Stelco lowers expectations
Under a wilting steel industry, Stelco Inc has decided to withdraw its operating earning guidance. Stelco reported in March that it had predicted second quarter 2005 operating earning of CA$350-CA$400 million but the uncertainty of the industry's future is forcing them to capitulate. Last Wednesday, June 1, 2005, the company publicly acknowledged its second quarter earnings will probably be “considerably below” the first quarter. It pinned the blame largely on lower spot market prices and higher energy prices. Despite the bad news, the company urged that its earnings be kept in perspective. While the second quarter will be far less stellar than the first, it is important to remember that first quarter earnings hit new records and thus the second quarter, by way of comparison, will be relatively good. Elsewhere, industry analysts do not see prices improving. Besieged by bulging inventories, rising imports, flat appliance sales, and low automobile production, prices for hot-rolled sheets have plunged $40 per short ton in just a month and expected to dive even further, perhaps as low $480-490 by mid-summer. The nagging question remaining is whether said prices will actually stop around $500 per short ton or go even lower.