BOCA RATON, Fla. -- The U.S. steel industry is in the early stages of a recovery that likely will take at least three more years-and possibly longer-to realize, according to top industry executives.
A press conference at the American Iron and Steel Institute (AISI) annual meeting in Boca Raton, Fla., opened Monday with theme music from the movie Apocalypse Now, evoking laughter from many in the room. The irony was not lost on AISI chairman Daniel R. DiMicco, who saw the great prosperity of 2007-08 quickly followed by one of the most severe economic downturns in history
"After what we saw in 2008-09, we''re not at apocalypse," said DiMicco, chairman, president and chief executive officer of Nucor Corp., Charlotte, N.C. "We are looking at some signs that the economy is slowly starting to recover, but it is going to take several more years for us to get back to where we were from ''04 to ''08," when the U.S. steel market exceeded 100 million tons annually. In recession-plagued 2009, shipments reached around only 60 million tons.
DiMicco later estimated that it likely would take until 2013 or 2014 for the steel industry to get back to the levels of 20004-08.
But signs are encouraging. First-quarter shipments totaled about 20 million tons, and if that pace can be maintained an 80-million-ton year would be one-third higher than 2009. Industry capacity utilization, meanwhile, was around 73 percent at the end of April, well above 2009 levels of about 43 percent.
DiMicco said it was "disturbing" that imported steel accounts for about 20 percent of U.S. market share, even though import levels remain roughly even with 2009.
"Our government must be vigilant in enforcing our trade laws," DiMicco said, adding that trade policy is a top priority of the AISI and that dealing with the mercantilist, trade-distorting practices of some U.S. foreign trading partners-no tably China-must become U.S. manufacturing policy.
James Wainscott, vice chairman of the AISI and chairman, president and chief executive of AK Steel Corp., West Chester, Ohio, said the steel industry remains "the backbone of the U.S. economy," evidenced by $350 billion in annual economic impact and the existence of 165,000 direct steel jobs and 1 million other jobs.
"Business conditions are beginning to show improvement," Wainscott said. "We are slowly moving out of recession," which he said was deeper than any of the 10 economic down-cycles that have occurred since World War II.
Wainscott said North American Free Trade Agreement (Nafta) automobile production, which totaled about 8.5 million vehicles in 2009, is expected to reach 11.6 million this year, and steel service centers'' inventory levels remain low and they are poised to buy more product.
Problems still exist, however. Wainscott noted that federal stimulu s funds from the American Recovery and Reinvestment Act still have not trickled down to steel-intensive bridge and highway projects. He said the housing market is improving, but on the back of lower home prices coming out of recession and buyers taking advantage of tax credits rather than a bounce-back on improved economic strength.
Still, fundamentals in steel bode well.
"We have not seen inventories rise," Wainscott said. "They are low by historic standards, but I think that''s a good thing. It says our customers are poised to buy. Our customers used their inventories to get through tough times. Now they are buying at two or three times what they were a year ago. But they''re not building inventory. They are getting an order, calling a mill and getting their steel."