Search Back Issues

Debate on Tap Over Water Resources Act

By on
When Congress returns to session in September, one of the key issues it will debate is the Water Resources Development Act, which calls for $12.2 billion in spending on various water projects over the next 10 years. If Congress breaks from recent tradition and passes the act quickly, it could pay immediate dividends for the steel industry, says Thomas Gibson, president of the American Iron and Steel Institute in Washington.

Among other projects, the bill would clear the way for steel-intensive work on the country’s ports, harbors and inland waterways, which are also vital for the transportation of steel and steelmaking raw materials. “That would result in a lot of steel sales this year and next year. The water bill is important to the industry in terms of steel consumption and transportation infrastructure,” Gibson said during AISI’s now-monthly conference call with steel industry watchers.

Considering Congress’ struggles to pass past transportation bills—authorizing numerous and troublesome emergency extensions before agreeing upon a short-term measure last year—many remain pessimistic about the prospects for the water bill. But Gibson is not one of them. “It doesn’t have some of the same funding hurdles it’s going to take to solve the transportation bill,” he said. “The water bill is a relatively easier bill to solve, and I’m optimistic it will get done this fall.”

Though a year in the distance, the next transportation bill is already on the minds of AISI leaders. The trade group would love to see a long-term bill passed, for a variety of reasons. As with the water resources bill, a comprehensive transportation bill would benefit the industry in two ways, as both sellers of steel and users of the nation’s roads and bridges. A longer-term bill would also give state highway departments the confidence to proceed with more ambitious infrastructure projects, with less fear that the clock will run out on federal funding.

But, Gibson said, the transportation bill faces several significant roadblocks, most notably a highway funding gap. Gasoline taxes fund much of the highway spending, but changes in driving habits and increases in vehicle fuel economy are reducing gas consumption and the resulting tax revenues. A solution won’t be easy.

“Some other means to finance highways, in addition to the gas tax, are going to have to be discovered,” Gibson said. “We’re working on that. And we’re working with some large coalitions beyond AISI, such as the Chamber of Commerce.”

Alcoa Curtailing More Smelting Capacity

Aluminum giant Alcoa will close or curtail 164,000 metric tons of smelting capacity in the United States and Brazil as part of its smelting capacity review announced in May.

One potline representing 40,000 metric tons at the Massena East plant in New York will be permanently closed. In addition, the company has started to temporarily curtail 124,000 metric tons at its smelters in Brazil. The closures and curtailments will be complete by the end of September.

“We committed in May to review our global smelting capacity for possible curtailment to maintain the company’s competitiveness,” says Bob Wilt, president of Alcoa’s Global Primary Products. “Aluminum prices, including premiums, have fallen to four-year lows, and we continue to operate in an uncertain, volatile market.”

To date, Alcoa has announced closures or curtailments representing 269,000 metric tons of the 460,000 metric tons placed under review in May. This includes the permanent closure of 105,000 metric tons of capacity announced earlier at Alcoa’s Baie-Comeau smelter in Canada. In addition, the company permanently closed its Fusina, Italy, smelter representing 44,000 metric tons that was not part of the May review.

Once the Massena and Brazil closures and curtailments are complete, Alcoa will have idled 16 percent, or 646,800 metric tons, of its smelting capacity.

Aleris Reports Quarterly Loss
Cleveland-based Aleris reported a net loss of $12 million during the company’s second quarter, a reversal from the $34 million in income posted during the same period last year. The aluminum maker reported a net loss of $1 million for the first six months, compared to net income of $82 million for the 2012 first half.

Net revenues for the second quarter declined 3.6 percent to $1.1 billion. For the year to date, the company’s net revenues dipped 3.2 percent to $2.2 billion.

“As expected, we generated solid sequential improvements in performance despite continued headwinds from metal and scrap spreads and sluggishness in the global economy,” said Steve Demetriou, Aleris chairman and CEO, in recent comments to investors and analysts.

Income in Aleris’ Rolled Products North America segment declined modestly in the second quarter to $33 million based on continued pressure from common alloy imports and tighter scrap spreads, offset somewhat by a higher value-added mix of products and productivity savings, management reported.
The company’s Rolled Products Europe segment also suffered a small decline to $39 million in income due to pricing pressures and higher employee and energy costs. The RPE segment enjoyed an 11 percent increase in volumes.

Second-quarter income from Aleris’ Extrusions segment was consistent with 2012, up $1 million to a total of $5 million. Volumes increased 2 percent as increased demand for transportation and automotive products offset the effect of the continued weakness in the European economy on demand for building, construction and engineered products.

Aleris executives estimate third-quarter 2013 income will be in line with second-quarter and third-quarter 2012 levels as a result of increased demand from the higher value-added global automotive market segment and the North American building and construction industry.

Given the current LME price of aluminum, Aleris expects that scrap spreads in the North American rolled products business will continue to be tight. Weaker demand from the global aerospace industry is also expected over the next several quarters as aircraft manufacturers look to destock current high levels of raw material inventory.

“In the second half of 2013 and into 2014, we expect to see steady improvements in our results based on the contributions from growth initiatives and an expected recovery in the global economy,” Demetriou said.

Profits Decline for Novelis
Atlanta-based Novelis reported net income of $14 million for its first quarter of fiscal 2014, a significant drop from the $91 million posted during the same quarter of its previous fiscal year.

The aluminum rolling and recycling company reported net sales of $2.4 billion, a little below the $2.6 billion posted last year. This decrease was attributed to a 7 percent decline in average aluminum prices, lower shipments and lower conversion premiums.

"Despite the challenges we faced in the first quarter, we maintained financial discipline through good cost control and will continue this focus on cost containment going forward," said Phil Martens, president and CEO. "In addition, our global strategic expansions and favorable demand trends supported by the 2014 World Cup in Brazil and automotive material substitution towards aluminum sheet will also help drive our business forward in the second half of this fiscal year."

Shipments of aluminum rolled products totaled 708 kilotons for the first quarter of fiscal 2014, down 2 percent compared to the same period last year.
Company officials said fiscal 2012 is a transition year, as it begins the commissioning of several strategic global expansions to support further demand for premium products in can, automotive and specialty markets. Those projects include two new automotive finishing lines in Oswego, N.Y. The commissioning process for this 240 kiloton expansion, which began in July, will continue through the remainder of the 2014 fiscal year.

Other projects included the July commissioning of the company’s new hot and cold mills in Korea, a $400 million investment that will add approximately 350 kilotons of rolling capacity and 265 kilotons of recycling capacity, as well as the ramp-up to full production of its rolling expansion in Brazil.

Expansions Ongoing in Iuka
Two metals manufacturing companies are expanding operations in the Iuka, Miss., industrial region on the Mississippi River.

G&G Steel will grow its operation through a $5 million expansion. The new facility will be used to manufacture large components for the U.S. Army Corps of Engineers for use on the inland waterway system. The first project will consist of large tainter gates that will be shipped by water to a lock on the Ohio River.

In a separate move, Contract Fabricators Inc. has launched a $3 million expansion at its waterfront facility. The new building, which will have two specially designed, 120-ton bridge cranes with 85 feet of clearance, will be used to manufacture pressure vessels, columns, cyclones, heat exchangers and other fabrications for the petroleum refining, cement and chemical industries. CFI specializes in large and complex special alloy vessels.


Executive Vice President Mario Longhi will succeed John Surma as president and CEO of U.S. Steel Corp., Pittsburgh. Surma will retain the position of executive chairman through Dec. 31, when he will retire from the company and its board of directors. “Mario is an experienced CEO, and we have benefitted from his strong leadership as we position our company for the future,” Surma says of Longhi, who served as president and CEO of Gerdau Ameristeel before joining U.S. Steel last year.

Libby Archell has been appointed vice president of corporate affairs for Alcoa, New York. Archell will be a member of Alcoa’s executive council and be responsible for communications activities affecting Alcoa’s reputation, relationship with the media and employee engagement.

Tori Johnson has been named product market analyst for Memphis, Tenn.-based Varco Pruden Buildings, a division of BlueScope Buildings North America. Johnson will be responsible for the innovation, research and testing of the company’s products.


Tube Tech Machinery, an Italian manufacturer of 3D tube laser cutting systems, has reached an agreement with Innovative Tube Equipment Corp. of Rockford, Ill., and Montreal, for the sale, service and support of TTM’s equipment in North America. ITEC’s partnership with TTM will be focused around the sale and support of its laser tube and profile cutting systems for industries ranging from agricultural and construction equipment to structural steel, architectural and oil extraction.

United Steelworkers members ratified an 18-month labor agreement with AK Steel covering approximately 800 production and maintenance workers at the company’s Ashland Works facility in Kentucky. In a separate deal, members of the United Auto Workers ratified a four-year agreement covering 195 hourly production workers at the company’s Rockport Works in Indiana.