UPDATE 1-Nucor CEO sees steel industry near bottom for awhile

NEW YORK, June 24 (Reuters) - The steel industry is at or close to a bottom amid the downturn in the global economy, and will be there for a while, the chief executive of U.S. steelmaker Nucor Corp (NUE.N) said Wednesday.

Speaking to reporters on the sidelines of American Metal Market's Steel Survival Strategies conference, Nucor CEO Daniel DiMicco said, "Based on what's happened up to now, we should be at or near bottom, but we're going to be there for awhile."

He explained that apparent demand, which he defined as orders coming into Nucor from its middlemen customers, had recently reached levels matching real or actual end demand by customers such as the auto industry for the steel processed by the middlemen, following a long period of inventory drawdowns.

While real demand held fairly steady since the sharp reduction in manufacturing activity in the fourth quarter, he said, Nucor's customers, as well as end users of steel, had been working off inventories and therefore cut orders for steel products from the steel giant.

However, DiMicco said orders across product segments coming into his company had recently improved, after customers had been working down their inventories for nearly three quarters.

"We've seen some improvement in orders. Improvement is pretty much across the board, but I wouldn't want to say anything more than that," the CEO said.

He said he read that increase in orders up to a level of actual demand as a likely signal that a bottom had been reached in the steel industry.

From now forward, he added, Nucor's level of operation and order levels will depend on real demand, unless there is another shock to the economic system and customers take their inventories down again.

"I think we are at a bottom or close to it, unless there is another shock to the system and people take their inventories down again. Then we won't be at bottom," he said.

Still, he thinks recovery will take at least 3 years. The loss of wealth, tight credit conditions and sagging consumer activity all point to a hockey stick-shaped recovery, in which economic activity, and therefore orders for steel, remain near botton for a long time, with a gradual ascent.

"I think you'll see some increased operating activity, see some things restarted, or, for mini-mills, greater operating rates. I'm afraid we might plateau at that point," he said.

Citing economists' forecasts from the auto and residential and non-residential construction sectors, all heavy steel users, DiMicco said, "We will not see a return to what we consider good levels of economic activity until 2012, 2013, 2014 and 2015 in those three segments of the economy."

A long, slow recovery probably means the industry will have excess capacity for awhile, leading to production cuts both in the United States and around the world.

At Nucor, he said, capacity usage had recently improved slightly, but remained at its lowest level in decades.

"We are still running at greatly reduced capacity. There's been some improvement since the first quarter, but I would not say significant improvement at this time," the executive said.

He added that Nucor was still operating at "lower levels than anything we have seen for 45 years. We are operating at higher rates, but significantly below anything that would be considered normal." (Reporting by Carole Vaporean; Additional reporting by Humeyra Pamuk; Editing by Gary Hill)