PALM DESERT, Calif.
Service center sources say they are somewhat less sanguine than
some industry analysts at the prospect of another major entrant
into the domestic flat-rolled steelmaking market.
The impact of steelmaking
veteran John D. Correntis proposed Big River Steel LLC
project in Arkansas might not be as benign as IHS Global
Insight Inc. has indicated, members of the Association of Steel
Distributors (ASD) said at its recent annual convention.
Analysts at Lexington, Mass.-based IHS recently wrote that the
U.S. market can likely absorb output from the $1.1-billion,
1.7-million-ton-per-year flat-rolled facility, provided
additional capacity doesnt also come onstream (
amm.com, March 26).
While distributors say they are
generally positive about the outlook for steel demand, and many
agree that manufacturers are actually returning to the United
States, theyre not altogether confident the reshoring
trend will be sufficient to soak up domestic production
capacity anytime sooneven without Big River Steel in the
"Do I see manufacturing coming
back? Yes," said James P. Bouchard, chairman and chief
executive officer of Sewickley, Pa.-based Esmark Inc. "But will
it keep pace with the amount of (steel) product being produced
here? I dont think so."
Bouchard said that despite the
shutdown of former steelmaker RG Steel LLCs Sparrows
Point, Md., and Warren, Ohio, furnaces, "there hasnt even
been a blip" in terms of competition easing among producers.
Existing mills are determined "to hold their (market) share,"
he said, and that doesnt account for such proposed new
players as Big River.
Moreover, another steel industry
shakeout could be in the cards "capacitywise," said William M.
Hickey, president of Lapham-Hickey Steel Corp., Chicago. He
compared todays domestic steel environment to the first
years of the new century, when steelmaking was plagued by
excess capacity and populated with "weak sisters," which
resulted in massive restructuring and bankruptcies that forced
the disappearance of some of the industrys oldest names.
This time, said Hickey, he wouldnt be surprised if "every
legacy producer in North America wont have to go through
some reorganization process."
Keith Busse, chairman of Fort
Wayne, Ind.-based producer Steel Dynamics Inc. and a panel
moderator at the ASD conference, said the best way to promote
greater domestic steel demand is through both reshoring efforts
and a return to annual increases "north of 3 percent" in the
U.S. gross domestic product (GDP), especially after GDP rose
just 2.2 percent in 2012. But even given these conditions, and
despite the loss of industrial capacity in recent decades, the
United States is "still the place to be" for manufacturing in
the future, Busse said.
Meanwhile, Heidtman Steel
Products Inc. president Tim Berra noted that, with service
center customers increasingly seeking "one-stop shopping," the
Toledo, Ohio-based company is "partnering more with our
competition." For example, he noted that Heidtman invited
fellow distributor Steel Warehouse Co. to set up shop on its
campus in Cleveland.
"Why? They were coming anyway," he said about the South
Bend, Ind.-based distributors move to Cleveland, pointing
out that each firm performs a specialized role for customers in
that market. "They do the cut-to-length and we do the