The recent decade of the 1990s was as good as it gets for the steel industry although it now seems like a long time ago. The period was marked by a phenomenal economy, strong growth in steel demand and significant capital investment in new facilities and modernizations. A major blemish, however, was the surge in imports and continued downward pressure on pricing. The first decade of the new millennium has ushered in a dramatically different picture. Everyone has heard the bad news: two dozen steel and steel related bankruptcies, tens of thousands of steel jobs lost, plant idlings and closures, continued import pressure and historical low pricing. To add insult to injury the industry is now facing a sharp decline in demand. What is in store for the next two to three years? As one major steel producer phrased it, "The crystal ball we look into is cracked." Some key variables include: · A declining U.S. and world economy prior to Sept.11 · The industry impact of the tragic events of Sept.11 in the United States · The ultimate resolution of the Section 201 investigation · The ability of the world steel industry to reduce overcapacity · The ability of the world steel industry to effectively address market-distorting subsidies These uncertainties render traditional forecasting (volume or price) unreliable at the present time. Even recent forecasts, made prior to Sept.11, are now considered obsolete. However, one thing is certain. Whereas the decade of the 1990s was one of great expansion, at least the first part of this decade will be one of restructuring, transition and survival. This article examines the key issues facing the domestic and world steel industries.
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