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Global market shifts defy prediction: like their service center counterparts, executives from leading bar mills see a problematic market for 2003. (MSCI Bar Producers Panel).

Article Excerpt
Editor's note: Following are excerpted comments from four executives on a steel producer panel at the Metals Service Center Institute's Bar Products Division conference Feb. 22 in San Antonio. Tim Triplett, editor of Metal Center News, served as moderator.

Panelists:

* Steve Higley, executive vice president, Gerdau Ameristeel Bright Bar Inc., Orrville, Ohio

* Joseph Lapinsky, president and chief executive officer, Republic Engineered Products, Fairlawn, Ohio

* Joseph Alvarado, vice president, sales and marketing, Ispat Inland Inc., East Chicago, Ind.

* John Blomberg, senior trader, Duferco Inc., Lugano, Switzerland

HIGLEY: STOCKING SERVICE CENTERS WILL WIN THE BATTLE

"One thing I've learned along the way--it's never as good as we think it is when it's good, but it's never as bad as we think it is when it's bad. There is a lot of opportunity right now, even in this environment" said Steve Higley, executive vice president of Gerdau Ameristeel Bright Bar Inc.

Gerdau Ameristeel claims to be the third largest North American steel producer, with 11 minimills in the U.S. and Canada, producing 6.8 million tons annually, primarily cold-drawn bar, rail and wire. Gerdau South America is the largest Latin American long-products producer with 10 mills in Brazil, Uruguay, Chile and Argentina.

In 1998, the market consumed 1.8 million tons of cold-finished bar, Higley noted. Last year, that figure was less than 1.5 million tons. "That's obviously a lousy trend, which has caused a lot of changes in our business."

One has been shifts in supply. Cold-finished bar capacity has been reduced significantly at Republic, Moltrup and CSC mills and, to a lesser degree, production has been added by Gerdau, Fort Howard, Eaton, Corey and Vulcan.

In the current business environment, uncertainty and insecurity are the dominant factors holding back investment. The effect is a reduction in new projects, capital spending and inventory. "Very few companies are investing in new equipment now as they try to streamline their businesses. Boards won't make decisions until they have the earnings," he said.

What will it take to improve? A return to sustainable corporate profitability so that companies have the money to invest in plants and equipment, increased consumer confidence to fuel demand, and banks that are...

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