Majestic’s Leebow Sees Fundamental Changes in Steel

“In my opinion, I think we are near the bottom,” he commented during SMU’s webinar. There have been major changes in the industry landscape over the past 10-20 years, he noted, pointing to new players in the market, new leadership, mill consolidation and the transition from integrated to electric arc furnace steelmaking. “To say the market has not fundamentally changed would be naïve.”

Cleveland-based Majestic is a privately held distributor and processor of flat-rolled steel serving customers in manufacturing, construction and distribution from its network of locations across North America. Majestic’s latest growth initiative is a major new processing facility under construction on the campus of Nucor Steel Arkansas.

Demand is healthy and should get even better once the current “buyer’s strike” is over and customers who have been waiting on the sidelines for a lower price finally get back into the market, Leebow said.

“This is not the 2008-09 cycle. At least for now, demand is very strong. Customers are projecting the second and third quarters significantly stronger than what we have seen in the first. We are optimistic about demand. We just need to work through the short-term buyer’s strike and inventory correction.”

Steel pricing is not a one size fits all number. It varies widely by product, by geography and by mill. “Cold roll today is higher than coated, which does not make sense from a cost perspective. What does that mean? If means we are no longer in a cost-plus environment, we are in a market-driven environment,” he added.

Leebow is less concerned than many about the new mill capacity that will come online over the next few years. He sees it more as an opportunity than an oversupply. New galvanizing lines mean new business for Majestic. “From our perspective, the new coated capacity means more consumption of coated products. We believe there is more demand out there for coated product that is not being captured today. We are a supporter of the new capacity long term; however, we have to manage through it short term.”

Editor’s note: Missed the Community Chat with Todd Leebow? No problem. Click here for a recording of this and past SMU webinars. Our next, tentatively scheduled guest will be Johnny Sjöström, head of special steels for SSAB, beginning at 11 a.m. on Wednesday, March 2.

By Tim Triplett, Tim@SteelMarketUpdate.com