Last week I spoke at the AMM Steel Tube & Pipe conference in Houston. My presentation was titled “Return of the Evil Banana” and provides a forecast of 2009-2013 steel demand in the US. The forecast is based on a proprietary First River model which relates steel demand in the US to NA automotive production levels and non-residential construction activity. Given the bearish nature of these forecasts over the next 5 years, the implications for steel demand in the US are dire.
As for the title, it refers to the fact that during the recession of 1980, Jimmy Carter did not like his economic advisers using the term recession, so they substituted the word “banana”.
{ 3 comments… read them below or add one }
Excellent presentation, though I wish there were some rough notes to go with it. From the slide showing service center destocking can’t go on forever…some analyis shows inventory levels remain 20%+ too high.
Your group does a great job!
Thanks Insider. I think some analysts expect service centers to continue shipping at current (very depressed) levels. If so, inventory levels are certainly too high. But this seems unlikely to me. I assume service center shipments will average 15-20% less during 2009-2013 than they did during 2004-2008 – in line with my total steel demand forecast. In this case, inventory levels need to come up by 50% to get back to the historic average level of turns. Hence my comment on de-stocking.
Hope this helps.
Tony
find your targets for less steel made/used to be light.our own group sees a number closer to 25-30%.no real recovery in sight.i,ve seen this movie before. jeff mindlin
the mindlin fund
412-427-1055