NEW YORK Steel traders
hope that demand will pick up with more market certainty in the
second half of 2013.
Traders squeezed by tight
margins, uncertain markets and hesitant buyers of foreign
material say that the trading community has struggled to keep
business at steady levels in recent months. While 2012 numbers
came in stronger at the start of the year, business activity
has slowed down considerably since then.
"Thank God for the first five
months of this year," Richard Brazzale, general manager of
commercial operations at Houston-based steel trader Coutinho
& Ferrostaal Inc., told AMM. "This (year) was so
front-end-loaded, and we anticipated there would be a lull
somewhere midyear, working up to the elections. Right now,
things are quiet. I think the first quarter will also be pretty
The first half of the year saw
strong shipments of pipe and tube, reinforcing bar and
hot-rolled coil, but those subsided considerably in the second
half. While some sources cited uncertainty over the
presidential election as a cause, others said that they saw
"Usually, imports are seen as
more important than exports. But were seeing a
record-setting year on exports and, frankly, Im stunned,"
American Institute for International Steel (AIIS) president
David Phelps told AMM. "Particularly as problems in
Europe and others have accelerated, Ive been quite
surprised at how well the export trade has held up. The world
market has done a lot better than anticipated."
The United States imported 25.7
million tonnes of steel in the first 10 months of 2012, up 16.3
percent from 22.1 million tonnes in the same period a year
earlier, according to U.S. Census Bureau data, while exports
rose 7 percent to 10.7 million tonnes from 10 million tonnes in
the same comparison.
On the policy side, one of the
major items on the AIIS agenda is the harbor maintenance tax, a
0.125-percent federal levy on cargo values to generate funds
for dredging maintenance. But port and shipping interests say
that the estimated $6-billion surplus hasnt been used as
"The money should be earmarked,
by law, to go back to the ports for necessary
infrastructure-related maintenance. Dredging is the big thing
right now, and the money isnt going there. The concern is
that perhaps, to a great degree, the funds have been used
elsewhere," Brazzale said. "The more that the infrastructure at
the ports are modernized, the more efficient it is to handle
cargowhether dredging or widening channels. Bigger ships,
more economic vessels, can then access the ports and the
customers further inlandit affects them, too;
theyre indirectly paying for it."
Other items on the AIIS radar
include the ongoing Trans-Pacific Partnership negotiations and
a potential free-trade agreement between the United States and
the European Union.
Looking forward, market
stability will depend on how the government responds to certain
pressing matters, including the fiscal cliff.
"Theres a lot of
uncertainty right now. There are a lot of companies out there
... (that are not) going to make any investment decisions until
(they) know what the framework in the new year looks like,"
Phelps said. "Theyve got money, but theyre waiting
... until the government tells them where the bar is. There are
hundreds and hundreds of companies in the same position."
Brazzale agreed, saying that
although business slowed in the second half of 2012 and is
likely to do so in the first half of 2013, it may still return
to normal before long. "The thing we can hope for in 2013 is
just a reverse and mirror image of 2012 and have it
back-end-loaded," he said. "Well have to see."