Study Suggests There May Be
a Future for Steel Futures
The metals industry in North America has given a cautious welcome to the concept of steel futures, claims industry publication American Metal Market. Fifty-six percent of respondents to a recent AMM survey said they welcomed plans by the New York Mercantile Exchange (Nymex) and the London Metal Exchange (LME) to introduce steel futures contracts in 2008.

“The jury is still out on steel futures, but it seems the metal industry is a lot more willing to give them a chance than is commonly thought,” says Jo Isenberg, editor of AMM.

AMM received almost 250 responses to its steel futures survey, which it published in January.

Executives at major steel producers are on record as strongly opposed to steel futures, which they consider a tool used mainly by financial speculators. Steel futures could transfer pricing power away from big metal companies in favor of prices determined on industry exchanges, which could have major repercussions for producers, distributors, consumers and traders.

Almost one-third of respondents to AMM’s survey said they planned to make use of a steel futures contract when it is launched.

Nymex has said it will launch a financially settled hot-rolled band contract, and the LME is planning physically delivered contracts in Asian and Middle Eastern steel billet, with the possibility of a North American contract in the future.

However, the exchanges may need to do a lot more marketing ahead of contract launch. Less than 10 percent of those taking part in the survey described their knowledge of the futures markets as “excellent,” while a whopping 84 percent said they didn’t have enough information to choose between the contracts on offer from the exchanges.

The metal industry is split almost down the middle on whether steel futures are likely to succeed. Just over 51 percent thought steel futures would eventually become an accepted price benchmark, while almost 49 percent thought that would never happen.

AMM and its sister publication Metal Bulletin are the official media partners and outlets for World Steel Dynamic’s SteelBenchmarker Index. WSD hopes that its global steel benchmark pricing system eventually will become the foundation for the trading of financial instruments used to hedge steel price risks.

U.S. Steel, JFE EnterTechnical Exchange
United States Steel Corp., Pittsburgh, and Japan’s JFE Steel Corp., have entered into a technical exchange agreement under which they will share expertise in the general areas of steelmaking practices, benchmarking and other areas of mutual interest. The exchange of technical know-how is expected to help U.S. Steel and JFE improve productivity, promote efficiency and deliver better steel products to the market at lower costs.

The program, which will be managed by each company’s research and technology organizations, will include periodic meetings, cooperative technical exchange programs and plant visits in North America, Europe and Japan.

“Today’s global steel industry faces many challenges including competition from alternate materials, environmental responsibility and rising energy and raw materials costs. U.S. Steel and JFE are leaders in independent steelmaking research and technology. By sharing our expertise in a variety of steelmaking areas, we will each become more globally competitive and enhance the sustainability of steel,” says John H. Goodish, U.S. Steel executive vice president and chief operating officer.

U.S. Steel also is planning a capital investment program in excess of $300 million for its Minnesota Ore Operations’ Keetac facility in Keewatin, Minn. The program, which will take an estimated 36 months, will increase production, enhance overall environmental performance, support the long-term viability of the Minnesota Ore Operations and modernize and improve a pellet production line that has been idle since 1980.

The restart will involve energy-efficient technologies in addition to new emission controls to exceed current environmental standards. The expansion will increase Keetac’s iron pellet production output by 3.6 million tons to a total annual output of 9.6 million tons. 

“U.S. Steel’s Minnesota Ore Operations have been providing iron-bearing pellets to our operations in the United States and Europe for many years. In 2007, we expanded our steelmaking operations into Canada, creating an opportunity to increase our production at Keetac in order to provide the same high-quality product to our Canadian operations,” says U.S. Steel Chairman and CEO John Surma.

Nucor, Duferco Team Up in Foreign Beam Venture
Nucor Corp., Charlotte, N.C., has found an international partner for steel production in Europe—Switzerland’s Duferco Group.

Nucor has signed a memorandum of understanding with Duferco, Lugano, Switzerland, to establish a 50-50 joint venture for the production of beams in Italy and the distribution of beams in Europe and North Africa. The parties hope to form the venture by the middle of the year.

The joint venture will encompass the Duferco Group’s Duferdofin subsidiary and associated distribution companies. Production of beams and other long products from Duferdofin’s plants in San Zeno, Pallanzeno and Giamorro, Italy, exceeded 900,000 tons in 2007. A new merchant bar mill is under construction in Giamorro and is expected to be operational in the fall of 2008. Additional investments in the Italian operations are under review by the two companies.

“For the last few years we have been saying that Nucor would enter into international steel production through joint ventures with culturally compatible partners where Nucor can leverage its particular operating know-how and intellectual property,” says Daniel DiMicco, chairman and CEO of Nucor. “We have been working with Duferco for some time to find the right fit for our two companies.”

Nucor is the largest producer of beams in North America, with a 2007 beam production of approximately three million tons. Nucor would bring its technical and commercial expertise to the venture.

“In a rapidly consolidating steel industry environment, Duferco has chosen the direction of strategic alliances with major players in order to continue operating on a global level,” says Bruno Bolfo, Duferco chairman. “We have enjoyed an excellent business relationship with Nucor over the years, and the prospect of a structured cooperation with our American friends is certainly an attractive step, given their impressive record of operating excellence.”

Rio Tinto Rejects
BHP Billiton’s $147.4 Billion Buyout Offer 
Rio Tinto has rejected a $147.4 billion buyout offer from BHP Billiton which would have created the world’s largest natural resources company.

“The logic of this transaction is well understood; a combination would provide opportunities to exploit quantified synergies and benefits worth $3.7 billion per annum, which would otherwise be unavailable to both sets of shareholders,” says Marius Kloppers, CEO of BHP Billiton. “A combined company would also create the world’s premier diversified resources company with both sets of shareholders being offered an opportunity to be part of a truly great global growth story.”

But Rio Tinto’s leadership says the offer for 3.4 BHP Billiton shares per Rio Tinto share undervalues their company. The two companies have been in discussions about a potential combination since November.

“Billiton’s offers, while improved, still fail to recognize the underlying value of Rio Tinto’s quality assets and prospects,” says Rio Tinto Chairman Paul Skinner.

 “Our plans are unchanged, and will remain so unless a proposal is made that fully reflects the value of Rio Tinto. Accordingly we are forging ahead with our strategy of operating and developing large-scale, long-life, low-cost assets to generate significant value for shareholders.”

BHP, Rio Tinto and Brazilian mining company Vale, already control more than 70 percent of iron ore production in the world. The combination would reduce the number of players, and has been a cause for some concern among some steelmakers about its impact on raw material prices.

Timken Acquiring Boring Specialties
The Timken Company, Canton, Ohio, will acquire the assets of Boring Specialties Inc., a provider of precision deep-hole oil and gas drilling and extraction products and services. Based in Houston, BSI had 2006 sales of approximately $48 million.

The acquisition will extend Timken’s presence in the growing energy market by adding BSI’s value-added products to its wide range of alloy steel products for oil and gas customers. Terms of the acquisition were not disclosed.

“Customers operating in an oilfield environment face some of the most demanding conditions on earth, and both Timken and BSI provide the products they need to succeed. As the search for new energy reserves goes farther afield and deeper below the surface, we believe that together we can capitalize on growth opportunities that alone we could not have tapped,” says Salvatore J. Miraglia, president of Timken’s steel group.

Charlie Elder, who founded Boring Specialties in 1972, will continue to serve as president of the new entity following the completion of the transaction.

Samuel Manu-Tech Buys Tube Company
Samuel Manu-Tech Inc., Toronto, has acquired Tubular Products Co., which designs, engineers and manufactures laser-cut carbon-steel tubing, fabricated tubular components and welded sub-assemblies The purchase price was approximately $30 million.

Birmingham, Ala.-based Tubular Products, founded in 1973, has annual sales of $30 million. The acquisition complements Samuel’s existing tube bending and welding capability at its Tube.tec operation in Statesville, N.C.

Bolton Metals Acquired
by Global Brass, Copper
Global Brass and Copper, a subsidiary of KPS Capital Partners LP, has acquired certain operating assets of Bolton Metal Products Co. Bolton Metal closed its brass rod manufacturing facility in Bellefonte, Pa., effective Feb. 1.

Chase Brass and Copper Co., a subsidiary of GBC, will service the customers of Bolton Metal. GBC intends to move certain equipment to the Chase Brass rod facility in Montpelier, Ohio.

“We are pleased to complete a transaction that positions our company to better serve the brass rod industry. Current customers can be assured that we will work closely with Bolton Metal to ensure as seamless a transition as possible,” says John Walker, GBC CEO.

The acquisition is GBC’s first since its formation by KPS in November 2007, when it acquired the worldwide metals business of Olin Corp.

Briefs
To alleviate capacity issues, Germany’s B ALunna Tubes Ltd., a subsidiary of Aluminiumwerk Unna AG, will acquire the operating business and assets of BA Tubes Ltd., Redditch, UK. The merger will provide substantial support capacity to B ALunna’s traditional plant in Unna, Germany, company officials say. The Redditch plant operates three extrusion presses, as well as cold drawing, heat treatment and ancillary facilities. Billet supply is secured from its own cast house.      

Butech Inc., Salem, Ohio, has purchased the product lines of Toptek Industrial Systems Ltd., Milton, Ontario, giving Butech Bliss the ability to provide material handling equipment to complement its metal processing equipment. Toptek has been supplying low profile scissor lift coil cars and other material handling equipment for 25 years. All sales, engineering, manufacturing, spare parts and service of the Toptek product line will be handled out of Butech’s Salem facility. 

Nucor’s Crawfordsville, Ind., facility set a record by casting 24 ladles of steel, continuously, over a 38-hour period in late December with the company’s Castrip process. Total throughput was 2,467 tons cast, while producing 2,387 tons of prime coils.

Aleris International Inc., Beachwood, Ohio, has completed the sale of its zinc business, US Zinc, to affiliates of Votorantim Metais Ltda. for $295 million.

Outokumpu has announced plans to produce high-quality, ultra-clean ferritic stainless steel grades and bright annealed austenitic and ferritic stainless steel products at its Tornio, Finland, facility. The $548.8 million investment will also include a service center in Southern Germany.

Northwest Pipe Co., Portland, Ore., has been awarded a $30 million contract by Major Tool & Machine Inc., Indianapolis, to manufacture tubing for steel casings to be used in centrifuge machines. Northwest Pipe will begin manufacturing the tubing in 2008 at its Parkersburg, W.Va., division. 

Pittsburgh-based Alcoa was named one of the most sustainable corporations in the world in the fourth annual Global 100 ranking of the top role models in sustainable business practices. Alcoa has been on the list every year since the ranking was started in 2005 and is the only U.S.-based company named to the list from the materials sector. Approximately one-third of companies on last year’s ranking did not return in 2008. The Global 100 looks at the environmental, social and governance performance of companies. 

Guang Ya Aluminum, NanHai City, China, has placed an order for seven flying cut double puller systems from Granco Clark, Belding, Mich. The Chinese company already has double pullers on two of its press lines.

ArcelorMittal has been awarded a license from the Industrial Development Authority of Egypt’s Ministry of Trade and Industry to construct a steel plant in Egypt. The license was auctioned in a competitive bidding process and ArcelorMittal’s winning bid was $60 million. Under the terms of the license, the plant will produce 1.6 million tons of steel using DRI technology, and 1.4 million tons of billets from an EAF. Construction of the plant, which will be located close to the Northern Red Sea Coast, is expected to start in 2009.

Sapa Extrusions LLC, Delhi, La., has been chosen to supply the aluminum extrusions that frame the glass walls of the new Dallas Cowboys football stadium. From its Louisiana plant, Sapa is providing more than 700,000 pounds of soft alloy extruded profiles to Texas Wall Systems Inc. 

Trageder Corp., Richmond, Va., will sell its aluminum extrusions operations in Canada for $25 million to WXP Holdings Inc., an affiliate of H.I.G. Capital. The deal is expected to close later this month.

Craig Davis has resigned as chairman of the board of Century Aluminum Co., Monterey, Calif. The board has elected John O’Brien, a current director, to succeed Davis as chairman.

New aluminum billet company Alexin, Bluffton, Ind., has appointed two aluminum industry veterans to vice president positions. Neil Johnson has been named vice president of sales and materials and Jay Jarrett is the VP of finance.

Alcoa Director of Investor Relations Tony R. Thene has been elected vice president and controller of the Pittsburgh-based company. Greg Aschman, who had been finance director for Alcoa’s Building and Constructions Systems business, will replace him. Also, Alcoa appointed Stan O’Neal, former chairman and CEO of Merrill Lynch, and Michael G. Morris, chairman, president and CEO of American Electric Power Co., to its board of directors. 

PRIMA North America, Champlin, Minn., has appointed Peter G. Thompson to the position of technical director for Laserdyne Systems. His responsibilities include advanced process development and technical support for Laserdyne customers worldwide.

People
Thomas J. Cera has been appointed chief operating officer of Severstal North America, Dearborn, Mich. Cera will be responsible for quality, operational effectiveness and safety. He replaces Jim Hrusovsky, who was appointed CEO at SeverCorr, Columbus, Miss.

 The Port of Longview has announced two promotions and a new hire. Director of Facilities and Engineering Norm Krehbiel will become deputy executive director and Manager of Business Development Valerie Harris will become director of marketing upon the retirement of Gary Lindstrom. Also, Ashley Opsahl-Scibelli is the new manager of communications and public affairs for the Longview, Wash.-based port.

Joel Mazur has been named president of Wheeling Corrugating Co., a division of Esmark Inc. Mazur has more than 25 years experience in the steel industry, including positions at Winner Steel, The Techs, Weirton Steel Corp. and National Steel Corp.

TMK North America Inc., Houston, has promoted Chuck King to president. King, a 24-year veteran of the steel industry, has been serving as vice president of sales for TMK North America, which sells and services all of TMK’s tubular products in the Americas.