The Russian company Severstal has promised to invest half a billion dollars in the Sparrows Point steel plant outside Baltimore. - THE WASHINGTON POST

U.S. steel industry forges a comeback

The U.S. steel industry is enjoying a new era of prosperity less than a decade after crippling production costs and lower-priced imports helped trigger a huge wave of bankruptcies that some thought would leave it permanently tarnished.

Buoyed by sharply reduced employee costs, soaring global demand, dramatic consolidation that has tamped down cutthroat competition and a weakened dollar that has made imports less attractive, steel prices have tripled in the past five years. For the first time in decades, companies operating in the United States have added capacity and workers.

German steelmaker ThyssenKrupp is building a $4 billion plant in Alabama that is expected to open in 2010 and employ 2,700 workers. Nucor has applied for permits to build a $2 billion plant in Louisiana that would manufacture iron to supply its processing plants. The Russian giant Severstal recently purchased the Sparrows Point steel plant outside Baltimore, promising to invest a half-billion dollars to update it and then run it at capacity. Severstal is also bidding against Essar Steel, an Indian firm, for control of Esmark, which runs a mill in West Virginia. In addition, the company is expanding its Severcorr plant in Mississippi, which is among about a half-dozen mills expanding across the country.

"There hasn't been this much building in 25 to 30 years," said Michael D. Locker, president of Locker Associates, a steel consulting firm. "We are in a new period here. I don't see us going back to the old period of high imports and low prices."

Steel companies also have become hot investments. As a group they have outperformed the overall stock market by wide margins in recent years. The American Stock Exchange's Steel Index increased an average of 49 percent a year from 2003 to 2007, while the Standard and Poor's 500-stock index had an average annual increase of just over 13 percent during that period.

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