LME
to Launch Steel Futures Trading
The value of steel puts it second only to oil as a global business,
but the steel industry is highly volatile. To help steel manufacturers,
distributors, and end-users manage the risks of that volatility, the
London Metal Exchange plans to launch a futures market for steel in
mid-2004.
One
of five speakers promoting the concept at the Steel Success Strategies
conference June 18 in New York, LME Chief Executive Simon Heale said
developing the tools for steel futures trading has required painstaking
and detailed research because “your industry is, to put it mildly,
very complicated.”
While
many people not familiar with metals futures trading fear this would
commoditize the steel market even more, Heale explained that the benchmark
product being traded would only provide a base value for the thousands
of variable steel products that are made and finished. The base product
will be hot-rolled coil for both Europe and North America, and rebar
or billet for Asia and other markets.
“There
is a good reason why steel futures do not already exist—yours is
a very difficult industry to design these instruments for,” Heale
says. Further, Enron’s attempt to hedge steel price risks was aborted
by its bankruptcy, leaving many sour on the idea.
It
took a number of years for the LME and its ring traders to normalize
trading of aluminum. “We are patient, we want to get it right,”
Heale said, adding he hopes the steel industry will study what the LME
proposes.
Slater
Files for Bankruptcy
Slater Steel Inc., Mississauga, Ontario, which reported a loss of $60.3
million (U.S. dollars) in 2002, filed June 1 for creditor protection
in Canada and bankruptcy protection in the United States. Slater’s
operations and those of all its subsidiaries are continuing as normal
during the company’s reorganization.
The
bankruptcy filing includes all of Slater’s operating business units:
Atlas Stainless Steels, Atlas Specialty Steels, Fort Wayne Specialty
Alloys, Hamilton Specialty Bar, Sorel Forge and Slater Lemont.
lthough
the company “made significant progress in refocusing Slater exclusively
as a specialty steel producer and lowering the company’s cost structure,
conditions to the closing of a refinancing effort were not satisfied
within the allocated time frame,” says Paul A. Kelly, Slater’s
president and chief executive officer. “In view of this situation,
as well as mounting liquidity pressures, we have determined that reorganization
is the most efficient and effective way to restructure Slater Steel
and position the company for long-term financial stability.”
Slater
has secured $33.5 million in debtor-in-possession financing from its
existing lending syndicate, which should be sufficient to fund its operations
during the restructuring process. While restructuring, the company plans
to review all options to enhance value for its stakeholders, and will
retain an investment banking firm to canvass the market.
The
specialty steel industry has been hurt by the recent economic slowdown
that has resulted in weak demand and soft pricing, Kelly says. The stainless
steel bar market has experienced a particularly severe downturn due
to the contraction of the capital goods sector.
Slater’s
2002 shipments of higher value alloys, used in the aerospace, power
generation and semiconductor industries, fell 30 percent from the prior
year. Despite the Section 201 remedy and other trade rulings intended
to reduce imports, import penetration of stainless steel bar is still
at historically high levels in the United States, holding about a 40
percent share of the market.
In
addition to these challenges, other factors adversely affected Slater’s
operating results and financial condition, Kelly says. For example,
the benefits of Slater’s lower cost structure were offset by lower
production levels, particularly in the stainless bar division, and rising
costs for natural gas.
The company reports that as of March 31, it had assets valued at $244.6 million and liabilities of $243.1 million.
Idled Republic Plant Sold, to Reopen Soon
The U.S. Bankruptcy Court in Akron, Ohio, has approved the sale of the idled Republic Technologies cold-finished steel plant in Beaver Falls, Pa., to BVV Acquisition LLC, an investor group led by Mark H. Breedlove. The sale was expected to close June 30.
BVV
has formed a “launch team” to prepare to reopen the plant
later this summer.
“The
plant will concentrate on engineered specialty products, such as cold-drawn
alloy and aircraft alloy rectangles and square bars; standard shapes
in carbon and alloy grades that require special applications such as
surface finish, tolerances or special edges; and cold-drawn special
shapes,” Breedlove says.
“We
plan to expand the types of material produced to include stainless steel,
tool steel and high-speed steel, and we will employ a full complement
of trained die makers and operators to provide customers with precision
cold-drawn products in a size range unequaled in North America,”
he claims.
He
terms early market response as encouraging. “Our plan is to place
special emphasis on the former customers of Republic Technologies and
Moltrup Steel, who may have been without a source of supply for some
products since the plants closed.”
He
notes that the community was negatively impacted by the closing of the
Republic Technologies and Moltrup Steel plants last year. The company
plans to hire 40 workers for the startup.
The Republic plant purchase is Breedlove’s introduction to the steelmaking business. Before forming this investment group, he was president of Qualitor Inc., which serves the automotive and truck parts markets, and held leadership posts with AlliedSignal.
Lone
Star Makes Two Acquisitions
Lone Star Technologies Inc., Dallas, recently purchased two companies.
On June 2, Lone Star completed the $18.9 million acquisition of Frank’s
Tubular International, Houston, a supplier of tubular threading and
inspection services. In early May, the company spent $14 million to
acquire the assets of Delta Tubular Processing, also in Houston, which
already processes a majority of Lone Star’s oilfield production
tubing.
Frank’s
Tubular International’s full large-diameter API and premium thread
casing capabilities complement the tubing and small-diameter casing
capabilities of Delta Tubular Processing, according to Lone Star Chairman,
President and CEO Rhys J. Best. The Frank’s and Delta facilities
are only 10 miles apart. Lone Star expects to realize improved flexibility
for small-quantity processing, increased capacity utilization and reduced
transportation costs as a result of integrating the operations of these
assets.
The
addition of Frank’s management and workforce and its assets and
infrastructure should enable Lone Star to establish a substantial base
of operations nearer its Gulf Coast OCTG and line pipe customers, Best
says. The facilities are ripe for expansion in case Lone Star wants
to incorporate additional value-added products and services.
Apart
from the acquisition of Delta, Lone Star has a new multi-year contract
to continue Delta’s finishing services for a high portion of U.S.
Steel Group’s oilfield production tubing.
Lone Star expects to make no management or workforce changes at either of the acquired companies.
CMC
in Talks to Acquire Steel Minimill in Poland
Commercial Metals (International) AG, a subsidiary of Commercial Metals
Co., Irving, Texas, is the preferred bidder in negotiations to buy a
Polish steel minimill.
Commercial
plans to buy all the shares of Huta Zawiercie S.A., Zawiercie, Poland,
which produces rebar and wire rod from a 1 million metric ton minimill
with two electric arc furnaces, similar to those operated domestically
by CMC.
The
mill is currently owned by Impexmetal S.A., Warsaw. Impexmetal owns
71.1 percent of the outstanding shares of Huta Zawiercie, with the Polish
treasury controlling most of the remaining shares.
Impexmetal
acquired the shares through a privatization transaction in 1995 and
has funded continuous improvements to the operations.
Stanley
A. Rabin, chairman, president and CEO of CMC, believes the purchase
will “be an opportunity for investment in an updated facility with
a dedicated workforce making products with which we are familiar for
the growing Polish and European markets.”
The parties hope to complete the due diligence review and execute a definitive share purchase agreement this month.
IPSCO
Wants to Dominate Plate
Ipsco Inc., Lisle, Ill., has launched an initiative—including organizational,
technical and personnel changes—to enhance its position as a leading
supplier of plate in North America, says President and CEO David Sutherland.
On
the personnel front, Peter MacPhail, former president of Ipsco Saskatchewan,
is now corporate vice president of primary operations, coordinating
all operational activities for primary steel production at steelworks
in Alabama, Iowa and Saskatchewan.
From
a technical perspective, Ipsco is accelerating plans to expand its product
range. The company will shortly offer higher-grade specialty products,
utilizing Steckel rolling and accelerated cooling capabilities in its
mills. In several areas, these steels will replace heat-treated products
with as-rolled steels of equal or better performance on a more competitive
cost basis, Sutherland says.
This
thrust also will include the continued transfer—to Ipsco’s
two newer U.S. mills—-of capabilities developed at the Regina Steelworks,
where specialty steels have become a key part of the product mix. Many
of these fine-grained specialty steel products were developed from Ipsco’s
high-grade steel line pipe capabilities.
The
company appointed Steve Hansen as director of technical services for
Ipsco’s U.S. steel operations. Hansen has 25 years of technical
and research experience in the metallurgical processing and properties
of plate and sheet steel. Hansen is working with former Bethlehem Steel
manager Chuck Mattia, hired in January as vice president of new business
development.
“With Ipsco’s growth in the U.S. market, plate products represent the major focus of our steel products business,” says Dan Miksta, vice president-steel sales. “The addition of these individuals, the expansion of our product range and our technical capability clearly illustrates our commitment...to lead in the industrial markets we serve.”
Alcoa
Opens New Tube Plant
Alcoa Mill Products recently opened two aluminum welded tube lines at
its Texarkana, Texas, plant. The equipment came with Alcoa’s purchase
of assets from the former Scottsboro Aluminum rolling mill facility
in Alabama. The new lines, when fully staffed to a three-shift operation,
will employ 27 people, says Ann E. Whitty, Texarkana’s director
of manufacturing.
The welded tube lines transform coiled aluminum sheet into a tube or other cylindrical shape, longitudinally welding the product while maintaining extremely close tolerances.
Century,
Kaiser Sign Alumina Supply Pact
Century Aluminum Co., Monterey, Calif., and Kaiser Aluminum and Chemical
Corp., Houston, recently entered into a new supply contract covering
all of the alumina requirements of Century’s Hawesville, Ky., operations
from January 2006 through December 2008.
The price of alumina purchased under this contract will be indexed to the price of primary aluminum on the London Metal Exchange. An existing alumina contract between Century and Kaiser covering the Hawesville facility is priced at a similar formula and expires Dec. 31, 2005.
Briefs
United Steelworkers of America members at six former Bethlehem
Steel plants ratified a labor agreement with the new owners of the
facilities, International Steel Group, by a nearly 90 percent
margin. Bethlehem was operating the plants under Chapter 11 since October
2001. ISG acquired the facilities April 30 for $1.5 billion and union
members have been ISG employees since May 1. This contract, which expires
in September 2008, brings the former Bethlehem employees into an agreement
that already covers former LTV Steel and Acme Steel employees now employed
by ISG. Covered employees work at ISG plants located in Sparrows Point,
Md.; Burns Harbor, Ind.; Lackawanna, N.Y.; and Steelton, Conshohocken
and Coatesville, Pa.
U.S. Steel Corp. signed an agreement to sell the assets of U.S. Steel Mining Co. LLC to a newly formed company, PinnOak Resources LLC. The agreement is subject to the buyer’s ability to obtain financing and other customary conditions. Under the terms of the agreement, PinnOak would acquire all the coal and related assets associated with USM’s Pinnacle No. 50 mine complex near Pineville, W.Va., and its Oak Grove mine complex near Birmingham, Ala. The sale is set to close late in the second quarter.
Algoma Steel Inc. has signed a letter of intent with Algoma Tubes Inc., a Canadian subsidiary of Tenaris SA, relating to the sale of tube manufacturing facilities in Sault Ste. Marie, Ontario, and now leased to Algoma Tubes Inc. The sale for $8.95 million is scheduled to close by year-end. This sale is part of Algoma’s program to reduce debt and improve liquidity.
Duferco Farrell Corp., Farrell, Pa., has ordered equipment from Butech Inc. as part of an upgrade project to be completed on its No. 7 continuous pickle line. Butech will supply a hydraulic strip notcher, turret edge trimmer and high-production double-hub scrap chopper. All three machines will process high-strength steel up to 60 inches wide from 0.05- to 0.21-inch thick at speeds up to 800 feet per minute. Butech will provide on-site startup assistance during installation and commissioning.
Gerdau Ameristeel Corp. intends to raise $400 million through a private offering of senior notes due 2011, and intends to enter into a senior secured credit facility providing commitments of $350 million. The company will use the proceeds from the offering and credit facility to repay debt under its existing credit facilities. Once the company completes the refinancing, it plans to reorganize its subsidiaries to more efficiently integrate its operations and bring its U.S. operations within the same group.
Republic Engineered Products LLC, Fairlawn, Ohio, received a Supplier Recognition Award from American Axle Manufacturing based on its quality, on-time delivery, customer service, technology and cost-saving performance.
Bayou Steel Corp., LaPlace, La., and Atlas Tube Inc., Harrow, Ontario, have each contracted BestTransport to provide them with on-line transportation execution systems. BestTransport launched Bayou Steel’s system in June. Bayou uses the system to move shipments from LaPlace and Harriman, Tenn., production facilities and from its Chicago, Leetsdale, Pa., and Catoosa, Okla., stocking locations. Atlas Tube will use the system for shipments from Ontario and from its Plymouth, Mich., production facilities.
Obituuary
Tenaris Chairman
Rocca Dies
International pipe producer Tenaris S.A., Luxembourg, on June 10 announced
the death of its chairman, Robert Rocca.
Mr.
Rocca was born in 1922 and was the head of Techint, an international
group of companies (that includes Tenaris) with operations in the steel,
energy, infrastructure, engineering, construction and public service
sectors.
No
changes in the strategies, policies or conduct of Tenaris’ business
are expected. The company’s board of directors will determine,
in due course, Mr. Rocca’s successor as chairman.
Tenaris manufactures seamless steel pipe products and supplies pipe handling, stocking and distribution services to the oil and gas, energy and mechanical industries, and supplies welded steel pipes for gas pipelines in South America.
People
North Star Steel has a new president: Jon Ruth, succeeding
Jim Thompson, who continues as chairman of the board. Ruth joined
North Star in 1980. He has served as executive vice president-commercial
since 1996.
Pechiney Rolled Products LLC, Ravenswood, W.Va., has some new leadership. The company appointed Steven M. Abelman as president and chief executive officer and John H. Ferguson as chief financial officer.
Ernie Rummler was named vice president, customer service and manufacturing planning, at AK Steel Inc., Middletown, Ohio. He succeeds Theodore Holmes, who retired as vice president, customer service, on May 31. Holmes spent 30 years with AK Steel. Al Ferrara was named director of strategic planning.
Scott J. Montross has been named vice president, sales and marketing, at Oregon Steel Mills Inc.’s Portland Steelworks. Prior to joining OSM, Montross held the same post at National Steel Corp.
Titanium Metals Corp., Denver, elected six incumbents and one new member to the board of directors. Newly elected Terry N. Worrell joins incumbent directors J. Landis Martin, chairman, Norman N. Green, Albert W. Niemi Jr., Glenn R. Simmons, Steven L. Watson and Paul J. Zucconi.
Chuck Blackledge has joined Drawn Metal Tube, Thomaston, Conn., as general manager. This follows a long career at Precision Tube Co.
Questions or comments about Metal Center News. E-mail feedback@metalcenternews.com