According to Bloomberg many industry leaders who gathered at the SMU Steel Summit in Atlanta earlier this week said they have high hopes in 2025. They see a turnaround fueled by an improving US economy, as large infrastructure projects get built and interest-rate cuts encourage consumer spending.
“If it’s a good economy, if people are out buying washing machines, they’re buying cars, they’re buying houses and building commercial buildings,” said Mike Barnett, president of Grand Steel Products Inc., a steel service center based in Wixom, Michigan. “That’s really good for us.”
The US steel industry has been dominated this year by Nippon Steel Corp.’s proposed takeover of United States Steel Corp., the country’s largest producer. The $14.1 billion deal, which has become a hot political issue following opposition from President Joe Biden and union workers, is driven by the Japanese company’s optimism of more growth within the US.
Yet despite the potential for more spending on major energy projects due to government incentives, higher borrowing costs have been a drag on manufacturing and economic growth. Steel demand in the first half of this year was 50.9 million tons, about 0.4% less than the same period a year ago, according to data from the American Iron and Steel Institute.
Benchmark US steel futures are down 37% since the start of the year and earlier in the summer hit the lowest levels since December 2022.
The Federal Reserve’s signaling of rate cuts as soon as September lifts the prospects of a turnaround for sectors that rely on steel. “We’re expecting growth in demand domestically here from construction, with all of the investment driven by government policy over recent years,” Kevin Dempsey, president of the American Iron and Steel Institute, said in an interview.
Among those are the Biden administration’s Infrastructure and Investment Jobs Act of 2021, which included mandates to build projects with American steel. Geoff Gilmore, chief executive officer of Columbus, Ohio-based processor Worthington Steel, said the act included $550 billion for projects using steel — equal to about 50 million tons of the material.
