US will be the shining star after the S201 measures are lifted

US will be the shining star after the S201 measures are lifted

The US steel industry has been going through a painful period since 2001. As a matter of fact not only the US mills but, in a wider picture, North American mills have been going through a series of changes both organizationwise and ownershipwise. That process is very much in line with the consolidations that European and Asian mills have been going through. It is, in fact, a much desired process by the Bush administration for the US mills. We will be noticing major steel mill groups, namely US Steel, ISG, and Nucor, dominate the market for flat rolled products before the end of the year in the US. It is, of course, a natural result of the consolidations, takeovers and mergers between the mills. On the other hand, Nucor will be on the frontline again dominating long products market with North Star Steel following. Therefore, it is obvious that, those major steel mill groups will be controlling the prices in the market, basis their market shares. Relatively smaller sized mills will be facing difficulties in terms of competition with those major groups, and protecting their market share. Under these circumstances, it should not be surprising to see some new mergers or acquisitions in the US, involving those relatively smaller mills. Consolidation will bring along a new market outlook, which is not necessarily something disadvantageous for the international suppliers of steel products. Of course, first of all, the new environment will let the local US mills benefit. Prices will increase in the market, and then the doors will be opened for imports once the safeguard measures under section 201 are lifted. The demand for imported steel has been very good up until 2001 in the US, but then showed a significant drop as a result of section 201 measures. As of today we can still talk about some new mergers of steel mills to be seen this year. Market analysts expect some of the smaller sized mills, like Wheeling Pittsburgh, Weirton and Rouge, either to merge or be closed. The industry definitely needs to be consolidated following the bankruptcies that have led to the section 201 measures. Market stability will be achieved as a result of the consolidations. The inefficient plants will be closed and efficient ones will start to generate profits again. The good news for international suppliers to the US market is that; as the mills consolidate and number of alternatives get limited in the US, prices will go up. And once the section 201 safeguard measures are lifted, there will be plenty of room for imports into the US, particularly for slabs and hot rolled steel sheet in coils. There will always be room for long products and cold rolled and galvanized steel too.