Steel sector waits on demand from infrastructure bill

“It’s taking between one to three years to go through the entire process,” Alexandra Anderson, senior analyst for CRU, told SMU. “So there’s going to be a pretty long tail on some of these projects that have been in planning and budgeting and the like.”

Many expected to see things ramp up sooner, even in 2022 and 2023.

“That just hasn’t happened,” Anderson said. “We were anticipating at the end of last year and the second half of this year we were going to start to see some activity, and now it’s looking like the second half of next year.”

In its most recent outlook on steel longs (done before the outcome of the US presidential election was known), CRU wrote:

“Demand from government infrastructure projects will boost longs consumption, with most growth occurring in 2025–26, especially as uncertainty regarding the 2024 [US presidential] elections has slowed demand heading into Q4. While continued recovery in key end-use sectors will keep the market bolstered through 2028, prices will settle below the highs seen in recent years.”

“Seasonally low demand, as well as uncertainty around the upcoming presidential elections, will keep longs under pressure for the rest of 2024. However, 2025 will bring renewed activity alongside continued economic recovery. At the same time, domestic production will gradually rise as new longs capacity comes online,” CRU continued.

In a recent third-quarter earnings call, Leon Topalian, chair, president, and CEO of Nucor noted that construction related to semiconductor factories, advanced manufacturing facilities, data centers, and institutional buildings is strong. But the company, like many others, is looking to 2025 for demand to pick up.

“And while we recognize that new infrastructure spending has been less deal-intensive than originally expected, we do still expect to generate incremental demand in the years ahead,” the head of the Charlotte, N.C.-based steelmaking and manufacturing conglomerate said.