TPT November 2008

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From the AmericaS
November 2008 78 ›
second-largest producer by market value, declined 10 per cent, and
AK Steel – No 3 in the US – dropped 8.9 per cent.
Already, in August, the US producers were getting 2 per cent less
for their steel. The price of hot rolled steel sheet fell to an average
$1,047 a ton from $1,068 in July, according to an 29 August report
by Purchasing (Waltham, Massachusetts). The magazine for
supply-chain managers said most steel mills had expected prices of
$1,080 for the month.
This must be seen in perspective. The decline was the first in about
a year, and steel prices in the US had more than doubled from
the $508 a ton average that the mills were charging customers in
August 2007. Through August, US steel prices had gained around
80 per cent since the beginning of 2008. Even so, the decision
by ArcelorMittal was distinctly unwelcome news to the American
producers. The world’s biggest steel maker will cut prices for its
long-steel products, used primarily in construction, by an average
of 5.6 per cent in South Africa. Dale Crofts of Bloomberg News
explained the significance for North America:
“The US relies on imported steel for about 25 per cent of its needs,
and relatively lower prices in NorthAmerica have made the US a less
attractive destination for the imports it requires. That has allowed
domestic producers to boost prices even amid lower demand.” ( ‘US
steelmakers fall as ArcelorMittal cuts prices,’ 2 September).
But, as noted by the second-largest steel maker in Latin America,
a reverse trend has set in. Ternium SA, a division of the Argentina-
based Technint group, said on 6 August that slowing North American
demand for automobiles, appliances, and construction materials
was starting to weigh on steel pricing, even as inventories remain
balanced.
Moreover, Bloomberg pointed out, the price declines coincided
with a seasonal slowdown, when General Motors Corp and other
US automakers cut steel use during their scheduled shutdowns.
The situation was not helped by the high price of gasoline and the
changed driving habits of the suddenly thriftier average American.
GM’s sales in the U.S. fell 18% through August, as demand for
many of its vehicles plunged.
Of related interest . . .
› In other news of ArcelorMittal, after four months of talks the
company on Aug. 30 said it had reached agreement with the
union representing steel workers at its U.S. plants. Some 14,000
employees represented by the United Steelworkers at 14 plants
in eight states had voted to authorize a strike if a contract were
not agreed upon by Sept. 1. The workers make up 4.5% of the
company’s global workforce. The contract covers ArcelorMittal’s flat
carbon, long carbon, and iron ore mining locations in the U.S.
› After buying mines in Russia and the U.S. this year, ArcelorMittal
on Aug. 20 said that it had agreed to buy iron ore miner London
Mining Brasil for up to $810 million to help improve its self-sufficiency
in raw materials. By 2012, the Luxembourg-based company expects
to have raised its iron ore sufficiency from 45% currently to 75
percent. It recently raised its sufficiency in coal from 15% to 20
percent.
London Mining Brasil has an estimated 1,059 million metric tons of
indicated and inferred iron ore, and ArcelorMittal said it is considering
a further $700 million investment to increase production. The group
also announced an agreement with Canada’s Adriana Resources
for the development of an iron ore port facility in the Brazilian state
of Rio de Janeiro.
Automotive
Ford’s new diesel-powered Fiesta is ‘awesome,’
but European and Japanese models will beat it
into the US market
“Ford’s 2009 Fiesta ECOnetic goes on sale in November. But here’s
the catch: Despite the car’s potential to transform Ford’s image and
help it compete with Toyota Motor and Honda Motor in its home
market, the company will sell the little fuel sipper only in Europe.”
David Kiley, a senior correspondent in the Detroit bureau of Business
Week, wrote this in the magazine’s ‘Green Biz’ section – where the
new Ford product definitely rates a mention. It is described as a
sporty subcompact that seats five, offers a navigation system, and
gets a ‘whopping’ 65 miles to the gallon, which makes it at least
30 per cent more fuel-efficient than a comparable gasoline-powered
car. And, self-praise or not, Ford America President Mark Fields
obviously felt comfortable making the assertion, “We know it’s an
awesome vehicle.”
What, then, are the ‘business reasons’ why the car will not be sold
in the US? Chiefly, the Fiesta ECOnetic runs on diesel, and it seems
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