Steelonthenet blog

Steel industry comment and analysis

Decline of steelmaking in the UK

The decline of UK steelmaking continues.

According to a press report published today, the Tata steelworks in Port Talbot is set to shed 400 jobs, with chief executive Karl Koehler saying the moves are necessary for the company to remain competitive.

High business rates and rising energy costs were cited as reasons for the job losses.

“Steel demand and prices are likely to be under pressure for some years. Our business rates in the UK are much higher than other EU countries’ and our UK energy costs will remain uncompetitive until new mitigation measures come into effect”, said Koehler.

A 45-day consultation period will begin shortly. This is not the first time the Tata boss has warned about the consequences of high energy costs. In January, Koehler urged the government to slash energy bills.

For original press report, visit http://www.cityam.com/1404212347/tata-steelworks-cuts-400-jobs-due-uncompetitive-energy-costs 

Strategic planning process at ThyssenKrupp

The press have just reported the completion by ArcelorMittal / Nippon Steel & Sumitomo Metal Corporation of the purchase of ThyssenKrupp’s North American Calvert plant. For full report, visit http://uk.finance.yahoo.com/news/arcelormittal-completes-acquisition-thyssenkrupp-steel-211100386.html.

This Calvert plant comprised a state-of-the-art hot strip mill with tandem cold rolling and further coating capability and some 4.3 million tonnes of installed capacity, and was commissioned around November 2007. The facility apparently cost $5 billion to set up, and was reportedly sold for $1.55 billion.

Now – what does this episode tell us about the quality of strategic thinking at ThyssenKrupp? I ask this question, because as a steel industry adviser I am forever being asked to comment on upside and downside scenarios. We do of course also live in a world where the number of tools available for a risk assessment is greater than ever before. The question thus arises: how did ThyssenKrupp’s management allow this disaster to happen?

Were the management of ThyssenKrupp so sure of their own views that they did not want to listen to any cautionary voices? Do ThyssenKrupp not like using external consultants? Is the German model of corporate governance perhaps suboptimal is some rather fundamental way?

This episode should not only teach managements a lot about how to properly manage large investment decisions, but perhaps also remind us all about the value of independent external perspective.

Dr Andrzej M Kotas
Managing Director
Metals Consulting International Limited

Steel demand forecast

Did you know that we help clients with steel demand forecasts? And with steel price forecasting?

If you are interested in steel consumption today / tomorrow for any steel product or in the likely evolution of steel prices in any particular steel product niche, contact us at http://www.steelonthenet.com/statistics.html

Dr Andrzej M Kotas

http://www.steelonthenet.com

Mobile: +44 775 149 0885

 

 

 

What is a steel industry due diligence study?

We are often asked – what exactly is a steel sector due diligence study all about?

I will answer as follows. A steel industry due diligence study is a review of a steel firm, that reports on certain important techno-commercial issues. If you want to invest in a steel business, you are quite likely to want a due diligence report that covers market, technical and financial issues. Sometimes, environmental matters are included in this list as well.

So the due diligence investigation typically consist of a visit from a few steel experts [e.g. technical, market, financial, environmental experts] who take a look at the main issues in their expert area. For example, a steel market expert will look at steel demand today and in the future; will consider market requirements in terms of quality, size and shape; will review the competition; consider future capital investment; will forecast future sales and market share; will assess steel prices today; establish steel price trends in the near future; will project current and future sales revenues; will review steel distribution arrangements and so on. Once the expert visits the steel plant and talks to plant management about the relevant issues – and often validates these by speaking to local customers – he or she usually then prepares a written report on this topic. That market report – together with similar technical, financial, environmental or other sections – is an important chapter in the final due diligence study.

A well-prepared due diligence investigation will of course be internally consistent. This means that sales assumptions in the market study will relate to steel production levels in the technical study; both the sales and the production volumes will also relate to the financial assessments describing fixed and variable costs of production; and so on.

Crucially, a due diligence study should also be independent. This is important because if financiers are to have confidence in the written views and opinions contained in the report, it is important that such opinions are objective and without bias.

To learn more about how our consultants can help in preparing a due diligence or feasibility study, visit our steel feasibility study page.

Dr Andrzej M Kotas
Chief Executive
http://www.steelonthenet.com/

steel sections

A picture of some cut medium steel sections. The steel is beginning to rust.

Steel slab

Great shot of a steel slab. Looks like this may have just come off the continuous caster, and is now ready for the reheat furnace and then rolling into hot rolled coil.

steel slab

For further images see our steel photo gallery.

Steel Industry News Digest

The steel team at Steelonthenet.com has today launched Steel News Digest, a free synopsis of the week’s steel industry news.

With worldwide coverage touching on steel, iron ore and other key raw materials – both from traditional media sources and from social networking sites – Steel News Digest will offer timely and valuable insights into the world of steel. 

Check out Steel News Digest today. We can be found online 24/7 at http://digest.steelonthenet.com. Copies of the latest edition can also be sent (without charge) to subscribers.

With compliments

Dr Andrzej M Kotas, Chief Executive, Steelonthenet.com

UK steel industry news

We now offer a free UK steel industry news service. This is available without charge 24/7 to all our site visitors.

The news feed may be found at http://www.steelonthenet.com/feeds/uk.php

http://www.steelonthenet.com 

 

2012 world steel demand analysis

Our analysis of 2012 finished steel demand is that total world demand of 1413 million metric tonnes comprised consumption of ~644 mt flat products, ~660 mt long products and ~109 mt of tube. With respect to end use, some 39% of demand was accounted for by construction, with mechanical engineering and metal goods the two other dominant steel-consuming sectors [see chart].

 Image

For further analysis and information, visit our website’s steel consumption page. 

Engineering steel – SBQ – in Europe

As the European engineering steel sector languishes because of declining or (at best) stagnant automotive production volumes, many European producers of SBQ bar remain in difficulty because of poor capacity utilisation in their engineering steel bar mills. This matter was discussed in our recent European SBQ sector report.

We now read that – together with rising automotive production in Turkey – Kardemir in Turkey is investing in a new SBQ mar mill. This investment seems well targetted and well timed. What a shame that some of our larger European producers of engineering steels could not undertake a Turkish venture of this form?

For more about Kardemir, see SteelOrbis news report.

 

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