Steel is ‘strong, lean and green’, But prof warns of higher energy prices, soaring debt

Northwest Indiana News

The crisis-induced consolidation of the steel industry in recent years has helped to make the steel industry ‘strong, lean and green,’ though it is still threatened, said professor Timothy Considine, who delivered the results of his industry research Thursday.

Consolidation and restructuring as a result of falling prices from 1997 to 2003 left the steel industry with fewer, but stronger firms, Considine said in a briefing hosted by the Congressional Steel Caucus and the American Iron and Steel Institute.

His report noted that the steel industry cut energy consumption 17 percent from 1990 to 2002. It also improved labor productivity by 5.7 percent per year on average since 1990, outstripping the manufacturing industry average of 3.9 percent.

This productivity reduced the labor hours per ton of steel from about five hours in 1990 to less than three in 2003.

But Considine, a professor of natural resource economics at Penn State University, warned that higher energy prices, soaring national debt and East Asian overproduction could throw the steel industry back into decline.

The steel industry was boosted back into recovery and record profits last year as China’s demand for steel became voracious. International steel producers have struggled to supply enough steel to meet China’s demand, but their efforts may lead to overproduction if China loses its appetite for steel, he said.

A decline in Chinese demand may lead to a repeat of the dumping of steel in the U.S. market that occurred from 1997 through 2002, he said.

‘If [international steel producers] are not selling it in China, they will look overseas to sell it,’ he said.

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