Economic Forecast

Conclusion
Mostly, the problems facing the integrated sector of the steel industry (the sector with the largest producers) stem from causes unrelated to federal policy. Declining demand for steel products is probably the single largest factor. No steps the industry takes to improve its position can overcome this trend. Another of the industry's problems involves costs. Partly because of its own mistakes, and partly because of economic forces beyond its control.
The integrated sector finds itself at a cost disadvantage relative to minimill producers (smaller-scale domestic steel makers) and foreign steel makers. Many analysts of the industry also point to an overhang of excess production supply capacity as inhibiting steel modernization. Firms may be hesitant to close their older facilities because of "shutdown" costs that often include expensive labor payments. In order to avoid these costs, they may sell steel at prices substantially lower below full cost when the market permits, discouraging investment in more modern facilities.
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