as "at very low levels" and "anemic."
None of the executives said they
anticipated a full recovery approaching anytime soon.
"While I would say every month
is better than the previous month, were nowhere near 2007
levels of activity and demand,"according to P.S.
Venkataramanan, chief executive officer of Luxembourg-based
ArcelorMittal SAs Long Carbon North America operations.
"The meat of the whole business is commercial construction.
Public spending has been nonexistent. Were not seeing
schools, were not seeing bridges, were not seeing
major projects coming back."
The infrastructure spending that
the industry needs to see isnt solely limited to civil
infrastructure such as roads and bridges, Venkataramanan said,
citing electrical infrastructure as a prime example of an area
in which the United States hasnt yet invested sufficient
In the meantime, the outlook for
construction appears to be a a slow and uncertain climb, the
"(Construction is) the last to
be affected going into a recession, andas my sales
manager reminds me every dayits the last to come
out," Sumoski said.