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Article Excerpt
[ILLUSTRATION OMITTED]
WHILE 2008 AS A WHOLE was a good year for the galvanized steel market, demand is now being described as abysmal, and industry observers are uncertain whether it will get measurably better in 2009. Some hope for a slight uptick as service centers and manufacturers replenish their depleted inventories, but most doubt there will be any true recovery before late this year.
"The market for galvanized steel is currently just about as bad as that for any other type of steel," says Keith Busse, chairman and CEO of Steel Dynamics Inc., Fort Wayne, Ind. "Destocking is the order of the day. Everyone has expensive inventory and they are trying to get it off their toe."
The underlying demand for galvanized steel--as for steel in general--has not been very strong for some time, says John Anton, manager of the steel service at Global Insight, Washington, D.C. True demand actually peaked in 2007, he says.
Galvanized steel consumption is split primarily among three markets: construction (mostly nonresidential, but also housing), automotive, and industrial equipment and other miscellaneous applications, according to Christopher Plummer, managing director of Metal Strategies Inc., West Chester, Pa. Automotive has been sour for some time, while the previously robust nonresidential construction market is weakening.
Much of the domestic galvanized steel is sold through service centers--40 to 45 percent of the market, estimates Bill Sternard, vice president of purchasing for Viking Materials Inc., Minneapolis. Many distributors--especially those heavily leveraged--are struggling with profitability due to the rapid decline in steel prices over the past few months. "Unless a company has zero inventory, they have been caught with high priced material," he says.
Not every competitor has been slashing its stock. Some service center operators report reasonable inventory levels. "We have been able to maintain our inventories at a good level as we keep close track of...
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