The stainless steel industry is following a similar path traveled by the carbon steel industry, and specialty steel demand actually was hit harder than carbon in the current economic environment, according to an industry analyst.

Stainless and specialty steel had higher import penetration rates than carbon steel, and stainless flat-rolled price recovery in 2002 was more modest than carbon, Paul Lowrey, managing partner of SteelBase Partners, said at AMM 's 17th Stainless and Alloys Conference here.

Lowrey said that demand for specialty steel slipped 17 percent compared with the 2000 peak, while demand for carbon steel fell 11 percent in the same comparison.

He contended that the carbon steel industry had come to the end of the road it was on. He said the Section 201 remedies gave the industry some breathing room, while Chapter 11 and 7 restructuring, consolidation, the collapse of asset prices, some steel loan assistance as well as Cleveland-based International Steel Group Inc. arising as a new entrepreneurial driver were all factors in the industry's overall restructuring.
* A demand rebound is unlikely soon.

* There could be a core bankruptcy soon.

* Labor/legacy costs are becoming an issue.

* New ownership could emerge to stir things up.

Lowrey said that while the renegotiation of labor contracts had changed the landscape of the integrated industry, he was not sure how that would come into play in the stainless market.

"Keep in mind, it took the Chapter 7 of LTV Corp to bring that all about," Lowrey told conference attendees.

Ed Blot, president of Ed Blot & Associates Inc., Canton, Ohio, said everyone was trying to address the labor/legacy issues. Blot, who discussed trade issues related to the stainless industry, said U.S. producer shipments had declined during the past three years, except for rod. He added that import penetration had not declined significantly during the same time span, except for rod products.