Despite the rocky road ahead for many segments of the steel industry, those attending the National Association of Steel Pipe Distributors (NASPD) Annual Convention carried with them an air of promise. Approximately 300 people from throughout the globe made the pilgrimage to Las Vegas to discuss the forecast for pipe and tube with distributors, manufacturers, movers and shakers, all of whom felt that 2010 had dawned a new day, where cautious optimism had emerged on the horizon.
"Pipe is forecasted to be up about 10 percent," said Rick Preckel of Preston Publishing Co, Inc. during Friday's General Session. Yet within the same breath, he pointed out that with numbers as low as those posted in 2009 (approximately 1.41 million tons), a 10 percent increase doesn't really develop into many more truckloads. "But the good news is that the market is heading up and at 10 percent we're really excited."
Standard shipments are faring better and structural shipments are forecasted to be at 2.3 million tons for 2010 (an increase of 0.2 million from 2009), he noted; a far cry from shipment totals posted prior to the economic downfall, but still a move in the right direction.
Paul Vivian, also of Preston Publishing, spoke of the potential impact of government stimulus package spending. But he too, shared in Mr. Preckel's cautious optimism.
According to a recent report, only about 30 percent of President Obama's $787.2 billion economic stimulus package has been spent and the funds slated for infrastructure projects have not yet been allocated. And while infrastructure spending may equate to more of a nudge than a push for demand, this help is likely on the way.
The hot topic of discussion, however, seemed to revolve around natural gas exploration and the government's desire to expand the country's use of greener energy--all of which would translate to dollars and tons for pipe and tube companies.
"The natural gas business has totally changed. Natural is the future," commented Dolty Cherameie, President of Pipe Exchange Ltd.
Lewis Leibowitz, a partner in the law firm of Hogan & Hartson spoke next. While his area of expertise is focused on trade legislation, he strongly agreed with the sentiments on green energy. "One of the policy imperatives being talked about in Washington right now involves global warming," said Liebowitz. "It's a key driver of energy policy. We need to see what we can do quickly to reduce carbon emissions, and that is where you all come in.
"We have a lot of natural gas, and natural gas production is a rational choice," he added, further stating that that increased natural gas production would afford the US energy independence. "The pipe industry makes all that possible. You need significant quantities of pipe to explore and produce oil and natural gas in the US." The challenge, he warned, was that the frequency of AD and CVD related to tubular products may inhibit forward movement.
Friday's final speaker, Vicente Wright, President and CEO of California Steel Industries, closed the day's session with a positive industry update. "The worldwide steel industry is recovering," he said. "The world economy is experiencing faster recovery than expected."
Mr. Wright also pointed out that at the same time, industry professionals should be cautious in moving forward and should not overreact to false starts.
"[The natural gas and oil] rig count is driving OCTG line pipe. Rig count has crept upward in the past few months, bringing the pipe market out of the intensive care unit. But people are only buying to match orders, and purchasing levels are still off substantially," he added, furthering that large expansion will likely not come until prices of natural gas and oil once again begin to creep upward.
"Jobs must return and real demand must return. The unemployment rate must stop increasing, jobs must return and the present turn must reverse."
Mr. Wright believes the steel industry will experience a "V" shaped recovery."'V' is for victory," he concluded. "There was a huge crash in 2009 but recovery will be faster than expected. There is a story of a son who once asked his father why he builds pipeline. ‘To hold up the streets', he replied. So let's hope for recovery. Our streets need all the help they can get."