For Steel Industry in 2013: It's 'The Economy, Stupid'

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As we’ve glanced at historical steel price trends, we’ve seen that the steel market at the end of 2012 generally ended up in pretty much the same spot as at the beginning of the year.

The steel industry has gone through the motions in 2012, swaying to the breezes of lukewarm economic growth and rather anemic demand in a number of sectors, including construction.

MetalMiner’s Raw Steels MMI® for this December notched an increase, the first time our raw steel price index recorded a rise since the March-April reading. Will this continue as try to forecast steel price movements?

current steel prices - MetalMiner IndXIn this three-part series of posts, we look to the commentary of a few industry insiders for some answers as to where steel prices are going in 2013.

Where Will the Economy Go In 2013?

The meat of many recent economic outlooks hints is the possibility of recession in the US economy moving into 2014. US GDP revisions for the third quarter aren’t helping much, and unemployment is still a big drag.

My colleague and MetalMiner’s managing editor, Lisa Reisman, recently outlined the near-term economic outlook of the Beaulieu Brothers, calling for inflation and tax increases to stir things up in 2013. The Institute for Supply Management (ISM) sees an improving US manufacturing economy next year, according to a recent report, calling for a 4.6 percent increase in revenues and steady if not greater production capacity and capacity utilization.

And of course, there’s the fiscal cliff. Although David Phelps, president of the American Institute for International Steel (AIIS), speaking at a recent steel conference in Chicago, doesn’t expect a recession to hit, he maintained that the fiscal cliff is an important factor in 2013 predictions, and that pro-growth policies — which the current administration is not fostering — need to be put in place.

“The most important problem our economy faces is uncertainty…it’s poison,” Phelps said. Although we now know the makeup of our government for the next two years, he said, in some industries like the steel sector, two years is not enough time to create certainty.

“Decision-makers should put on some big-boy pants and big-girl pants and make a decision,” he said. “The taxpayers deserve certainty.”

today's metal prices - MetalMiner IndXWe’ll come back to uncertainty as it relates to the steel price forecast in a follow-up post. But first, we’ll take a look at steel scrap prices.

Continued in Part Two.

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