What will spur renewed demand?

Posted by Peers

February 3, 2009

Here we are in early February, seeing a few more inquiries and a trickle of orders, but when will real demand return?

Some are hoping the government stimulus package will help the steel industry. We could surely use some new bridges, updated highways and other steel intensive building projects. While we are at it, how about a high speed rail line moving people coast to coast with lots of stops in between? Okay, back to reality…. I believe this will be a help, but when? My guess it it will take 6 to 9 months for these projects to get funded and steel buying to begin. Please remember to contact your representatives in Washington to push them to fund a real stimulus package, not the bloated, pork filled $885 billion now being pondered, and potentially increased in value.

Then we have the spring season. Snow and ice melt in the northern states, road crews begin to repair what is damaged,and many states release their annual rebuilding funds. It has been a severe winter and I’m quite sure there are a lot of roads in need of repair. This will definitely be helpful this year.

Automotive pick up?

Don’t count on it this year. Too many have either lost their jobs or are in jeopardy of losing one to spring for a new car in 2009. Maybe the government bailout of the automotive sector should have been a $5,000 government rebate to taxpayers for buying a new car made in the USA to stimulate demand. This way taxpayer dollars are spent on the products, increasing demand for cars. If the demand is not great enough, then look at the alternatives.

Real Estate?

It seems that the bargain hunters are starting to buy pre-existing homes, which is good. New home sales aren’t likely to spur demand this year and neither is commercial real estate.

I think we will have to muddle through 2009, expecting steel demand to be down at least 15 to 20% from 2008.

I expect 2010 to be better than this year and real demand to return in 2011.

Let’s hope I am wrong and demand returns sooner!

Steel Thoughts