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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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| Elizabethtown High School |
| Schools |
Location: Elizabethtown, KY
Architect: Sherman-Carter-Barnhart Architects
General Contractor: Morel Construction
Date of Project: Spring 2004
Project Value: $3,000,000
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| Fort Knox Dining Hall |
| Government |
Location: Fort Knox, Kentucky
Architect: Burgess & Niple
General Contractor: Messer Construction
Date of Project: Summer 2004
Project Value: $10,109,000
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| Courtyard by Marriott |
| Other |
Location: Dayton, OH
Architect: Braun & Steidl
General Contractor: Messer Construction
Date of Project: March 2006
Project Value $6,000,000
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| Georgetown Fire Station |
| Civic |
Location: Georgetown, Kentucky
Architect: Architecture Plus
General Contractor: David Engineering
Date of Project: Spring 2004
Project Value: $1,200,000
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| Laurel County Central Office |
| Civic |
Location: London, KY
Architect: Sherman, Carter, &Barnhart
General Contractor: Hacker Brothers
Date of Project: May 2007
Project Value: $4,450,000
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| Children’s Medical Plaza |
| Other |
Location: Dayton, OH
Architect: Pinnacle Architects
General Contractor: Danis Building Construction
Date of Project: July 2005
Project Value $8,500,000
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| Bishop-Fenwick High School |
| Schools |
Location: Franklin, Ohio
Architect: SFA Architecture
General Contractor: Turner Construction
Date of Project: Fall 2003
Project Value: $10,000,000
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| Hancock Public Library |
| Other |
Location: Greenfield, IN
Architect: K.R. Montgomery & Assoc.
General Contractor: Meyer-Najem Construction
Date of Project: April 2005
Project Value $6.100,226
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| Winton Hills Academy |
| Schools |
Location: Cincinatti, Ohio
Architect: BHDP Architecture
General Contractor: Dugan & Meyers Construction
Date of Project: Spring 2004
Project Value: $8,213,000
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| Tri-State Orthopedics |
| Other |
Location: Evansville, IN
Architect: Conner & Associates
General Contractor: Weedle Brothers Construction
Date of Project: May 2004
Project Value $3,500,000
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| Retail |
Location: Cincinnati, OH
Architect: RSP Architects
General Contractor: Premiere properties
Date of Project: July 2005
Project Value: $11,000,000
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| Deupree Housing Community |
| Other |
Location: Cincinnati, OH
Architect: SFCS Architects
General Contractor: Messer Construction
Date of Project: June 2006
Project Value $10,000,000
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| First Baptist Church Georgetown |
| Churches |
Location: Georgetown, Kentucky
Architect: Harbour Construction
General Contractor: Harbour Construction
Date of Project: Spring 2004
Project Value: $1,400,000
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| Girl Scout's Regional Headquarters |
| Civic |
Location: Louisville, Kentucky
Architect: Luckett & Farley
General Contractor: Whittenburg Construction
Date of Project: Summer 2004
Project Value: $5,800,000
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| Wyann-Pine Grove School |
| Schools |
Location: London, KY
Architect: Sherman, Carter, & Barnhart
General Contractor: Burchfield & Thomas Construction
Date of Project: August 2006
Project Value $5,300,000
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| Heartland Elementary |
| Schools |
Location: Elizabethtown, KY
Architect: Peck, Flannery, Gream, & Warren
General Contractor: Morel Construction
Date of Project: March 2008
Project Value: $13,625,000
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| Retail |
Location: Louisville, Kentucky
Architect: Ronald J. Gajoch & Associates, Inc
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Date of Project: Fall 2003
Project Value: $1,430,000
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| Dayton Belle-Haven PK-8 |
| Schools |
Location: Dayton, Ohio
Architect: Moody-Logan LTD
General Contractor: Staffco Construction
Date of Project: Fall 2005
Project Value: $9,322,524
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| Stewart Elementary |
| Schools |
Location: Cincinnati, OH
Architect: Cole & Russell
General Contractor: GC Contracting
Date of Project: September 2006
Project Value: $4,500,000
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| Salem & Union Chapel Elementary |
| Schools |
Location: Russell Springs, Kentucky
Architect: RBS Design Group
General Contractor: Branscum Construction
Date of Project: Fall 2005
Project Value: $4,512,115
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| Miami Univ. Conservatory |
| Schools |
Location: Oxford, OH
Architect: Woolpert, LLP
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Date of Project: October 2005
Project Value $1,621,000
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| McDonald's Restaurant |
| Retail |
Location: Lebanon Junction, Kentucky
Architect: Architectural Concepts
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Date of Project: Summer 2004
Project Value: $520,000
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| Chapel Rock Christian Church |
| Churches |
Location: Indianapolis, Indiana
Architect: Arc Design Group
General Contractor: Patterson-Horth
Date of Project: Fall 2004
Project Value $3,500,000 |
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| Woodlawn National Guard |
| Government |
Location: Woodlawn, Ohio
Architect: KZF, Inc.
General Contractor: Shook Building Group
Date of Project: Fall 2004
Project Value $14,000,000 |
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| Pleasant Hill Academy |
| Schools |
Location: Cincinnati, Ohio
Architect: Burgess & niple
General Contractor: Quantum Construction
Date of Project: Spring 2005
Project Value $6,600,000 |
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| Streets of Chester Lifestyle Center |
| Retail |
Location: Chester, New Jersey
Architect: Patrick Marchetta
General Contractor: Continental Building Systems
Date of Project: Spring 2006
Project Value $12,200,000 |
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| Springdale Nursing Home |
| Other |
Location: Cincinnati, Ohio
Architect: PDT Architects
General Contractor: Schumacher-Dugan Construction
Date of Project: Fall 2005
Project Value $7,400,000 |
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| Edinburgh Retail Outlets |
| Retail |
Location: Edinburgh, Indiana
Architect: C70 Builders, Inc
General Contractor: C70 Builders, Inc
Date of Project: Spring 2005
Project Value $4,100,000 |
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