Summit Speakers Debate Steelmaggedon

Will it be “Steelmaggedon” or simply new capacity replacing old? Bank of America analyst Timna Tanners, who trademarked the term, still believes an abundance of new capacity will come online in the next few years, despite the COVID pandemic, oversupplying the market and dooming steel prices. Many of the other executives who spoke during SMU’s Virtual Steel Summit last month offered more tempered views.

“One of the biggest pushbacks to our Steelmaggedon steel glut thesis is that older, less efficient blast furnace capacity will permanently shut to make way for new electric arc furnace (EAF) capacity to take its place. This ‘convenient solution’ would yield a better price outlook, flattening the U.S. cost curve and eliminating distressed players,” said Tanners in a recent report. “Unfortunately, we’re not a believer in a happily-ever-after outcome,” she added. “Furnaces can keep running for years at a loss.”