But Mazzaferro doesn't see a quick recovery for the industry. One-third of the world's steel production is in countries that have seen their currencies devalued by as much as 50 percent and that have much lower labor costs. The U.S. and Canada cannot compete on price under those conditions, he says. Nucor is more optimistic. The turnaround could be very sudden, especially with the market fears about the impact of strikes at some of the integrated mills.
Labor contracts end for many integrated mills in mid-summer.
The union could strike at one or more companies, which would remove excess supply and provide the market with additional balance, analysts and industry observers say. Detroit-based metals distributor Thyssen Inc. Imports this year could decline by a fourth, or about 10 million tons, from 1998. Of that, more of the remaining tonnage will shift to semifinished steel, such as slabs. In the longer-range recovery that Mazzaferro forecasts, Asian economies could require another three to five years to bounce back. If import levels remain around the 40 million tons expected to enter the U.S. in 1998, then domestic production would have to decrease by about 15 million tons to keep demand and supply in balance.