WCA January 2014

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46 Wire & Cable ASIA – January/February 2014
From the Americas
in October. The Russian steelmaker’s hot-rolled steel plant
in Dearborn, Michigan, was running at full capacity as it
worked to keep up with rising demand from automakers.
The interview with business writer Brent Snavely marked
the first public comment by Mr Dey since he took over at
Severstal, in September. Previously the company’s chief
strategy and procurement officer, he was promoted as part
of an overhaul of Severstal’s North American leadership
team.
The new CEO told Mr Snavely that the prior executive team
was good at managing the mergers, acquisitions, and large
capital investment projects that were a feature of Severstal’s
activities in North America over the last ten years. Now,
however, the company is confronting new challenges.
(“Severstal Profits [are] under Pressure from Competitor
Pricing,” 4th October).
Mr Dey sees the challenges in the context of a global steel
industry equipped to produce between 300 million and
400 million tons more than its customers want, with slower
growth in Asia the main factor in the imbalance. “Cars
might be flying off the shelves here,” he said 3rd October,
in Dearborn. “But we have seen significantly eroded margins
in pricing.”
Mr Snavely noted that back in 2008, the last time
automakers were performing on this scale (more than
15.5 million cars and trucks sold in 2013), a ton of hot-rolled
steel was selling for more than $1,100. When he wrote, in
October, hot-rolled steel was going for about $637 per ton
for November deliveries.
OAO Severstal, the parent company of Severstal North
America, has suffered accordingly. The company reported
a loss of $44 million for the three months ending 30th June
2013, compared with a profit of $44 million in 2012.
“The gauntlet has been laid down by aluminium,” Mr Dey
told the Free Press. “Let’s not ignore that fact or try to deny
it.” The Severstal weapon of choice in the competition with
the aluminium industry will be higher-strength, lighter-weight
steel.
 Since acquiring Rouge Steel for $285 million in 2004,
Severstal has invested between $6 billion and $8 billion
in its North American operations. Last year the company
commissioned a $285-million hot dip line as part of its
$1.4-billion upgrade of the Dearborn plant, which has a
workforce of 1,800 people.
Elsewhere in steel . . .
 According to the short-range outlook of the World Steel
Association, the US will likely see three per cent growth
in steel demand in 2014, compared with last year’s
estimated 0.7 per cent growth in demand. Favouring the
improvement is the pickup in the automotive, energy,
and residential construction sectors.
 The Steel Recycling Institute said on 30th September
that steel is North America’s number one recycled
material, with more than one billion metric tons recycled
since 1988. According to Pittsburgh-based SRI, which
calculates the recycling rates for steel and major steel
products, more steel is recycled in the US every year
than paper, plastic, aluminium and glass combined.
In 2012 the recycling rate for the North American steel
industry was 88 per cent. The almost 84 million metric
tons (mmt) of steel recycled that year included 16.3mmt
of automotive scrap, 2.7mmt of appliance steel, and
1.3mmt of tin plate steel. Fully 98 per cent of plates and
beams from demolition projects was recycled.
The SRI, which reported that the industry’s recycling
effort has helped it to reduce its carbon dioxide
emissions by 32 per cent, was established 25 years ago
by the American Iron and Steel Institute (AISI) to create a
system for recycling steel cans.
Automotive
 The CEO of Chrysler Corp, Sergio Marchionne, said on
10th October that the Detroit carmaker will invest $1.249
billion to build an assembly plant in Saltillo, a city in the
northern Mexican state of Coahuila. Chrysler already has
four plants in the area around Saltillo. Some 1,570 jobs
will be created by the investment, Mr Marchionne said
in Mexico City, where he met with Mexican President
Enrique Peña Nieto.
According to President Nieto, Mexico is the world’s
eighth-largest automobile producer, ranking fourth as an
exporter and fifth as a producer of car parts for both the
domestic and international markets. Ildefonso Guajardo,
the economy minister, said the auto industry accounts
for 26 per cent of Mexico’s total exports.
Automakers are expanding production in Mexico
to capitalise on lower labour costs that bolster the
profitability of vehicles sold in the American market.
General Motors of the US has budgeted $691 million
to expand three existing Mexican factories. Germany’s
Volkswagen is investing $1.3 billion in a new Audi plant
in San Jose Chiapa with a capacity of 150,000 cars a
year. Fiat, of Italy, builds a North American version of its
500 subcompact at a plant in Toluca.
 Edging closer to unloading its remaining shares in
General Motors, the US government said in a 17th
September report to Congress that it has recovered
about $36 billion of the $51 billion invested to bail
out the automaker in 2008 and 2009. The Treasury
Department said it owned a 7.3 per cent stake in GM,
down from 13.8 per cent as of 12th June, and that it
plans to sell its last GM shares by April 2014.
Business writer Nathan Bomey of the Detroit Free
Press noted (10th October) that, by the time it gets quit
of GM, the US government is expected to have lost
about $10 billion on carmaker bailouts. But the Obama
administration has declared the initiative a success
because it rescued the domestic auto industry and
preserved hundreds of thousands of jobs.
Claiming that that the government is recouping
“significantly more than expected” on auto bailouts, the