For all the talk of recession, steel demand in some key markets is showing signs of perking up.
ArcelorMittal forecast consumption in Brazil to double within a decade as the nation tries to fill a huge need for infrastructure, and Holdings Inc., the biggest Canadian producer, said prices have bottomed following the biggest decline since at least the Great Recession.
The comments from executives signal glimmers of hope for an industry that depends on demand for building everything from skyscrapers and automobiles to washing machines and tractors. It also offers some optimism for the broader economy that’s been battered by a downturn in China’s vast real estate sector, persistent semiconductor supply-chain issues that have slowed auto production, and an energy crisis in Europe and China that threatens to hobble manufacturing.
Manufacturing indicators have been uneven, with US business activity contracting one day, capital goods orders rising the next. Caterpillar Inc., one of the world’s largest machinery producers, warned earlier this month of slowing sales in China and across Asia, and Deere & Co. trimmed its annual outlook due to rising costs and supply chains slowdowns.
Still, within the gloom there are bright spots. Deere cited problems keeping up with orders, and Stelco said its books are again filling up across the Americas. Fellow steelmakers Cleveland-Cliffs Inc. and Steel Dynamics Inc. said that carmakers can’t get enough chips to produce enough vehicles to meet consumer needs. Construction, while currently weak, could be on the verge of getting a boost as soon as early 2023 from the US infrastructure bill, said Ken Simonson, chief economist for the Associated General Contractors of America.
Prices are likely to trade between $650 to $850 per ton by the end of the year from $792 Wednesday, according to steel executives, service centers, traders and analysts surveyed at two of the world’s largest steel conferences this week in Atlanta and Brazil.
“There was a lull in the beginning of July and of late, things have been moving pretty quickly in terms of the order book,” Stelco Chief Executive Officer Alan Kestenbaum said Tuesday in a phone interview. “Things are going to stay steady as we get to the end of the year, and I don’t see any further breakdown in price.”
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