EoW November 2012

Transatlantic cable

in turn by Custom Truck & Equipment, known as CTE, which believes it is the biggest provider of truck cranes in the world. Its business is booming. (“CTE’s Success Is a Quiet Chapter in Story of GST Steel’s Demise,” 17 th August) The family operation sells new and used trucks, truck parts, cranes, cement mixers, and engines. About 170 people work at CTE, retro tting the industrial vehicles in 28 bays. “Basically, we think of this place like a seashell,” Fred Ross, president and eldest of 12 siblings who grew up in the area, said of the old plant. “It’s the same as if one animal died and then another moved in.” The enterprising Rosses bought about 18 acres of the GST property and spent $6mn gutting the old mill to its skeleton before refurbishing. CTE is building two more structures on an additional 35 acres acquired from GST, which itself purchased 300 acres of Armco’s roughly 1,000-acre property, where heavy metals still contaminate the soil in spots. CTE also has three locations in Texas and recently expanded into Wisconsin. † On the day of Ms Kavanaugh’s visit to the Kansas City plant, 23 trucks were parked in a ruler-straight, ve-row formation. “A bumper crop,” she pronounced it. “Everywhere one looked, gleaming trucks were within a screwdriver’s reach.” Acknowledging his satisfaction at the new life in the old place – with Americans “making things that are being sold and shipped all the way to Mongolia” – Mr Ross also noted his family’s frustration at the duelling TV ads of the recent political season. He wishes that the cameras panning over the site had taken in just a little more than the still-empty and padlocked buildings from the Armco era. “It would have shown more of the story,” wrote Ms Kavanaugh. “The CTE chapter.” Elsewhere in steel . . . † AK Steel (West Chester, Ohio) announced that, as of 4 th September shipments, it increased transaction prices for all Type 201, 301, 430, 430 Ultra Form®, 409 and 409 Ultra Form at rolled stainless steel products. The company said that prices for its Types 409 and 409 Ultra Form products were raised by two cents per pound. Increases on the other steels were to be achieved through a two-point reduction in the functional discount. All of AK Steel’s raw material surcharges for stainless steel products, including those for materials under 0.015" in thickness, remain in e ect.

Steel

A new scrap futures contract for the US will target recyclers, mini mills, and construction companies

Only days before creating news with its plans for a for a derivatives market in London (”Futures Markets,” above), CME Group Inc said it had set a 10 th September launch date for the US scrap futures contract announced by the company in June. This will be the second scrap contract and the 13 th steel and steel raw materials derivative product for the Chicago-based exchange. The extension of its reach in ferrous derivative products has a basis in CME’s perception of growing interest in hedging among recyclers, mini mills which use scrap as raw material, and construction companies which buy long steel products derived from steel scrap. While the contract, to be cash settled against an index price set by the metals trade publication AMM , is focused on the United States – the industry’s largest scrap exporter – CME has said that it hopes its price will become a global benchmark. US investment banks including JPMorgan Chase were reported to be interested in the new CME contract. Again according to Reuters, the contract could bene t from declining interest in the four-year old physically backed steel billet futures o ered by the London Metal Exchange. With a growing investor base and greater liquidity in its US hot-rolled-coil (HRC) contract, CME is also working on launching ferrous contracts in China, the world’s largest steel producer and consumer. The contract announced 17 th August is subject to regulatory approvals. Whether or not Bain Capital brought down GST Steel, the newcomer Custom Truck & Equipment is an unquali ed success On the presidential campaign trail this summer and autumn, Republican challenger Mitt Romney relied heavily on his tenure as head of the Boston-based private investment rm Bain Capital to showcase his executive credentials. Supporters of the incumbent, Barack Obama, took a contrary view: that Mr Romney during his tenure as CEO presided over the destruction of American rms and jobs in the interests of Bain and its investors. A political TV ad produced by the Obama campaign featured an interview with a couple whose life took a sharp turn for the worse after Bain forced the closure of a Kansas City, Missouri, steel plant, at the loss of 750 jobs. When the Romney people found and trumpeted some holes in the su erers’ story, the extent of Bain’s culpability, if any, was lost in the resulting din. Yet again, the murky politics of an election season had crowded out sober evaluation. Writing in the Kansas City Star , Lee Hill Kavanaugh suggested that another important story had been obscured in the media coverage of the closure of GST Steel Co, whose steelmaking days may be over but whose former plant oor is far from idle. Itself a successor of an Armco Steel plant at the site, GST was succeeded

Commerce

Overseas-minded American companies are advised to forget the BRICs, cultivate the CIVETS

“The past decade was all about the BRICs, the massive economies of Brazil, Russia, India and China, which kicked o at the beginning of the new century, boomed, and are now slowing. Taking their place is a new group of fast-rising economies promising businesses outsized returns.” Business Without Borders, an online platform for US businesses looking to expand beyond their national borders, de nes this group laying claim to the next decade as the CIVETS: Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa. Taken together, the rising middle class, young populations and rapid growth rates of the CIVETS are seen to “make the BRICs look dull in comparison.”

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November 2012