The $1 trillion infrastructure bill passed by the US Senate yesterday could be a boon to steel demand as supply remains tight.
Most US steel buyers surveyed agreed that the bipartisan Infrastructure Investment and Jobs Act, if passed by the US House of Representatives, would likely increase demand for steel, particularly plate products used in infrastructure like bridges and rebar used for roads.
The bill comes as US steel supply for the past year has been unable to keep up with demand for flat-rolled products like hot-rolled coil (HRC) and its derivatives as well as for plate, used for heavier applications like bridges, oil and gas industry projects and shipbuilding.
The Argus US hot-rolled coil (HRC) Midwest ex-works assessment has increased by 90pc since the beginning of the year to $1,900/short ton (st) yesterday, while delivered plate pricing has increased by 83pc to $1,660/st.
If enacted, the infrastructure bill would likely boost demand for plate and long products like rebar, keeping market supply tight. But it would likely be well into 2022 or beyond until projects begin consuming steel, depending on whether they are "shovel ready" or are new projects that require environmental reviews and approvals, buyerssaid.
The bill allocates $343bn to highway programs, $48.4bn to drinking water and wastewater infrastructure, and $17bn to the Army Corps of Engineers, which manages flood mitigation projects and waterways.
The American Iron and Steel Institute (AISI) applauded the passage of the bill in the Senate and said it will work with the House to get the bill to the desk of President Joe Biden.
The AISI has estimated that every $1bn of infrastructure spending requires 50,000st of steel, so the highways portion of the bill alone would account for an additional 17mn st of steel demand. Apparent US steel demand in 2018 was 112.2mn st, AISI estimates.
Electric arc furnace (EAF) steelmaker Nucor is building a 1mn st/yr plate mill in Brandenburg, Kentucky, that is expected to start up in late-2022. Nucor also runs plate mills in North Carolina, Texas, and Alabama.
Other US-based platemakers include integrated steelmaker Cleveland-Cliffs, and EAF steelmakers Evraz, JSW and SSAB.
A major hurdle for the bill now is passage in the House, where speaker Nancy Pelosi (D-California) has said the bipartisan package will get a vote only after a separate $3.5 trillion "budget reconciliation" package is passed by the Senate. The larger package — which could fund a clean electricity standard, methane emission penalties, clean energy tax credits and sweeping tax code changes — is expected to be a partisan fight, with Democrats attempting to hold together their slim Senate majority to win passage.
