During Fort Wayne, Indiana-based steelmaker and metals recycling company Steel Dynamics' (SDI)quarterly conference call Wednesday, President and Chief Executive Officer Mark Millett addressed questions regarding the additional flat-rolled steel capacity in the US and its effects on domestic spot market prices.
Millet said that Steel Dynamics "remains optimistic across all our markets," but increased capacity from ThyssenKrupp Alabama, RG Steel and upgrades at Severstal North America remain a potential headwind. Nonetheless, Millet was bullish on demand levels and noted that SDI has maintained its goal of currently holding about three to four weeks of inventory in stock and its flats mills are seeing improved backlogs. Lead times at automotive mills have stretched out further because of automotive production, he added. Customer inventories are still tight, Millet explained, so any further pick-up in demand will be a little more exaggerated when restocking occurs.
Overall, Millet said SDI isn't seeing "a great deal of discounting in the market" and the recent restart of the blast furnace at RG Steel's Sparrows Point, Maryland mill isn't having any major impact on SDI. Their shutdown right before Christmas last year came at a very opportune time, Millet said, when there was seasonal slowdown in demand, and they are reentering the market just as the market is improving. Although with any additional capacity there is a "ripple down effect...there's more chatter about that capacity than market impact."
Looking to the rest of 2012, Millet conceded that the market cycle this year looks similar to 2011, with a good first half and "who know where the second half is going to be."