Mildly optimistic describes attitudes of attendees of stainless event in Nashville.A banner year is not in the cards for the stainless steel market in North America, but growth should be the expectation.
That was the conclusion of SMR’s Markus Moll, one of the leading stainless steel analysts around the world. He was giving his assessment at this past fall’s North American Stainless & Special Alloys Conference in Nashville. The event was put on by SMR and World Steel Dynamics.
“We are not, in the short term, too optimistic we’ll have a boom year, but the growth rate per year of about 1.7 percent from 2023 through 2025,” Moll projected.
Moll is more bullish about the prospects in North America than other parts of the globe, with both China and Europe experiencing different, but meaningful, issues. But the U.S. is poised for greater long-term growth, led by expansion in construction, infrastructure and oil and gas.
“We’re breaking out of the stagnation we’ve had,” Moll said.
Conference attendees seemed to share Moll’s guarded optimism. Asked before his presentation about their expectations for this year, almost two-thirds of the attendees predicted conditions would be slightly better in 2025. Another low double-digits projected significant growth, while less than 5 percent predicted conditions would decline.
The attendees believed three end markets would be the prime drivers of that growth, with the energy space cited by more than seven in 10 attendees. Building and construction and the chemical process industry were expected to be growth markets by more than a quarter of attendees.
Fewer than 15 percent of the attendees expected automotive, food and catering and home appliances to be sources of greater sales this year.
For North American stainless production executives, one advantage for their industry is the positive developments in the manufacturing space, specifically, the location of new plants in the Western Hemisphere.
“The biggest one I can point to is our semiconductor business, a lot of that through the CHIPS act to move things back onshore. That market was a little softer than we expected , but we’re confident for [2025]. There has been a lot of investment in plants. There is a lot of capacity being put back in the U.S.,” said Christopher Zimmer, president and CEO of Universal Stainless & Alloy Products, Bridgeville, Pa.
Outokumpu’s Carmen Pino had a slightly different take. “There’s reshoring and nearshoring. There has certainly been nearshoring in Mexico. There are new investments in Mexico and there are things that indicate that is happening,” said Pino, whose Finnish parent company operates a facility in Calvert, Ala. “The preponderance of reshoring we were expecting – industrial production is flat or negative for the last two years – that doesn’t indicate reshoring. That indicates less production.”
And that suggests a more worrisome trend. “There is, give or take, 200,000 tons of stainless steel used in North America every year. It’s not growing the way it should,” he said.
The stainless production market was upended in October with the announcement that Luxembourg’s Aperam was acquiring USAP. It was the second major consolidation effort of the year, following Acerinox’s purchase of Haynes.
Though the deal has not yet been finalized, Zimmer is confident it won’t suffer the same fate as the bedeviled U.S. Steel-Nippon transaction.
“I look at Acerinox and Haynes. That’s a lot better parallel. They didn’t find any issues with that. As we talked with our lawyers, they don’t anticipate any issues as well,” Zimmer said.
He said the benefits of the transaction include USAP’s long products division adding a new business for Aperam, while the European company will give Universal more financial clout. “What they bring is the ability to finance and accelerate our growth strategy.”
While the producers are excited about the prospect of manufacturing returning to the U.S. from overseas, they’re less enthused about foreign material crossing our borders. And the panelists assembled at the SMR event were worried about to what degree imports are affecting the domestic market.
“Imports are at 30 percent-plus of the market, which is more market share than we have,” Pino said. “We need legislation like Leveling the Playing Field, we need support from the government and we need the enforcement we recently got from Mexico.
With the return of President Donald Trump to the White House, the expectation is there will be increased use of tariffs to protect (or “make a fair market for,” as Cristobal Fuentes of North American Stainless described it) various U.S. metals industries.
“What we do know about President Trump we saw back in first term. He proactively addressed some inequities on unfairly traded product. That’s good for our industry today,” said Ryerson’s Mike Burbach. “Tariffs long term aren’t great for anyone. But with excess capacity in the world right now, there are some needs for our customers to make sure the playing field is level. We want to have healthy manufacturing in the U.S. That’s been loudly communicated by the president.”
And that means thinking beyond just the product from the mills. “There have been tariffs. It seems there have been workarounds. It’s not coming in as coil but showing up as a washing machine. It’s larger than just the people in the room. The thought process has to be more expansive than it’s been in the past,” Burbach said.
The audience shared many of the concerns of the on-stage panelists. Asked what the biggest risks to competitiveness of the North American supply chain will be in 2025, approximately six in 10 indicated overcapacity in China and Indonesia. About half the audience said competition from countries with lower production costs was the biggest threat.
Lack of skilled labor, the new administration and green policies were all cited by less than15 percent of the attendees.
And in a sign that not all members of the supply chain are onboard with a steady diet of tariffs – not surprising for an audience with participants from throughout the supply chain – almost 30 percent of attendees said the biggest threat to a healthy supply chain would be protectionist policies.
[Sidebar:]
Service Centers Gobble Up Independent Processors
“And then there were none.”
Seth Young, president of Amerinox Processing, was tasked with updating the SMR Stainless Conference on the state of the union for specialty metals processing. And he highlighted a rather meaningful development that has taken place over the last several years, culminating in events just before the conference was held.
The days of independent stainless processors, as Amerinox was before being acquired last fall by Kloeckner, are essentially over. That happened when the last of the major players, Maryland Metals, was purchased by Mill Steel in October.
The dominoes have been slow toppling, as several service center giants picked up assets over the course of several years. Precision Strip was acquired by Reliance, Specialty Metals Processing and TSA Processing were brought into the Ryerson fold and Samuel Son & Co., picked up Main Steel.
The major North American distributors of specialty metals obviously wanted to ensure available processing capability, particularly as that market dwindled. And the owners of those independents looked to benefit on all that comes with a larger operation behind them.
“Being a part of a much larger organization like Klockner brings financial strength to continually invest in value-added services and equipment which differentiates us from our competition. The strength of the global organization and management tools improves our business through the integration of systems, technology and many other benefits we didn’t possess, knowing the long-term future of Amerinox is secure,” Young said of the benefits to his company.
And for the acquiring companies, landing established businesses with strong reputations is far less risky than what it would take with a greenfield project. “The cost to acquire the equipment, the land and building to set up a processing center is prohibitive when you compare it to buying an established company,” he said.[Caption:]
North America is poised for specialty metals growth in 2025. (Photo courtesy Sierra Alloys)