Steel Industry Insight

What a summer!

What a summer!  While heat waves blasted most of the US, demand for steel, unfortunately, remained lukewarm, and even the steel sector that is usually lively during the annual summer doldrums—scrap—followed a curious neutral trend for most grades and regions during the hot months.

That doesn’t mean, however, that the summer was devoid of any excitement.  The US economy was a hot topic of conversation throughout, especially the debt ceiling crisis and the eventual downgrading of the country’s sterling AAA credit rating.  Stocks followed a severe yo-yo trend in the aftermath, frightening many major steel corporations who already had lackluster end-use demand to worry about.  The downgrade could very well have an effect on third-quarter financials, but the good news is that for Q2, nearly every major steel company in the US posted positive results (even US Steel, which had suffered nine consecutive quarters in the red).

It’s not just steel financial reports that are looking bright—several steel and steel-related markets are doing incredibly well considering the economic climate.  For example, in the US’ ongoing effort to become energy independent, the domestic oil and gas industry has shown remarkable growth alongside the burgeoning alternative energy market—two seemingly opposite industries which, in fact, are finding ways to work hand-in-hand.

Another industry that shows no sign of slowing down is transportation and logistics.  For most transportation sectors in the US, the demand to move products—including all products along the steel supply chain—far surpasses the available fleet supply, which has in turn made the industry one of the busiest (and most profitable) around.  For specifics on all the factors responsible for bolstering each transportation sector, see the feature article on page 32.

Of course, not all of the steel industry is doing as well—but while there seems to be nothing but obstacles on the horizon (for the construction market and related steel sectors most of all), there is every reason to believe that not only stability, but actual prosperity is not that far off.  Hopefully, as the weather cools down, so will the volatility that is damaging one of the most important factors of all (in every corner of the economy): confidence.

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