HANGING ON TO THE HIGH END
Making profits against a margin is always an ulcer-inducing way of doing business, but when the margin is moving unpredictably, ulcers are almost guaranteed. On the other hand, ferrous processors have also had a look at a stable market, and stability is not much fun when prices are low and scrap is not flowing. Where scrap processors hope they are headed is a time span where prices are stable in the more margin-friendly $100 per ton or more price range. After a couple of months of such stability, early February brought an unwelcome interruption. One scrap processor classified prices as being "down $7 to $15 for good grades." Thus far, most mills and foundries seem to remain very much in the market, however. "Buying is still good," says the processor, who adds that most orders from mills are consistent, with "a few down a bit." With scrap consuming activity still strong in his market, he is uncertain where prices will head next. Economic forecasts for the largest steel-consuming industries remain good, with neither the North American construction nor the automotive sectors predicted to fall off very much in 2000. While competitive price pressures continue to make steelmaking a tough market, the demand for structural products ranging from steel beams to re-bar is strong and is expected to stay strong throughout 2000. With imports taking up a slightly smaller share of that market, domestic mills should continue melting scrap in their pursuit to feed the hungry markets. Likewise for steel sheet products, auto makers will continue to aggressively sell light trucks and sport utility vehicles to Americans who, so far, have not seemed to lose their appetites for them. Such sunny forecasts have ferrous scrap processors hopeful that pricing can stay in the $100 a ton and above range for an extended period of time.HYLSA, SMS DEMAG TO COOPERATE ON DRI DESIGNS
SMS Demag of Germany and the HYL Technology Division of Hylsamex, San Nicolas de los Garza, Mexico, have agreed to collaborate on the design of electric arc furnaces using continuously charged direct reduced iron (DRI). According to an HYL news release, the two companies will cooperate in designing the furnaces that will use "continuously charged DRI and hot briquetted iron (HBI) using know-how and operational experience developed at Hylsa’s facilities in Monterrey, Mexico." SMS Demag will have worldwide marketing rights for DRI-based EAF melt shops designed under the agreement. Any resulting patents will be shared jointly by SMS Demag and Hylsa. The companies may have an opportunity to collaborate very soon. "The recently announced slab project by Kingstream Steel in Western Australia will likely be the first collaborative opportunity for the two companies under the terms of the new agreement," according to Hylsa. Current plans call for Kingstream to install an integrated mini-mill using two 1.5 million tons-per-year HYL modules to be built by an SMS Demag sister company. Other potential projects for the new venture include two proposed steel mills in Malaysia.BETHLEHEM, NOVAMERICANTO BUILD TUBE MILL
Bethlehem Steel Corp., Bethlehem, Pa., and Novamerican Steel, Montreal, have announced that they have formed a joint venture to build a steel tube mill at an undetermined site. The joint venture has been named BethNova Tube LLC. The bulk of the tubes to be produced at the mill will be bound for a facility operated by automotive parts supplier Dana Corp., Toledo, Ohio. Dana is in the process of building a hydroforming plant in central Kentucky, and the BethNova tubes will be made for use in hydroforming automobile and truck parts. The two companies say that hydroforming is growing in popularity with vehicle makers because it cuts manufacturing costs and lowers vehicle weight. "In recent years we have invested in machinery specially designed to manufacture tubing for the hydroforming process," says D. Bryan Jones, CEO of Novamerican Steel. "We are very pleased to be combining our efforts with Bethlehem Steel to enhance our development of this process and to further our goal to become, through this partnership, North America’s leading supplier of tubing to the automotive industry." The site selection process is underway, with construction to be completed and tube production starting by the first quarter of 2001.OHIO CLAIMS NUMBER ONE STEEL SPOT
Is Ohio the new leader in American steel production? A study conducted by Standard & Poor’s DRI, Lexington, Mass., ranked Ohio first in terms of the dollar value of steel produced combined with the dollar value of steel value-added processes taking place. The study, commissioned by the American Iron and Steel Institute, found Ohio to have $5.3 billion worth of steel industry activity taking place in 1999, followed by Indiana with $4.9 billion and Pennsylvania with $3.6 billion. Other states with more than $1 billion in steel industry activity included Illinois with $2.1 billion, Michigan with $2.1 billion, Alabama with $1.3 billion, and Washington with $1.2 billion. Ohio, Indiana and Pennsylvania all employed more than 30,000 people in steel manufacturing and processing in 1999, while Illinois was fourth with more than 17,000 people employed in the steel sector. Pennsylvania, Ohio and Illinois all contained more than 100 steel companies as part of their steel dollar value and employment totals, while Indiana had just 50 companies with a larger average size putting it second place in dollar volume and third in employment. Another Standard & Poor study commissioned by the Ohio Steel Council, Columbus, pegged the steel industry’s annual economic impact on the Buckeye State to now be in the range of $8.8 billion. That figure represents value-added steel production and processing together with figures from industries supplying steel, including the ferrous scrap industry, iron ore, sintering, coke, and limestone operations. "The results of this study underscore the importance of steel to Ohio and demonstrate that the industry does not operate as an entity unto itself," says Cole Tremain of the Ohio Steel Council and LTV Steel Co., Cleveland.TWO EAF OPERATORS REPORT RESULTS
Profits were obtainable in late 1999 for two electric arc furnace (EAF) steelmakers reporting results recently. AmeriSteel, Tampa, Fla., has reported net income of $4.9 million in the quarter ending December 31, down from $6 million in profits during the same period in 1998. "The recent upward trend in raw material scrap costs has put pressure on mill product margins," says AmeriSteel chairman and CEO Phillip E. Casey. Roanoke Electric Steel Corp., Roanoke, Va., has reported improved results for the its quarter ending January 31, 2000. The company earned $3.9 million in profits compared to $3.7 million earned for the same quarter last year. Sales were up by 24.5% over the same quarter last year. The increase in sales was due in part to the acquisition of Steel of West Virginia Inc.
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