WCA March 2014

From the Americas

remain stable. He wrote: “In this scenario, payback for the ArcelorMittal-Nippon Steel consortium could take less than two years.” Elsewhere in steel . . . ❖ AK Steel Corp (West Chester, Ohio) on 3 rd December said that the US International Trade Commission had made a unanimous preliminary determination that non-oriented electrical steel (NOES) produced in several foreign countries is causing injury to AK Steel. The preliminary injury determination means that cases against NOES producers in six countries will proceed. Additionally, effective 1 st January, the company raised the base prices of some of its speciality stainless steel products. The increase will be achieved through a discount reduction of two percentage points. ❖ Essar Steel Algoma may be facing a raw materials shortage in the first quarter of 2014, forcing the Canadian flat-rolled steel producer to make and sell less material through mid-April. As far back as 30 th September, the company said in its second-quarter earnings report that it was operating with “a low level of raw material inventories.” In December some sources indicated to American Metal Market that the shortage was likely, noting that the freezing-over of navigable waterways during the winter months meant that the steelmaker needed to either procure a larger volume of iron ore or coal beforehand or face the higher costs of getting its materials in via rail. Essar (Sault Ste Marie, Ontario) had acknowledged in Autumn that it needed “a substantial amount” of coal and iron ore before Great Lakes shipping closed down from mid-January to the end of March, and that supply disruptions could impede its operations. Catherine Ngai of American Metal Market reported (5 th December) that some of the company’s customers had been told that promised delivery dates for hot rolled coil had been extended from January into the middle of February. Ms Ngai wrote: “Spot buyers in southern Ontario, as well as market participants in the US Midwest and Northeast, might feel extra pressure because Essar Steel Algoma is heavily invested in the spot market, sources indicated, underscoring that extended lead times would be difficult in an environment with razor-thin inventory levels.” ❖ Also on 5 th December, another prediction for the first quarter: a mill source reported to the metals information provider Platts that, while US mills were largely comfortable with current margins, an uptick in scrap prices could force electric arc furnace steelmakers to raise their sheet prices early in the quarter. Other market sources confirmed the likelihood that steel sheet prices were headed higher as mills appeared to be maintaining tight discipline. Platts maintained its assessments of $670-$680 per short ton for hot rolled coil, $780-$790 for cold rolled.

As noted by Mr Snavely (6 th December), that would be fewer “global debuts” than last year, but more than in 2009 and 2010 during the depths of the Great Recession when the automotive industry was reeling. ❖ As to safety precautions for NAIAS, the US Coast Guard was taking no chances. From the Federal Register (28 th December): “The Coast Guard is establishing a temporary security zone on the Detroit River [in Michigan]. This security zone is intended to restrict vessels from a portion of the river in order to ensure the safety and security of participants, visitors, and public officials at [the auto show], which is being held at Cobo Hall in downtown Detroit. Vessels in close proximity to the security zone will be subject to increased monitoring and boarding during the enforcement of the security zone.” As finished steel prices sag in Europe and Asia, a joint venture in Alabama has reasons for optimism Luxembourg-based ArcelorMittal and Nippon Steel and Sumitomo Metal Industries, both Japanese, have bought the ThyssenKrupp AG steel complex in Calvert, Alabama, for $1.55 billion. The plant, with a capacity of 3.5 million metric tons per year (mtpy), produces hot rolled, cold rolled, and finished steel from slabs. The partners intend to supply zinc-coated sheet steel to the US automotive and construction industries. For five years ArcelorMittal and Nippon Steel will purchase two million mtpy of slabs produced at ThyssenKrupp’s plant in Brazil, which has a capacity of five million mtpy of slab steel. To keep the Brazilian operation profitable the German conglomerate will have to run that plant at 80% utilisation, at least, producing more than double what it will send to Alabama. That would leave a differential of about three million tons of slab steel for sale. Bill Foote of the Virginia-based investment newsletter Motley Fool considered what this might mean for the finished steel market in the US, where economic recovery and some significant supply disruptions at US Steel Corp combined to support prices through 2013. (“How Steel Is Making Its Comeback,” 12 th December). In his view, the outlook is still favourable, with anti-dumping measures in force in the US helping to insure that prices for domestic finished steel will continue to exceed those for Asian material. At the Calvert mill the ThyssenKrupp material from Brazil will be fabricated into such products as hot rolled coils (HRC) and sold as finished steel. The spread between slab steel and HRC averages about $175 per ton. At that per-ton baseline spread, Mr Foote reasoned, the Calvert plant could earn a margin of over $787 million per year. With infrastructure demand burgeoning in the Americas, HRC prices should be rising while slab prices Steel

BigStockPhoto.com Photographer: Aispl

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Wire & Cable ASIA – March/April 2014

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