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Martin Wolf, as he often does, wrote an interesting column in the Financial Times recently called The market sets high oil prices to tell us what to do. As $1,000/ton steel becomes an accepted fact of life it’s worth asking what the market is telling us to do about high steel prices.
Martin Wolf offers six ‘do’s and ‘do not’s’ as responses to the price of oil. Here they are and how they apply to steel.
1. Do not blame conspiracies or speculators
The steel industry version of conspiracy or speculation theory is ‘insanity’ theory. Current steel prices are regularly called “ridiculous” by some observers. But calling prices ridiculous cuts off any further, more reasoned analysis as to why prices of $1,000/ton or even twice that might not only be rational, but sustainable in the foreseeable future. Avoid calling prices ridiculous. It doesn’t help, especially if they go up again.
2. Do not blame emerging countries for their growing demand
It seems obvious that soaring steel demand in developing countries is a good thing for most industry participants, sellers and buyers. But sometimes these emerging economies are blamed for the few negative aspects to the industry’s current good fortune. China, India and the like have helped drag the industry out of its long term poor performance and we should be thankful at least for that and hope their growth continues.
3. Adjust to high prices by becoming more efficient in the use of oil
Just as with oil, the developed world has been profligate in its use of steel. We thought we could afford to be when it cost only $200/ton. But in Pittsburgh, we still use it to cover potholes in the street. In many manufacturing processes, yield losses of 25% or more are commonplace. We need to be more efficient in our use of steel because it isn’t cheap any more and it’s unlikely to be for some time. Smart manufacturers like Toyota recognize this. Read the rest of this entry »
MMK’s planned steel mill in southern Ohio just received final permits from the Ohio EPA. You will be able to see the permits (though they’re not yet online) at the Ohio EPA site. A number of other application documents were linked to from this post back in February.
This link will take you to the Ohio EPA page for New Steel International, the working title of MMK’s proposed steel mill investment in Haverhill or Franklin, OH. Deep in the detail you will see estimates of the facility size. It’s not clear exactly how big the facility will be. The plan is to build the finishing end first (cold rolling capacity of 6,000 tons/day) followed by the meltshop (casting capacity of 12,000 tons/day). New Steel International is the name of the consulting company which filed the application on MMK’s behalf.
And on the subject of ThyssenKrupp, here’s a short video from DeutscheWelle (in English) describing the start up of the ThyssenKrupp number 8 blast furnace in Duisburg.
There’s a very useful Google Maps mashup from MapEcos that uses emissions data from the EPA’s Toxic Release Inventory (which has been gathering industrial emissions data from industrial facilities since 1988). You will be asked to enter a name and a zip code on the landing page link above. You can do so or just hit skip it and go to the map. Once the map has booted, enter 3312 in the second search box for the SIC code for steel. All steel facilities in the database will populate the map. Zoom in on any region and then one of the map markers and the TRI data for each facility (along with other information) will show up in the marker’s callout balloon in a series of tabs along the top of the callout.
