The US House of Representatives transportation leaders unveiled a new five-year, $494bn highway and transportation bill, the INVEST Act.
The new bill replaces the $306bn FAST Act, which expires in September 2020. The new bill, designed to improve and update aging transportation systems in the US, may also have a positive impact on steel demand.
Significant funding us earmarked over the next five years, including $319bn for highways, a 42pc increase, $105bn for transit, a 57pc increase, and $60bn for rail. The new act will likely take effect in October 2021, but new sums of money could be available 12 months earlier, when the FAST Act expires, to help agencies manage new regulations during the post-COVID-19 restorative period.
Under the new program—assuming the same activity level and other similar factors—steel consumption could increase by 2pc annually, or 2mn mt, and construction-based steel demand by about 5pc over the existing FAST Act. It includes rebar, beam, plate, sheet and fabricated materials, likely benefiting steelmakers such as Nucor, Steel Dynamics, Schnitzer, Commercial Metals, and Reliance Steel.
Construction comprises 40-45pc of steel demand in the US, with nonresidential spending totaling an annualized $801bn in April, and publicly-funded nonresidential totaling around $335bn, or about 42pc the total, according to the US Census Bureau.
FAST Act cash is estimated to make up about 18pc of all public spending, and about 8pc of all nonresidential spending, according to reports.
Steel demand and construction activity from the new legislation could manifest in about a year following the availability of funds, as was the case when the FAST Act was implemented.