Infrastructure Spending Not a Panacea for Steel Demand, Says SDI Executive
10/26/2015 - Despite a school of thought that says otherwise, an increase in public spending on America's crumbling infrastructure likely won't do much to lift steel demand, according to Steel Dynamics Inc. (SDI) Vice President Christopher A. Graham.
Speaking during CRU's North American Steel 2015 conference in Chicago, Graham said that even a 10 percent increase in infrastructure spending would boost nationwide steel demand by 1.6 million to 2.4 million tons annually, based on company estimates.
"We don't think it's necessarily the savior that some folks believe," he said.
Graham said "Buy American" provisions in government contracts could boost the estimate, but even then, there's no guarantee that domestic producers would share in any increase, considering the level of imports into the U.S.
As imports remain a challenge, Graham said producers need to find ways to stop buyers from flocking to foreign steel.
"We have to figure out what we can add to the supply chain," said Graham, who is president of SDI's New Millennium Building Systems.
Imports aside, he said that construction overall remains a bright spot for steel demand.
"We're quoting an enormous amount of work. There's a lot of pent-up money out there ready to get invested," said Graham.
Graham said nonresidential construction remains especially strong, driven in part by Internet retailers who are commissioning large distribution centers built from steel.