NEW YORK Many U.S. steel producers have faced a challenging few years on the back of overcapacity and global economic malaise, but there are some reasons to be optimistic about the recovering region, several top executives said on a panel at the Steel Success Strategies XXVIII conference.
"We would certainly agree that we are in a new paradigm where sluggish world economics ... will continue to pressure steel margins," said Mark Millett, president and chief executive officer of Fort Wayne, Ind.-based Steel Dynamics Inc. "But the sun is coming out in America, and it will shine some prosperity on steel companies in this country in years ahead."
"We are seeing some bright spots in the market for certain steel products, highlighted for us by a healthy and growing automotive industry," agreed James Wainscott, chairman, president and chief executive officer of West Chester, Ohio-based AK Steel Corp. "The automotive market continues to be a real bright spot for us and many others."
But the recovery isnt just anecdotal, said Joseph Alvarado, chairman, president and chief executive officer of Irving, Texas-based Commercial Metals Co., citing real improvements in key industry metrics.
"The U.S. consumed the same amount of steel in 2012 as it did in 2008," Alvarado said. "The underlying data shows us that our (economic) data is improving, just not as quickly as wed like it to and not as quickly as it did following a recession."
But Alvarado noted that infrastructure spending remains a challenge. "I would be remiss if I didnt mention infrastructure, or, the lack thereof," he said. "The U.S. didnt get to the No. 1 global position by avoiding infrastructure."
Also contributing to the brighter U.S. outlook is the availability of low-priced natural gas, which many call a game-changer for steel and other energy-intensive industries. But only those who take advantage of natural gas will remain on top, executives said at the event, hosted in New York by AMM and Englewood Cliffs, N.J.-based World Steel Dynamics Inc.
"Steel companies are now being compelled to ask a difficult question about whether, when and how to adapt their strategies to take advantage of natural gas rapidly being extracted from the shale fields in the United States," Nick Sowar, global metals sector leader at London-based Deloitte Touche Tohmatsu Ltd., said.