U.S. Steel Demand Expected to Rise 14% in 2011

Executives say increased natural gas production is a boon to the steel industry.

U.S. steel shipments will rise 14% in 2011 to approximately 95 million tons as the industry continues to rebound from the recession, said Nucor Chairman and CEO Daniel DiMicco during the American Iron and Steel Institute's state of the industry report May 2.

Steel executives who presented during AISI's general meeting expressed optimism for the remainder of 2011 but reiterated their concerns regarding U.S. trade and energy policies.

In March finished steel imports into the United States rose to their highest level since January 2009, said DiMicco, who also serves as AISI chairman.

"We are urging the government to remain vigilant against any surges of unfair trade that could harm recovery," DiMicco said.

Demand from the commercial and residential construction industry remains weak and is not expected to reach pre-recession levels until 2012 at the earliest, said DiMicco.

But increased demand from infrastructure construction projects has the potential create up to 3 million jobs over the next several years, said Mario Longhi, president and CEO of Gerdau Ameristeel Corp. and AISI director.

The energy sector also offers growth opportunities for the steel industry, Longhi said. Steel products are used in various energy applications, particularly tubular steel for oil and gas pipelines.

Natural gas production has increased significantly over the past five years as energy companies have improved drilling techniques used to extract gas from shale rock.

"The whole situation with natural gas is a game changer not only for the steel industry but the entire manufacturing sector," DiMicco said.

The corresponding drop in natural gas prices has been one of the few major input cost benefits for U.S. Steel Corp., said company President and CEO John Surma.

Steel makers are battling rising raw materials prices, including coke, coal and iron ore costs. Scrap costs are also high, forcing Nucor to pass the costs on to customers, DiMicco said. Nucor is the world's largest purchaser of ferrous scrap.

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