| January 2005 |  |
| Metal Industry News | |
|
|
|
Novelis:
A New Model in Aluminum “We
want to be more of a solutions provider and less of an integrated
company moving many tons of metal,” explained Martha Finn Brooks,
chief operating officer, in her remarks to the Aluminum Division
of the Metals Service Center Institute in mid-November. Novelis
encompasses 38 operating locations in 12 countries, employing about
14,000 people. “It is the largest aluminum mill products supplier
in the world, based on both revenue and volume by tons,” Brooks
says. “We are on a run rate in 2004 to achieve $7 billion in
revenues.” The
creation of Novelis allows for cultural and business model changes,
she continues. “We want to become more focused on the world
from the shoes of our customer. We don’t have the same upstream
mindset. Vertical integration did not always allow us to match our
goals between what distributors and manufacturers wanted.” For
example, she said, an integrated producer typically wants to sell
the most tons at the highest possible price. But when a company
is not integrated, the thinking is more about solutions. “You
are willing to work on light-gauge product, which means fewer tons,
but you do a better job for the end user and provide a better solution.”
Another
aspect of Novelis’ transformation is its emphasis on recycling.
“For us, it’s more important than ever to promote the
recyclability of our product.” ISG
Plans to Restart Burns Harbor Plate Mill “Restarting
our 110-inch plate mill is another exciting advancement in the growth
of our business,” says Rodney B. Mott, president and chief
executive officer. “Our decision to return this mill to operation
is driven by increasing customer demand and our desire to quickly
respond to the needs of our valued customers.” The
110-inch plate mill, one of the most modern in North America, is
capable of producing carbon, high-strength low-alloy and alloy plate.
Markets for these products represent a wide range of industries,
including rail, construction, shipbuilding, oil and gas exploration
and production, and machinery. The ISG Plate Division also is a
major supplier of armored plate products that are used to protect
the U.S. Armed Forces serving in Iraq and elsewhere. The
Burns Harbor plant employs approximately 3,700 workers. It is one
of five fully integrated raw steel-making facilities owned and operated
by ISG. In
other action, ISG started up its hot briquetted iron (HBI) facility
in Trinidad and Tobago. ISG purchased the facility in July 2004
from Cliffs and Associates Ltd. as part of its strategy to stabilize
its raw material supplies and costs. ISG management is aiming for
a production rate of 36 tons per hour in the next few months and
hopes to reach design capacity by summer. HBI can be used in both electric arc and blast furnaces as a high-quality substitute for scrap steel. ISG’s Trinidad facility has the capacity to produce approximately 550,000 tons of HBI annually. The process uses natural gas to heat iron ore fines (powder and small particles) in a liquid slurry and reduce the mixture under a hydrogen environment into iron briquettes. TXI
to Spin Off Chaparral Steel Chaparral,
with mills in Midlothian, Texas, and Petersburg, Va., is one of
the top three structural steel suppliers in North America. TXI produces
cement, concrete and aggregates. “Both
businesses will have strong capital structures. Each will focus
on the improvement of returns from current operations and also pursue
strategic investment opportunities in their industries,” says
Mel Brekhus, TXI’s chief executive officer. The board named
Tommy Valenta, currently executive vice president of TXI’s
steel operations, as CEO of the stand-alone Chaparral. A
separation of TXI’s cement and aggregate business from its
steel interests is expected to permit each company to more efficiently
obtain and allocate resources and allow their managers to focus
on the opportunities and challenges specific to their particular
business. The
plan is subject to confirmation that the share distribution will
be tax-free, continued favorable market conditions, satisfaction
of U.S. Securities and Exchange Commission requirements and other
customary conditions. The spin-off should be completed by summer. Brekhus, in a letter to employees, said the vast majority of employees won’t be affected by the change and that details would follow as they develop. Investors
Show Interest in Stelco First,
Algoma Steel Inc., an integrated steel producer based in Sault Ste.
Marie, Ontario, announced its possible interest in participating
in the process. Denis
Turcotte, Algoma’s president and CEO, says this review of Stelco
is consistent with an internal program to look at all opportunities
to improve the company’s value. “Algoma will proceed with
a transaction only if certain significant issues can be satisfactorily
resolved and our shareholder value can be enhanced.” Second,
Island Energy Partnership, a joint venture between the Ontario Teachers
Pension Plan Board and Sherritt International Corp., submitted a
$1.8 billion recapitalization and asset purchase proposal. This
proposal includes the purchase of assets and additional capital
investment by IEP in the assets after they have acquired them from
Stelco. Courtney
Pratt, Stelco’s president and CEO, says the board of directors
is pleased with the expressions of interest in the company’s
bankruptcy court-managed capital raising process. “Our goal
has been a vigorous and competitive process that benefits all of
our stakeholders. The interest we have received suggest that our
goal is being achieved.” Hap
Stephen, Stelco’s chief restructuring officer, says each of
the two proposals will be subject to due diligence and negotiation
before any binding offers are requested under the process approved
by the court. The
next stage for Algoma will be to provide Stelco with some details
of what it has in mind, Stephen says. “Island Energy’s
proposal includes some details including a list of proposed benefits
with dollar values associated with each element. At this stage,
it is hard to predict how those values will change as due diligence
takes place.” Until these two proposals were brought forward, Deutsche Bank and affiliates were the stalking horse bidders for Stelco’s assets. Oregon
to Close Napa Mill, The
steelmaker contracted with Casey Equipment to sell the pipe mill
assets, while Cushman & Wakefield will sell the mill property,
152 acres valued at $31 million. However,
the company plans to build a spiral weld double-submerged pipe-making
facility near Portland. The project consists of two pipe mills with
an annual capacity of about 150,000 tons, capable of producing API
certified large-diameter line pipe from 24 to 60 inches in diameter,
with wall thicknesses of 0.25-inch to 1 inch, and up to 80 feet
long. The facility should be finished in the first quarter of 2006.
Meanwhile,
Oregon will bid for and produce all its large-diameter line pipe
orders at Camrose Pipe Co., a subsidiary in Camrose, Alberta. Camrose
is expected to produce about 100,000 tons of large-diameter line
pipe during the first six months of 2005 vs. 2,000 tons for all
of 2004. The
steel plate requirements for Camrose will be manufactured at the
Portland rolling mill. Plate production began in the second half
of December. The
company surveyed customers, who indicated that between 2005 and
2008, there could be demand for as much as 2.5 million tons of large-diameter
line pipe in North America. “We believe that Oregon Steel is in a very good position with our current and future large-diameter pipe making capability, coupled with our Portland rolling mill, to participate in a significant way in these projects,” says Oregon Steel CEO Jim Declusin. Maverick
Tube to Build in Louisville Total
cost of the new facility, including land, building and equipment,
is estimated at $63 million. Construction will begin this quarter
and be completed by the end of the year. Northwest
Consolidates California Facilities The
company has signed an agreement to sell the Riverside facility to
a real estate developer, O’Donnell Group Inc., for $12.5 million,
for a possible residential development. “These
two facilities are less than one hour apart and have been operated
under common management for some time,” explains Brian W. Dunham,
president and CEO. “The Riverside facility has focused on smaller-diameter
pipe and projects while our Adelanto division has provided larger
pipe for major systems for San Diego County, Metropolitan Water
District, Los Angeles Department of Water and Power and others. “We
expect to serve all of our customers’ needs more efficiently
from this single, combined facility,” he says. The
new facility will include five separate manufacturing lines. It
will be the largest steel pipe facility focused on water transmission
projects in the United States with the capacity of producing pipe
from 4 to 156 inches in diameter. The facility is designed to provide
complete piping requirements for complex projects throughout the
Southwest. Grupo
Imsa Joins Slab Consortium For
10 years, Grupo Imsa will have access to 16 percent of the Teesside
plant production capacity, estimated at between 3.2 and 3.6 million
tons of slab per year, at cost. This will represent approximately
20 percent of the company’s current and future needs. As
part of the agreement, Grupo Imsa will pay over the life of the
contract an estimate of $53 million. If Dongkuk Steel joins the
consortium, that price drops to $46 million—proportional to
the redistribution of the steel slab capacity among the participating
companies. Santiago Clariond, chief executive of Grupo Imsa’s parent, Imsa Acero, says the contract is in line with the company’s strategy to assure an important part of its steel needs in order to serve customers better and improve control over inputs. “It also opens the door to exploring opportunities to expand the production capacity at our hot-rolling mill,” he adds. Republic
Plans New Caster The
new caster, along with additional steel refining and processing
equipment, will provide Republic with additional flexibility to
schedule steel production at its two electric arc furnaces in Canton
and its blast furnace in Lorain. “This
investment, being made in conjunction with state and local cooperation,
will strengthen our capability to supply high-quality electric furnace
steel products to the automotive, industrial equipment and other
demanding markets,” says Joseph F. Lapinsky, president and
CEO. Plans
call for Republic to employ approximately 170 people to operate
the new caster and related equipment, which will cast blooms and
billets that will be rolled into bars at facilities in Lorain and
Lackawanna, N.Y. “Adding
electric furnace casting capacity in Canton will provide more operating
flexibility, and permit us to better address the impact of raw material
cost and supply variability,” Lapinsky says. “We will
continue to schedule production based on customer needs and market
conditions.” In financial news, Republic reported net income of about $19.7 million on net sales of $839.8 million for the nine months ended Sept. 30, 2004. This compares to a net loss of $105.5 million in the comparable period of 2003. Net sales increased 49.8 percent compared to the $560.7 million reported a year earlier. Republic also paid out more than $1 million to its hourly and salaried employees under its profit-sharing programs as of Nov. 15. Kaiser
to Boost Shipments of Armor Plate During
2004, Kaiser shipped more than 4 million pounds of aluminum plate
to specialized producers of vehicle armor kits for military applications.
In 2005, Kaiser expects to boost shipments further, despite the
fact that broad industry demand for aluminum plate has been so strong
that many non-military customers are receiving only limited-allocation
shipments. Kaiser
has shipped most of its vehicle armor plate to the Phoenix and Cincinnati
manufacturing facilities of Armor Holdings Aerospace & Defense
Group. The company uses the aluminum in combination with steel to
provide ground vehicle armor and mine blast kits for U.S. military
vehicles such as the Humvee and heavy trucks. Robert
Mecredy, president of the Armor Holdings Aerospace & Defense
Group, says the aluminum plate “is a crucial piece of the armor
kits. When combined with steel, the aluminum basically acts as an
additional buffer to decelerate projectiles.” Mecredy
says Kaiser’s ability to deliver aluminum plate has enabled
his company to meet an aggressive production schedule, and thus
the military’s immediate needs, for vehicle armor kits. “We
are proud to work alongside suppliers who are as dedicated as we
are to increasing production as needed to protect our troops.” Kaiser
shortly expects to hear from the Army Tank-automotive and Armaments
Command (TACOM) regarding additional quantities of plate that may
be required for the balance of 2005. In
other news, Kaiser hopes to emerge from Chapter 11 bankruptcy by
summer, when it will be a smaller company primarily focused on its
fabricated products business, now based in Foothill Ranch, Calif. In
order to best achieve cost efficiency and take advantage of the
staffing and expertise in the fabricated products business, Kaiser
plans to relocate its corporate headquarters from Houston to Southern
California, according to Kaiser CEO Jack A. Hockema. The move will
occur in stages, generally over the first half of 2005. Steel
Volume at Indiana Ports Hit Record Highs This
total—and the increased shipping numbers at Indiana’s
two river ports—combined for the largest shipping month for
the entire system since 1996. October’s total volume increased
100,000 tons over September. “We
are seeing increased shipping in all directions,” Port Director
Steve Mosher says, citing two shipments in November and December,
each of 27,500 tons of steel slabs from Mittal Steel (formerly Ispat
Inland) in Burns Harbor to Dofasco Inc. in Hamilton, Ontario. Through
October, the Port of Indiana at Burns Harbor handled 731,645 tons
of steel, up 53 percent from a year ago. System-wide,
steel and coal cargoes each rose 64 percent year to date. Coal is
used to make coke to feed steel blast furnaces. On the Ohio River
at Mount Vernon, steel volume increased 82 percent year to date and coal volume increased 67 percent. On the river at Jeffersonville, steel volume nearly doubled (95 percent) through October. Wolverine
Expands in Mexico “We’ve
been talking about Mexico for seven years,” says James Deason,
executive vice president. The facility, with a $5 million investment
in capacity expansion, will serve existing customers in Mexico and
North America, and plans to go after growing markets and new business
opportunities throughout the NAFTA region. The
operations were to start producing brazed assemblies for heating,
ventilating, air conducting and refrigeration and appliance customers
by December 2004, and add technical tube production during the first
quarter. About $3 million of Wolverine’s initial $5-million investment included existing equipment being relocated to Mexico from manufacturing facilities in Decatur, Ala., and Carrollton, Texas. Briefs Companhia Vale do Rio Doce (CVRD), a producer of iron ore and pellets, and ThyssenKrupp Stahl A.G., one of Europe’s largest steelmakers, signed a memorandum of understanding to build an integrated slab plant in Brazil. The next step is to form a joint venture, Companhia Siderurgica do Atlantico, to conclude a joint feasibility study and implement the project. The plan is to construct a steel furnace operation that will produce 4.4 million tons of slabs per year in the State of Rio de Janeiro. Production would begin in 2008. AK Steel will increase base prices for all its carbon flat-rolled steel products sold in the spot market by $50 per net ton effective Jan. 1. The company also advised its flat-rolled carbon steel customers that a $205 per ton surcharge will be added to invoices for products shipped in January, an increase of $52 from December’s surcharge of $153 per ton. Electrical steel customers will see a $400 per ton surcharge added to their invoices in January 2005, up $140 from December’s surcharge of $260 per ton. AK
Steel has signed agreements for the supply of all of its anticipated
coke purchases through the end of 2009. Commercial
Metals Co.’s board of directors declared a two-for-one stock
split in the form of a 100 percent stock dividend on the company’s
common stock, payable Jan. 10 to shareholders of record Dec. 13.
Each stockholder receives one additional share of CMC common stock
for each share held as of the record date. CMC also intends to institute
a quarterly cash dividend of 6 cents per share on the increased
number of shares. The effect of the dividend combined with its new
rate means shareholders will see a The Timken Corp. announced price increases on mill shipments of seamless tubular steel products effective with shipments Jan. 1 until further notice. Raw material surcharges will remain in effect. Hot-rolled and cold-drawn carbon tubing moved 8 percent higher; hot-rolled, annealed alloy products rose 12 percent; hot-rolled, double thermal treated alloy products increased 12 percent. All carbon tubing greater than 9 inches in diameter with OD/wall ratios of less than 6.5 increased 13 percent; and all alloy tubing greater than 9-inch diameters with OD/wall ratios of less than 6.5 rose 18 percent. Timken Latrobe Steel raised prices 5 percent on all high-speed alloys and raised prices 5 to 10 percent on all remelted aerospace alloys and air melt stainless steel grades, effective Dec. 1. Consulting firms Metal Strategies Inc., West Chester, Pa., and Shackleton Partners LLC have formed an alliance, integrating the capabilities of the former in the metals and raw materials sectors with the expertise of the latter in steel handling and transportation. The focus of the alliance will be to leverage Shackleton’s experience in maritime and inter-modal transportation through Metal Strategies’ consultancy customer base. People Franklin “Frank” L. Feder has been named president of Alcoa Latin America, based in Sao Paulo, Brazil. He oversees Alcoa’s businesses in South America, coordinates growth activities in the region, and works closely with government and communities to optimize Alcoa’s profile in the country. He also is a vice president of Alcoa Inc. Feder has been with Alcoa Aluminio, Brazil, since 1990. James E. “Jed” Deason, executive vice president, chief financial officer and secretary of Wolverine Tube Inc., has retired. He is succeeded by Thomas B. Sabol, who was named chief financial officer and senior vice president of finance and accounting. From 1996-2003, Sabol was executive vice president and CFO for Plexus Corp. Woody Petchel has been appointed president of Cerro Metal Products, succeeding Charles Doland, who retired after 39 years with the company, the last six as president. He continues as an advisor through March. Petchel was president of Koehler-Bright Star Inc., manufacturer of portable lighting equipment for mining and other industries. Both Cerro and Koehler-Bright Star are members of The Marmon Group of companies. Doland began with Cerro working in the factory at age 19 and went on to serve in a variety of capacities in maintenance, engineering, sales, manufacturing, and senior management. |
|
Questions or comments about Metal Center News. E-mail feedback@metalcenternews.com