The incoming Trump administration's plans to spend $1 trillion on infrastructure over the next decade is projected to boost demand for steel.
Kathryn Thompson, chief executive of the Thompson Research Group, said growth should continue for several years in a report prepared for the Steel Framing Industry Association. Non-residential construction is already close to what is nearing a historic peak, but she expects forward momentum to continue.
“Bipartisan federal and state support for rebuilding infrastructure—including highways, schools and hospitals, water systems and the electric grid—appears poised to help engender new private construction projects in areas served by that new and refurbished infrastructure,” Thompson said.
Much of the demand for steel in construction over the next few years could also come from the housing market.
“The strongest sector in the current cycle, multifamily construction, is cooling and may signal a shift to more single-family construction where there is room to grow to meet current needs,” Thompson said.
The American Iron and Steel Institute estimates construction accounts for 42 percent of overall demand for steel. Mini-mills make most of the construction products, but the strength of construction demand has a wide-reaching impact throughout the overall steel industry.
An industry survey found a year-over-year increase in nonresidential surety bonding requests over the last three months, and nearly half of contractors have been seeing increased bidding activity. The AIA Architectural Billing Index, a key index of upcoming projects, has been above the crucial benchmark of 50 for 40 of the past 45 months.
“This year’s survey indicates an overall positive outlook for 2017,” Thompson said. “In addition, the infrastructure dollars related to a potential federal stimulus plan would provide upside to 2018 and 2019."
Larry Williams, executive director of the Steel Framing Industry Association, said the forecast was good news for the steel framing industry that's supported by steel mills, coil coaters, processors, roll-formers, fabricators, engineers, material distributors and framing contractors.
“The prospect of widespread multi-year economic stimulus resulting from new infrastructure projects presents a once-in-a-generation opportunity to those who manufacture, distribute and install steel framing,” Williams said.
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