November 21, 2008

Steel in the US seen as a growth industry

A panel of steel industry analysts at the Steel Business Briefing Steel Markets North America conference agreed that 2008 will be a banner year for North American steel mills, notwithstanding the specter of a recession.

Mr Mark Parr MD and equity research analyst at Key Banc Capital Markets told delegates that “Steel is a growth industry. Steel product shipments from US mills could increase 5% in 2008, even as demand from end users may drop 5% to 10%” He explained that imports to the US are down, inventory levels are low, but exports are up. He added that "It's a volume story for the US mills in 2008. The earnings outlooks for steel mills and service centers in the US market are as good as ever, but we are looking at a potential recession."

Mr Charles Bradford president of Bradford Research told delegates that the steel industry in the US actually had its recession last year, in 2007, when apparent consumption was down 9.9%. He said if any steel companies cannot make money in this market, then something is wrong. He elaborated on the extent of low import volumes by calculating that the net flow of imports into the US market may be as little as 4 million ton. To arrive at such a net flow figure, Mr Bradford takes total imports and then deducts for semi finished material and some hot rolled coil that's further processed and also subtracts the industry's healthy export quantities.