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Steel buyers will see more imports in 2009 but growth still uncertain
11/14/2008
By Tom Stundza -- Purchasing, 11/13/2008
Global metalworking activity has weakened, setting the stage for excess steel supply in the months ahead. And if the dollar continues to strengthen, as some analysts suggest, more imports could flow into the U.S., putting further downward pressure on transaction steel prices.
With steel orders slowing worldwide and credit lines reduced, steelmakers in many parts of the world are planning to reduce production to damp supply. Still, it takes time to bank furnaces and reduce processing schedules. So, entering 2009, there still may be enough steel choking the warehouses of service centers, processors and traders to depress market pricing.
Analyst Mark Parr says steelmakers, especially sheet mills, "are living 'hand-to-mouth' and are unwilling to predict when demand will return." The managing director of KeyBanc Capital Markets in Cleveland adds its "unclear how long it takes the recently announced global supply cuts to effectively tighten up the supply/demand balance in the marketplace."
Worldwide, steel purchasing is collapsing under the weight of the U.S. housing recession, credit-market turmoil, high raw materials costs and inflation pressures. In North America, even if steel mills grind to a 25% halt in production by year's end, as forecast by independent analyst Michelle Applebaum, excess stocks still could be evident in January.
The lack of steel buying has coincided with a sharp decline in world steel prices with the North American price collapse occurring faster than anticipated.
"This likely will result in a sharp decline in shipping volumes in the fourth quarter of this year and well into 2009," says analyst Michael Willemse at CIBC World Markets in Toronto. "A significant increase in the U.S. dollar and a sharp decline in global freight rates have further contributed to negative sentiment towards global steel prices," he says.
World steelmaking has expanded by 6% this year through September although reduced output is probable in the fourth quarter as the world steel market "is demonstrating rapidly changing circumstances," according to Ku-Taek Lee, chairman of the World Steel Association and CEO of Posco in South Korea. Although he admits "the market now is in a period of high economic uncertainty," he believes 2008 will be another year of steel demand growth and continues to expect growth in 2009. Economists aren't so sure—but they do agree with the 15–20% reduction in world steel production this quarter.
Analyst Michael Gambardella at J.P. Morgan Securities in New York estimates that planned downtime this quarter at U.S. mills "will cut sheet supply by at least 23%." However, supply could expand in 2009 because of the financial need to run factories at better-than-breakeven operating rates at home and abroad.
Some early analyses suggest that steel demand globally will slide in 2009 after a decade of consecutive annual growth as businesses rethink capital investment projects, consumers curtail purchases of capital goods and businesses back off buys of commercial goods. Upshot: World steel prices could slide by as much as 30% next year while demand drops 20% or more. This could make more steel available to price-shopping buyers in North America.
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Thoughts for Today
1/1/2006
The desire to succeed means nothing without the will to
prepare.
Commit to the Lord, whatever you do, and your plans will SUCCEED!
Prov. 16:3
“Unless we know what we're willing to die for, we may never figure out what we're living for.”
Unknown Source
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Tri-State
Cold-Formed Steel Components was formed in 2003 with a shared
mission to be the best supplier of cold-formed trusses and related
components.
With a lot of faith and experience and even more hard work,
this team set out to accomplish its mission by offering very
competitive prices without sacrificing quality.
The commitment to our customers is evident in the way we communicate
with them and increase their bottom line through value-added
ideas and solutions. The independent testimonials of our customers
speak for themselves. There is
no reason to expect your experience to any different. Give us
a call today! |
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Stuart
C. Melvin, President & CEO
Over the past 20 years, Stu has held positions of increasing
responsibility in the financial and operations management of
manufacturing organizations. These positions include Accounting
Manager, Materials Manager, Plant Manager, Corporate Controller,
Chief Financial Officer, and General Manager. He has a BS degree
in Accounting from North Carolina Central University. His experience
is gained from a broad spectrum of industries including financial
services, metal fabrication, chemical manufacturing, biotechnology,
and truss manufacturing. His leadership is the driving force
behind Tri-State CFS emphasizing teamwork, quality, value-added
customer service, and growth. |
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Karen Bickett, Design Administrator
Karen has over 10 years of progressive experience in customer relations. She has a thorough knowledge of truss design and job layouts and assists with all phases of the orders including preparing and coordinating sealed engineering drawings, expediting shop drawing approvals, and coordinating product delivery. Karen's personality and eagerness to solve problems is a matchless combination for delivering outstanding customer service. |
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Ed
French, Vice-President Operations
Ed has over 15 years of design experience in the truss industry.
He has a degree in Architectural Design from State University
of New York – Delhi and has been involved in the startup
of several truss manufacturing operations. Ed has been directly
involved with the Alpine TrusSteel product since its conceptual
development and inception. He has over 10 years of experience
in truss manufacturing design management and steel truss operations.
Ed utilizes Just-in-Time and Lean Manufacturing production strategies
to maximize efficiency and reduce operating costs. |
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Troy
Lutgens, Vice-President Engineering
Troy started in the truss industry as a production line leader
for a wood truss manufacturer. After completing a BS degree
in Physics from Lock Haven University (PA), he was promoted
to Designer. Troy has held the position of Senior Steel Truss
designer for 10 years. His strength is in his ability to communicate
directly with contractors, architects, engineers, and builders.
His thorough understanding of construction standards and roof
designs creates value-added solutions and cost saving ideas
that directly benefits the customer. He is currently completing
his degree in Civil Engineering-Structural Design from the University
of Louisville. |
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Steve
Beck, Vice-President Finance, Controller
Steve brings over 25 years of experience in financial management.
He has a BS degree in Accounting from the University of Louisville.
Steve is a solid hands-on Controller and has over 15 years experience
in manufacturing and construction project accounting. His extensive
experience in job costing, financial management, and information
systems comes from a variety of industries including construction,
electrical contracting, transportation, personnel services,
and truss manufacturing. |
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John
Daring, Operations Manager
John has over 16 years experience in the production of wood
and steel trusses. He started as a laborer and worked his way
up to Lead Man, Quality Control Tech, and Production Manager.
He was one of the very first people to build the Alpine TrusSteel
product in this area. John’s experience and dedication
to quality and safety has contributed greatly to the success
of our customers. |
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