Business Topics

Steel Should Fight Through Headwinds in 2023

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MCN Editor Dan Markham Though headwinds persist, most notably in the dual-pronged elements of high interest rates and stubborn inflation, the steel industry will navigate through 2023 relatively well. 

That was the conclusion of Alex Ostoich, product marketing manager at Nucor Tubular Products at January’s Outlook event hosted by the Chicago Chapter of the Association of Women in the Metal Industries. “The economy is in a little bit of a hangover from all of the money being pumped into it – $5.8 trillion. Actions have consequences, even those of our federal government.”

While there’s no question the macroeconomic forces will work against growth in certain sectors, other offsetting economic factors should serve as a buffer to demand destruction, Ostoich noted. Among them are rising rig counts creating strong growth in the energy sector, expected strength in public spending through the Infrastructure Investment and Jobs Act and the Inflation Reduction Act. 

Ostoich said the renewables market is particularly well-positioned to grow in the coming years, a byproduct of both federal government commitment and advancements in the field. “Indiana has not been a place to spot a solar field. Now it is, because of the technology,” he observed. “The IRA will have an impact on renewables and the steel industry.

One wildcard in the outlook is automotive, which has both headwinds and tailwinds in play. The last two years have seen supply shortages that have severely curtailed production, which would ordinarily produce substantial pent-up demand from the car-buying public. However, those interest rates and inflationary conditions may keep some would-be buyers out of the market in 2023. 

Despite that, “we’re still expecting to see a good year out of automotive,” he said.

The pressures on the consumer may keep a check on other sectors, most notably residential construction. Of course, a decline in new housing builds has an effect on numerous other steel-containing markets such as appliance and HVAC. 

Businesses will also feel the pinch, if not as dramatically. 
“Rising interest rates are impacting business spending as well. The BPI is expected to be in contraction in the second quarter, which is the first time we’ve seen that in a while,” he said. 

For domestic steelmakers such as Nucor, they could be buoyed by continued roadblocks facing import penetration. While there has been some relaxing of the impediments through gradual evolution of the 232 tariffs, caveats in the new federal legislation should help protect the steel sector from overseas material making great gains. 

“Steel demand overall is supposed to be where it’s been over the last couple of years, which is not bad at all,” he concluded. “A lot of the weakened outlook has to do with interest rate hikes and inflation, but it’s still pretty positive overall. I don’t think we can expect a crash or fall, as some people might have expected.”


[Sidebar:]
AWMI In Brief


The Association of Women in the Metal Industries was founded to promote and develop the growth of women in the male-dominated world of industrial metals. Founded in California in 1981, the organization has grown to 19 chapters in five separate regions of the country. 

AWMI believes that women in similar industries can benefit themselves and their companies through relationships, education and shared knowledge. The programs and activities of AWMI are intended to enhance members’ skills and experience, address challenges confronting the industry, and promote members’ career growth with the ultimate goal of increasing the number of women employed in the metal industries. 

Membership is open to both women and men who are seeking to develop all aspects of their professional development and career advancement.

The Chicago Chapter of AWMI is one of the most active, with industry events scheduled all year long. The chapter is celebrating its 40th anniversary in 2023. 

For more information on the organization, including membership, visit www.awmi.org.