DiMicco Says No Building Rebound Before Mid-Decade
(Corrects name of Institute in second paragraph.)
U.S. demand for steel in construction won’t recover to the level seen before the country slipped into recession until about the middle of the decade, Nucor Corp. (NUE) Chief Executive Officer Dan DiMicco said.
“There will be no major turnaround by the end of this year in non-residential or residential construction,” DiMicco said today in a conference call organized by the American Iron and Steel Institute, of which he is chairman. “It doesn’t appear likely it will get back anywhere near the previous peaks until somewhere around mid-decade.”
U.S. residential real-estate prices slid in the 12 months through February by the most in more than a year, a report last week showed. The S&P/Case-Shiller index of property values in 20 cities fell 3.3 percent from February 2010, the biggest year- over-year decline since November 2009. Commercial property prices fell about 45 percent from their 2007 peak through the end of February, according to Moody’s Investors Service.
Still, production of steel in the U.S. will increase 14 percent to 95 million tons this year, DiMicco also said. That would match the gain seen last year, according to AISI data.
U.S. steelmakers used 75 percent of their production capacity as of April 25, according to AISI data, up from 68 percent in the last week of 2010. Capacity utilization averaged 70 percent last year, 51 percent in 2009 and 81 percent in 2008.
Rising prices for steelmaking inputs iron ore and metallurgical coal have overshadowed cost-cutting measures undertaken during the recession, John Surma, CEO of Pittsburgh- based U.S. Steel Corp., said on the call.
“Total cost for everybody who makes steel the way we do is much, much higher,” he said. “The achievements we made during that very, very difficult time during the recession may not be all that evident and visible, but they’re there.”
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