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Recyclers News Press
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The automobile industry is the second-biggest steel consumer. It accounts for one-quarter of steel consump-
tion in the U.S. AK Steel gets almost 50% of its revenues from automotive companies. ArcelorMittal is anoth-
er leading supplier to this sector.
The energy sector is the third-biggest steel consumer in the US. Energy com-
panies require steel for drilling and transporting oil. These products are also
known as “tubular goods.” US Steel is the biggest supplier of tubular goods in
North America. This segment has been under pressure due to the drop in
crude oil prices.
Consumer confidence is a key indicator for U.S. steel markets.
Real es-
tate and the automotive industry are two of the biggest steel consumers in the
U.S. Both of these industries deal with high-value products. Most real estate
and vehicle sales are driven by financing from banks. A higher consumer con-
fidence index thus bodes well for automobile and real estate companies.
Vehicle sales in January were 16.59 million units on a seasonally adjusted ba-
sis, an increase of nearly 10% over January 2014. Low interest rates, the
launch of new vehicle models, and rising consumer confidence are some of
the primary reasons for the uptrend in vehicle sales. Rising vehicle sales are
positive for the steel industry. AK Steel earns more than half of its revenue
from automobile companies. ArcelorMittal is also a major supplier to this sec-
tor. US Steel has announced a new management structure for its operations. It
will now have an automobile industry expert heading its automobile division.
Allegheny Technologies also supplies steel products to the automobile indus-
try. Gasoline prices have dipped sharply with the fall in crude oil prices. This is
positive for the automobile industry. However, steel demand from the energy
sector might take a hit due to lower crude oil prices.
Two of the three major demand-side indicators show promise toward increas-
ing demand for steel in the near future. Unfortunately, steel production data
tells another story. The American Iron and Steel Association (or AISI) releases
weekly steel production figures. It also releases the
capacity utilization rate
in
the steel industry.
Only about three-fourths of total steel demand in the U.S. meets with produc-
tion from domestic companies. The remaining demand comes from imports
from countries like China and Korea. The biggest challenge that steel compa-
nies faced last year was cheap imports. 2014 could have been a phenomenal
year for the U.S. steel industry if steel imports hadn’t spoiled the party
.1
Steel
imports increased by a whopping 37% compared to 2013.
Continued on page 8...
DEFINITIONS
Macroeconomics i
s econom-
ics dealing with the perfor-
mance, structure, behavior, and
decision-making of an economy
as a whole, rather than individu-
al markets. This includes nation-
al, regional, and global econo-
mies.
Wikipedia
Flat products
include slabs,
hot-rolled coil, cold-rolled coil,
coated steel products, tinplate
and heavy plate. They are used
in automotive, heavy machinery,
pipes and tubes, construction,
packaging and appliances.
Long products
include billets,
blooms, rebar, wire rod, sec-
tions, rails, sheet piles and
drawn wire. The main markets
for these products are construc-
tion, mechanical engineering,
energy and automotive.
A
billet
is a length of metal that
has a round or square cross-
section, with an area less than
36 in
2
. Billets are created direct-
ly via continuous casting or ex-
trusion or indirectly via hot roll-
ing an ingot or bloom.
Reinforcing bar or
Rebar
is
formed from a steel billet, nor-
mally having surface defor-
mations for use in reinforcing
concrete. The bar can be pro-
duced in straight lengths as well
as coiled. Rebar is used in the
construction industry to reinforce
concrete.
Metal Market Recovery Next Quarter?