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Chicago, IL – In a presentation to industry insiders on Tuesday, March 24, in Chicago, R. Ravi, Vice President, Commercial at ArcelorMittal – Long Carbon North America, discussed the challenging economic conditions facing the steel industry around the world. Distributors and suppliers in attendance at the GAWDA Spring Management Conference learned that U.S. steel production dropped by 6 percent in 2008, while world steel production went down 1.2 percent. Steel demand has declined as demand for certain end-market products has decreased: automotive, home appliances, commercial and residential production, agriculture equipment, HVAC, trucks and trailers. According to Bank of America Securities-Merrill Lynch estimates, there are some stronger end-markets, including energy applications, electrical, government/military, railcar and public works.
Steel Prices And Their Impact On Our Industry- 3/25/2009
Ravi predicts that steel demand will grow particularly in China and India. As destocking is completed in the United States, demand will improve here as well. Chinese imports into the U.S. of carbon and allow have decreased steadily since September.
Of particular interest to the audience was wire rod production. Ravi reported that increased wire rod imports in Q4 2008 arrived at customer plants at the same time as overall wire demand had dropped significantly. These orders were placed several years prior. Excess wire rod inventory in the supply chain dramatically affected ArcelorMittal’s domestic rod capacity utilization in Q4 2008 and Q1 2009.
Ravi stated that wire rod inventories are still too high based on the current wire sales levels, and wire rod inventories will continue to be reduced into Q2 2009. ArcelorMittal will have the capacity to meet overall demand once order patterns return to replenishing stocks (based on wire sales).