skip to Main Content

Steel Summit: Reshoring Is Real and Driving Steel Demand, Execs Say

The reshoring, or nearshoring, of manufacturing is real and happening now. And that trend is driving steel consumption, executives from Ternium and Reliance Steel & Aluminum said at SMU’s Steel Summit this week in Atlanta. Speaking in two separate fireside chats, Ternium Mexico’s president and CEO Cesar Jimenez and Reliance’s president and CEO Karla Lewis both said their companies are seeing real demand stemming from companies moving production back to North America. “We are seeing real activity on nearshoring/reshoring,” Lewis stated in her fireside chat with SMU managing editor Michael Cowden on the morning of Tuesday, Aug. 22. “It’s not easy for companies to change their supply chains. … Those aren’t quick decisions,” the service center exec noted when asked if the trend could be reversed in the future. With good labor and resources in North America, there is “a lot of opportunity for us to recapture a lot of manufacturing activity and hold that here,” she commented. Jimenez said in his fireside chat with Cowden later that morning that nearshoring “is really happening,” with the entire North American region seeing a lot of new investments. It’s an important trend that he believes will continue. Nearshoring was the first thing the steel mill executive mentioned when asked what will drive steel demand moving forward. Both he and Lewis said companies have learned the hard way from history that it’s very risky to have a supply chain that’s too far away. Noting the current problem of a drought causing issues for vessels trying to move through the Panama Canal, Jimenez commented: “Everything is telling us you have to be closer.” In another fireside chat on Monday, Zekelman Industries’ executive chairman and CEO Barry Zekelman commented that “black swan events are real” and have proven that companies need a diversified and local supply chain. As mortgage rates continue to rise and housing demand slows, builder confidence is waning. A drop in July housing starts was the first in seven months. Total privately owned housing starts were at a seasonally adjusted annual rate (SAAR) of 1,452,000 units in July, according to the latest estimates from the US Census Bureau. Compared to June’s revised estimate of 1,398,000 units, July starts saw a 3.9% increase. Year-over-year, July’s figure rose 5.9%. Single-family housing starts in July increased 6.7% to 983,000 units from June’s revised figure of 921,000 units. Overall, housing starts have been relatively flat for the past year. Builder confidence for new builds dropped six points from July to 50 this month, according to the latest Housing Market Index (HMI) release from the National Association of Home Builders (NAHB) and Wells Fargo. NAHB attributes the slowdown to rising mortgage rates and high construction costs. “While this latest confidence reading is a reminder that housing affordability is an ongoing challenge, demand for new construction continues to be supported by a lack of resale inventory, as many home owners elect to stay put because they are locked in at a low mortgage rate,” said Alicia Huey, NAHB chairman. NAHB chief economist Robert Dietz said that the decline in buyers is a reminder of 7.7% inflation. “The best way to bring housing inflation down and ease the housing affordability crisis is to enact policies at all levels of government that will allow builders to construct more homes to address a nationwide shortfall of approximately 1.5 million housing units,” said Dietz. A survey led by HMI showed that about 55% of builders are using sales incentives to draw customers in. According to regional HMI scores, the Northeast saw an uptick by four points to 56. Unmoved, the Midwest and South remained unmoved at 45 and 58, respectively. The West fell by one point to 50.

Click here to view original web page at Steel Summit: Reshoring Is Real and Driving Steel Demand, Execs Say

Daisie Hobson

Daisie Hobson is a Director at the Reshoring Institute and an engineer with many years of experience in manufacturing and project management.

Leave a Reply

Back To Top