In a recent gathering at the SMU Steel Summit in Atlanta, American steel executives expressed optimism, expecting a recovery in the demand for steel next year. The industry has faced lackluster demand and low prices in 2024, hindering its growth. However, industry leaders are hopeful that 2025 will bring a turnaround fueled by an improving US economy, large infrastructure projects, and interest-rate cuts that encourage consumer spending.

Mike Barnett, the president of Grand Steel Products Inc., a steel service center in Michigan, highlighted the importance of a robust economy for the steel industry. He emphasized that increased purchases of household appliances, cars, houses, and commercial buildings would significantly benefit the steel market.

The steel industry in the United States has been dominated by Nippon Steel Corp.'s proposed takeover of United States Steel Corp., which is the country's largest producer. This $14.1 billion deal has become a hot political issue due to opposition from President Joe Biden and union workers. However, the Japanese company remains optimistic about the growth potential within the US.

Despite the potential for increased spending on major energy projects due to government incentives, higher borrowing costs have acted as a drag on manufacturing and economic growth. The data from the American Iron and Steel Institute shows that steel demand in the first half of this year was 0.4% lower than the same period last year, amounting to 50.9 million tons.

Benchmark US steel futures have also witnessed a decline of 37% since the beginning of the year, hitting the lowest levels seen since December 2022 in the summer. However, the Federal Reserve's indication of rate cuts in the near future offers hope for a turnaround in sectors reliant on steel.

Kevin Dempsey, president of the American Iron and Steel Institute, believes that growth in demand will come from construction projects driven by government policies, such as the Infrastructure and Investment Jobs Act of 2021 presented by the Biden administration. The act allocates $550 billion for projects that utilize American steel, which could translate into an estimated 50 million tons of steel demand, according to Geoff Gilmore, CEO of Worthington Steel.

Despite the prevailing optimism, Alexandra Anderson, senior steel analyst at CRU, points out that the industry still faces challenges. The upcoming addition of new steel capacity in the US, including US Steel's Big River 2 plant in Arkansas, threatens to outpace the growth in demand. Moreover, ongoing trade issues, such as the abundance of Chinese steel and the influx of cheap foreign steel despite protective tariffs, continue to affect the sector.

The forthcoming US presidential election also adds a level of uncertainty. Tom Price, senior commodities analyst at Panmure Liberum, explains how investors tend to be cautious before elections. Nevertheless, regardless of the outcome, whether Vice President Kamala Harris or Republican nominee Donald Trump, a relief rally is expected.

As the year progresses, US steel industry leaders remain cautiously optimistic, counting on an improving US economy, infrastructure projects, and government support to pave the way for a revival in 2025. Despite the challenges that lie ahead, the prospect of increased demand and a more favorable business environment offers a glimmer of hope for the industry's recovery.