It is reported that the steel industry continues to struggle despite rising orders from automakers, who have added third shifts and new employees to keep pace with their turbocharged sales.
Most of the rest of the market for steel remains weak, but an analyst predicts a brighter outlook for the second half of this year.
Mr Charles Bradford, New York based steel industry analyst, said that robust auto sales and improving economic conditions could start to lift the fortunes of steelmakers this year, though the year end numbers should still be down.
Mr John Surma CEO of US Steel Corporation said that recovery won''t take place until 2015. But demand could tick up slightly next year if there''s a healthy amount of economic growth.
Mr Roy Berlin President of Hammond-based Berlin Metals said that demand for steel has not yet recovered to pre-recession levels. Domestic mills shipped an estimated 89 million tonne of steel last year, or about 8% less than in 2007.
Mr Berlin said that a major obstacle has been that nonresidential construction remains sluggish, and that market accounts for about 50% of the domestic demand for steel.
More shopping centers, office buildings, schools, and bridges will have to be built for the steel industry to turn around. Steelmakers face other challenges, including low steel prices, high fixed costs, cheap imports and overcapacity.
According to statistics from the American Iron and Steel Institute, domestic steel mills have only been running at a 76.8% capacity utilization rate so far this year. That''s down from a near 90% rate in 2008, before the economic downtown gutted the demand for steel.
Production is down by about 6.2% so far this year, and shipments are down by 6.3%. ArcelorMittal and US Steel both posted net losses in the Q1 and their stock prices have plunged since the beginning of the year.
Locally, US Steel has operations in Gary, East Chicago and Portage, while ArcelorMittal has integrated mills in East Chicago and Burns Harbor, a research and development facility in East Chicago, a hot strip mill in Riverdale, a plate mill in Gary and processing and finishing JV facilities in New Carlisle.
Standard & Poor''s Rating Services has downgraded both steelmakers'' credit ratings to junk grade. The firm recently lowered US Steel''s corporate credit rating from BB to BB- because of the weak market conditions for steel.
Mr Berlin said that "The prices are too low. It''s difficult when input costs are high."
(Source: www.steelguru.com )