SMU CEO Reflects on SDI's Mark Millett Comments on Steel Supply

Mark Millett, CEO of Steel Dynamics, had some interesting comments in this morning’s earnings conference call with analysts. Based on his comments, the domestic steel industry is capable of producing 90-95 million tons of steel annually. The demand for steel is closer to 120 million tons; in extremely strong markets in the past it has gone as high as 140 million tons. So, the U.S. is in a net deficit of 25-30 million tons in decent markets and as much as 45 million tons in booming markets. In the past, foreign steel has made up the difference, which helped keep inventory levels high and prices muted.

Through May, the U.S. has imported 11.46 million net tons (10.4 million metric tons), and we are well on our way to exceeding 20 million tons for the calendar year. However, we need to remember one-third of those tons are semifinished steels (mostly slabs), which go to the conversion steel mills (California Steel, NLMK USA, ArcelorMittal Nippon Steel, JSW Texas, etc.).