Steel Prices May Rise Despite Declining Demand

TAMPA - Businesses that use steel for construction and other projects will continue to face high prices during the first half of 2008, despite a continued decline in housing and automobile demand that theoretically should begin to bring prices down.

That was the general consensus among steel industry and government trade officials who spoke Friday at the 19th annual Tampa Steel Conference, which drew more than 400 participants to the Tampa Marriott Waterside.

The price for a ton of cold-rolled steel coil, which now is about $752 in North America, could rise to $900 by April or May, said Tom Stundza, executive editor of the trade journal Purchasing Magazine. However, conference participants expected the high prices would begin to abate by midsummer or soon thereafter.

Uncertainty over steel prices and demand is likely to cloud the outlook for steel import tonnage through the Port of Tampa and other U.S. seaports this year, industry officials agreed.

But U.S exports of scrap metal, bolstered by foreign demand and the decline of the dollar versus foreign currencies, should remain strong, they said.

Tampa's port reported a 22 percent increase in year-over-year steel imports in fiscal 2006 and a 27 percent decline for the 12-month period ended Sept. 30, to 338,099 tons, port reports show. That tonnage is about 46 percent of all steel imports through Florida seaports.

However, scrap metal foreign exports and domestic outbound shipments from Tampa increased 6.7 percent in fiscal 2006 and 37.4 percent in fiscal 2007 to 575,898 tons.

"The outlook is a mixed bag," said Wade Elliott, senior director, marketing division for the Port of Tampa. "There is a direct correlation with residential construction and imports," Elliott said.

Despite the housing slowdown in Florida, the Port of Tampa's location continues to be advantageous, in particular for scrap exports because the state's growing population generates considerable scrap material.

Smorgon Steel Recycling is scheduled in April to open a $24 million shredder in Tampa to meet business demand.

Expectations for steel imports at the Port of Tampa were illustrated by the official opening Thursday of Titan Metal Service's 50,000-square-foot facility, which can handle up to 60,000 tons of steel coil annually.

"This facility will reduce inefficiencies in the logistics and processing of steel coils to the manufacturing customer base in Florida and stretching to the Southeast," Titan Metal Service co-general manager Chris Bush said.

The facility includes 15-ton and 30-ton cranes and an indoor rail spur.

In addition to bulk steel shipments, Tampa's port is beginning to reap benefits from both steel imports and exports shipped in container cargo, Elliott said.