Steel news in brief - Americas
Third quarter blues Industry experts are speculating that this year's third quarter is not looking so hot for US steel industry. Low prices and demand combined with the high costs of scrap and gas may prove the third quarter the low point of the year. Mittal, U.S. Steel, and Nucor are all warning investors to expect a drop in third-quarter results, and one analyst says that some companies will experience profits 30 to 100 percent weaker than last year's third quarter. Many now see last summer's booming market as an artificial high point. Record prices for cars and appliances led steel users to build up inventory in hopes of waiting out further price increases that never came. Nucor shareholders get a little bit richer Nucor announced its 130th consecutive cash dividend Wednesday, September 7. Nucor Corporation declared the regular quarterly cash dividend of fifteen cents per share on its common stock, plus the payment of a supplemental dividend of twenty-five cents per share, for a total dividend of forty cents per share. The twenty-five cent per share supplemental dividend is based on Nucor's results for the year ended December 31, 2004. According to Nucor's press release, the payment of future dividends will depend on multiple factors, including Nucor's earnings, cash flows, and financial position. Brazilian steel company expects prices to stay on the rise Brazilian steelmaker Usiminas expects steel prices to remain historically high for the next two years because of sustained demand from China and high production costs. “It will be difficult for prices to fall,” said Renato Vallerini, Usiminas' international business director at a conference September 3. “There will be oscillations in the market, but we expect prices to be maintained around the same levels as 2004.” He said China's surge in steel production and consumption, which began in 2003, started price hikes in raw materials like coking coal and iron ore. Despite some price let-up in 2005, the overall trend is still on the upswing. With China's continued demand, Mr. Vallerini expects this general pattern to continue, with price increases until at least 2007. However, these increases will be gradual compared to the short-lived surge in prices experienced in 2004. SDI ups credit line; Nasdaq rebuff Steel Dynamics Inc. reported Wednesday it replaced its current $230 million credit line with a five-year $350 million senior secured revolving credit facility, boosting liquidity from about $200 million to $335 million. The new facility also has an option for $100 million increase during the next five years. After the announcement, SDI shares fell 19 cents to close at $32.37 on the Nasdaq stock index. Canadian Steelworkers too old After completing a human resource sector study of the Canadian steel industry, a group of Canadian steelmakers has determined that workers need to be intensively trained and recruited to offset the coming wave of employee retirements. The one-year study, funded in part by the Government of Canada, consisted of a comprehensive program of data gathering and analysis, and confirmed the importance of a highly skilled workforce for a healthy steel industry. Key players in the Canadian steel industry, including Mittal, the Canadian Steel Trade and Employment Congress, and the Canadian USW, have committed to implementing the recommendations of this study. One of the key findings of the study is that 55 percent of the Canadian steelworkers are over 45 years of age, which will pose a significant recruiting challenge in the near future.