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Article Excerpt
Executives from leading U.S. steel mills offered their perspectives on the market--past, present and future--during the Metals Service Center Institute's annual meeting last month in Hawaii.
"I don't know that I can recall a period quite like 2004," in which so many players in the steel industry made so much money, said Keith Busse, president and CEO of Steel Dynamics Inc.
He offered a global, historical perspective on the evolution of the steel market: In the 1950s, U.S. production was concentrated in large regional producers. The advent of electric arc furnace minimills in the 1980s, and the influx of foreign steel, heated up the competition in the last decades of the century. Domestic steel production was in the 100 million ton range in the 1950s and '60s, peaked at around 150 million tons in the '70s, "and today we're back at that same 100 to 110 million tons we were at some 40 to 50 years ago," Busse said, with about half the domestic steel produced by integrated mills and half by minimills.
After World War II, the United States became an attractive market for foreign steel, as governments around the world invested in their own countries' steel industries, often dumping their excess production in North America. "Nationalized steel companies did not work out and governments [such as Great Britain, the USSR and those in Eastern Europe] started privatizing," Busse explained, with the notable exception of China.
In the '90s, the United States became the world's dumping ground for steel, and domestic integrated producers fell on hard times. "They had not adapted to lower cost technologies, they carried extremely high employee obligations, they required strong steel prices to stay afloat, and they were increasingly vulnerable to economic downturn," Busse said.
When the manufacturing recession hit in 2000-2001, it caused a decline in domestic...
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