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Sandy's impact on steel said likely longer term

Keywords: Tags  U.S. steel market, steel demand, Sandy, superstorm, rebuilding, infrastructure projects, steel mill, service center SMA

NEW YORK — The steel industry stands to see an uptick in demand due to the effects of Hurricane Sandy, but the boost will likely not be felt anytime soon, according to market sources.

However, automobiles, buildings and infrastructure were all damaged during the storm, and with the amount of steel that is used by the automotive and construction sectors, steel will be a likely beneficiary of increased demand due to replacement and rebuilding efforts, sources said.

"Natural disasters do tend to be good for the steel business," one service center source told AMM. "Mother Nature—it tends to be more longer term, when the rebuilding begins."

Steel products that feed into the construction sector will likely see the largest jump in Sandy-related demand, sources said.

"There’s a lot of projects you’ll start seeing," a second service center source said, running through a list of steel products that are likely to see increased demand, including fencing products, sheet piling, plate, sheet and rebar.

Not everyone has had to wait to see a post-Sandy bump in business.

"I hate to say this ... but the storm really helped us. We service a lot of the hardware manufacturing companies," a third service center source said. "Sandy wiping out all the power poles in the Northeast brought a lot of orders in our direction. We had big orders and we have a pretty quick turnaround—all of that left us with a great October."

Steel Manufacturers Association (SMA) president Thomas Danjczek echoed that sentiment, but said such increases aren’t likely to last.

"There is short-term steel consumption dealing with emergency needs. But those are short term; those are blips. The longer-term items that go into bridges, highways, buildings—they need to be designed; the money needs to be approved and required permits need to be obtained," he said, adding that as a result, the real impact will be felt by steel companies anywhere from one to two-and-a-half years after the storm.

"A lot of project and repairs are in design and planning phases. We don’t expect any significant uptick for at least another five or six months," one mill source told AMM, although he noted that his company received an order immediately from one steel supplier.

Automotive sector demand for steel might be greater, particularly for coated sheet products, but how much—and how quickly—remains to be seen.

"We do think there is some upside in new (car) sales. Some of that will spill over in 2013," Charles Chesbrough, senior economist at Englewood, Colo.-based IHS Automotive, said.

IHS has increased its 2012 U.S. automotive forecast to 14.4 million new car sales, up by 100,000 units, due to the storm, he said, but noted that the increase in car sales might not immediately translate into significant demand for new steel.

"I don’t know that it will be a substantial change in orders from the OEMs (original equipment manufacturers)," Chesbrough said. "They were already pretty optimistic on the year. And inventories have been strong. It’ll be marginal at best."

Catherine Ngai, New York, contributed to this story.

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