The 14th annual SteelOrbis RWR conference took place on Monday January 16th at The Paris Hotel and Casino in Las Vegas, Nevada. Not only was this our first-time hosting RWR at The Paris, this was our first in-person US-based event since February 2020.
Approximately 120 traders, executives, and market players from companies throughout the globe registered for this year’s event, which focused on the construction outlook and rebar / wire rod market forecast for the next 12 months.
This year’s presenters included keynote speaker and panelist Ken Simonson, Chief Economist at The Associated General Contractors of America, along with panelists Fernando Villanueva Cuéllar, CEO of Deacero USA, Murat Askin, Founder and CEO of StaalX, and Chris Casey, Executive Director of the Independent Steel Alliance. The event was once again moderated by SteelOrbis Americas Content Manager and 13-year veteran staff member Katie Memmel.
Mr. Simonson kicked off the event by discussing his projections for the domestic construction industry. Residential construction employment is still improving, he said, noting that the number of job openings within this industry continues to outpace employee availability. And while construction employment continues to vary from state-to-state, he added, roughly 42 states showed an increase in construction employment between November 2021 and November 2022.
Simonson also pointed out that the US Census Bureau reports that there have been numerous changes in construction spending during that same reporting period, including a 15% increase in highway and street spending, a 20% rise in commercial construction spending, such as warehouse, farm, and retail construction projects, and a 7% increase in both transportation and health care construction spending.
“Manufacturing construction is going to continue to grow strongly,” he said. “Airports have been a strong market with expansions and modernization. Passenger rail has more money than it’s ever seen as promised by the Infrastructure Investment and Jobs Act (IIJA).”
Sewage, waste disposal, and water construction projects have also been positively impacted by the IIAJ in the months moving forward. In terms of the forecast going into Nov. 2023, nearly all sectors are expected to increase construction spending, he added, with hotel and lodging, private office, and retail construction being the only three segments forecast for negative growth.
At the end of his presentation, SteelOrbis content manager Katie Memmel kicked off the panel session by asking the presenters their opinion of what may happen with infrastructure projects between now and the end of the year.
“We look forward to seeing the IIAJ money being released [by the US government] which will of course impact steel sales,” said StaalX founder Murat Askin. “US mills will be first in line to benefit from that. Whatever they can’t handle, [steel traders and] imports can take care of it.”
When asked directly about whether it’s believed that Mexican steel will be permitted for use in IIAJ-funded projects, Deacero USA CEO Villanueva Cuellar said he believes that it’s unlikely. On the other hand, he also believes that if the three North American countries can work together to eliminate the use of imported steel for all North American infrastructure projects, including projects in Mexico, that perhaps someday, an agreement could be reached between the US and its Southern neighbor.
The next topic of discussion shifted to pending new steel capacity in the US.
The panelists said that while some believe that older mills will eventually go offline, it’s widely held that this is unlikely to happen anytime soon, which will, at the very least, lead to a temporary stent of oversupply in the US market.
“We represent independent rebar fabricators, and our group represents 18% of all the rebar purchased in the US,” said Independent Steel Alliance Executive Director Casey. “We’ve asked people what they think of all of these new mills and the general sense of it was that more supply is good, but they said they’d prefer to have more independent options. So, there are concerns about further concentration of supply.”
In terms of the upcoming year, Askin said he believes that even with all of the new US construction projects that are pending or on the books, he still thinks 2023 will be a challenge for imports.
“I don’t know if Section 232 will go away,” he said. “As long as the tariffs exist 25% is a big handicap for imports to work against.”
Memmel asked the panelists to expand on the impact the tariffs are still having on the market, 5 years after they were implemented. She also asked whether they think it’s likely the tariffs will be overturned any time soon.
Panelists Simonson and Askin said they believe it’s unlikely that talk of the tariffs coming off will start until after the 2024 election. Whether talks start to take place after that, on the other hand, is anyone’s guess.
“The argument has come down to the need to defend the domestic mills. They said needed some room to breathe, and they said they needed some space to defend themselves from unfairly priced imports,” Casey added. “But now the domestic [mills] have done some amazing jobs of producing more energy efficient and production efficient mills, so maybe it’s time for some free trade again.”
That being said, he also said his group generally thinks Section 232 isn’t going away anytime soon.
“It would be a political hot potato to any politician who says they want to take the tariffs away [which could harm the domestic steel industry,” he said.
The dates for the next RWR conference will be announced toward the end of the year.