Steel makers say market starting to recover despite recessionary fears

Industry has been hit by slowing sales, rising costs and supply chain slowdowns worldwide

The steel industry depends on demand for building everything from skyscrapers to washing machines. Reuters

For all the talk of recession, steel demand in some key markets is showing signs of perking up.

Multinational steel producer ArcelorMittal has forecast consumption in Brazil to double within a decade as the nation tries to fill a huge need for infrastructure.

And Stelco Holdings, the biggest Canadian producer, said prices have bottomed following the biggest decline since at least the Great Recession, in the late 2000s.

These comments from executives signal glimmers of hope for an industry that depends on demand for building everything from skyscrapers and cars to washing machines and tractors.

It also offers some optimism for the broader economy that’s been battered by a downturn in China’s vast real estate sector, persistent semiconductor supply chain issues that have slowed auto production and an energy crisis in Europe and China that threatens to hobble manufacturing.

Manufacturing indicators have been uneven, with US business activity contracting one day, capital goods orders rising the next.

Caterpillar, one of the world’s largest machinery producers, warned earlier this month of slowing sales in China and across Asia, and Deere and Co trimmed its annual outlook due to rising costs and supply chains slowdowns.

Still, within the gloom there are bright spots.

Deere cited problems keeping up with orders, and Stelco said its books are again filling up across the Americas. Fellow steel makers Cleveland-Cliffs and Steel Dynamics said that car makers can’t get enough chips to produce enough vehicles to meet consumer needs.

Construction, while currently weak, could be on the verge of getting a boost as soon as early 2023 from the US infrastructure bill, said Ken Simonson, chief economist for the Associated General Contractors of America.

Prices are likely to trade between $650 to $850 per tonne by the end of the year from $792 on Wednesday, according to steel executives, service centres, traders and analysts surveyed at two of the world’s largest steel conferences this week in Atlanta, in the southern US state of Georgia, and Brazil.