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Stainless demand said strong in aero, oil, gas

Keywords: Tags  MSCI, Dennis Oates, William Sales, Universal Stainless, Reliance Steel & Aluminum, stainless steel, Daniel Fitzgerald

CARLSBAD, Calif. — The aerospace and oil and gas sectors are the best-performing end markets for the stainless steel industry, while the power generation sector is lagging, industry leaders said at the Metals Service Center Institute’s (MSCI’s) Specialty Metals Division Conference in Carlsbad, Calif., last week.

The observations were made during a March 22 panel discussion featuring Universal Stainless & Alloy Products Inc. chief executive officer Dennis Oates, Reliance Steel & Aluminum Co. senior vice president for nonferrous operations William Sales and ATI Allegheny Ludlum Corp. vice president and general manager for sheet Terrence Hartford.

"There are clearly some end markets that are better than others. Oil and gas continues to be good; oil companies are investing a lot of money right now. Power generation is not so good—I think the disaster at Fukushima last year has impacted the nuclear business, and coal-fired plants are being challenged with new regulations, creating uncertainty. So energy is a mixed bag," Hartford said.

"Aerospace continues to be good; our long-term view is strong there. And I think housing finally is starting to return. Certainly housing starts drive so much of what we make, with appliances and furniture and
so on," he added.

Oates agreed. "Aerospace is very strong, and oil and gas is strong," he said. "Power generation is an enigma for me. I think there’s a pent-up demand coming, but frankly two years ago I would have said the same thing."

Panelists complained that tightening regulations from the federal government, through such agencies as the Environmental Protection Agency, and legislation such as the Dodd-Frank Act, has created burdens for their business operations.

"We have a new transformer for our melt shop that will make us more productive, but it’s been sitting around for six years because we can’t get approval for it. I look at other companies that have capital projects which can’t go live because they’re not getting the approvals. And they’re waiting not weeks, not months, but years," Oates said.

Meanwhile, executive agreed that there is likely to be further consolidation in the stainless industry in the coming years.

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