| October 2005 |  |
| Metal Industry News | |
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Prices,
Surcharges Heading Up AK
Steel Corp. advised its flat-rolled carbon steel customers that
a $154 per ton surcharge will be added to invoices for products
shipped in October. AK Steel also advised its electrical steel customers
that a $90 per ton surcharge will be added to invoices for electrical
steel products shipped this month. Surcharges for stainless steel
products can be found at www.aksteel.com. Wheeling-Pittsburgh
Steel Corp. implemented a raw materials surcharge of $75 per ton
on shipments of all steel products effective Sept. 18, and continued
its motor carrier fuel surcharge. “The surcharge reflects significant
increases in our costs,” says Steve Sorvold, vice president-commercial.
“The cost of scrap, natural gas and transportation that were
already increasing have all risen dramatically since the disruptions
caused by Hurricane Katrina. Natural gas is at record-high levels.
The surcharge reflects the unprecedented effect of Hurricane Katrina
on these and other tightening raw material supplies.” The
Timken Co. seeks higher prices on steel bar products effective Nov.
1. Non-contract base prices will rise $25 a ton for all sizes and
grades of carbon and alloy steel bars. All thermal treatment pricing
extras will go up $30. Timken
also raised prices on seamless mechanical tubing products effective
Nov. 1. Non-contract base prices will increase 4 percent for all
sizes and grades of carbon and alloy seamless tubing. For all double
and triple thermal treated seamless tubing products, base prices
will increase 7 percent. On
both bar and tubing products, a natural gas surcharge will be implemented
using the monthly close Nymex Natural Gas Contract Settlement price
(Henry Hub Louisiana), as published in Platt’s Gas Daily. A
trigger point of $6.60 per MMBtu and a multiplier of 5.5 will be
used to determine the surcharge amount. Universal
Stainless & Alloy Products Inc., Bridgeville, Pa., also implemented
an energy surcharge, effective with shipments Oct. 1. The surcharge
covers only natural gas and will be published monthly on a per pound
basis. It will be calculated on the same Nymex settlement price
basis that Timken and many other manufacturers use. Rocky
Mountain Steel Restarts Seamless Mill, The
Pueblo mill is equipped to produce tubular products from 5.5 to
10.75 inches in diameter. The production capability includes carbon
and heat-treated tubular products. Production is expected to begin
in December at an annual rate of 100,000 tons with an emphasis on
quench-and-temper seamless casing products. In
conjunction with reopening the pipe mill, Rocky Mountain has agreed
to sell all of its output to one customer: Colorado Seamless Corp.
Its affiliate, OCTG LLC, will perform full-length ultrasonic testing
on the mill’s products as part of the manufacturing quality
control program. Colorado Seamless will ship the product to OCTG’s
facility in Houston, where that company will end-finish Rocky Mountain’s
tubular products. In
addition, Oregon Steel signed an agreement with a Canadian investment
group to build a facility at its pipe mill in Camrose, Alberta,
Canada, to manufacture, sell and service coiled tubing products.
Coiled tubing is a welded product produced in diameters from 1 through
3.5 inches and wrapped around a spool for continuous feed in oil
and gas field applications. Uses
of coiled tubing include well completion, well work-over and clean-out,
well stimulation and logging, drilling and production. Construction
of the coiled tubing facility will be completed in the first quarter
of 2006. Jim
Declusin, OSM President and CEO, says, “We are very excited
about the reopening of the seamless mill and the coiled tubing venture.
These investments will enable us to offer more value-added specialty
products that will complement our current offerings of energy-related
products.” With
the startup of the seamless and coiled tubing mills and the expected
commissioning of a new large-diameter pipe mill in Portland, Ore.,
in the first quarter of 2006, OSM will have approximately 650,000
tons of production capacity dedicated to the oil country tubular
goods and line pipe markets. “As
a result of today’s energy prices, we anticipate that the high
level of exploration and production activity will continue and should
result in increased demand for all of our energy-related products,”
Declusin says. “We expect the energy part of our business to
record strong financial performance into the foreseeable future.”
U.S.
Steel Expects Lower Natural
gas and scrap prices increased, leading to higher costs in making
steel. Meanwhile, U.S. Steel predicts its third-quarter flat-rolled
shipments will be slightly below second quarter levels, and average
realized prices will be moderately lower than the previous quarter.
The company says U.S. spot market prices are bottoming. In
Europe, a blast furnace outage at U.S. Steel Kosice has expanded
in scope and schedule. The furnace is scheduled to return to production
in mid-October. Third-quarter shipments in Europe will be below
those of the second quarter, and raw material costs declined less
than the company’s earlier prediction. Spot market prices in
the EU have declined substantially in the third quarter compared
to the second quarter. However,
order rates have strengthened both domestically and in Europe, and
U.S. Steel expects these orders will support higher operating levels
when the two blast furnace projects are completed and the equipment
is returned to production. Tubular markets and operations remain
strong. Steelworkers
Sign New Contracts The
union reached a tentative labor agreement covering 5,000 workers
at three Mittal Steel USA Inc. locations: East Chicago, Ind., Local
1010; Minorca Mine, Virginia, Minn., Local 6115; and New Carlisle,
Ind., Local 9231. International and local leaders are recommending
the agreement for ratification by the membership. Members
of Local 1865 ratified a new five-year labor contract covering 750
hourly production and maintenance employees at AK Steel Corp.’s
Ashland Works in Kentucky. James L. Wainscott, president and CEO,
says the labor agreement, which lasts through Sept. 1, 2010, contains
total employment costs that are competitive with the pattern established
in the wake of steel company bankruptcies and consolidation, while
providing equitable and competitive contract provisions for employees
and retirees. The
Timken Co. employees ratified a new, four-year labor contract covering
about 2,700 people at Timken bearing plants in Canton and steel
plants in Canton and Wooster, Ohio. The new contract went into effect
Sept. 26. However,
union negotiators at Local 14465 rejected what aluminum producer
Ormet Corp. called its “last, best and final” offer and
the existing contract expired Sept. 27. The union represents 1,200
members at Ormet’s Burnside, La., refinery, and reduction and
rolling facilities in Hannibal, Ohio. These members have been on
strike since November 2004. Ormet completed a bankruptcy reorganization
this year. Union leaders say they wish to resume talks with the
company. Stelco
Files Restructuring Plan Courtney
Pratt, president and CEO, says the plans and agreement “reflect
the constructive discussions held with creditors and other stakeholders.
We have listened to their views, acted on those concerns and tried
to amend the plan” in a fair and reasonable manner, in order
to balance competing interests. Under
the restructuring agreement, the province will invest $100 million
toward an upfront contribution to Stelco’s pension plans. It
has agreed to a schedule of fixed annual cash payments the company
will make into the plans through 2015. Stelco will contribute $400
million to the pension plans up front. The
restructuring agreement is conditional on the conclusion of a funding
arrangement with Tricap Management Ltd. to provide up to $450 million
in new financing and on the company entering into a memorandum of
agreement with each of USW Locals 8782 (Lake Erie) and 5220 (AltaSteel).
Local,
district and national leaders of the United Steelworkers greeted
Stelco’s court filing of a restructuring plan with guarded
optimism and the commitment that, if the company bargains in good
faith, they would support the plan. The
plan will provide Stelco with an estimated $630 million in net liquidity
at the plan implementation date, Dec. 31. And the new capital structure
and available liquidity will facilitate pursuit of the company’s
strategic plan. Allegheny
Expands Nickel, Major
projects of this expansion, which is expected to increase ATI’s
premium-melt capacity by approximately 20 percent, include: c
Upgrading and expanding vacuum induction melt (VIM) capacity. VIM
is a melting process designed for premium grades with high alloy
content that require more precise chemistry control and lower impurity
levels. c
Installation of two new electro-slag re-melt (ESR) furnaces and
three new vacuum arc re-melt (VAR) furnaces. ESR and VAR furnaces
are consumable electrode re-melting processes used to improve both
the cleanliness and metallurgical structure of alloys. “We
expect growth of approximately $70 million of annual revenue with
attractive after-tax returns from these capital projects when they
are implemented,” says Pat Hassey, chairman, president and
CEO. “These investments will help maximize the potential of
our installed asset base and optimize market opportunities for ATI.” This
expansion follows the company’s $100 million commitment to
grow its titanium product capabilities. Kaiser
May Emerge from Jack
Hockema, president and CEO, says a vote by creditors and confirmation
by the bankruptcy and district courts, when completed, will allow
Kaiser to emerge a globally competitive company with a strong balance
sheet, best-in-class operations, and the ability to grow in key
transportation and industrial markets. The
plan would result in the cancellation of the equity interests of
current stockholders and the distribution of equity in the emerging
company to creditors or their representatives. The majority of the
new equity would be distributed to two voluntary employee benefit
associations to defray the cost of medical benefits for salaried
and hourly retirees. Tarpon
to Acquire Midwest Tube Mills Midwest,
with 2004 revenues of about $25 million, manufactures mechanical
steel tubing products for the industrial and commercial sectors.
Applications include chain link fencing, agricultural fencing, pet
kennels, security partitions, sports facilities and parks, housewares
and furniture. Tarpon
Chairman and CEO J. Peter Farquhar says Midwest’s product line
will be complementary to Tarpon’s Steelbank Tubular mechanical
tubing platform and provide the company with further customer diversification
on both a geographic and end-user market basis. As
a result of the acquisition, “we would expect to see improved
purchasing efficiencies, reduced freight expense and increased revenues
due to additional sales into our complementary market segments.” Alcoa
Invests in China, Brazil With
its 73 percent stake in the new venture, Alcoa will be the managing
partner. Alcoa plans to invest $200 million to expand the facility,
installing a hot-rolling mill and related equipment. The mill should
be commissioned by 2008. The plant will serve customers in China
and throughout Asia in multiple markets with aluminum sheet, plate
and foil. Separately,
Alcoa Fastening Systems will create two new 50,000-square-foot manufacturing
sites in the Shanghai region. One plant will produce certain aerospace
fastening systems and the other will make fasteners for Alcoa’s
rail car/transportation customers. Production
at the rail car fastener facility is slated to begin operation by
the end of 2005. The aerospace fasteners plant is expected to start
production by October 2006. Alcoa
has decided to invest $1.6 billion in its Brazilian operations,
including a 2.1 million metric tons-per-year expansion of the Alumar
consortium alumina refinery in Sao Luis; the creation of a bauxite
mine in Juruti that will initially produce 2.6 million metric tons;
and the modernization of the Pocos de Caldas aluminum smelter. The
operations in Brazil “are among the lowest-cost facilities
in our system as well as in the world,” explains Alain Belda,
chairman and CEO. The company began operating its first plant in
Brazil in 1970 and today has seven operating locations there. Third-quarter
2005 income from continuing operations is expected to be between
27 and 31 cents per diluted share. Lower aluminum prices and higher
input costs, particularly for energy and raw materials, had a negative
impact in the quarter. Seasonal weakness in Europe and automotive
markets also lowered profitability. “This
quarter, we are squeezed between a weaker upstream pricing environment
and significantly higher energy and input costs,” says Belda.
“We continue to face challenges from escalating costs in energy
and raw materials.” The
company is selling off four short-line railroads serving aluminum
manufacturing operations in Texas and New York, and a former specialty
chemicals facility in Arkansas, for an estimated $77.5 million.
As part of the transaction, RailAmerica will continue to provide
services to Alcoa’s facilities. Copper
Tubing Maker The
company will also cut back certain support functions in its U.S.
manufacturing operations, and reduce its reliance on leased space
for executive and administrative offices. These actions should result
in year-over-year cost savings of up to $4 million. While
reducing costs in the United States, the company plans to expand
its Shanghai, China, operation to meet increasing customer demand
for technical tube and fabricated products in that country. Wolverine
is almost finished relocating its technical tube manufacturing operations
from Decatur, Ala., to Shawnee, Okla., and Monterrey, Mexico. The
company continues to expand its fabricated products offering in
Mexico. EWK
Deal Creates “The
integration of EWK into Swiss Steel creates the world’s largest
steel production, distribution and processing company for long products,”
claims Tony Elfstrom, president and CEO of Swiss Steel International.
“The combination results in investments in product offerings,
customer service capabilities and value-added services to benefit
our customers. The new group has 7,500 employees worldwide and total
steel production capacity of 2.5 million metric tons, with annual
sales of $4.1 billion. Elfstrom
says the existing sales and marketing team has remained in place
and that the source and mixture of products would not change. “Our
tool steels will still be produced by EWK in Germany, and we will
continue to provide nonferrous tooling materials supplied through
our distribution partners Alimex, Alcan and Brush Wellman. Our Heat
Treatment Division will continue to provide vacuum heat treatment,
metallurgical lab services and technical support,” he says. EWK
has received approval to invest $150 million in current production
facilities. These capital projects are designed to reduce lead times
and increase output in the production process. Swiss Steel International
NA has operations in Cleveland, Chicago, Detroit, Minneapolis, Toronto
and Windsor, Ontario. Mittal
USA Schedules The
moves are part of the company’s ongoing effort to balance its
supply of steel with the demand for its products in the marketplace
and the needs for maintenance of various ironmaking and steelmaking
equipment. John
Mang, executive vice president-operations west, says the IH3 blast
furnace at Mittal’s Indiana Harbor Steelworks will restart
in mid-October. The ironmaker on the west side of the Indiana Harbor
Canal typically produces about 4,000 tons a day. It has been idle
since early May. “Mittal
has the flexibility to fine-tune the maintenance needs in various
plants and the production required by our order book,” Mang
says. Workers
Strike Stainless Plant The
Titusville Steelworks includes five vacuum-arc remelt furnaces and
the Precision Rolled Products department. The Titusville facility
represents less than 6 percent of the company’s net sales.
Universal’s primary facilities in Bridgeville, Pa., and Dunkirk,
N.Y., which are under separate collective bargaining agreements,
will continue normal operations. Mac McAninch, president and CEO,
says Universal has implemented a contingency plan in order to continue
serving customers, while working with the union to reach an acceptable
agreement. Briefs Ontario’s
Superior Court of Justice approved the sale of substantially all
of the assets of Stelpipe Ltd. to Lakeside Steel Corp., a subsidiary
of Romspen Investment Corp. Stelco Inc. expects to close the transaction
by the end of October. Lakeside expects to continue Stelpipe’s
current operations in the current facilities and retain almost all
of Stelpipe’s employees. Stelco assumes all the pension and
benefit obligations respecting Stelpipe’s retirees. Mittal
Steel Company N.V., Rotterdam, received final approval relating
to its acquisition of 36.67 percent of Hunan Valin Steel Tube &
Wire Co., a deal valued at $338 million. Hunan Valin is one of the
largest steelmakers in China with annual capacity of 8.5 million
tons. It is listed on the Shenzhen Stock Exchange. Lakshmi N. Mittal,
chairman and CEO, says this marks the company’s entry into
China. Based
on a Sept. 20 rebuild schedule for the No. 14 blast furnace at Gary
Works, U.S. Steel Corp. expects the furnace to be available for
start-up in early December. The furnace should be capable of achieving
its expected production rate of 9,200 tons of molten iron per day
in January. The furnace section damaged in a Sept. 10 incident is
being repaired and was expected to be put in place by Sept. 28. Kaiser Aluminum won the 2005 TBM “Perfect Engine” Award for its Chandler, Ariz., operations. The award recognizes a company’s commitment to the continuous improvement in manufacturing through the implementation of LeanSigma techniques and standards. Winning facilities achieve outstanding productivity results, create business agility, growth and profitability. Arcelor
International America Inc. has successfully implemented the LoMaS
supply chain management system from ADS Logistics, Homewood, Ill..
LoMaS improves Arcelor’s EDI connectivity with customers. Steel
Dynamics Inc. has replaced its existing $230 million senior secured
revolving credit facility with a new five-year $350 million senior
secured revolving credit facility. Through this refinancing, the
company increased its liquidity from approximately $200 million
to $335 million, with the opportunity to raise the new facility
by an additional $100 million during the next five years. The new
facility is secured by substantially all of SDI’s accounts
receivable and inventories. The proceeds from the revolver will
be available to fund working capital and other general corporate
purposes. RUSAL,
Moscow, has closed the senior stage of syndication of a $575 million
credit facility with several major international banks. The loans
represent a building block in RUSAL’s future financing plans
and are being used to refinance current debt. The interest among
leading international lenders was so high that the leading arranger
closed the first stage of syndication with an oversubscription,
the company reports. Valbruna
Stainless Inc. instituted an energy component to its surcharge calculation
effective with shipments Oct. 1. The surcharge targets only natural
gas, and is based on the monthly close of the NYMEX Natural Gas
Contract settlement price as published in Platt’s Gas Daily.
The base level is $6.00 per decatherm of natural gas. The actual
per ton surcharge is determined by taking the difference between
the base ($6.00) and the NYMEX two-month prior settlement price,
which is then multiplied by a factor of 6.5. The gas surcharge for
October is $0.01 per pound. Nucor Corp.’s Crawfordsville, Ind., steel plant contracted Morris Material Handling to deliver a high-capacity P&H crane to transport hot metal ladles. It is the largest AC ladle crane operated by adjustable frequency control in the United States. It includes a 260-ton main hoist for the hot metal ladle, a 150-ton hoist for pouring, and a 25-ton maintenance hoist. The new equipment was to begin service in October. People Oregon
Steel Mills Inc.’s board of directors appointed Carl W. Neun
as chairman, succeeding William Swindells, who retired Aug. 31.
Swindells, former CEO and chairman of Willamette Industries Inc.,
had served as a director of OSM since 1994 and as chairman since
2001. Neun joined OSM’s board in 2002 and serves on its Audit
Committee. He was senior vice president and chief financial officer
for Tektronix Inc. from 1993 until he retired in 2000. U.S.
Steel Corp. has appointed George H. Thompson to general manager-service
centers, electrical, agricultural and industrial equipment. Thompson
oversees marketing and sales to U.S. Steel’s service center,
electrical, agricultural and industrial equipment customers. He
joined the company in 1987 and has held several managerial posts,
most recently as sales director for tubular products. Charles
Brown has been appointed senior vice president of sales, new product
development and materials at World Metals Corp., Scarsdale, N.Y.
He previously was director of global steel purchasing, materials
and logistics at Hayes Lemmerz International. He has also worked
at Gulf & Western, Trane and Kaiser Aluminum. Robert
J. Sellari has joined Continental Steel & Tube Co., Fort Lauderdale,
as executive vice president. He has 32 years of steel industry experience
at the mill and service center level, including purchasing and sales
management, international trade and materials management. Also joining
Continental is Darren Valentine as vice president. He has eight
years of steel industry experience in domestic and international
mill sales, purchasing and sales management, and international trading. Expanded Solutions LLC has promoted Cary Robinson to manager of the Wewoka, Okla., manufacturing plant and Vic Johnston to manager of finishing and logistics. A 25-year veteran of the company, Robinson was plant manager. Johnston, with the company for 20 years, oversees all finishing operations, warehousing and logistics. Charles F. White has joined Expanded Solutions as business manager in Wewoka. |
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