Lackluster demand, low inventory restocking and global
overcapacity will likely keep the U.S. plate sector at low but
stable levels, according to SSAB Americas top executive,
although positive data indicates that the slump might not last
"We have a bit of a
depressed demand right now from a plate standpoint; when you
combine the import share of cut-to-length plate and
plate-in-coil with current domestic production, certainly we
have an overcapacity issue," Charles "Chuck" Schmitt,
president of Lisle, Ill.-based SSAB Americas, told
AMM. "Then when you expand upon that globally,
particularly in Europe and increasingly in Asia, then the
overcapacity is sizeable."
Plate demand this year
has generally been stable but stagnant, particularly as
construction activity has picked up even if the non-residential
sector remains slow. Bright spots include a strong automotive
run rate, high industry truck sales and strong energy and shale
plays that are spurring plate demand opportunities such as pipe
production, petrochemical tank projects and infrastructure
investments, Schmitt said.
"I think one of the
weaker areas thats getting a lot of attention is the
mining (capital expenditure) spending, which is expected to
take a hit during the second half of the year," he said.
"However, the mining aftermarket appears to be holding
Last week, Peoria,
Ill.-based mining and heavy equipment producer Caterpillar Inc.
saw second-quarter net income plunge 43.5 percent on a tough
mining environment (
amm.com, July 24).
Plate prices took a
dive in recent weeks after the last set of increases in the
spring effectively fizzled out. SSAB Americas had
previously joined other steelmakers in raising prices $30 per
amm.com, July 11).
"In the very near
term, demand seems to be picking up a bit. Weve seen a
decent order intake recently, and also renewed interest in some
midsized to large projects," he said. "As published, we
announced a price increase not long ago, and the
increaseat this pointhas not slowed down our order
intake. In general, the capacity utilization of the mills
continues a slow rise, which is good news for the
The company, a
subsidiary of Swedens SSAB AB, saw its utilization rate
climb just above 80 percent recently. It will be undergoing a
planned outage at its Mobile, Ala., facility in August, Schmitt
said, which was moved up from the fourth quarter. The first
half of the outage would be scheduled for August, while the
second half would be in the first quarter of 2014, he
"Were moving the
outage up because certain things in the mill we want to get
done immediately ... as were still in a bit of a summer
vacation season, we want to nail that down in hopes of having
our mills ready to run when we see that uptick," Schmitt
While SSAB Americas
isnt planning any major investments or upgrades for the
latter part of the year, Schmitt said the company is targeting
several internal cost-reduction schemes at its mills and
processing lines in the United States and Canada in an effort
to remain competitive, although he declined to offer
The company is also
focusing on making headway in high-strength steel, which
accounted for some 40 percent of the parent companys
global shipments in the second quarter. With its new quenching
line in Mobile, along with production of quenched steels in
Borlange, Sweden, the company aims to have high-strength steel
account for 50 percent of its shipments by 2015.
Looking to the second
half of the year, participants noted that 2013 has been
different than 2012 because the second half of last year saw a
"huge loss of momentum" due to greater imports and a loss of
market confidence in the fourth quarter that continued into the
first quarter of this year.
"Imports are always a
concern. Imports had been lower in recent months accordingly
with the lower demand in the U.S. market. But, depending on
market conditions, the import share could be significant," he
said. "So, its something we constantly keep an eye on and
are quite vocal in the trading of fair imports."
imports totaled 64,449 tonnes in June, according to preliminary
U.S. Census Bureau data, down from 102,056 tonnes in June
Looking to Capitol
Hill, Schmitt said more certainty needs to be established
before material change can happen in the market.
"Before confidence is
built in the market, and before service centers and customers
are going to get back into the inventory game, theyre
going to want to see some stability. And thats
increasingly important in this fragile economy," he added.