U.S. Steel Industry

The global steel industry looks optimistic, as it seems to be edging away from recession. The year marks the first time since 2011 that all major steel-consuming countries show positive growth.

These developments suggest that the industry is headed into recovery. Several current trends in the industry point to continued improvements in 2014. These include:

* Less disruption in steel trade as Chinese exports slow, in response to the anti-dumping rulings that have come down in many countries throughout the world.  Indeed, the OECD report 2013 saw a record number of anti-dumping and countervailing trade cases filed since 1999.

* Gradually improving capacity utilization, (78.1% in 2013 vs 76.2% in 2012), as excess capacity is slowly absorbed or closed. Here, there is potential for dramatic improvement if China decides to accelerate the closing of aging plants and facilities with especially pollution-intensive operations.

* Expected further softening of raw material prices—especially iron ore—as new supply enters the market. This should provide some relief from the “squeeze” created by higher material costs and the inability to pass those costs on to customers .

These welcome developments in the steel industry indicate a brighter future.

Nevertheless, there are several fundamental issues lingering in the industry that it needs to address for a sustainable long-term growth:

* Excess Capacity is still the biggest threat to the industry. The strain lingers on the industry due to years of excess steelmaking capacity and low margins.

* Potential price volatility, in terms of sudden spikes in raw material prices or abrupt declines in steel prices in the event of regional or even global political, economic or natural disruptions.

* Public-sector austerity programs are still very much in place in many countries. The subdued government spending will continue to affect the market. In a number of countries, inefficient producers are able to continue...