Letter to the Editor: Steel Mills Face a Real Conundrum

Steel Market Update received an email late last week that spoke to the problems the domestic steel mills are facing right now: a weak global steel market, strong dollar, all U.S. production facilities up and running, growing steel inventories, low in-put costs and a collapse in demand from the energy sector. We thought our readers would be interested in this steel executive’s opinions about the future of the industry and steel prices:

“We are moving into a fascinating market. The mills have nearly every market factor working against them: high imports which show no sign of abating yet, a globally weak steel market, strengthening US dollar, strong/stable domestic production, higher and still growing inventories, iron input costs which are low and staying/moving lower (Iron Ore, DRI, Pig Iron, Scrap, etc), an abrupt collapse in demand from the Energy sector – especially OCTG – due to dramatic falling oil prices, and lastly, very weak order books. The exception is the relatively stable domestic demand picture in the US, especially vs. the rest of the world.