TPT July 2008

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From the AmericaS
July 2008 92 ›
No timeline was announced for construction and completion. It is
expected to be at least 10 years before gas begins to flow. Even
so, with so many regions in continental US off-limits to oil and
gas development, a gas line from an Alaska to the heartland is an
attractive prospect worth the wait.
Of related interest . . .
› Alaska Native and environmental protection groups on May 5 sued
to stop exploration this summer in Arctic waters, challenging US
permits that allow Shell Oil Co and BP PLC to search for oil and gas
with the use of powerful acoustic devices. The technology, known as
seismic exploration, examines the geologic makeup of the seabed.
According to the nonprofit law firm Earthjustice, for the plaintiffs, the
federal government violated US laws by failing to study the effects on
marine animal life before permitting the companies to project ‘noises
as loud as a rocket or a volcanic eruption’ into the sea.
For almost a decade, London-based BP has been the only company
producing offshore oil in Arctic Alaska. But receding sea ice has
drawn other companies to the region, with Shell Oil emerging as
the largest new player. In February, the US-based affiliate of Royal
Dutch Shell paid the US government $2.1 billion for oil and gas
leases in the Chukchi Sea, which spans Russian and American
territory. The company had already spent more than $80 million for
federal leases in the Beaufort Sea, about 450 miles to the east.
Steel
To recoup surging energy and raw materials
costs, ArcelorMittal raises some US prices
The mid-April announcement by ArcelorMittal, the world’s largest
steel maker, that it would raise prices on some steel shipments in
the US by $250 a ton boosted the fortunes of a number of American
steel makers. US Steel, based in Pittsburgh, added $8.74, or
6 per cent, for a record close on April 16 of $155.37. AK Steel (West
Chester, Ohio) also reached its highest value ever, gaining $2.35, or
3.6 per cent, to close at $68.50. Other beneficiaries included Nucor
(Charlotte, North Carolina) and Steel Dynamics Inc (Fort Wayne,
Indiana).
As reported by Dale Crofts of Bloomberg News, according to an
internal memo ArcelorMittal was to add the surcharge to all orders
of flat rolled steel for shipment 5 May and later. The Luxembourg-
based company will not add the charge to spot sales or contracts
that already allow prices to fluctuate, the memo said.
The US producers were cagey about their response to the news
from Europe, despite the lift it gave them. US Steel will work to
get ‘the market price’ for its metal, spokesman John Armstrong
told Bloomberg. He declined to say whether the company, which
sells about 50 per cent of its steel under contract, would follow
ArcelorMittal’s move.
“We will continue to honour our contracts,” said Alan McCoy, a
spokesman for AK Steel, the No 3 US steel maker. “Most of our
contracts for the last seven years have had a variable pricing
component.”
Global steel prices have gone up 40 per cent since the beginning
of 2008; and, according to Purchasing magazine, US prices for flat
rolled steel rose to $740 a ton in March from $665 a month earlier.
Mr Crofts wrote, “ArcelorMittal wants to take advantage of soaring
global demand to pass on higher costs for iron ore and the energy
to produce and ship the metal.”
• AK Steel had already generated good news of its own, reporting
that first-quarter profit rose more than 60 per cent, aided by
soaring global steel prices and favourable labour contracts. The
Ohio-based maker of flat rolled carbon, stainless, and electrical
steel, and carbon and stainless tubular products, posted
net income of $101.1 million for the period ended 31 March,
compared with $62.7 million a year earlier. Sales totalled $1.79
billion, compared with $1.72 billion in first-quarter 2007.
A company spokesman noted that, while many such traditional
customers of American steel mills as those in the automotive
sector have been hit by the country’s economic slowdown,
other markets – commercial construction, energy – continue to
generate strong demand. AK Steel has streamlined itself to take
advantage of these opportunities. The company has about 30 per
cent fewer employees system-wide than it did five years ago.
Elsewhere in steel . . .
›Cleveland-Cliffs Inc, North America’s largest producer of iron ore
pellets, said first-quarter profit fell 49 per cent after a loss on a
Brazilian iron ore project. Net income was $16.7 million in the three
months ended 31 March, down from $32.5 million a year earlier, the