U.S. raw steel output has just had its best five
months since the beginning of the Great Recession in fall 2008.
January, February, March and April were all months of growth,
while May dipped just slightly, according to American Iron and
Steel Institute figures. Raw production exceeded 1.9 million
tons every week, the longest stretch of output at that level
since September 2008, and for the first time in nearly four
years the weekly production capability utilization rate topped
the 80-percent mark.
What this means is that the U.S. steel industry may
finally be returning to normal, although perhaps not as quickly
or definitively as many had hoped.
While I would say every month is better than the
previous month, were nowhere near 2007 levels of activity
and demand, P.S. Venkataramanan, chief executive officer
of Luxembourg-based ArcelorMittal SAs Long Carbon North
America operations, said at AISTech, the Association for Iron
and Steel Technology conference and exposition. The meat
of the whole business is commercial construction. Public
spending has been nonexistent. Were not seeing schools,
were not seeing bridges (and) were not seeing major
projects coming back.
Steel production in the first five months of the year
averaged 1.94 million tonnes per week vs. an average of 1.8
million tons per week in the same period last year.
Year-to-date production totaled nearly 42.72 million tons at an
average capability utilization rate of 78.6 percent, up 7.9
percent from a year earlier, when mills produced
39.6 million tons at an average capability utilization rate of
While the U.S. construction market is unlikely to see
a sudden rebound, steel producers are seeing renewed demand
from the automotive and transportation sectors, as well as the
energy and exploration industries, a panel of industry
executives said at AISTech.
Its 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 sectors 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, which has
been bouncing back much faster than
But the growth goes beyond the automotive sector, with
the transportation market at large booming. André B.
Gerdau Johannpeter, chief executive officer of Porto Alegre,
Brazil-based Gerdau SA, said he saw opportunities in bus,
underground rail, shipping and beyond. Venkataramanan agreed,
noting particular opportunities in rail
In addition to transportation, the energy and
exploration industriesand their suppliershave been
doing well, the executives said, citing investments that
companies have made recently catering to the natural gas
Any increase in exploration for natural gas will
help the construction market, said David Sumoski, vice
president and general manager of Charlotte, N.C.-based Nucor
Corp.s Marion, Ohio, steel mill. Were very
focused on that market.
And the natural gas boom doesnt simply benefit
domestic steel producers by reducing costs. The oil country
tubular goods (OCTG) market is also a major steel consumer.
Were a big player in the energy market in the sense
that we supply a lot of steel to the OCTG market,
Venkataramanan said, noting increased activity at drilling
platforms and the strength of the global mining
Meanwhile, the outlook for construction appears to be
a slow and uncertain climb, the panel agreed.
(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
The U.S. construction markets slow and unsteady
rebound has prevented domestic steel mills from returning to
even higher capacity utilization rates, and theres no
relief on the horizon, steel executives said during the Town
While certain areas of the steel-consuming economy are
back and booming, the construction sector remains a laggard,
with serious consequences for steel producers. That
consumption needs to come back if were ever going to see
our utilization rates get back above 85 to 90 percent,
Sumoski had harsher words. The building market is
pathetic, he said. It is improving, but
improving from pathetic is still pathetic.
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, Johannpeter said, noting that non-residential
construction was most robust, followed by infrastructure
development, which he described as lagging, and
then 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.
U.S. producers were 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 expect a full recovery anytime
soon. But the overall situation looks brighter than it has been
for some time, they said.