Highlights Infrastructure spending not forecast to affect market until the second half of year Higher interest rates expected to weigh on demand from construction sector The startup of new steelmaking capacity and weaker construction activity could weigh on US sheet steel prices and keep them more rangebound in 2023, compared with the last two years, according to a panel discussion at the 2023 Tampa Steel conference in Florida. Not registered? Receive daily email alerts, subscriber notes & personalize your experience. Register Now “2023 could be a return to a more boring environment,” said Timna Tanners, equity research analyst for metals and mining at Wolfe Research, during a Feb. 7 panel discussion at the 2023 Tampa Steel conference. Tanners said she expected pricing in the steel industry to become “more rangebound,” noting that she didn’t see any factors justifying significant price swings in 2023. Some factors that could temper steel sheet prices this year include growth in domestic capacity from electric arc furnaces and the impact of higher interest rates on construction activity, Tanners added. “Overall, our view is that construction spending, including infrastructure, will be somewhat flat,” she said, adding that the first half of the year could be stronger for the nonresidential sector before it weakens in the latter half of the year. “On the positive side, we think more infrastructure spending will kick in in the second [half of the year],” Tanners said. According to Tanners, indicators suggested a slight uptick in that spending in the second half of the year, which would benefit rebar products more than sheet steel. In terms of supply, Tanners said there was an “overwhelming amount of new capacity in the market” this year, which “could start to slow things in the second half of the year.” Specifically, Tanners pointed to the restart of a blast furnace at US Steel’s Mon Valley steelmaking complex, as well as expected ramp ups at Nucor’s Gallatin facility, North Star Bluescope and Steel Dynamics’ Sinton facility. Still, a lack of import competition, as well as support from the higher scrap pricing environment, were cause for optimism, according to Tanners’ forecast. William Van Meerbeke, associate director for corporate finance at Fitch Ratings, also noted some headwinds for the coming year, including softer overall demand, inflation and expectations for a potential recession. However, among positive factors, Van Meerbeke said mill consolidations would lead to “greater supply discipline” in the domestic market. “We see the infrastructure bill, the CHIPS act and the reshoring of manufacturing as providing support for construction demand,” Van Meerbeke said in his demand forecast, adding that Fitch expected automotive demand to pick up as supply-chain challenges alleviated. Similarly, Alex Hacking said long-term steel demand could be boosted by tailwinds from reshoring and infrastructure, while in the short term, steel demand was forecast to trend slightly lower this year, with the automotive sector being the only exception. Hacking is the head of Americas metals and mining research at Citi. Regarding supply, Hacking agreed that additional capacity in the market would serve to “keep a lid on prices,” adding that Citi’s forecast for hot-rolled coil was in the $650-$800/st range. Platts assessed the daily TSI US hot-rolled coil index at $820/st on an ex-works Indiana basis Feb. 7, according to data from S&P Global Commodity Insights. The assessment swung between a wide range in 2022, with a high of $1,500/st in April and a low of $620/st in November.