Final Thoughts

I want to outline a few key takeaways I got from a great lineup of speakers.

First is that the first quarter of 2023 got off to a much better start than many expected. Is the “r” word still haunting us? Yes. But those concerns, which were really dragging on the market in Q4’22, have been mostly kicked in the second half of this year – and hopes are that any downturn won’t be as severe as had been feared last year.

Second is that, despite that relative optimism, the demand outlook is very hard to discern. Are higher prices mostly a momentum and restocking story, or does underlying demand support them?  

It varies *a lot* depending on who you talk too. I spoke to one manufacturer along the sidelines of the event who said that demand for their products was down across the board – from automotive to construction. And they consider themselves a bellwether of the broader steel market. But others – for example, Rocky Christenberry, vice president and Priefert Steel and Priefert Manufacturing – noted that demand for their products in markets as diverse as solar energy and agriculture was still strong. And agriculture is only at the beginning of what is expected to be a multiyear upswing.

So is demand slowing down in some areas? Yes. But is it the kind of broad-based declines we’ve seen during past market downturns? It doesn’t seem so.

Another thing that struck me is that markets, like people, aren’t as black as white as you might think.

Friedman Industries chairman and CEO Michael Taylor, for example, noted that traditional carbon energy markets remain strong even as demand for renewables ramps up. It’s not an either or proposition. The grid needs both.

It was a similar story on the automotive front. Bernard Swiecki, senior director of the Center for the Center for Automotive Research, reassured enthusiasts of the Ford F-250 that they shouldn’t feel too guilty about CO2 emissions from their big pickups. Why? Pickups are hugely popular in the US and hugely profitable for US automakers. They are more or less subsidizing innovations in electrical vehicles. And electrification is coming to even the biggest passenger vehicles – even if the battery required for a Hummer might weigh more than a sporty convertible.

What I found a little concerning is this: Swiecki said that automakers have been resilient because they are increasingly catering not to “Joe Average” but to “Joe Above Average Income”. And, as you might guess, Joe Average is less able to weather economic hard times.

I also enjoyed our fireside chats.

It was refreshing to hear from Algoma Steel CEO Michael Garcia that the town of Sault Ste Marie, Ontario – which has a long history as integrated steelmaking – is proud of contributing so much to the province’s efforts to decarbonize by switching to the EAF route.

Cesar Jimenez, president of CEO of Ternium Mexico, meanwhile, stressed that reshoring wasn’t just a buzzword anymore. There might be anecdotal evidence of it elsewhere in North America. But in Mexico, the trend – sometimes referred to as “friend shoring” – is already moving the needle on steel demand, he said.

At US Steel, traditionally thought of as an integrated steelmaker, chief commercial officer Ken Jaycox’s excitement about the expansion underway at Big River Steel was palpable. The Pittsburgh-based steelmaker remains on track to nearly double the capacity of the Osceola, Ark., mill. It is also on track to start up a non-grain-oriented electrical steel line in the third quarter – meaning the US will soon have another producer of NGO electrical steels.

Note that we had steelmakers from across North America at the Tampa Steel Conference this year. And I look forward to the event continuing to grow in both attendance and in scope in 2024. So mark your calendars for Sunday-Tuesday January 28-30, 2024. That’s when we’ll be hosting the event next year along with our good partners, Port Tampa Bay.

I suggest coming a day early, on Saturday, January 27, for the Gasparilla Pirate Fest. Think Mardi Gras with buccaneers too. On Saturday, pirates in full regalia and firing cannons will invade Tampa city hall and steal the key to the city. (It’s good fun. They’ll give it back.)

I regularly thank all of you for your business, which we truly appreciate. I also want to take a moment to say thanks to all the folks at SMU, CRU and Port Tampa Bay who made the event possible this year. I was up on stage a lot. But I had a lot of support behind the scenes. I couldn’t have done it without the rest of the team.

Correction: A previous version of this article stated that Cleveland-Cliffs was the only domestic producer of non-grain-oriented electrics steels (NGOES). I was incorrect in writing that. Cliffs is the only producer grain-oriented electrical steels.

By Michael Cowden, michael@steelmarketupdate.com