Structural steel demand is dismal
"It's a lousy marketplace," says Busse of Steel Dynamics
Tom Stundza -- Purchasing, 10/21/2009 12:58:04 PM
The outlook for structural steel mill products "is not all
that good in the fourth quarter and perhaps in quarter one of 2010," says Keith
Busse, CEO of mini-mill company Steel Dynamics in Fort Wayne, Ind. "Structural
remains a pretty lousy market place," he tells analysts in a conference call
this week.
In the face of that weakening structural market, he and other Steel Dynamic executives say that pricing has softened significantly. Producers are quoting beams at $700/ton and distributors want $800 after processing but the market price is closer to $630, buyers report. Busse believes some competitors may be selling below costs "in an effort to generate sales in regions where competition is particularly fierce."
Demand for wide-flange beams may not have reached bottom yet, Busse says. He believes that a pickup in beam sales momentum won't occur until next spring, when construction is expected to start its recovery. "We could see increased operating activity in that arena beginning sometime next year," he says, "but right now, it's fairly dismal out there in terms of nonresidential construction activity."
A "very tough market" has caused the company's structural steel sales to slide 11% in the latest quarter, says Gary Heasley, executive vice president for strategic planning and business development. The company's joist and deck business, New Millennium Building Systems, is experiencing the same difficulties as structural products, also because of very weak residential and commercial construction activity.
"Industry conditions have become more difficult as nonresidential construction continues to weaken," Heasley says, as shipments of joist and deck products "remain off significantly from earlier years." "Obviously, the nonresidential construction weakness is going to remain into 2010, the fourth quarter as well and into 2010," says Heasley. "We are seeing projects being quoted several times. What used to be quoted once or twice is now being quoted five or six times as projects are being delayed and (contractors) seek to reduce project costs."
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Isn't a "lousy" market for suppliers a good market for buyers?
BuyGuy - 10/22/2009 12:12:37 PM EDT
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