News Column

Steelmakers Look to Energy Industry for Growth

May 3, 2011

Bowdeya Tweh

steel rope

The North American steel industry is continuing its push to serve the energy sector as companies are finding market opportunities with the development of the Marcellus Shale and other exploration efforts.

Steel company executives said at a press briefing Monday the federal government should support the development of domestic natural gas resources and an avoid implementing rules that could have a negative impact on job creation. The briefing was at the American Iron and Steel Institute annual meeting in Colorado Springs, Colo. The Washington, D.C.-based trade group's members represent 80 percent of U.S. and North American steel capacity.

"This whole situation of natural gas is a game changer," said Dan DiMicco, CEO of Nucor Corp. and AISI chairman. "It's a game changer not only for the steel industry but for the entire (manufacturing sector)."

Mario Longhi, president and CEO of Gerdau Ameristeel Corp. and AISI director, said natural gas extraction and transportation and clean coal, wind and solar power generation systems are expected to be a strong source of steel demand through the next decade.

Longhi also said the domestic industry could benefit from continued federal incentives for industry efficiency and energy reduction projects. He said the United States is lagging behind other countries in terms of spurring research, which would be an important part of any national energy policy.

Industry executives also renewed their calls for the country to support a pro-manufacturing strategy, avoid burdensome regulations, enforce its trade laws and address currency manipulation from countries such as China.

DiMicco said he expects about 95 million tons to be shipped from the United States in 2011, which would be up about 14 percent from a year earlier. About 22 million tons of steel was shipped in the first quarter.

Imports consisted of 21 percent of the finished steel market at the end of March, according to AISI figures. DiMicco said U.S. officials need to remain vigilant on any surges that could impact domestic economic recovery as the import level is at its highest since January 2009.

The rate of capacity utilization within the steel industry was 75 percent in the first quarter.

Last month, the World Steel Association's short-range projection said global steel use will increase 5.9 percent this year nearly 1.36 billion metric tons (1.5 billion tons), following a 13.2 percent growth in 2010. The forecast was based on a "stable and steady recovery of the world economy."

Next year, steel demand is expected to increase another 6 percent to a record-high 1.44 billion metric tons (1.59 billion tons). The growth in demand is coming from emerging and developing countries, which are expected to account for 72 percent of global demand in 2012.

Source: Copyright (c) 2011, The Times, Munster, Ind.

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