SMU Data and Models

SMU Market Trends: Mixed Reaction to Infrastructure Bill

August 19, 2021

Roughly half of the steel executives responding to Steel Market Update’s market trends questionnaire this week believe the infrastructure legislation now working its way through Congress will have a significant impact on steel demand in the next year or two. The other half are unsure if the two parties in Washington can reach agreement even on such a feel-good issue as fixing the nation’s crumbling roads and bridges.

The Senate passed a $1-trillion infrastructure bill last week that included $550 billion in new federal spending. Of that amount, $110 billion is for highways, $25 billion for airports and $65 billion for high-speed internet access. The House is now considering a similar measure.

Most survey respondents agree the biggest impact will not be felt among producers and distributors of sheet products. Long products, such as rebar, as well as plate and beams, are expected to see the greatest benefit. Any real boost to the steel market is probably a few years away, they said, after projects are planned and bid – assuming the House and Senate can even agree on new funding.

Here’s What Some of Them Had to Say:

“Without a doubt, it’ll be a nice boon. Obviously, for some sectors more than others. But anyone tied into construction equipment or rental companies will have a very fun run.”

“It certainly won’t hurt the market.”

“This will be more help to structural products than flat rolled.”

“Most impact will be seen for long products, which have been running at well under mill capacity levels.”

“Planning for this will take years, and governments – state and federal – don’t move fast. Engineers alone will take many months to plan and get approved way before implementation.”

“It will only kick-in in earnest in three years’ time. If infrastructure focuses heavily on renewables, such as solar, that could be a positive for flat rolled.”

“Most of the new demand will be for plate or shapes, and there is plenty of capacity to handle that. Flat-rolled will be minimal. And there will be no impact until 2023 when most of it is needed.”

“There’s quite a bit of apprehension among long products mills regarding potential infrastructure-related demand, but it doesn’t seem to be impacting flat products mills at this time.”

“Obviously steel shortages will continue if this package passes.”

“The reported 3% increase in steel demand from the infrastructure package does not seem significant to me.”

“Actually, I don’t think it will pass the House.”

“Not sure if it will ever get through Congress. We’ll cross that bridge (no pun intended) when we get to it.”

By Tim Triplett, Tim@SteelMarketUpdate.com