Friday, January 13, 2006

Steel Strip News Round-up

Latest forecast on Asian Steel Prices from MEPS reported:-

“In the flat products category, we still cannot see any short term solution to the chronic over supply situation in the region. Production cuts have been made in Japan, South Korea and Taiwan. However, more action is needed in China to redress the imbalance between supply and demand. This may be partially achieved by higher export volumes to the North American and EU markets. Significant price cuts are anticipated in January. The only positive note on pricing in Asia is that the rate of decline should ease and a modest upturn in prices is possible in the second half of 2006. We believe that drastic action to curb output growth will be taken in China during the first half of this year. Moreover, higher export activity will ensue from all the main Asian steel producing countries.”
They go on to say that recent price falls are not taken in to account in this forecast.
It is almost certain that despite the cuts in production within the EU and North America, that Asian exports will have a negative impact on overall prices. Whether or not this will effect will slow or halt in the second half is a matter of speculation.
In contrast to standard steel strip, it would appear that the price for galvanized products are rising as a result of the increase in zinc costs.


On Jan. 17, the Hamilton-based company will seek a judge's final approval to begin implementing its restructuring plan. If approved, the plan will pull Stelco out of two years of bankruptcy-court protection. If I understand the situation correctly, it is likely that existing stockholders’ will realise no value for their shares as Michael over at Stamping out a living, reported back in December. I would welcome the views and comments of anyone more familiar with the ongoing situation with Stelco.
Stelco Inc. is Canada’s largest and most diversified steel producer, with an annual steelmaking capability of 5.9 million tons. The other major producer Dofasco is currently the subject of a bidding war between Thyssen-Krup and Arcelor.

Wordpress Help

Off topic, but of interest to me! I produce this blog on two platforms, ie blogger and Wordpress. I am looking at moving the Wordpress version from my internet provider to a new (and more stable) location. I have installed Wordpress 2 on the new platform, and would welcome any advice on an easy way to “back up” my old database and transfer the information to the new location. Is there anyone out there can help me with this?


GCS said...

Just a few comments on the steel situation in Canada for you...Stelco's new plan does wipe out the value for existing shareholders. The big issue, is that once the plan gets court approval, the funds that are the largest creditors will get most of the new stock. The question when this all happens, is when the funds decide to bail on the company, leaving it in the same shape as it was before bankruptcy. So, as far as I can tell, there are no big changes in the Stelco plan, that put it in bankruptcy protection in the first place. With the prices of hot roll dropping to mid $400 this year, Stelco is going to have a hard time paying off the pension deficit, and creating value for their shareholders. Stelco management should have negotiated with the unions to reduce the costs there.
As for Dofasco, TK just came in with a revised bid of $68 a share this morning. Will Arcelor top it? I doubt it. I find it hard to believe that at the new offering price, that TK has put any value into the steel works in Hamilton, without some severe cost cutting measures. I give it a year, two at the most, before significant changes at Dofasco.

Steve said...

As I understand it, the attraction of Dofasco for both TK and Arcelor is access to the large Automotive Sector in North America.
TK have a good reputation in Europe and have do not have a history of plant closures.Prices and future revenues will of course play a large part in the future of all major steel plants.
The Stelco situation as you correctly point out seems far from being close to a longer term solution.