LAS VEGAS While the steel long products trading community has suffered much in recent years due to a grim economic and political climate, a turnaround may be seen in the near term, according to John Foster, president of Kurt Orban Partners LLC and chairman of the American Institute for International Steel.
"If theres an overriding theme at the core of what Im going to say ... its the seemingly ever-present air of uncertainty settling as a cloud many of us have been seeing since early Q1 of last year," he said at SteelOrbis Rebar and Wire Rod Conference in Las Vegas. "Slowly but surely, however, some life is coming back into the economy and showing a heartbeat in critical areas in our business, such as the housing market."
The National Association of Realtors reported last month that sales of existing homes in 2012 rose to its highest level in five years, with overall home sales up 9.2 percent from 2011. Single-family home sales in December were 11.5 percent above those in December 2011.
Many sources have said that non-construction demand usually picks up some eight to 12 months after residential building.
But the road ahead is a challenging one for steel traders, particularly as traditional bright spots, such as the energy sector, are now proceeding with a "buy what you need" mentality.
"Were waiting to see what happens in the post-fiscal cliff and now post-debt ceiling discussions. What seems clear is that our elected officials in Washington keep finding uncertainties," Foster said.
Steel imports have plummeted in recent months due to challenging economic times, he said, noting that softening domestic prices put "significant downward pressure on import activity."
Another drag on the long products sector, Foster said, is the high U.S. unemployment rate, which is around 7.9 percent. That, coupled with sluggish growth in gross domestic product figures and lackluster domestic demand, may mean a significant turnaround may be delayed until later this year.
"The way its started out, this is going to be a back-end-loaded year," Foster said.