Global Fastener News

2009 FIN – Metals Editor: ‘If No One is Buying, What is the Price?’

April 12
00:00 2013

May 11, 2009 FIN – “It is entirely ugly out there” and “There are few encouraging signs at this point” are among comments steel industry leaders made recently to American Metal Market editor Jo Isenberg-O’Loughlin.

Speaking at the International Fastener & Precision Formed Parts Manufacturing Exposition, the editor noted steel prices last summer soared to $1,100 per ton due to the weakness of the dollar and stiffening domestic demand. “Imported steel was almost nowhere to be found, thanks to the weakness of the American dollar,” she explained.
After record prices a year ago, the bottom fell out of the market during the first week of September, Isenberg-O’Loughlin noted. “Since then it has only gotten worse.”
“The roof fell in … but, in retrospect, there were plenty of signs,” she acknowledged.
“This in not just a temporary downward (spiral) … it is more ominous,” she cautioned.
Steel producers began cutting back. Capacity utilization rates plunged from 90.3% a year ago to below 50% by December and in April 2009 stood at 41.9%.
The slow market makes it difficult to determine where prices are headed, Isenberg-O’Loughlin observed. “If no one is buying, what is the price?”
Noting it takes eight hours to restart a furnace, Isenberg-O’Loughlin doubts producers are going to “light a blast furnace on a small surge in order activity.”
Automakers buy 30% of steel in the U.S., she noted. The editor suggested that what the industry needs to revive is a combination of stabilization and improvement in the economic environment, access to credit, economic improvement from the government stimulus program, Chinese economic growth, producer discipline, sales for the Big Three automakers and more liquidity/cash flow.
We may see more steel industry acquisitions. Isenberg-O’Loughlin suggested, “the time is right for consolidation” in the steel industry. ©2009/2013 Fastener Industry News.

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