Forecasts for steel demand for 2021 are mixed as US capacity expands

(Daiphuc corp) - Steel demand forecasts look mixed for 2021 and beyond as U.S. producers increase capacity, supported by strong regional steel prices and an economic recovery from the coronavirus pandemic, according to the show. Speaker presented at the Tampa Steel Conference on February 2.

 
 

 
Nucor CEO Leon Topalian said the booming steel demand could compensate for the increase in supply capacity this year.
 
"I still think we're going to have a net deficit when we think about the supply picture compared to 18 months ago," he said. "The opportunities for our industry will still be enormous."
 
Topalian says Nucor's inventory in virtually every product segment is "at the highest or near historic high", with customers reporting similar trends in demand.
 
The US steel industry had a "fundamental change" in the market that was driving supply growth, he added.
 
"Over the past 18 months, we've seen about 30 million tons of capacity come out of the market, but in the last year we've seen about 15 million out of those 30 million being brought back," Topalian said. "We think there are about 6 million tons or 7 million tons that we know will come back online and new projects will bring many new tons and new capacity into the market."
 
However, strong steel prices in the US are expected to drop dramatically amid an uncertain demand, according to Timna Tanners, executive director of joint stock research for the metals and mining industries of Bank of America.
 
"The US tends to have bigger price swings compared to the rest of the world," Tanners said. "In the past, when prices rose sharply, they have fallen sharply again."
 
Tanners said Bank of America forecasts that steel prices will reach their peak in the first quarter with strong correction in the second half of the year.
 
In the key final auto market, Tanners said car sales are not expected to increase much y-o-y in 2021 after a surprising recovery in late 2020, driving steel demand in the sector. This area can be "exhausted".
 
Tanners added that steel demand is also likely to decline in the oil and gas and non-residential construction markets, even as major infrastructure spending negotiations take place under President Joe Biden.
 
"We think that stimulating infrastructure will use less raw materials, and added that such spending could focus on clean energy initiatives," Tanners said.
 
In contrast, Iron and Steel Institute CEO Kevin Dempsey said he was optimistic about the prospect of infrastructure spending for the steel industry.
 
"A big infrastructure bill will help boost overall spending in the construction sector, boost the economy and be good for steel," he said.
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