Scrap and hydrogen shortages drive steel prices up

Scrap and hydrogen shortages drive steel prices up

In addition to the 20 percent September price increases by steelmakers US Steel and Nucor, raw material shortages are expected to boost steel prices through the roof. The Wall Street Journal reported Wednesday that flooding in New Orleans has created shortages of liquid hydrogen and scrap, and that this could drive the price of steel for auto manufacturing and industrial equipment up as much as 20 percent. Scrap is used to make new, basic steel and liquid hydrogen is needed for higher-quality products such as galvanized and cold rolled steel. As buyers of scrap and higher-quality steels stockpile to avoid these shortages, prices could rise by as much as $80 per ton. The Journal reported current prices for hot rolled coils are around $500 per ton. Steel company shares are also on the rise. Nucor’s shares are up 11 percent since Katrina hit, closing at $57.65 on Tuesday. US Steel Corp. shares rose 9 percent during the same period and closed at $43.77 Tuesday. Price increases by the two companies became effective September 1 for industrial products such as hot rolled coils. The Journal expects large steel and automakers to ship supplies of steel from abroad, but many companies are still holding their own. Daimler Chrysler, US Steel, Nucor, and Mittal Steel Co. all said that they have found alternate sources of hydrogen and do not expect the shortages to affect them greatly. However, other companies are struggling because of the hydrogen shortage. Major producer Air Products & Chemicals Inc. says it cannot deliver liquid hydrogen to customers because of damage to its New Orleans plant. The company is uncertain as to when it can restart production. Steel Dynamics is suspending future orders of value-added products like cold rolled, galvanized and painted sheet steel products because Air Products was its main hydrogen supplier. Another company, which uses Air Products as its primary hydrogen supplier, Winner Steel Co., had to lay off 70 of its 300 workers to curb production.