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“We do anticipate that there is a lot of pent-up demand and growth opportunities,” Lauren Wilk, vice president of government relations and international programs at the Aluminum Association, said during a virtual panel hosted by the Association of Women in the Metal Industries (AWMI) on Wednesday March 10.
“We are cautiously optimistic about 2021,” she said. “We are excited to see projections for overall economic growth and stimulus measures in Washington.”
Aluminium Demand for aluminium – which “could not have looked worse” in mid-2020 – has bounced back thanks to some bright spots that have begun to emerge, Wilk said.
She highlighted four positive sectors for aluminium:
Wilk also cited positive trends in the recently released shipment data for rolled products and extrusions, the significant canning capacity coming online this year and the next and the expectation for positive outcomes in the two pending anti-dumping and countervailing duty cases that should support domestic consumption for common aluminium sheet.
She warned, however, that there are still many questions about impacts of the Covid-19 government relief bill and vaccination rollout, as well as new government policies under the Biden administration that could affect trade policies, infrastructure investment and fuel economy regulations.
When asked what the Biden administration might do to the Section 232 tariffs on steel and aluminium imports into the United States, Wilk said: “I would guess that long-term we will see a fairly significant modification of the program. There has been frustration with the exclusion program in particular… we’ve focused on that not working well for our industry. It’s creating a magnet for imports on the way the exclusion program has been executed.”
Steel “Expectations for steel demand drivers in 2021 and 2022 are mixed… but on balance they’re pointing in the right direction,” Timothy Gill, chief economist at the American Iron and Steel Institute (AISI), said during the AWMI panel.
Steel demand as measured by apparent steel usage plunged last spring – ultimately falling 17.70% year over year in 2020 – but has seen substantial improvement thanks to the automotive sector and other durable goods manufacturing “coming back to life,” according to Gill.
However, non-residential construction – which accounts for upwards of 40% of total steel used in the United States – “is going to be a struggle,” Gill said.
“It struggled last year and probably is going to again this year,” he said. “We’re expecting some continued decline through the first half of the year before stabilizing and turning upwards in the second half.”
Although the industry remains concerned about global steel overcapacity, “one silver lining is the domestic market share increased due to the ongoing impact of the tariffs and quotas enacted in 2018,” Gill said, referring to the Section 232 tariffs.
The estimated finished steel import market share was 16% year-to-date in February, according to the latest data from AISI released on March 5. Last year, finished steel import market share stood at 18%, Gill said.
The most immediate concern for the steel industry this year is if the pandemic worsens and leads to a global economic downturn, according to Gill.
“Previous [economic downturn] episodes have been followed by steel import crises in the United States as foreign countries export to the US,” he said. “It is critical that the tariffs system remain in place to prevent history from repeating itself.”
Scrap For recyclers, capital investments and other efficiency gains have lowered certain risks, but supply constraints, labor shortages, transportation and logistics hurdles, regulatory costs and trade restrictions are still of paramount concern, according to Joe Pickard, chief economist and director of commodities at The Institute of Scrap Recycling Industries.
“One of the challenges we continue to face is on supply chain issues,” he said during the panel. “The shortage of semi-conductors is continuing to impact production of autos in the country… it is expected to remain for the short-term at least.”
He also cited backlogged shipping containers at ports domestically and globally, and the shortage of truck drivers as other major transportation issues.
Still, “we do expect to see increased demand here domestically this year, but also growth for a number of key developing markets overseas,” he continued, noting that domestic demand typically accounts for roughly 70% of scrap consumption and overseas demand 30%.
“Overseas demand is going to be improving this year in part based on non-metallic commodities as restrictions in China and other markets, particularly paper and plastics, come into effect,” he said.
US scrap imports – the vast majority of which was ferrous scrap followed by aluminium scrap – increased by about 5% last year, explaining “some of the discrepancy between ferrous scrap versus finished steel pricing,” Pickard said.
Fastmarkets’ steel scrap No1 busheling index, delivered Midwest mill was calculated at $551.32 per gross ton ($492.22 per short ton) on March 10, up 11.99% from 492.29 per gross ton in February.
Fastmarkets’ daily steel hot-rolled coil index, fob mill US was calculated at $63.51 per hundredweight ($1,270.20 per short ton) on Wednesday, up 7.55% from $59.05 per cwt a month ago.
Learn how to monitor packaging prices using cost and price indices and understand the underlying cost drivers, from material cost to labor, energy and more. Examples include cartonboard, liquid container and paper bag.