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Chinese scrap market maintains its slight rising trend

Over the past week, the Chinese scrap market saw a slight rising trend, with a further ascension expected in the coming period against the tight availability of scrap supply. However, the relatively soft performance lately observed in the finished steel market is likely to exert a significant impact on the scrap market

Source: SteelOrbis Shanghai  – For the latest in steel news & trends subscribe to SteelOrbis News at http://www.steelorbis.com

US demand too weak to prop up steel prices against falling scrap

With US shredded scrap prices dropping by up to  $30/long ton this month, there is a very good chance that US rebar prices will fall right along with them.

Given the ongoing weak demand in the US rebar market, it is quite likely that this time, domestic mills may opt to  lower rebar prices in step with the decreases in scrap.

Meanwhile, Turkish mills are still pretty hungry for business and they are seeing falling scrap costs as well. However, if US prices do come down another notch as expected, Mexican rebar imports, along with imports from other sources, will most likely come down by at least as much in order to stay competitive with US material. Source: SteelOrbis  – – For the latest in steel news & trends subscribe to SteelOrbis News at https://www.steelorbis.com.

Interlake Files for Chapter 11 Bankruptcy

NAPERVILLE, Ill.—Interlake Material Handling, a large long time  manufacturer of steel storage racks and a division of United Fixtures, has filed for Chapter 11 bankruptcy.

The news was reported by a  newspaper in Sumter, S.C. The newspaper quoted  a company manager who said the filing was a preemptive measure that would allow the company to restructure.

“This is not a liquidation,” Jones said. “The biggest advantage to us is that it allows us to restructure our debt. It will allow us to obtain working capital in order to continue our operations and put us in a better position to be acquired by another company.”

Although there is no word yet about a final deal, Interlake is reportedly in talks with a potential buyer. “We have a buyer with a very strong balance sheet,” said Jones. “The sale has not been finalized yet, however.”

Jones also said the bankruptcy will not lead to a closure of the Sumter plant and predicted a bright future for Interlake in Sumter, S.C.

“This is a very positive thing for us,” he says. “If bankruptcy can be seen in a positive light, this definitely is. And, while I can’t speak for the future, especially if the company is purchased, at this time, we have no plans for further reductions in personnel.”

Interlake Material Handling Bidding Procedures Approved for Assets

Yesterday, the bankruptcy court entered an order approving bidding procedures for substantially all of the assets of Interlake Material Handling, Inc. and its affiliates.  The court also approved the proposed break-up fee and expense reimbursement for the stalking horse bidders for the assets, Mecalux USA, Inc. and Mecalux Mexico S.A. de C.V., which would be paid in the event that those parties are not the winning bidders for the assets at the conclusion of the bidding process.

The order attaches the approved procedures for other parties to provide competing bids for the assets.  In the event that qualified competing bids are received, an auction is scheduled to be held on March 4, 2009 in Wilmington, Delaware.  Source: netDockets Corporate Restructuring and Bankruptcy Blog

World stainless production plummets 30%

World stainless steel production fell by almost 30% year-on-year in the final quarter of 2008, estimates analyst Macquarie Research Commodities. This is the biggest such quarterly drop since 1975, it adds, reflecting the severity of the global turndown and the “desperate measures” taken by stainless mills.

Factoring in this decline in activity, Macquarie estimates global stainless production at 26.4m tonnes in 2008. This is 6.6% down on its figure of 28.3m t for 2007, which in turn was 1.2% below the record 28.6m t in 2006 (slightly more than the International Stainless Steel Forum’s 28.4m t for that year).

Info provided courtesy SBB Steel Purchaser

Steel prices expected to fall further in 2009

steelpricechart

Steel buyers aren’t showing much enthusiasm for early 2009, according to a poll by Purchasing magazine, since incoming customer orders are down, manufacturing operations are depressed and prices on all raw materials have been collapsing. Though more optimistic than in November, buyers are entering the New Year with little enthusiasm about first-quarter demand or flat-rolled product–even with expectations of lower transaction prices than the December averages of $634 for hot-rolled sheet, $736 for cold-rolled sheet and $757 for hot-dip galvanized.

Reason: “The U.S. economy remains firmly locked in a deep recession that will be difficult to emerge from in the months ahead,” which will keep steel demand depressed, says Scott Anderson, the senior economist at Wells Fargo Economics in Minneapolis. “Consumer confidence is getting totally swamped by a rapidly deteriorating labor market and plunging housing and stock market wealth,” which will keep sales of steel-bearing products depressed.

Analyst John Anton at IHS Global Insight’s offices in Washington says that “fear has descended onto the steel market, with prices seizing for many products.” He believes the demand side is weak in preparation of a long recession and that has been stronger than the fourth quarter supply-side reduction in production to less than 50% of capacity.

Mills have cut production but buyers have reduced purchasing more

“There is some credence to the fears on the demand side,” says Anton, noting that “the downturn will be severe and there will be little recovery in North American sheet end-markets of housing, appliances and automotive, which are at the lowest levels in decades.” Anton says this end-use weakness will persist through 2009.

In December, the purchase price average for benchmark hot-rolled sheet in coil was 47% below the cyclical peak of $1,068 in July while cold-rolled sheet in coil dropped by 42%. And there was December price slippage also evident for coated sheet, plate products, rods, light structurals and most bar grades. Stainless steel prices also dipped at year’s end. And the slide isn’t over yet.

In fact, according to sheet steel buyers polled in December, early delivered prices for January averaged $525 for hot-rolled and $628 for cold-rolled. The survey also shows that only 16% of the steel buyers plan to increase purchasing even at reduced prices, though that’s higher than the 12% reporting plans to increase buying in November. “There aren’t that many orders out there, especially at this time of year,” a Midwest service center source tells the American Metal Market subscription newspaper. “The holidays are always slow, but with everything that has happened (related to the global credit crisis), things are even slower.”

Source:  Tom Stundza- Purchasing.com

US Steel Producer Nucor Reports Record Results

Entering the fourth quarter, the global economy has been negatively impacted by the crisis in the financial markets. What started out as a seasonal slowdown  (due to temporary global market disruptions such as the six-month China Olympics effect and the Middle Eastern religious holidays)

has now been overwhelmed by a worldwide financial crisis that is unique in both size and scope in our lifetime. The business environment has obviously become significantly more challenging for everyone including Nucor. There is little forward visibility on either the economy or our industry, even for the fourth quarter. These conditions are such that financial projections are not practical. Therefore, we will not be providing numerical or qualitative guidance at this time. We will give an update of our business at the normal time midway between our quarterly earnings releases.

What we can say is that 2008 will be another record year for Nucor and today our competitive position is stronger than ever, both here and globally. If recent initiatives by the world’s governments to stabilize financial markets are successful, then businesses should see significantly improved access to credit and resulting improved business conditions beginning early in 2009. We are still strong believers in the long-term strength of the global infrastructure build and the associated bull market for steel. It is this global growth in steel demand that will help drive Nucor’s growth and profitability.

Headquartered in Charlotte, N.C., Nucor makes more steel in America than any other company. Nucor and affiliates are manufacturers of steel products, with operating facilities primarily in the U.S. and Canada. Products produced include: carbon and alloy steel — in bars, beams, sheet and plate; steel joists and joist girders; steel deck; fabricated concrete reinforcing steel; cold finished steel; steel fasteners; metal building systems; light gauge steel framing; steel grating and expanded metal; and wire and wire mesh. Nucor also brokers ferrous and nonferrous metals, pig iron and HBI/DRI; supplies ferro-alloys; and processes ferrous and nonferrous scrap. Nucor is North America’s largest recycler.

Certain statements contained in this news release are “forward-looking statements” that involve risks and uncertainties. Factors that might cause the Company’s actual results to differ materially from those anticipated in forward-looking statements include, but are not limited to: (1) the sensitivity of the results of our operations to prevailing steel prices and the changes in the supply and cost of raw materials, including scrap steel; (2) market demand for steel products; (3) energy costs and availability; (4) competitive pressure on sales and pricing, including pressure from imports and substitute materials; and (5) capital investments and their impact on our performance. These and other factors are outlined in Nucor’s regulatory filings with the Securities and Exchange Commission, including those in Nucor’s December 31, 2007 Annual Report on Form 10-K. The forward-looking statements contained in this news release speak only as of this date, and Nucor does not assume any obligation to update them.

SOURCE Nucor Corporation – excerpt courtesy of Google Financial

Related links:  http://www.nucor.com

US scrap prices start to rebound in November

US scrap prices, which have decreased significantly since August, seem to have finally bottomed out this month.

Many scrap dealers believed that the scrap transactions that took place in the beginning of November were settled at prices that were too low, and with an up-tick in export activities also observed in the first days of November, US shredded scrap prices started to rebound.

Busheling and HMS I scrap prices have not moved considerably since the beginning of the month, but a few scrap dealers in the Midwest report that their domestic shredded scrap prices now range from $210 to $220 /lt. This price reflects an increase of $85 /lt since the beginning of November.

However, the export market has started to slow again as scrap demand is generally still very low due to the weak finished product markets.

But despite the recent slowdown in export activity and continued weakness in the finished product markets around the world, market sources expect that scrap prices will be higher in December than in early November. December is a short month in terms of scrap transactions, with many companies closed for the holidays; however, since the scrap inventories for the integrated mills are low, they will need to make purchases during the month in question in order to make sure they have enough inventory to last them through the winter.

In December, both domestic busheling and shredded prices are expected to move up by $80 to $90 /lt while HMS I may increase by $40 to $50 /lt from the prices in the beginning of November. At the beginning of November, US East Coast busheling scrap prices were ranging from $140 to $150 /lt. Shredded scrap was sold for $125 to $135 /lt and HMS I prices ranged from $100 to $110 /lt.

On the export side, scrap prices have already shown a considerable up-tick since the beginning of November. The most recent export deal concluded for HMS I/II 80:20 is $278 /mt CFR Turkey, while prices were concluded at $160 /mt to $170 /mt CFR Turkey at the beginning of the month.

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