Although most can agree that the global steel economy is in a much better position than it was at the height of the crisis in 2009, many areas of the world have not returned to pre-recession levels, according to Mario Longhi, President and COO of US Steel, during AMM's Steel Success Strategies conference on June 18. However, Longhi was optimistic about the US steel industry, based on a mix of positive and negative factors.
The first, he said, is the "tremendous comeback" of the US automotive industry. New vehicle designs and the continuing development of advanced high-strength steels (AHSS) are ensuring that steel is the "material of choice" for automotive manufacturers. According to Longhi, AHSS today are five times stronger and about 35 percent lighter than the material's predecessor, while also improving safety standards.
While the automotive sector is overwhelmingly a source of optimism for the steel industry, the second factor is a mix of positive and negative: energy resource development. Longhi said there are "opportunities for steel at all levels of development," leading to a rich demand/supply cycle: more resource development means more steel in the way of pipelines and infrastructure development, and the more steel produced means more energy needed--and thus the cycle continues. In fact, cheap natural gas is giving many companies the option of producing steel via DRI facilities, said Longhi.
However, demand for more pipe and tubular products in the US has led to the final factor impacting the US steel industry, a resoundingly negative one: unfairly traded steel. Longhi said that between 2010 and 2012, tubing and casing imports into the US increased 52 percent--a surge that "must be addressed." Unfairly traded steel is the result of overcapacity, but also because the US is a very attractive target for overseas steelmakers. Asia, Russia, and Europe are largely net-exporters of steel, while Brazil is relatively even. That leaves the NAFTA region, said Longhi, as the primary destination for steel in the world. The US government must take action, but he stressed that government intervention in the steel industry not go too far--infrastructure investments are more than welcome, but the market, not government, should decide which companies supply the market.