Sunday, April 30, 2006

Profit improvement plans for steel businesses

For industry executives who may be interested in profit improvement programmes (PIPs) or cost reduction programmes in the steel industry, a new podcast on this topic is now available from

This audio broadcast takes ~6 minutes and describes what PIPs are, who they are for, and how to go about implementing them...

Andrew M Kotas
Managing Director
Metals Consulting International Limited

Friday, April 28, 2006

2006 iron ore price negotiations - update

TMCnet today report on progress in negotiations over the 2006 iron ore price. With the fifth-round negotiation between China's steel plants and leading world iron ore suppliers about to start, the current expectation is for a 20-24% price increase.

For full story, see:

Wednesday, April 26, 2006

Coal reserves could make ethanol cheaper [BlackDiamond]

As oil exceeds $73 a barrel, the news in The Morning Call on April 15 that a large ethanol plant may soon be constructed in Pennsylvania is welcome, indeed. Kathleen McGinty, Department of Environmental Protection secretary, said agreement is near on a facility to produce millions of gallons of ethanol from corn, crop waste and dead timber.

Positive social and economic impacts from the construction and operation of this plant would include well-paying jobs, new business, tax revenues and a revitalization of local communities. Further, with our vast tracts of farmland and forests Pennsylvania could become a leader in America's commitment to reduce dependency on expensive foreign oil.

Lehigh Valley Local Links
These benefits would be all the greater if the new plants are designed to use Pennsylvania's greatest energy resource - coal. Ethanol production requires substantial heat and plants using coal are being constructed across the nation including in Illinois, Iowa, South Dakota, Minnesota and Missouri. Our research at Penn State suggests coal is becoming a preferred fuel in ethanol production based on several important advantages:

1. Coal is increasingly clean. Environmental progress in mining and coal combustion over the past 20 years has been spectacular. Coal power plants, for example, produce three times as much electricity than in 1970 but emissions have declined by one-third and are heading lower as clean coal technologies propel continuous improvement.

2. Coal is inexpensive. While natural gas has been the typical heat source in ethanol production, its prices have increased 150 percent in just the last four years. Coal is much less expensive and far more reliable. In 2005, for example, the cost of producing electricity from natural gas was $8.33 per million Btu. The cost for coal was $1.54 per million Btu.

3. Coal is available. U.S. oil and natural gas production both peaked in the 1970s, but we have enough coal to last 200 years. We now use 1.1 billion tons of coal per year but have a reserve base of over 500 billion tons distributed across 30 states. With more than 21 billion tons of bituminous and 7 billion tons of unique anthracite, Pennsylvania is the Saudi Arabia of coal.

4. Coal is secure. We are growing increasingly dependent on foreign oil. The Department of Energy has projected that we will soon be importing almost 60 percent of our petroleum and 21 percent of our natural gas. Much of this supply must necessarily come from hostile nations who despise our way of life, use our dollars to support terrorism and fund schools which teach young boys to hate America. As we look to the future we should take note that 42 percent of the world's natural gas is in Russia and Iran.

5. Coal fits Pennsylvania's Energy Plan. In December, Gov. Ed Rendell unveiled an exciting strategy to significantly strengthen Pennsylvania's economy through the greater use of coal, truly a step toward the goal of ''Jobs, Prosperity and Independence.'' Last month, Gregory Boyce, president of Peabody Energy, reported that using coal to make liquid fuels and natural gas could create over 1.4 million new jobs and reduce energy prices by 33 percent.

Clean coal can do all this - more jobs, higher incomes, new businesses, lower energy costs, a reduced trade deficit, enhanced national security and a major step toward less dependence on foreign suppliers. For the last decade we have been shipping millions of manufacturing jobs overseas. We now spend over $250 billion per year on energy purchases from foreign suppliers. As ethanol plants, gasification facilities and liquefaction units are built in our state we can take control of our own energy destiny and follow a new clarion call to the future: ''Coal - Made in Pennsylvania.''

Frank Clemente, Ph.D., is senior professor of social science at Penn State University, where his research specialization is energy policy. He was formerly Director of the University's Environmental Policy Center.

Saturday, April 22, 2006

Further EU Steel Price Rises Expected [MEPS]

According to MEPS, the third quarter of the year is often regarded as an inauspicious time to attempt an increase in steel prices in Europe. Conditions can of course change abruptly when buyers go off for their summer holidays. Global market conditions certainly do however appear to be in the mills' favour, say MEPS. Prices are rising around the world. Hot rolled coil imported into Asia is reported to be selling at more than USD 500 per tonne. Prices of coil exports from Russia and Ukraine have been increasing steadily. US prices also remain strong. Price increases are therefore probable. The extent of any likely third quarter attempted price increases is not yet clear. At the bottom end of the range are suggestions of Euro 10-30 per tonne for uncoated coil. At least Euro 60-80 per tonne is being mentioned for hot-dip galvanized coils, suggest MEPS, where mills, having rejected the idea of a special surcharge, are seeking to pass on their record high zinc costs.

For full report, see

Saturday, April 01, 2006

Iron ore negotiations stall - contract prices likely to go higher [MEPS]

This year's iron ore price settlement turned in recent weeks from private negotiation to public argument. China's very public interventions were followed by threats of government-imposed price caps - and whilst negotiations are currently stalled it seems likely that the final iron ore price settlements will go higher.

For more, see MEPS' latest report at: