Smithers Apex recently spoke with Becky Hites, President of Steel-Insights to gain her perspective on the past and current and future steel market.
Smithers Apex: What are the biggest challenges facing the industry right now?
Becky Hites: While all eyes are focused on the 30% global overcapacity as the steel industry remains in a protracted trough, a more concerning trend is the less than strong demand associated with the slower economic growth in the USA and in many of the leading economies. Historically, the USA integrated steelmakers have focused on surviving through the bad times to recover in the good times. It’s encouraging to see that mentality changing now to incorporate strategies to remain profitable even in the trough of the cycle.
Smithers Apex: What opportunities seem most important?
Becky Hites: Almost half of the steels in production today didn’t exist a decade ago. With the advances in production technology and information processing and control systems, it is exciting to speculate what the future might hold. Smaller micro mills and more flexible finishing operations are among some of the possibilities. Multi-phase steels and 60 plus, even 100 year old bridge applications are being developed. Modular bridge span replacements and hollow structural segments are just two examples of new products used in recent construction projects.
Smithers Apex: What are the most important factors influencing the steel today?
Becky Hites: USA monetary policy that has resulted in a strong dollar has significantly impacted the competitiveness of domestic mills versus steel being shipped to the US. It’s a double whammy because not only are steel products sold predominantly in US dollars, in the USA, the mill costs are in “expensive” dollars compared to lower cost home currencies in non-USA markets. Which brings us to trade. The USA is not the only developed world country fiercely battling against “unfair” trade through increased enforcement of existing trade laws and aggressive pursuit of offenders to eliminate loopholes.
Smithers Apex: What factors do you see influencing the industry most that didn't exist five, ten or twenty years ago?
Becky Hites: Globalization has become an increasingly dominant factor in how all business gets conducted. While there’s an increasing backlash in the developed world and a move towards mercantilism and protecting markets, the world is not likely going to revert to an earlier simpler age. Thus, it’s incumbent on the steel industry to evolve and adapt to the new realities, once again, as it has every decade or so over the past century.