I understand the temptation. Every time we see a modest increase in activity in a sector we follow, we'd like to conclude that we're on the road to recovery. For U.S. steelmakers, however, I think this road leads nowhere -- for now.
As shipping industry executives assess their own challenges in a separate forum, representatives of major steelmakers have also gathered in the Big Apple for a conference. Lakshmi Mittal of ArcelorMittal
Thankfully, Texas-based metals conglomerate Commercial Metals
The company reported domestic steel production at 58% of capacity in its fiscal third quarter, up from 55% in the second quarter and comparing favorably to the 45% reported by the likes of Nucor and U.S. Steel when we last checked in. Furthermore, the company expects domestic mills to run to near 65% of capacity in this quarter. Sounds like the furnaces are heating up, right?
Not so fast, Fools. Commercial Metals CEO Murray McClean has his own green-shoots-busting remarks: "Any volume improvement in the quarter was seasonal and not reflective of any stimulus effect. Destocking appears to be in its last stages; however, end-use demand remains weak." He sees no evidence of the federal stimulus package boosting steel demand in 2009, but hopes that will change in 2010.
On a more positive note for scrap metal recyclers, for whom Commercial Metals is a major player, McClean sees prices increasing for ferrous scrap metal on improving exports and some pickup in domestic demand. For scrappers like Metalico
For the domestic steel industry, though, I see no major signs that those stone-cold furnaces are preparing to thaw.
Fool contributor Christopher Barker is the Nat King of Coal and the wild boar of iron ore. He can be found blogging actively and acting Foolishly in the Motley Fool CAPS community under the user name TMFSinchiruna. He owns no shares in any companies mentioned. The Motley Fool has a disclosure policy.