WCA March 2014

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58 Wire & Cable ASIA – March/April 2014
From the Americas
BigStockPhoto.com Photographer: Aispl
As noted by Mr Snavely (6th 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
(28th 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.”
Steel
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
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 3rd 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 1st 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 30th
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 (5th
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 5th 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.