Winter storms in the Eastern US prevented some registrants from making their trip down to the Annual Port of Tampa Steel Conference, hosted by the Tampa Port Authority and Ports America in Tampa, Florida late last week, but for the majority of registrants who were still able to attend, the conference once again did not disappoint.
As Tampa battled its fair share of inclement weather, the opening networking reception was moved from a waterside patio to an indoor ballroom, but that didn’t seem to bother the crowd, which was filled with a few more smiles than last year. Last year’s conference came just a couple months after the steel industry experienced one of the sharpest declines in its history. A year later, most businesses are still struggling with the depressed economic conditions, but it appears that the worst business conditions were left in 2009.
While the reception provided excellent networking opportunities, the conference the next morning featured some of the industry’s most respected speakers including: David Phelps (moderator), president of the American Institute of International Steel; Dr. Donald McNeeley, president and COO of Chicago Tube & Iron; John Ferriola, COO of Steelmaking Operations for Nucor Corporation; John Packard, owner of Steel Market Update; and Peter Svennson, director of Clipper Steel Services.
Mr. McNeeley provided a wealth of statistics and examples illustrating the current and prospective states of the US economy and how they particularly apply to the steel industry. The primary points Mr. McNeeley wanted to the attendees to remember is that rather than a “V,’” “W,” or “U”-shaped recovery, he expects the steel industry’s recovery will look more like a “hockey stick,” meaning that the market will remain depressed and flat through most of 2009 and the first half of 2010 and will then gradually begin to improve. Sharp improvements are not expected but Mr. McNeeley does expect overall economic growth to improve by 2.9 percent over 2009. And 60 percent of company/business gains this year will transpire over the latter half of 2010.
Mr. Ferriola’s presentation was less optimistic than Mr. McNeeley’s. Mr. Ferriola insisted that the economy and steel industry will not rebound until employment--specifically manufacturing employment--improves. In June 1998, the US had 17.7 million manufacturing jobs. Just 11 years later, that figure dropped to 11.9 million as of December 2009, which is especially daunting considering that for every manufacturing job loss, the US loses approximately 5.1 associated jobs. The other main point Mr. Ferriola emphasized is that while Nucor fully supports free trade, the company is not supportive of “free-for-all trade.” Mr. Ferriola insisted that the “government needs to enforce trade laws,” and “all we’re asking for is a level playing field.” Mr. Ferriola remained a bit more cautious than Mr. McNeeley and rather than predict an expected 2010 growth, he explained that now is the time to position your company for a better long-term future.
After a short break, Mr. Packard provided some specific insight on the flat rolled steel industry. Through surveys he conducted with numerous steel professionals, Mr. Packard stated that while buyers’ sentiment remains pessimistic, at a negative 29 percent, this is a vast improvement from the majority of 2009. Also, despite growing skepticism regarding the flat rolled market over the next several months, most buyers still expect higher prices to stick at the mill level for April. Mr. Packard’s overall message to the attendees was that even though there are several potentially optimistic and negative factors looming over the flat rolled steel industry, 2010 should be an improvement over 2009.
The final speaker of the session, Mr. Svensson, provided in-depth information surrounding the ocean freight industry. Mr. Svensson declared that the biggest issue facing the industry right now is the fact that “Capesize fleet growth is constrained by congestion.” However, he does see a growing confidence that the steel industry will experience a “V-shaped” recovery. Regarding freight prices, “as steel prices go up, so will freight prices,” Mr. Svensson concluded.