Port Panelist Discuss Imports, Pricing & Consolidation

Mr. Busse was one of the panelists assembled to speak about the current state of the steel market. Busse was joined by Lisa Goldenberg, President of Delaware Steel; Richard McLaughlin, Partner in World Steel Dynamics Consulting and Ira Kreft of Bank of America Merrill Lynch. The panel was moderated by Jo Isenberg of the American Metal Market.

Lisa Goldenberg pointed out to the group that the industry was “spoiled” over the past five years not having to deal with extremes in pricing. “It’s an adjustment to deal with the volatility,” she said.  

As the panel progressed Goldenberg said prior to the last five years that service centers had become used to volatility. “What feels different [now] is we are a little less prepared [to deal with volatility].”

Even so Ms. Goldenberg was quite confident in solid demand and continued growth over the long haul. “There is strong demand with a strong upside. We are in a capacity issue not a demand issue.” She also felt that the service centers were “not in a dramatically over-inventoried position.”

Richard McLaughlin, partner in World Steel Dynamics Consulting told the group what we are seeing is the result of “over-capacity” of steel production facilities in the world. “We think we are in for a period of difficult times,” he said. “The growth in imports is not an aberration and may be with us for some time.”

He also said that the United States needs to import about 25 million tons of steel to support apparent steel demand. “If you import 26 million tons prices go down, if you import 24 they go up.”

However, McLaughlin was not all doom and gloom and forecast, “We think we are in for a period of more stable pricing.”

Keith Busse deemed the economy as being a “bump-along economy” and the issue comes from our politicians, “We have too many politicians instead of statesmen. We would have done better than this bump along economy [if we had some statesmen].”

A number of the panelists spoke to the subject of consolidation with all agreeing that it is a good thing for the industry. McLaughlin called it, “This is the most constructive thing that could happen in this industry.”

The next step may well be a further consolidation of the service center industry which Lisa Goldenberg called, “inevitable.”

Steel Market Update asked the panelists if they believe there will be trade cases against foreign flat rolled steel in the coming months. Goldenberg responded with, “How can there not be more trade cases?”  While Keith Busse responded with, “U.S. prices are down, if foreign prices go down [from here] then there probably will be trade cases.”