EoW September 2011

Transat lant ic Cable

❈ Mr Baptista Filho also said that he expects Brazil’s steel market to grow six to seven per cent this year. He sees continued rising demand for flat rolled steel products for automotive, construction, and oil and gas applications.

This is good, as the change is going ahead rapidly. Mr Ebhardt and Ms Rotondi noted that, even as it re-badges Chrysler and Lancia products, Fiat is taking regional sensibilities into account. The Lancia version of the Chrysler 300 will feature leather from the high-end Milanese design and furnishings firm Poltrona Frau. Fiat is also bridging cultures with ads featuring Elisabetta Canalis, the Italian ex-girlfriend of American actor George Clooney, captioned “Italian character meets American glamor.” To one American observer, that tagline needs work. It may in fact need major surgery, as late word has it that Ms Canalis and Mr Clooney have ended their relationship. ArcelorMittal mulls a $1 billion conversion of its Tubarao works in Brazil to produce rolled steel for that country’s market Reporting from the 22 nd Brazilian Steel Conference, held 1 st - 3 rd June in São Paulo, Diana Kinch of MarketWatch took note of an important piece of information from the sidelines of the Brazil Steel Institute event. The chief executive of Brazilian operations for Luxembourg-based ArcelorMittal said that the world’s biggest steel maker is contemplating a $1 billion investment in a new steel rolling mill in Brazil to supply the country’s growing flat steel products market. According to CEO Benjamin Baptista Filho, a decision will be reached by the end of this year. The ArcelorMittal Brasil chief said that, as of 2015, the project would add three million metric tonnes per year (mtpy) of hot coil rolling capacity at ArcelorMittal’s Tubarao works in southeast Brazil. The basic idea, he said, “is to convert Tubarao one hundred per cent to rolled steel, principally for the domestic market, and stop exporting slabs.” Given rising costs of steel production in Brazil, Mr Baptista Filho explained that it is no longer worth his company’s while to produce slabs – a lower-value semi-finished form requiring further processing – for an export market in which prices are volatile. Ms Kinch of MarketWatch , a Dow Jones publication, observed that the expansion planned for Tubarao signals an about-face for the European company. The works was set up in the early 1980s as a slabs exporter, eventually becoming Brazil’s biggest steel mill with a capacity of 7.5 million mtpy. Recently ArcelorMittal installed 4 million mtpy of flat rolling capacity at Tubarao to turn out value-added product principally for the Brazilian market. The installation under consideration for the Tubarao works will process all slabs for use in Brazil. Currently, some rolled steel output is sent to ArcelorMittal’s Vega do Sul steel galvanising and cold rolling works in southern Brazil for which, said Mr Baptista Filho, a $300 million expansion is planned. The company is tendering for a third, 550,000-mtpy, galvanising line for Vega do Sul. This would boost processing capacity there to over 2 million mtpy by late 2013, mainly for Brazil’s automotive industry, the ArcelorMittal Brasil executive said. Steel

Canada

❈ The United States government has quietly scrapped a popular exchange programme for Afghan teens after scores of students fled the US for Canada as refugees rather than return to Afghanistan. As reported by the Toronto Star, the defections from the US State Department’s Youth Exchange and Study (YES) initiative have been occurring since 2005, the second year of the programme. But they reached the breaking point this year when more than half of the 40 Afghans brought in to attend American high schools vanished. A Star investigation disclosed that the newest arrivals are collecting welfare in Canada as they attend school and work their way through the Canadian immigration system. Students accepted into the US programme were chosen from among more than 5,000 applicants across Afghanistan each year. They were deemed the brightest, the most articulate, and those most likely to become Afghanistan’s future leaders. Wrote Allan Woods of the Star ’s Ottawa bureau (11 th June): “That made it a big problem in both Kabul and Washington when [the students] started using their stay in the States as a beachhead for asylum bids in Canada.” ❈ The Canadian economy will continue to outperform others in the West over the next two years, even as the pace slows and risks mount, according to the International Monetary Fund. Julian Beltrame of the Toronto Star w rote (17 th June): “The IMF’s latest forecast presents Canada as a relative sea of tranquility amid rising global turbulence from European and US debt issues, the aftermath of Japan’s natural disasters, and growing inflationary pressures.” The international financial organisation predicts 2.9% growth for Canada this year and 2.6% in 2012, virtually unchanged from its previous forecast. Mr Beltrame noted that those numbers are identical to the Bank of Canada’s call, made in April. The projections are also in line with a new forecast from Toronto-based TD Bank, which like the IMF sees the global economy slowing but Canada with 2.8% and 2.5% growth rates this year and next. All the forecasters pointed to a soft spot in the Canadian economy at midyear, due in part to supply-chain disruptions deriving from the earthquake and tsunami that hit Japan in March. Among the seven industrialised nations of the G-7 economic and political group, the IMF sees only Germany doing better than Canada, with an expected 3.2% expansion this year, slowing to 2% next year.

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EuroWire – September 2011