CHICAGO Ensuring access to low-priced natural gas will give Nucor Corp., along with other U.S. steelmakers, a competitive edge in global markets, according to president and chief executive officer of the Charlotte, NC-based steelmaker, John Ferriola.
But, that advantage could be under pressure given subsidies by foreign governments to steelmakers and overregulation, Ferriola told participants during CRUs North American Steel 2013 conference in Chicago Nov. 11.
"The entire U.S. steel sector has advantages going for it that should make the U.S. the low cost producer of steel in the world, absent foreign government subsidies to their industries," he said.
Production of oil and natural gas has increased 26 percent in the last half decade, Ferriola said, which has led to announcements of billions of dollars worth of domestic industrial projects.
Nucor consumes some 30 to 35 million MMBTU per year of natural gas at its steel facilities, and with its direct-reduced iron facility set to open in the near term, it will use another 25 to 26 million MMBTU.
"Phase one (of the DRI facility) doubles our annual consumption making Nucor one of the largest consumers of affordable gas," he added. "Having a long-term supply of affordable gas is very important to us."
But local and federal government regulation, including those on hydraulic fracturing, could hurt steelmakers. With the U.S. Environmental Protection Agency studying the influence of "fracking" on drinking water expected next year, the impact could be detrimental.
"If regulations significantly increase drilling costs or stop it altogether, that will drive down supply and will drive up price," he said. Overzealous government agencies that put too much of a restriction on it has a very negative impact on oil going forward."