Wednesday, November 30, 2005
China to see huge steel surplus: report
Remember the issue a few weeks ago with Algoma steel wanting to keep some cash in reserve, and the shareholders wanting it now?
Here's one of the reasons Algoma was right and the shareholders wrong ...
Yahoo! News
China will produce a surplus of steel next year equivalent to Japan's entire annual output as demand from the once red-hot property sector cools, a top government think tank said on Wednesday.
The world's largest steel producer and consumer could chalk up excess output of 116.5 million tonnes in 2006, or about a third of forecast output of crude steel this year, the State Council Development Research Center predicted.
It put the country's 2005 steel surplus at 43 million tonnes -- roughly level with Germany's yearly production.
Large investments in domestic steel capacity have fomented a growing glut and eroded world prices.
"The overcapacity problem in China's steel industry cannot be solved next year, and that will further depress steel prices," the think tank -- backed by the country's cabinet -- said in a report in the official China Securities Journal.
Global markets have long feared that China would emerge as a net steel exporter, possibly triggering mill closures elsewhere with a flood of low-priced products.
Here's one of the reasons Algoma was right and the shareholders wrong ...
Yahoo! News
China will produce a surplus of steel next year equivalent to Japan's entire annual output as demand from the once red-hot property sector cools, a top government think tank said on Wednesday.
The world's largest steel producer and consumer could chalk up excess output of 116.5 million tonnes in 2006, or about a third of forecast output of crude steel this year, the State Council Development Research Center predicted.
It put the country's 2005 steel surplus at 43 million tonnes -- roughly level with Germany's yearly production.
Large investments in domestic steel capacity have fomented a growing glut and eroded world prices.
"The overcapacity problem in China's steel industry cannot be solved next year, and that will further depress steel prices," the think tank -- backed by the country's cabinet -- said in a report in the official China Securities Journal.
Global markets have long feared that China would emerge as a net steel exporter, possibly triggering mill closures elsewhere with a flood of low-priced products.
Stop illegal trade practice - AG Weekly on the Byrd flu
Another voice heard from ..
AG Weekly Online -- Twin Falls, Idaho
The case for repealing a U.S. trade provision known as the Byrd Amendment just got stronger.
[...]
The GAO has a well-earned reputation for credibility. Its report is another good reason for Congress to bury the Byrd Amendment.
AG Weekly Online -- Twin Falls, Idaho
The case for repealing a U.S. trade provision known as the Byrd Amendment just got stronger.
[...]
The GAO has a well-earned reputation for credibility. Its report is another good reason for Congress to bury the Byrd Amendment.
Government officials join UAW in fight for GM plant
And so it starts .... there's a similar movement in Oshawa, Ontario, near us here at stampingoutaliving.com.
It seems the Oshawa plant is one of the most efficient of GMs plants, so why are cuts happening there? And there are, of course, similar rationalizations for every plant ... this one has the shortest unit cycle time, this one has the shortest changeover time ...
PittsburghLIVE.com
The United Auto Workers local at General Motors Corp.'s West Mifflin metal stamping plant has formed a coalition with government officials to fight the plant closing scheduled for 2007.
The coalition was formed in response to GM's Nov. 21 announcement that it would close its Pittsburgh Metal Center plant as part of a companywide restructuring that will eliminate 12 plants and 30,000 jobs between 2006 and 2008. The closing would eliminate about 640 jobs at the West Mifflin plant.
Here's a couple of Oshawa articles:
Layoffs a bitter pill for Oshawa's auto workers
One of North America's most efficient plants will lose almost 4,000 jobs
The Globe and Mail
Employees at General Motors of Canada Ltd.'s sprawling Oshawa factory learned a harsh lesson yesterday as layoffs hit North America's largest car manufacturer. No matter how productive the company's Canadian plants are, the financial woes at the struggling U.S. auto giant are now too deep to escape.
Hampered by mounting losses and trying to cut costs, Detroit-based parent General Motors Corp. stunned employees by announcing 30,000 layoffs at 12 of its North American plants, including extensive cuts at its GM Canada unit's two Oshawa operations.
The Oshawa plants are among the most efficient in North America -- ahead of several Toyota and Honda operations -- and form Canada's largest auto manufacturing site.
GM's deepest cutbacks since 1991 will see 3,900 Canadian jobs, most of them in Oshawa, eliminated by the end of 2008.
Further on it says:
The company's battles with rising labour costs, including soaring heath care bills in the United States, are well known throughout the struggling North American auto sector. Still, Oshawa employees were angry the Canadian plant is being targeted, saying the plant is paying for corporate mistakes south of the border.
Kevin Sexton, an assembly line worker with 22 years experience at the company's Windsor and Oshawa plants, said the Canadian operations are being forced to prop up the U.S. factories.
"We shouldn't have to pay the price because of their inefficiencies and their problems but that's what's happening," Mr. Sexton said.
The Oshawa plants have fared well in two key industry rankings this year, placing first and second in J.D. Power's annual quality studies, which track customer satisfaction and defects. Meanwhile, Oshawa No. 1 scored the highest in North American productivity rankings compiled by Michigan-based Harbour Consulting. Oshawa No. 2 wasn't far behind in fourth spot.
Both plants manufacture cars that aren't selling well for General Motors. Industry watchers said the Canadian layoffs are a sign of how deep the troubles run at GM.
"The fact that General Motors can't make good productive use of one of the most efficient automobile factories in North America indicates that the problem isn't merely on the factory floor," said Peter Morici, an auto industry expert at the University of Maryland.
Another newspaper, Durhamregion.com, a more regional one, had this to say:
Oshawa Mayor confident that GM layoffs can be mitigated
Mayor John Gray started Monday morning’s strategic initiatives committee meeting on a grim note, when he confirmed for councillors that General Motors had just announced staggering job cuts at its Oshawa plants.
In a memo provided to the Oshawa mayor and councillors, General Motors indicated that the changes at Plant 1 could be managed through attrition and without layoffs.
“We are seeing a bit of bad news this morning, but I’m hoping that the situation is not as bleak as it would appear,� Mayor Gray said just after hearing the news. “Some changes won’t be in effect until 2006 or 2008, so we have time to mitigate the damage.�
And a few other comments ...
From Yahoo News Canada
The city of Oshawa, Ontario may be a good 4-1/2 hour drive from the home offices of Detroit-based General Motors Corp.. But when General Motors sneezes, Oshawa quickly catches a cold.
The decision, which comes as GM struggles to compete with rivals led by Toyota Motor Corp., was particularly surprising to some, given the Oshawa plants ranked first and second in the most recent J.D. Power and Associates quality survey of North American assembly plants.
"It came as a complete shock," Oshawa Mayor John Gray told Reuters.
"Obviously, we knew that GM is in some difficulties, but it did come as a surprise that they would want to touch probably their most productive, efficient award-winning plants."
It seems the Oshawa plant is one of the most efficient of GMs plants, so why are cuts happening there? And there are, of course, similar rationalizations for every plant ... this one has the shortest unit cycle time, this one has the shortest changeover time ...
PittsburghLIVE.com
The United Auto Workers local at General Motors Corp.'s West Mifflin metal stamping plant has formed a coalition with government officials to fight the plant closing scheduled for 2007.
The coalition was formed in response to GM's Nov. 21 announcement that it would close its Pittsburgh Metal Center plant as part of a companywide restructuring that will eliminate 12 plants and 30,000 jobs between 2006 and 2008. The closing would eliminate about 640 jobs at the West Mifflin plant.
Here's a couple of Oshawa articles:
Layoffs a bitter pill for Oshawa's auto workers
One of North America's most efficient plants will lose almost 4,000 jobs
The Globe and Mail
Employees at General Motors of Canada Ltd.'s sprawling Oshawa factory learned a harsh lesson yesterday as layoffs hit North America's largest car manufacturer. No matter how productive the company's Canadian plants are, the financial woes at the struggling U.S. auto giant are now too deep to escape.
Hampered by mounting losses and trying to cut costs, Detroit-based parent General Motors Corp. stunned employees by announcing 30,000 layoffs at 12 of its North American plants, including extensive cuts at its GM Canada unit's two Oshawa operations.
The Oshawa plants are among the most efficient in North America -- ahead of several Toyota and Honda operations -- and form Canada's largest auto manufacturing site.
GM's deepest cutbacks since 1991 will see 3,900 Canadian jobs, most of them in Oshawa, eliminated by the end of 2008.
Further on it says:
The company's battles with rising labour costs, including soaring heath care bills in the United States, are well known throughout the struggling North American auto sector. Still, Oshawa employees were angry the Canadian plant is being targeted, saying the plant is paying for corporate mistakes south of the border.
Kevin Sexton, an assembly line worker with 22 years experience at the company's Windsor and Oshawa plants, said the Canadian operations are being forced to prop up the U.S. factories.
"We shouldn't have to pay the price because of their inefficiencies and their problems but that's what's happening," Mr. Sexton said.
The Oshawa plants have fared well in two key industry rankings this year, placing first and second in J.D. Power's annual quality studies, which track customer satisfaction and defects. Meanwhile, Oshawa No. 1 scored the highest in North American productivity rankings compiled by Michigan-based Harbour Consulting. Oshawa No. 2 wasn't far behind in fourth spot.
Both plants manufacture cars that aren't selling well for General Motors. Industry watchers said the Canadian layoffs are a sign of how deep the troubles run at GM.
"The fact that General Motors can't make good productive use of one of the most efficient automobile factories in North America indicates that the problem isn't merely on the factory floor," said Peter Morici, an auto industry expert at the University of Maryland.
Another newspaper, Durhamregion.com, a more regional one, had this to say:
Oshawa Mayor confident that GM layoffs can be mitigated
Mayor John Gray started Monday morning’s strategic initiatives committee meeting on a grim note, when he confirmed for councillors that General Motors had just announced staggering job cuts at its Oshawa plants.
In a memo provided to the Oshawa mayor and councillors, General Motors indicated that the changes at Plant 1 could be managed through attrition and without layoffs.
“We are seeing a bit of bad news this morning, but I’m hoping that the situation is not as bleak as it would appear,� Mayor Gray said just after hearing the news. “Some changes won’t be in effect until 2006 or 2008, so we have time to mitigate the damage.�
And a few other comments ...
From Yahoo News Canada
The city of Oshawa, Ontario may be a good 4-1/2 hour drive from the home offices of Detroit-based General Motors Corp.. But when General Motors sneezes, Oshawa quickly catches a cold.
The decision, which comes as GM struggles to compete with rivals led by Toyota Motor Corp., was particularly surprising to some, given the Oshawa plants ranked first and second in the most recent J.D. Power and Associates quality survey of North American assembly plants.
"It came as a complete shock," Oshawa Mayor John Gray told Reuters.
"Obviously, we knew that GM is in some difficulties, but it did come as a surprise that they would want to touch probably their most productive, efficient award-winning plants."
Tuesday, November 29, 2005
China Copper Trader Liu May Be Scapegoat for Weak Risk Controls
The copper plot thickens ...
Bloomberg.com
Liu Qibing, the Chinese copper trader whose wrong-way bets left his government with an estimated $300 million in losses, scored 90 out of 100 in a course on international investing at Wuhan University.
The son of farmers from the central province of Hubei is now at the center of a scandal that has reverberated from Beijing to London. He's under house arrest and hasn't been heard from since mid-October, a government newspaper reported. Liu, 37, was ``low-profile'' during his college days, says classmate Xiong Shenjie.
The case shows disclosure and risk controls at Chinese agencies haven't kept pace with the economic boom that has made the country the world's biggest copper consumer and No. 2 oil user, analysts and traders say. Liu's losses resulted from his ``personal actions,'' an unidentified government official said in the state-owned China Daily.
``It's hard to imagine Liu could have done what he did 100 percent without the knowledge of his superiors,'' says Gavin Wendt, a commodities analyst at Fat Prophets Fund Management in Sydney. ``There was some form of negligence. The superiors may think they can save face by shifting responsibility to one individual.''
Liu has been under house arrest since mid-October, the Economic Observer, a state-owned newspaper based in the eastern province of Shandong, reported Nov. 21, without citing anyone. Phone calls to the media-relations department of the Public Security Bureau in Beijing, which oversees the police, weren't answered. Liu didn't pick up calls to his mobile-phone and home numbers.
Bloomberg.com
Liu Qibing, the Chinese copper trader whose wrong-way bets left his government with an estimated $300 million in losses, scored 90 out of 100 in a course on international investing at Wuhan University.
The son of farmers from the central province of Hubei is now at the center of a scandal that has reverberated from Beijing to London. He's under house arrest and hasn't been heard from since mid-October, a government newspaper reported. Liu, 37, was ``low-profile'' during his college days, says classmate Xiong Shenjie.
The case shows disclosure and risk controls at Chinese agencies haven't kept pace with the economic boom that has made the country the world's biggest copper consumer and No. 2 oil user, analysts and traders say. Liu's losses resulted from his ``personal actions,'' an unidentified government official said in the state-owned China Daily.
``It's hard to imagine Liu could have done what he did 100 percent without the knowledge of his superiors,'' says Gavin Wendt, a commodities analyst at Fat Prophets Fund Management in Sydney. ``There was some form of negligence. The superiors may think they can save face by shifting responsibility to one individual.''
Liu has been under house arrest since mid-October, the Economic Observer, a state-owned newspaper based in the eastern province of Shandong, reported Nov. 21, without citing anyone. Phone calls to the media-relations department of the Public Security Bureau in Beijing, which oversees the police, weren't answered. Liu didn't pick up calls to his mobile-phone and home numbers.
Labels: Copper
Monday, November 28, 2005
White House: China Not Manipulating Money
I think this has to go in the Journal of Irreproduceable Results
Yahoo! News
The Bush administration on Monday determined that China was not manipulating its currency to gain economic advantages but still pressed the Chinese to move more quickly to allow the yuan's value to be set by market forces.
So, let me get this straight. China is not manipulating it's currency, but it should stop doing it more quickly!
Treasury Secretary John Snow said China's decision to allow a small revaluation of its currency last July had been a factor in deciding not to brand China a currency manipulator, but he said more must be done.
So it worked? I was sure no one would fall for that sucker move of China's, but they did.
American manufacturers believe that China has purposely kept its currency undervalued by as much as 40 percent, making Chinese goods cheaper for U.S. consumers and making American products more expensive in China.
China in July announced that it was allowing its currency, which had been pegged tightly to the U.S. dollar, to rise in value by 2.1 percent.
A little high school math tells me the chinese moved just a little over 5% in the direction they need to go.
It's no wonder Business Groups Rally Against Bush Administration
In the wake of President Bush’s recent trip to Asia, a coalition of U.S. business groups is assailing the administration for failing to press China to revalue its currency, which many say unfairly favors Chinese manufacturers and constitutes a violation of China’s free-trade obligations.
More than 40 manufacturing trade groups, including the Steel Manufacturers Association, have formed the China Currency Coalition with the U.S. Business and Industry Council to oppose what they consider China’s illegal manipulation of its currency. The Coalition favors passage of a Congressional bill that would allow U.S. businesses to file suit against China with the World Trade Organization on the grounds of currency manipulation.
“Any casual observer can see that China is manipulating its currency,� said Doug Bartlett, co-chairman of the coalition. “We have been extraordinarily lenient in granting them time to make necessary currency reforms.�
I love this quote:
“We’re not competing with Chinese businesses,� Bartlett said. “We’re competing with the Chinese treasury, and it would take a superhuman effort to win that battle.�
Yahoo! News
The Bush administration on Monday determined that China was not manipulating its currency to gain economic advantages but still pressed the Chinese to move more quickly to allow the yuan's value to be set by market forces.
So, let me get this straight. China is not manipulating it's currency, but it should stop doing it more quickly!
Treasury Secretary John Snow said China's decision to allow a small revaluation of its currency last July had been a factor in deciding not to brand China a currency manipulator, but he said more must be done.
So it worked? I was sure no one would fall for that sucker move of China's, but they did.
American manufacturers believe that China has purposely kept its currency undervalued by as much as 40 percent, making Chinese goods cheaper for U.S. consumers and making American products more expensive in China.
China in July announced that it was allowing its currency, which had been pegged tightly to the U.S. dollar, to rise in value by 2.1 percent.
A little high school math tells me the chinese moved just a little over 5% in the direction they need to go.
It's no wonder Business Groups Rally Against Bush Administration
In the wake of President Bush’s recent trip to Asia, a coalition of U.S. business groups is assailing the administration for failing to press China to revalue its currency, which many say unfairly favors Chinese manufacturers and constitutes a violation of China’s free-trade obligations.
More than 40 manufacturing trade groups, including the Steel Manufacturers Association, have formed the China Currency Coalition with the U.S. Business and Industry Council to oppose what they consider China’s illegal manipulation of its currency. The Coalition favors passage of a Congressional bill that would allow U.S. businesses to file suit against China with the World Trade Organization on the grounds of currency manipulation.
“Any casual observer can see that China is manipulating its currency,� said Doug Bartlett, co-chairman of the coalition. “We have been extraordinarily lenient in granting them time to make necessary currency reforms.�
I love this quote:
“We’re not competing with Chinese businesses,� Bartlett said. “We’re competing with the Chinese treasury, and it would take a superhuman effort to win that battle.�
China coal mine blast kills 68
From time to time we comment on Chinese workplace safety issues. Here's another case ...
Reuters
An explosion ripped through a state-owned colliery in northeast China, killing 68 miners and trapping 79 underground, just days after Chinese leaders called for vigilance to prevent major accidents.
The blast late on Sunday was the latest disaster to strike Heilongjiang, whose capital city, Harbin, was held hostage for five days by a toxic spill coursing through the Songhua river that provides its water supply, forcing a shut-down of tap water.
Later, Reuters reported 36 still trapped.
A few minutes ago, a report from a Turkish source implied the trapped 34 were lost:
Mine Accident Death Toll Rises in China to 134 from Zaman.com in Turkey
According to the official Chinese news agency, Shinhua, there are still 15 mine workers missing.
Some background: China's Deadliest Mining Disasters
And this, of course, is part of the problem:
Families compensated for lives lost in north China mine mishap
Families of the 33 miners killed in the plaster mine cave-in in north China's Hebei Province on Nov. 6 have been compensated 170,000 yuan (US$21,400) for each victim, the local source said.
Reuters
An explosion ripped through a state-owned colliery in northeast China, killing 68 miners and trapping 79 underground, just days after Chinese leaders called for vigilance to prevent major accidents.
The blast late on Sunday was the latest disaster to strike Heilongjiang, whose capital city, Harbin, was held hostage for five days by a toxic spill coursing through the Songhua river that provides its water supply, forcing a shut-down of tap water.
Later, Reuters reported 36 still trapped.
A few minutes ago, a report from a Turkish source implied the trapped 34 were lost:
Mine Accident Death Toll Rises in China to 134 from Zaman.com in Turkey
According to the official Chinese news agency, Shinhua, there are still 15 mine workers missing.
Some background: China's Deadliest Mining Disasters
And this, of course, is part of the problem:
Families compensated for lives lost in north China mine mishap
Families of the 33 miners killed in the plaster mine cave-in in north China's Hebei Province on Nov. 6 have been compensated 170,000 yuan (US$21,400) for each victim, the local source said.
ThyssenKrupp makes Dofasco bid
You may remember that last week Arcelor made an unsolicited bid for Dofasco. By the way, if you had shares in Dofasco, you're doing well today. From just under 45 a week ago to just under 64 today (above the ThyssenKrupp offer).
Financial News - Yahoo! Finance
ThyssenKrupp, Germany's biggest steelmaker, said it would offer C$61.50 per share of Dofasco.
The deal, which had been unanimously recommended by the board of Dofasco, was expected to close before the end of the first quarter of 2006, ThyssenKrupp said in a statement.
ThyssenKrupp said its offer represented a 9.8 percent premium over Arcelor's bid for Dofasco on November 23. Luxembourg-based Arcelor, which is the world's second-biggest steelmaker, had offered C$56 per share.
Financial News - Yahoo! Finance
ThyssenKrupp, Germany's biggest steelmaker, said it would offer C$61.50 per share of Dofasco.
The deal, which had been unanimously recommended by the board of Dofasco, was expected to close before the end of the first quarter of 2006, ThyssenKrupp said in a statement.
ThyssenKrupp said its offer represented a 9.8 percent premium over Arcelor's bid for Dofasco on November 23. Luxembourg-based Arcelor, which is the world's second-biggest steelmaker, had offered C$56 per share.
Labels: Dofasco
Sunday, November 27, 2005
U.S. Government Accountability Office (GAO) Report on Byrd Amendment Exposes Flaws in Trade Law
One Company (Timken) and Its Subsidiaries Receive 40% of $1 Billion in Byrd Amendment Payouts
metalformingadvocate.com
the GAO concludes that more than $1 billion of Byrd funds have been disbursed to a small number of U.S. companies with "mixed effects," with one company, the Timken Company and its subsidiaries (The Torrington Company and MPB Corporation), receiving 40% of total disbursements, or $395 million — nearly equivalent to the total amount received by 731 other companies during FY2001 — FY2004.
Chairman Bill Thomas (R-CA) stated, "the GAO report provides objective analysis regarding the ineffective operation of the CDSOA and the extreme misuse of taxpayer dollars." Trade Subcommittee Chairman Clay Shaw also said that the CDSOA has created a "Millionaires" Club of very few corporations which receive tens to hundreds of millions of dollars." As Senator Chuck Grassley (R-IA) stated: "The CDSOA lines corporate coffers for a select few, and too many innocent companies and workers end up paying the tab. We need to end this unfair subsidization as soon as possible."
metalformingadvocate.com
the GAO concludes that more than $1 billion of Byrd funds have been disbursed to a small number of U.S. companies with "mixed effects," with one company, the Timken Company and its subsidiaries (The Torrington Company and MPB Corporation), receiving 40% of total disbursements, or $395 million — nearly equivalent to the total amount received by 731 other companies during FY2001 — FY2004.
Chairman Bill Thomas (R-CA) stated, "the GAO report provides objective analysis regarding the ineffective operation of the CDSOA and the extreme misuse of taxpayer dollars." Trade Subcommittee Chairman Clay Shaw also said that the CDSOA has created a "Millionaires" Club of very few corporations which receive tens to hundreds of millions of dollars." As Senator Chuck Grassley (R-IA) stated: "The CDSOA lines corporate coffers for a select few, and too many innocent companies and workers end up paying the tab. We need to end this unfair subsidization as soon as possible."
Profit Squeeze for U.S. Manufacturers
Metalforming Advocate
The National Association of Manufacturers (NAM) has released a study titled “The Profit Squeeze for U.S. Manufacturers – A Close Look at Five Major Industries.� The study examines the impact of rising costs in health care and benefits, raw materials, energy and imports affected by currency manipulation between the years 2000 and 2003
The National Association of Manufacturers (NAM) has released a study titled “The Profit Squeeze for U.S. Manufacturers – A Close Look at Five Major Industries.� The study examines the impact of rising costs in health care and benefits, raw materials, energy and imports affected by currency manipulation between the years 2000 and 2003
We Want Our Money Back!
Yo Yo Yo, give us our dough
No Mc-D on December 3!
With that message, 2 10 year olds from British Columbia and Alberta have set up a web site to send "W" a message.
Help us send President Bush a message.
Boycott McDonald's for one day on December 3, 2005.
McDonald's is the most famous U.S. company in the world. And millions of Canadians buy food at McDonalds every day. If we all boycott McDonalds for one day, it will get people's attention. It will even get President Bush's attention.
If we stand up to this bully, we can help to stop this terrible situation. If we work hard, we can convince the U.S. to follow the rules and give us our money back. But whatever happens, we need to 'stand on guard' for Canada and stand up to the bully.
I especially like the line on one of their banners - "Friends don't steal from Friends"
and this picture
More on the Byrd Amendment
I found the following discussion of a GAO report interesting. I formatted it slightly differently so it would be easier to read.
The International Law Section of Williams Mullen prepared the following brief descriptions of selected issues in international trade and commerce for general information purposes and use by clients and friends of Williams Mullen.
Highlights in International Trade and Commerce Issue 10/06/05
[...]
2. GAO Report Perks up Movement to Repeal Byrd Amendment Perquisites:
A recent Government Accountability Office ("GAO") Report has revived debate about the Continued Dumping and Subsidy Offset Act or Byrd Amendment.
The Byrd Amendment distributes antidumping and countervailing duties to eligible U.S. producers.
Supporters argue that the Byrd Amendment offsets the effects of unfair competition from abroad. The GAO Report, however, has provided grist for critics, who argue that the Byrd Amendment hurts the U.S. economy in four ways.
First, the Bureau of Customs and Border Protection ("CBP") faces implementation problems. CBP does not have enough resources to verify all companies' claims for Byrd Amendment disbursements, and companies in the past have overstated those claims. CBP also lacks resources to collect the duties that fund the disbursements—and has, for instance, not yet collected about half the funds that should have been available for the 2004 fiscal year.
Second, the Byrd Amendment limits benefits to producers that filed a petition for relief or that publicly supported the petition during an investigation of whether imports caused injury. Given this eligibility requirement, a single company received one fifth of all Byrd Amendment payments through fiscal year 2004, only two companies received one third of such payments, and only five companies received half, with one of those top five companies owning two of the other top five. Paradoxically, some U.S. companies have benefited most when dumping has continued despite imposition of high duties. Critics have interpreted these facts as evidence that the Byrd Amendment does not restore conditions of fair trade but instead itself distorts competition in the United States.
Third, the WTO has found the Byrd Amendment to be "inconsistent" with the WTO Antidumping Agreement, because disbursement not only punishes foreign producers but also rewards their U.S. competitors. As a result, the United States faces additional tariffs on U.S. exports covering a trade value of up to $134 million dollars based on 2004 Byrd Amendment disbursements. Products subject to retaliation include live swine, fish, oysters, cigarettes, dairy products, wine, paper products, clothing, sweet corn, industrial belts, steel products, fork lift trucks and printing machines. Canada, the European Union, Mexico and Japan have already imposed punitive duties. Brazil, Chile, India and South Korea are expected to follow suit.
Fourth, the federal deficit has arguably placed a burden on supporters of the Byrd Amendment now to justify disbursements that decrease governmental revenues in a time of budgetary constraints.
Expect the debate to heat up in the weeks ahead.
The International Law Section of Williams Mullen prepared the following brief descriptions of selected issues in international trade and commerce for general information purposes and use by clients and friends of Williams Mullen.
Highlights in International Trade and Commerce Issue 10/06/05
[...]
2. GAO Report Perks up Movement to Repeal Byrd Amendment Perquisites:
A recent Government Accountability Office ("GAO") Report has revived debate about the Continued Dumping and Subsidy Offset Act or Byrd Amendment.
The Byrd Amendment distributes antidumping and countervailing duties to eligible U.S. producers.
Supporters argue that the Byrd Amendment offsets the effects of unfair competition from abroad. The GAO Report, however, has provided grist for critics, who argue that the Byrd Amendment hurts the U.S. economy in four ways.
First, the Bureau of Customs and Border Protection ("CBP") faces implementation problems. CBP does not have enough resources to verify all companies' claims for Byrd Amendment disbursements, and companies in the past have overstated those claims. CBP also lacks resources to collect the duties that fund the disbursements—and has, for instance, not yet collected about half the funds that should have been available for the 2004 fiscal year.
Second, the Byrd Amendment limits benefits to producers that filed a petition for relief or that publicly supported the petition during an investigation of whether imports caused injury. Given this eligibility requirement, a single company received one fifth of all Byrd Amendment payments through fiscal year 2004, only two companies received one third of such payments, and only five companies received half, with one of those top five companies owning two of the other top five. Paradoxically, some U.S. companies have benefited most when dumping has continued despite imposition of high duties. Critics have interpreted these facts as evidence that the Byrd Amendment does not restore conditions of fair trade but instead itself distorts competition in the United States.
Third, the WTO has found the Byrd Amendment to be "inconsistent" with the WTO Antidumping Agreement, because disbursement not only punishes foreign producers but also rewards their U.S. competitors. As a result, the United States faces additional tariffs on U.S. exports covering a trade value of up to $134 million dollars based on 2004 Byrd Amendment disbursements. Products subject to retaliation include live swine, fish, oysters, cigarettes, dairy products, wine, paper products, clothing, sweet corn, industrial belts, steel products, fork lift trucks and printing machines. Canada, the European Union, Mexico and Japan have already imposed punitive duties. Brazil, Chile, India and South Korea are expected to follow suit.
Fourth, the federal deficit has arguably placed a burden on supporters of the Byrd Amendment now to justify disbursements that decrease governmental revenues in a time of budgetary constraints.
Expect the debate to heat up in the weeks ahead.
Steel hopes to keep Byrd Amendment from dying - -
And of course, there are those who lived/live by the gravy train, who want to resuscitate the ruled-illegal-5-times Byrd Amendment ...
The Steubenville Herald-Star
When the House of Representatives voted 217-215 Friday on a series of budget cuts, among the victims was the Byrd Amendment, enacted to help domestic industries found to have been harmed by unfair foreign competition.
Local steel leaders are holding onto hope for a better result for the bill in the Senate.
Of course, the nonsense starts to flow early on in the article ...
"The only thing we have asked from the beginning was to be on a fair playing field, to have it leveled," Ravasio said. "Foreign countries subsidize steel companies. They don't have OSHA. They don't have workers' comp. They don't have our level of benefits. We would rather their standards be raised than for our government to lower our standard of living."
Canada is one of the countries injured by Byrd. We have OSHA. We have workers comp. The US doesn't have our level of benefits ... health care just to name one. We too would rather the US raise their standards than forcing us to lower ours ...
The Steubenville Herald-Star
When the House of Representatives voted 217-215 Friday on a series of budget cuts, among the victims was the Byrd Amendment, enacted to help domestic industries found to have been harmed by unfair foreign competition.
Local steel leaders are holding onto hope for a better result for the bill in the Senate.
Of course, the nonsense starts to flow early on in the article ...
"The only thing we have asked from the beginning was to be on a fair playing field, to have it leveled," Ravasio said. "Foreign countries subsidize steel companies. They don't have OSHA. They don't have workers' comp. They don't have our level of benefits. We would rather their standards be raised than for our government to lower our standard of living."
Canada is one of the countries injured by Byrd. We have OSHA. We have workers comp. The US doesn't have our level of benefits ... health care just to name one. We too would rather the US raise their standards than forcing us to lower ours ...
Steel pioneer hits the century mark
It's nice to hear about the human side of steel from time to time ...
The Mahoning Valley Tribune Chronicle
One of the grandfathers of steel in the Mahoning Valley celebrated his 100th birthday a few days early Saturday.
Roemer was born in Youngstown on Dec. 5, 1905, and eventually became the president and chairman of Sharon Steel Corp. In 1953, he was awarded a patent on a method of rolling titanium sheet metal that earned him a story in the business section of the Sept. 16, 1957, issue of 'Time'' magazine.
From 1935 to 1951, he was steadily promoted from secretary treasurer to president of Niles Rolling Mill, now RMI Titanium Co., in Niles Ohio, then a sister company of Sharon Steel. Roemer was vice president and then director of Sharon Steel from 1957 to 1965.
Roemer was not only a successful businessman, but also an avid traveler and visited all seven continents, including a trip to Antarctica at age 95.
The Mahoning Valley Tribune Chronicle
One of the grandfathers of steel in the Mahoning Valley celebrated his 100th birthday a few days early Saturday.
Roemer was born in Youngstown on Dec. 5, 1905, and eventually became the president and chairman of Sharon Steel Corp. In 1953, he was awarded a patent on a method of rolling titanium sheet metal that earned him a story in the business section of the Sept. 16, 1957, issue of 'Time'' magazine.
From 1935 to 1951, he was steadily promoted from secretary treasurer to president of Niles Rolling Mill, now RMI Titanium Co., in Niles Ohio, then a sister company of Sharon Steel. Roemer was vice president and then director of Sharon Steel from 1957 to 1965.
Roemer was not only a successful businessman, but also an avid traveler and visited all seven continents, including a trip to Antarctica at age 95.
Saturday, November 26, 2005
The Globe and Mail: U.S. House of Representatives kills Byrd amendment
The Globe and Mail
The United States is half way toward scrapping a controversial law that could eventually see the U.S. lumber industry pocket billions of dollars in duties paid by their Canadian rivals.
By a razor-thin 217-215 margin, the U.S. House of Representatives voted yesterday to kill the so-called Byrd amendment as part of a broader budget bill.
The World Trade Organization has already declared the law illegal, authorizing Canada and other countries to impose retaliatory duties for every dollar diverted to U.S. companies.
The United States is half way toward scrapping a controversial law that could eventually see the U.S. lumber industry pocket billions of dollars in duties paid by their Canadian rivals.
By a razor-thin 217-215 margin, the U.S. House of Representatives voted yesterday to kill the so-called Byrd amendment as part of a broader budget bill.
The World Trade Organization has already declared the law illegal, authorizing Canada and other countries to impose retaliatory duties for every dollar diverted to U.S. companies.
Skilled employees hard to find
Ain't this the truth ...
billingsgazette.com
Even as the number of manufacturing jobs nationally continues to decline, manufacturers say it's increasingly difficult to find qualified workers.
A survey from the National Association of Manufacturers released this week said there's a widening gap between the shrinking supply of workers and the growing technical skills needed to fill the available jobs.
More than 80 percent of the 800 manufacturers in the national survey say they are experiencing an overall shortage of qualified workers for jobs such as machinists, operators, craft workers and technicians. Part of the problem: As older workers retire, the idea of a factory job holds little appeal for younger workers just starting out.
After the manufacturing sector started feeling the effects of a slowing economy in 2000, "a lot of people were let go, and they just aren't returning to this market," he said.
I know at our place, we do thin metal stamping. Thin means down to about 0.008" thick, roughly the thickness of a human hair. Toolmaking at this level means working to under 0.001" accuracy, it means different skills and different tools. It means not being able to buy commercial die sets, and having to build our own, because they don't make the commercial ones accurately enough.
Toolmakers coming out of the school programs can work to roughly an order of magnitude less accuracy than this requirement. So after they graduate, we have to train them "down" to higher precision, smaller work. When we let them go (and we did have to let one go in the recent downturn), that's a huge investment in time and effort that we've lost.
billingsgazette.com
Even as the number of manufacturing jobs nationally continues to decline, manufacturers say it's increasingly difficult to find qualified workers.
A survey from the National Association of Manufacturers released this week said there's a widening gap between the shrinking supply of workers and the growing technical skills needed to fill the available jobs.
More than 80 percent of the 800 manufacturers in the national survey say they are experiencing an overall shortage of qualified workers for jobs such as machinists, operators, craft workers and technicians. Part of the problem: As older workers retire, the idea of a factory job holds little appeal for younger workers just starting out.
After the manufacturing sector started feeling the effects of a slowing economy in 2000, "a lot of people were let go, and they just aren't returning to this market," he said.
I know at our place, we do thin metal stamping. Thin means down to about 0.008" thick, roughly the thickness of a human hair. Toolmaking at this level means working to under 0.001" accuracy, it means different skills and different tools. It means not being able to buy commercial die sets, and having to build our own, because they don't make the commercial ones accurately enough.
Toolmakers coming out of the school programs can work to roughly an order of magnitude less accuracy than this requirement. So after they graduate, we have to train them "down" to higher precision, smaller work. When we let them go (and we did have to let one go in the recent downturn), that's a huge investment in time and effort that we've lost.
Friday, November 25, 2005
United States given a week to cut softwood lumber duties
Of course, this has nothing to do with stamping, but it does have to do with how Canada and the US resolve trade issues.
CBC News on Nov 16 wrote:
The U.S. government has been given one week to sharply cut the duties it has imposed on imports of Canadian softwood lumber, a NAFTA panel said Wednesday.
On Nov 22nd, United States says it will cut softwood lumber duties , but if you read further, they will maintain the duties during the public comment period, up to 45 days. Also, they won't give back any of the 4.3 billion dollars they've collected since 2002.
Shortly after the US said they wouldn't give back the 4.3, the canadian government said it would try to help out the industry by giving them 1.3 bilion. Now the US government is yelling "See, the industry really is subsidized".
From the Globe and Mail:
The offer was a $1.5-billion package of loan insurance for softwood companies that have been unable to reclaim duties from the United States despite successful international appeals.
Earlier this week, in response to a North American free-trade agreement panel ruling, the United States agreed to recalculate its anti-subsidy duty to 0.8 per cent from about 16 per cent but vowed to continue its legal fight and refused to return the $5-billion it has collected.
[the difference in the numbers reflects the fact that the Globe numbers were in Canadian $, and the other articles in US $ - 1 US$ is currently worth about $1.17 Canadian)
Let's see: 4.3 vs 1.3. The US government illegally took away 3x as much money as the Canadian government is now using to support the damaged industry. NAFTA and the WTO have ruled a total of 5 times that the US is in the wrong. The support payment announcement is 1/3 of the damage and came only after the US said they weren't giving the money back. But somehow the US still thinks they're right and Canada is wrong.
What am I missing here?
CBC News on Nov 16 wrote:
The U.S. government has been given one week to sharply cut the duties it has imposed on imports of Canadian softwood lumber, a NAFTA panel said Wednesday.
On Nov 22nd, United States says it will cut softwood lumber duties , but if you read further, they will maintain the duties during the public comment period, up to 45 days. Also, they won't give back any of the 4.3 billion dollars they've collected since 2002.
Shortly after the US said they wouldn't give back the 4.3, the canadian government said it would try to help out the industry by giving them 1.3 bilion. Now the US government is yelling "See, the industry really is subsidized".
From the Globe and Mail:
The offer was a $1.5-billion package of loan insurance for softwood companies that have been unable to reclaim duties from the United States despite successful international appeals.
Earlier this week, in response to a North American free-trade agreement panel ruling, the United States agreed to recalculate its anti-subsidy duty to 0.8 per cent from about 16 per cent but vowed to continue its legal fight and refused to return the $5-billion it has collected.
[the difference in the numbers reflects the fact that the Globe numbers were in Canadian $, and the other articles in US $ - 1 US$ is currently worth about $1.17 Canadian)
Let's see: 4.3 vs 1.3. The US government illegally took away 3x as much money as the Canadian government is now using to support the damaged industry. NAFTA and the WTO have ruled a total of 5 times that the US is in the wrong. The support payment announcement is 1/3 of the damage and came only after the US said they weren't giving the money back. But somehow the US still thinks they're right and Canada is wrong.
What am I missing here?
New Dofasco bid expected
National Post
Dofasco Inc. shareholders are betting Canada's largest and most consistently profitable steelmaker will draw another suitor to top a $4.3-billion unsolicited bid from Arcelor SA
Dofasco Inc. shareholders are betting Canada's largest and most consistently profitable steelmaker will draw another suitor to top a $4.3-billion unsolicited bid from Arcelor SA
Labels: Dofasco
Thursday, November 24, 2005
Md. Alcoa Aluminum Plant to Start Layoffs in December
You can't make Aluminum without electricity - boatloads of electricity. So all major aluminum smelting facilities are located where they can get cheap electricity - either by contract or by proximity to major generation facilities. In Canada, this means most aluminum is located near the James Bay hydro-electric project. We learned that in public school.
Washington Post
Most of the workers at a Frederick County aluminum plant will be laid off starting next month as production is curtailed because of high electricity prices, the plant's owner said yesterday.
Alcoa Inc. plans to lay off 500 of the 600 workers in late December, company spokesman Jake Siewert said. Another 75 employees are expected to be laid off next year from the 35-year-old plant.
The company probably will shutter the 400-acre smelting plant, called Eastalco Works, unless electricity prices fall, Siewert said. "If energy prices in the mid-Atlantic stay where they are, it's virtually impossible to see a scenario where that smelter is viable," Siewert said.
From biz.Yahoo
Alcoa said it has not been able to arrange a competitively priced power supply for the facility
[...]
The plant has been operating under a power arrangement with Allegheny Power that expires Dec. 31. The current rates Eastalco pays are about 40 percent higher than the global smelting average paid for electricity
and from Pittsburgh Post-Gazette via RedNova (RedOrbit)
electricity providers in the region are suggesting rates more than three times higher than the global industry average.
Alcoa sent out notices to about 600 workers in October warning that electricity prices were jeopardizing their jobs. Employees, elected officials and community leaders presented a short-term proposal to the Maryland state legislature.
But the measure has not been put to a vote and the company has no indication that it would be signed into law, said Alcoa vice president Geoffrey Cromer.
Washington Post
Most of the workers at a Frederick County aluminum plant will be laid off starting next month as production is curtailed because of high electricity prices, the plant's owner said yesterday.
Alcoa Inc. plans to lay off 500 of the 600 workers in late December, company spokesman Jake Siewert said. Another 75 employees are expected to be laid off next year from the 35-year-old plant.
The company probably will shutter the 400-acre smelting plant, called Eastalco Works, unless electricity prices fall, Siewert said. "If energy prices in the mid-Atlantic stay where they are, it's virtually impossible to see a scenario where that smelter is viable," Siewert said.
From biz.Yahoo
Alcoa said it has not been able to arrange a competitively priced power supply for the facility
[...]
The plant has been operating under a power arrangement with Allegheny Power that expires Dec. 31. The current rates Eastalco pays are about 40 percent higher than the global smelting average paid for electricity
and from Pittsburgh Post-Gazette via RedNova (RedOrbit)
electricity providers in the region are suggesting rates more than three times higher than the global industry average.
Alcoa sent out notices to about 600 workers in October warning that electricity prices were jeopardizing their jobs. Employees, elected officials and community leaders presented a short-term proposal to the Maryland state legislature.
But the measure has not been put to a vote and the company has no indication that it would be signed into law, said Alcoa vice president Geoffrey Cromer.
Stelco Inc. signs final deal to sell three subsidiaries to Mittal Steel
Yahoo! News
Restructuring steelmaker Stelco Inc. said Wednesday it has signed a final agreement to sell three of its subsidiaries to Mittal Steel for an undisclosed price.
[...]
Mittal Canada Inc., a subsidiary of the world's biggest steelmaker, Mittal Steel Co. NV, is acquiring Stelwire in Ontario, Stelfil in Lachine, Que., and Norambar in Contrecoeur, Que.
Restructuring steelmaker Stelco Inc. said Wednesday it has signed a final agreement to sell three of its subsidiaries to Mittal Steel for an undisclosed price.
[...]
Mittal Canada Inc., a subsidiary of the world's biggest steelmaker, Mittal Steel Co. NV, is acquiring Stelwire in Ontario, Stelfil in Lachine, Que., and Norambar in Contrecoeur, Que.
Labels: stelco
Wednesday, November 23, 2005
Cobalt blues? Not over the long haul
Every once in a while, we try to inject a little science into this blog.
You know Cobalt? Artists have a colour they call Cobalt Blue, because Cobalt is an ancient ingredient in some pigments.
Cobalt may just be the new copper. Or aluminum. Or steel. Possessing neither the glamour of precious metals like gold nor the industrial muscle of iron, this silver-white by-product of copper or nickel mining has always been considered a minor element on the world trading markets.
But cobalt is suddenly in vogue, thanks to surging demand for products that contain it. Known since at least 2000 B.C. as a coloring agent that produces a rich blue hue to glass, the metal now is an integral part of orthopedic implants, rechargeable batteries for hybrid cars and cameras, and aircraft engines and armor systems.
Mining companies are responding by stepping up production. Canada's Inco will develop a nickel-cobalt mine in the French Pacific territory of New Caledonia, while U.S. copper giant Phelps Dodge just acquired a controlling stake in a vast copper-cobalt deposit in Democratic Congo.
You know Cobalt? Artists have a colour they call Cobalt Blue, because Cobalt is an ancient ingredient in some pigments.
Cobalt may just be the new copper. Or aluminum. Or steel. Possessing neither the glamour of precious metals like gold nor the industrial muscle of iron, this silver-white by-product of copper or nickel mining has always been considered a minor element on the world trading markets.
But cobalt is suddenly in vogue, thanks to surging demand for products that contain it. Known since at least 2000 B.C. as a coloring agent that produces a rich blue hue to glass, the metal now is an integral part of orthopedic implants, rechargeable batteries for hybrid cars and cameras, and aircraft engines and armor systems.
Mining companies are responding by stepping up production. Canada's Inco will develop a nickel-cobalt mine in the French Pacific territory of New Caledonia, while U.S. copper giant Phelps Dodge just acquired a controlling stake in a vast copper-cobalt deposit in Democratic Congo.
Chinese Alliance is forged to cut alumina prices
Business Asia by Bloomberg - International Herald Tribune
China's 20 biggest aluminum companies, led by Aluminum Corp. of China, will form an alliance to negotiate alumina prices next year with global suppliers like BHP Billiton to lower production costs, an industry official said Tuesday
China's 20 biggest aluminum companies, led by Aluminum Corp. of China, will form an alliance to negotiate alumina prices next year with global suppliers like BHP Billiton to lower production costs, an industry official said Tuesday
BHP Expects China To Keep Aluminum Market Tight
Dow Jones via Yahoo Asia.
Global resources group BHP Billiton (BHP) issued a bullish outlook for aluminum prices Wednesday based on China curtailing its energy-intensive smelting industry and further closures in Europe and North America.
Both aluminum and its main ingredient alumina are expected to end 2005 in deficit and remain tightly balanced over the medium term, BHP Billiton's aluminum president Alex Vanselow told a Sydney investor briefing Wednesday.
The outlook is based on 5% annual growth in demand for primary aluminum up to 2010, driven by industrialization in China and India, with Chinese demand for the metal set to rise to 16 million metric tons by 2015 from 7 million tons this year.
Global resources group BHP Billiton (BHP) issued a bullish outlook for aluminum prices Wednesday based on China curtailing its energy-intensive smelting industry and further closures in Europe and North America.
Both aluminum and its main ingredient alumina are expected to end 2005 in deficit and remain tightly balanced over the medium term, BHP Billiton's aluminum president Alex Vanselow told a Sydney investor briefing Wednesday.
The outlook is based on 5% annual growth in demand for primary aluminum up to 2010, driven by industrialization in China and India, with Chinese demand for the metal set to rise to 16 million metric tons by 2015 from 7 million tons this year.
European steel maker Arcelor launches bid for Dofasco
CTV.ca
Europe's number one steel producer Arcelor S.A. has launched a hostile bid worth $4.3 billion for Canada's biggest steelmaker by revenue, Dofasco Inc.
The European steel company announced early Tuesday that it is offering $56 per share, all cash, for Hamilton, Ont.-based Dofasco's 77.4 million outstanding common shares.
That represents a premium of 27.3 per cent over Tuesday's closing price of $44.
Europe's number one steel producer Arcelor S.A. has launched a hostile bid worth $4.3 billion for Canada's biggest steelmaker by revenue, Dofasco Inc.
The European steel company announced early Tuesday that it is offering $56 per share, all cash, for Hamilton, Ont.-based Dofasco's 77.4 million outstanding common shares.
That represents a premium of 27.3 per cent over Tuesday's closing price of $44.
Labels: Dofasco
BIG VARIATIONS IN STEEL PRICES WILL DRAW ASIAN EXPORTS TO NORTH AMERICA AND EU
MEPS STEEL NEWS
Trade lawyers from Washington to Brussels must be rubbing their hands in anticipation. Legal actions against so-called “unfairly traded� imports look like being a big growth area in the steel industry for the next few months.
US producers of wire rods this month fired the first round. They filed unfair trade cases against imports from China, Turkey and Germany, asking their government to impose dumping margins as high as 330 percent. Until recently, the steel companies’ considerable profits had prevented them filing such claims, as they would be unable to argue that they had suffered injury – one of the criteria needed to prove dumping under WTO rules. But now, with mill profits falling, their lawyers will argue that the declines have been caused by “dumped� or “subsidised� imports.
Steel makers in Europe might be the next to consider sanctions. They are looking to gather evidence against wire rod imports particularly from Brazil, as well as flat product imports from other countries. Dumping complaints may follow. Elsewhere, Indian steel companies are contemplating legal action against what they see as unfair imports.
Wide disparities in steel prices in different parts of the world are helping to fuel the dumping claims. Prices in North America are a lot higher than the rest of the world, and values in Europe are above those in Asia.
Trade lawyers from Washington to Brussels must be rubbing their hands in anticipation. Legal actions against so-called “unfairly traded� imports look like being a big growth area in the steel industry for the next few months.
US producers of wire rods this month fired the first round. They filed unfair trade cases against imports from China, Turkey and Germany, asking their government to impose dumping margins as high as 330 percent. Until recently, the steel companies’ considerable profits had prevented them filing such claims, as they would be unable to argue that they had suffered injury – one of the criteria needed to prove dumping under WTO rules. But now, with mill profits falling, their lawyers will argue that the declines have been caused by “dumped� or “subsidised� imports.
Steel makers in Europe might be the next to consider sanctions. They are looking to gather evidence against wire rod imports particularly from Brazil, as well as flat product imports from other countries. Dumping complaints may follow. Elsewhere, Indian steel companies are contemplating legal action against what they see as unfair imports.
Wide disparities in steel prices in different parts of the world are helping to fuel the dumping claims. Prices in North America are a lot higher than the rest of the world, and values in Europe are above those in Asia.
Tuesday, November 22, 2005
Algoma Steel calls special meeting of shareholders for March 22, 2006
More on the Algoma story ...
Yahoo News
Algoma Steel Inc. announced late Monday its board of directors has called a special meeting of shareholders to be held in Toronto on March 22, 2006.
The meeting had been sought by Paulson & Co. Inc. of New York, the holder of 19 per cent of Algoma's common shares, who is demanding a recapitalization that would enable the company to distribute at least $400 million in cash to its shareholders.
Paulson also wants Algoma shareholders to vote on a resolution that would replace a majority of Algoma's current directors with nominees of Paulson.
Earlier, the United Steelworkers union, which represents current and retired employees at Algoma, filed motions in Ontario Superior Court on Monday seeking to block Paulson's cash distribution plan.
The union said Algoma Steel records indicate that a capital investment of $50 million a year is required just to keep the operation running. In addition, Algoma Steel has significant unfunded pension and health-care benefit liabilities, it said.
"Paulson's proposed cash grab would leave the company financially vulnerable at a time when steel prices have begun to retreat from the record highs they reached in the past year," union spokesman Wayne Fraser said in a statement.
"Algoma's cash is vital to the company's future. Without it, the company will not be able to retire its high-interest debt or complete a planned blast furnace reline."
Also some coverage here: Bloomberg.com
and here Globe and Mail
which included this interesting tail paragraph
Algoma, which has dived into bankruptcy protection twice in the past 15 years, says it needs to hold on to some of its cash because steel prices and costs are uncertain right now. The steel maker recently reported a third-quarter profit of $30.8-million, down from $121.6-million a year earlier, when steel prices had hit a record high.
My previous articles about Algoma:
Algoma Steel Rejects big Shareholders
Algoma Steel drops out of bidding war for Stelco
Big Steel faces it's next Revolution
Algoma Steel earns $10.1M profit
and another blogger who liked our reporting ... The Stalward - Plundering Algoma Steel
By the way, here's the weather on Sunday in Algoma District, Sault St. Marie area. I tried to upload the picture from the weather article above, but it didn't work, not sure why.
Yahoo News
Algoma Steel Inc. announced late Monday its board of directors has called a special meeting of shareholders to be held in Toronto on March 22, 2006.
The meeting had been sought by Paulson & Co. Inc. of New York, the holder of 19 per cent of Algoma's common shares, who is demanding a recapitalization that would enable the company to distribute at least $400 million in cash to its shareholders.
Paulson also wants Algoma shareholders to vote on a resolution that would replace a majority of Algoma's current directors with nominees of Paulson.
Earlier, the United Steelworkers union, which represents current and retired employees at Algoma, filed motions in Ontario Superior Court on Monday seeking to block Paulson's cash distribution plan.
The union said Algoma Steel records indicate that a capital investment of $50 million a year is required just to keep the operation running. In addition, Algoma Steel has significant unfunded pension and health-care benefit liabilities, it said.
"Paulson's proposed cash grab would leave the company financially vulnerable at a time when steel prices have begun to retreat from the record highs they reached in the past year," union spokesman Wayne Fraser said in a statement.
"Algoma's cash is vital to the company's future. Without it, the company will not be able to retire its high-interest debt or complete a planned blast furnace reline."
Also some coverage here: Bloomberg.com
and here Globe and Mail
which included this interesting tail paragraph
Algoma, which has dived into bankruptcy protection twice in the past 15 years, says it needs to hold on to some of its cash because steel prices and costs are uncertain right now. The steel maker recently reported a third-quarter profit of $30.8-million, down from $121.6-million a year earlier, when steel prices had hit a record high.
My previous articles about Algoma:
Algoma Steel Rejects big Shareholders
Algoma Steel drops out of bidding war for Stelco
Big Steel faces it's next Revolution
Algoma Steel earns $10.1M profit
and another blogger who liked our reporting ... The Stalward - Plundering Algoma Steel
By the way, here's the weather on Sunday in Algoma District, Sault St. Marie area. I tried to upload the picture from the weather article above, but it didn't work, not sure why.
Labels: stelco
Monday, November 21, 2005
China Forced to Disclose Copper Holdings After Losses
This is a followup to my story on the weekend
Bloomberg.com
China is being forced to disclose its holdings of copper for the first time, as the nation seeks to limit losses from a trader's wrong-way bet on a drop in prices.
Bloomberg.com
China is being forced to disclose its holdings of copper for the first time, as the nation seeks to limit losses from a trader's wrong-way bet on a drop in prices.
Labels: Copper
GM mulls closing 3 plants
Sharewatch
General Motors Corp could close at least three North American assembly plants and additional support facilities such as metal-stamping plants when it announces a plan to cut excess capacity in its home market, the Wall Street Journal reported, citing people who have studied the company''s operations.
an announcement could come as early as today.
Yahoo just sent me this, but it hasn't shown up as a news report anywhere yet ...
DETROIT (AP) General Motors Corp. plans to close nine North American assembly, stamping and powertrain facilities.
General Motors Corp could close at least three North American assembly plants and additional support facilities such as metal-stamping plants when it announces a plan to cut excess capacity in its home market, the Wall Street Journal reported, citing people who have studied the company''s operations.
an announcement could come as early as today.
Yahoo just sent me this, but it hasn't shown up as a news report anywhere yet ...
DETROIT (AP) General Motors Corp. plans to close nine North American assembly, stamping and powertrain facilities.
Stelco creditors vote on the firm's restructuring plan Monday
Perhaps I should have called this article "As the Stelco Turns".
Down the road from us about an hour and a half is Hamilton, home to two large steel companies Stelco and Dofasco and a bunch of subsidiaries. It's pretty much a steel town. As is Buffalo, about another hour south of Hamilton. When I was a kid growing up in Toronto, they taught us in school that Hamilton and Buffalo were large steel towns situated where they are because of access to the great lakes, to bring the coal and the iron ore in and the finished steel to market. Seems irrelevant these days, but I guess once a place gets set up as a steel town, it kinda sticks.
Dofasco pulled itself out of bankruptcy (eventually - it took some significant work). Stelco is trying to do the same. But this is like the Algoma story I did a while ago ... I'm not sure that the stock market is good for long term investment companies like steel and aluminum mills.
Basically, everyone is scrabbling over Stelco at the moment because steel prices are high. Everyone (the unions, the creditors, probably the board too) wants a piece of the current, fleeting prosperity. But it would be wiser to pay down debts with the money and put the house in order if Stelco is to survive beyond the current steel bubble (which is going to burst sooner or later, probably sooner). But shareholders, and even bond holders, don't seem to know (or even care) about the steel marketplace ...
National Post online
After nearly two years of bankruptcy protection for Stelco Inc.. the insolvent steelmaker's creditors are expected to vote on the company's restructuring plan Monday.
The Hamilton-based steelmaker is labouring to pull itself out from 22 months of bankruptcy protection.
After more than a year and a half of fighting with workers and creditors, it circulated a plan earlier this fall detailing how it intends to refinance and emerge as a new company.
On Tuesday, its creditors gathered at a Mississauga, Ont., conference centre to finally cast their ballot on Stelco's plan. But chief executive Courtney Pratt was forced to apologize as he told them the meeting was being cancelled.
The steelmaker's bondholders were going to vote the plan down, despite negotiations that stretched right up until the last minute.
Rather than allow that, Stelco decided to postpone the vote until 9 a.m. Nov. 21.
Update later on Monday ...
Stelco Inc. announced today that the meeting of its creditors to consider and vote upon a restructuring plan has been further adjourned until Wednesday, November 23, 2005. The Company indicated that the meetings of creditors of its subsidiaries will also be adjourned to the same date.
At the first of the meetings scheduled to take place today, the Company recommended to the Court-appointed Monitor that an adjournment was appropriate so that intensive negotiations among stakeholders can continue and so that a plan can be filed and circulated prior to a vote on Wednesday. The Monitor then exercised its discretion and allowed the adjournment.
Down the road from us about an hour and a half is Hamilton, home to two large steel companies Stelco and Dofasco and a bunch of subsidiaries. It's pretty much a steel town. As is Buffalo, about another hour south of Hamilton. When I was a kid growing up in Toronto, they taught us in school that Hamilton and Buffalo were large steel towns situated where they are because of access to the great lakes, to bring the coal and the iron ore in and the finished steel to market. Seems irrelevant these days, but I guess once a place gets set up as a steel town, it kinda sticks.
Dofasco pulled itself out of bankruptcy (eventually - it took some significant work). Stelco is trying to do the same. But this is like the Algoma story I did a while ago ... I'm not sure that the stock market is good for long term investment companies like steel and aluminum mills.
Basically, everyone is scrabbling over Stelco at the moment because steel prices are high. Everyone (the unions, the creditors, probably the board too) wants a piece of the current, fleeting prosperity. But it would be wiser to pay down debts with the money and put the house in order if Stelco is to survive beyond the current steel bubble (which is going to burst sooner or later, probably sooner). But shareholders, and even bond holders, don't seem to know (or even care) about the steel marketplace ...
National Post online
After nearly two years of bankruptcy protection for Stelco Inc.. the insolvent steelmaker's creditors are expected to vote on the company's restructuring plan Monday.
The Hamilton-based steelmaker is labouring to pull itself out from 22 months of bankruptcy protection.
After more than a year and a half of fighting with workers and creditors, it circulated a plan earlier this fall detailing how it intends to refinance and emerge as a new company.
On Tuesday, its creditors gathered at a Mississauga, Ont., conference centre to finally cast their ballot on Stelco's plan. But chief executive Courtney Pratt was forced to apologize as he told them the meeting was being cancelled.
The steelmaker's bondholders were going to vote the plan down, despite negotiations that stretched right up until the last minute.
Rather than allow that, Stelco decided to postpone the vote until 9 a.m. Nov. 21.
Update later on Monday ...
Stelco Inc. announced today that the meeting of its creditors to consider and vote upon a restructuring plan has been further adjourned until Wednesday, November 23, 2005. The Company indicated that the meetings of creditors of its subsidiaries will also be adjourned to the same date.
At the first of the meetings scheduled to take place today, the Company recommended to the Court-appointed Monitor that an adjournment was appropriate so that intensive negotiations among stakeholders can continue and so that a plan can be filed and circulated prior to a vote on Wednesday. The Monitor then exercised its discretion and allowed the adjournment.
Saturday, November 19, 2005
Copper prices hit record after China trader's loss
Wondering why copper has gotten so expensive?
Well, keep wondering .... a spate of articles today yield more questions than answers ...
International Herald Tribune
Speculation that China will refuse to deliver up to 200,000 metric tons of copper from its reserves to cover a massive gamble on futures contracts is driving prices to record highs and unsettling the global market for the vital industrial metal.
Copper hit a record $4,160 a metric ton on Thursday before falling back slightly on Friday after Chinese state media reported that Liu Qibing, a futures trader based in Shanghai, had amassed futures contracts on the London Metal Exchange betting that prices would go down. Instead, prices have continued to climb sharply this year on strong demand from China's booming economy and some unexpected supply shortfalls from major producers in Chile and the United States.
If prices remain at their current levels or continue to rise, Liu's trades could lead to losses of $200 million or more, according to some analysts.
'The next step is to see whether they really want to deliver this copper,' said a Shanghai-based market analyst who spoke on condition of anonymity.
Some traders and market analysts have suggested that China may refuse to honor the contracts, which come due on Dec. 21, after Beijing denied that Liu had been working for the government's secretive State Reserves Bureau when he made the trades.
'As far as I know, the loss was a result of his personal actions instead of the government,' the official China Daily newspaper reported Thursday, quoting an unidentified official at the bureau."
These other articles contain similar information, much of it speculative ...
http://news.ft.com/cms/s/b0c5fca8-58a0-11da-90dd-0000779e2340.html
http://www.nytimes.com/2005/11/19/business/worldbusiness/19copper.html
http://news.yahoo.com/s/ft/20051118/bs_ft/fto111820051254187593
http://money.cnn.com/2005/11/18/news/international/copper.reut/index.htm?section=money_latest
http://www.bloomberg.com/apps/news?pid=10000102&sid=aK08LyjayQGs
http://news.ft.com/cms/s/73dd61da-583e-11da-90dd-0000779e2340.html
Well, keep wondering .... a spate of articles today yield more questions than answers ...
International Herald Tribune
Speculation that China will refuse to deliver up to 200,000 metric tons of copper from its reserves to cover a massive gamble on futures contracts is driving prices to record highs and unsettling the global market for the vital industrial metal.
Copper hit a record $4,160 a metric ton on Thursday before falling back slightly on Friday after Chinese state media reported that Liu Qibing, a futures trader based in Shanghai, had amassed futures contracts on the London Metal Exchange betting that prices would go down. Instead, prices have continued to climb sharply this year on strong demand from China's booming economy and some unexpected supply shortfalls from major producers in Chile and the United States.
If prices remain at their current levels or continue to rise, Liu's trades could lead to losses of $200 million or more, according to some analysts.
'The next step is to see whether they really want to deliver this copper,' said a Shanghai-based market analyst who spoke on condition of anonymity.
Some traders and market analysts have suggested that China may refuse to honor the contracts, which come due on Dec. 21, after Beijing denied that Liu had been working for the government's secretive State Reserves Bureau when he made the trades.
'As far as I know, the loss was a result of his personal actions instead of the government,' the official China Daily newspaper reported Thursday, quoting an unidentified official at the bureau."
These other articles contain similar information, much of it speculative ...
http://news.ft.com/cms/s/b0c5fca8-58a0-11da-90dd-0000779e2340.html
http://www.nytimes.com/2005/11/19/business/worldbusiness/19copper.html
http://news.yahoo.com/s/ft/20051118/bs_ft/fto111820051254187593
http://money.cnn.com/2005/11/18/news/international/copper.reut/index.htm?section=money_latest
http://www.bloomberg.com/apps/news?pid=10000102&sid=aK08LyjayQGs
http://news.ft.com/cms/s/73dd61da-583e-11da-90dd-0000779e2340.html
Labels: Copper
Memories of a devoted steel worker - A Moment with Ted Williams
a bit of the human side of steel today ...
the late 1960s, a different era indeed in terms of security. It was a different era indeed in terms of Bethlehem and the Lehigh Valley. Bethlehem Steel was the biggest thing around here in terms of the economy. My dad had been with the company his entire working life, since graduating from Lehigh University after World War II. He loved the place. He was passionate about making the best steel in the world.
From http://blogs.mcall.com/a_moment_with_ted_william/2005/11/memories_of_a_d.html
the late 1960s, a different era indeed in terms of security. It was a different era indeed in terms of Bethlehem and the Lehigh Valley. Bethlehem Steel was the biggest thing around here in terms of the economy. My dad had been with the company his entire working life, since graduating from Lehigh University after World War II. He loved the place. He was passionate about making the best steel in the world.
From http://blogs.mcall.com/a_moment_with_ted_william/2005/11/memories_of_a_d.html
Friday, November 18, 2005
Schwarzenegger Tours Steel Plant on China Trade Mission
I guess it's been pretty quiet in the stamping news department if I'm covering this as a stamping news story.
Fox News
SHANGHAI, China: Gov. Arnold Schwarzenegger toured China's largest steel plant Thursday morning, praising its use of California technologies to reduce wastewater pollution.
He also spoke extensively to reporters for the first time during his three-city China trade mission, on topics ranging from China's human rights record to the country's struggle to contain the avian flu.
Shanghai is the second city on Schwarzenegger's six-day trade mission promoting California products and business opportunities. He travels to Hong Kong later in the week.
There was some other stuff he said ... human rights and openness will take a while ... the Chinese are taking their time ... they learned from Russia that you can't change everything in a second.
It seems everyone's doing it. Bush is going to China next.
I hope someone's going to talk to the Chinese about currency manipulation. ... This was published back in October 2003!
China's currency manipulation and U.S. trade
Both inward investment and export growth create strong demand for China's currency, the yuan. All things being equal, such demand pressures should cause the yuan to appreciate relative to the U.S. dollar and cause China's external position to return to balance.
But all things are not equal: China pegs the yuan to the dollar at a fixed rate and strictly regulates imports and the allocation of foreign exchange.
and furthur down it says
When a finding of currency manipulation is made, U.S. law requires the Treasury Secretary to undertake negotiations to end such manipulation. Current evidence indicates that China is engaged in just such a manipulation of the yuan for competitive gain.
Fox News
SHANGHAI, China: Gov. Arnold Schwarzenegger toured China's largest steel plant Thursday morning, praising its use of California technologies to reduce wastewater pollution.
He also spoke extensively to reporters for the first time during his three-city China trade mission, on topics ranging from China's human rights record to the country's struggle to contain the avian flu.
Shanghai is the second city on Schwarzenegger's six-day trade mission promoting California products and business opportunities. He travels to Hong Kong later in the week.
There was some other stuff he said ... human rights and openness will take a while ... the Chinese are taking their time ... they learned from Russia that you can't change everything in a second.
It seems everyone's doing it. Bush is going to China next.
I hope someone's going to talk to the Chinese about currency manipulation. ... This was published back in October 2003!
China's currency manipulation and U.S. trade
Both inward investment and export growth create strong demand for China's currency, the yuan. All things being equal, such demand pressures should cause the yuan to appreciate relative to the U.S. dollar and cause China's external position to return to balance.
But all things are not equal: China pegs the yuan to the dollar at a fixed rate and strictly regulates imports and the allocation of foreign exchange.
and furthur down it says
When a finding of currency manipulation is made, U.S. law requires the Treasury Secretary to undertake negotiations to end such manipulation. Current evidence indicates that China is engaged in just such a manipulation of the yuan for competitive gain.
Wednesday, November 16, 2005
U.S. Has No Plan On How To Deal With China
U.S.-China Commission Advises Congress To Fill Bush's Policy 'Vacuum'
Manufacturing and Technology News
The Bush administration does not have a coherent strategy for dealing with China. As a result, Congress must step into this policy 'vacuum,' according to the U.S.-China Economic and Security Review Commission (USCC) in its latest annual report.
'The commission's greatest concern is that the United States has not developed a fundamental assessment of how American national interests are affected by our relationship with China,' said Richard D'Amato, chairman of the commission at a Capitol Hill press conference. 'A detailed architecture that advances all areas of cooperation with China while reducing negative impacts on American economic and security interests still does not exist.'
In contrast to the United States, 'China has a very well crafted integrated plan towards us and as a consequence they are able to operate far more effectively towards us than we are toward them,' added Roger Robinson, vice chairman of the commission. 'This is something that we feel has to change.'
On the eve of Bush's upcoming trip to China on Nov. 20, USCC commissioner Carolyn Bartholomew said: 'The test of President Bush's visit is not going to be whether he brings back any more promises. The question is what are the results?' The U.S. needs China to take action on currency manipulation and protecting intellectual property rights. 'What do we have to show for all the promises other than a deficit of $200 billion, the loss of billions of dollars a year in intellectual property rights and the loss of our manufacturing base?' Bartholomew asked.
There's this very interesting quote a bit later ...
William Reinsch said in a conversation after the press conference. "We don't debate education any more. We don't debate economics. We don't debate manufacturing. We debate tax cuts and the war on terrorism and that's the end of the story."
Added Bartholomew: "Bush has decided that our manufacturing base doesn't matter. It's gone. What's going to happen is people are going to wake up too late on these things."
Manufacturing and Technology News
The Bush administration does not have a coherent strategy for dealing with China. As a result, Congress must step into this policy 'vacuum,' according to the U.S.-China Economic and Security Review Commission (USCC) in its latest annual report.
'The commission's greatest concern is that the United States has not developed a fundamental assessment of how American national interests are affected by our relationship with China,' said Richard D'Amato, chairman of the commission at a Capitol Hill press conference. 'A detailed architecture that advances all areas of cooperation with China while reducing negative impacts on American economic and security interests still does not exist.'
In contrast to the United States, 'China has a very well crafted integrated plan towards us and as a consequence they are able to operate far more effectively towards us than we are toward them,' added Roger Robinson, vice chairman of the commission. 'This is something that we feel has to change.'
On the eve of Bush's upcoming trip to China on Nov. 20, USCC commissioner Carolyn Bartholomew said: 'The test of President Bush's visit is not going to be whether he brings back any more promises. The question is what are the results?' The U.S. needs China to take action on currency manipulation and protecting intellectual property rights. 'What do we have to show for all the promises other than a deficit of $200 billion, the loss of billions of dollars a year in intellectual property rights and the loss of our manufacturing base?' Bartholomew asked.
There's this very interesting quote a bit later ...
William Reinsch said in a conversation after the press conference. "We don't debate education any more. We don't debate economics. We don't debate manufacturing. We debate tax cuts and the war on terrorism and that's the end of the story."
Added Bartholomew: "Bush has decided that our manufacturing base doesn't matter. It's gone. What's going to happen is people are going to wake up too late on these things."
Tuesday, November 08, 2005
MEPS STEEL NEWS
Here's what MEPS thinks is going to happen to steel pricing ...
Market sentiment for flat products has improved in recent weeks. The production curbs - amounting to 2.2 million tonnes (15 percent) in the second quarter are being extended to the end of 2005. Consequently, there is much less material now in the supply chain. Mill order books are much healthier because import volumes have so far not increased compared to 2004. These factors and higher scrap costs have prompted us to upgrade our forecast for the next twelve months.
We envisage a reasonably stable pricing picture as we enter the New Year. As Spring approaches we expect more import penetration, particularly from the Asian region. This could put negative pressure on prices because the current premium enjoyed by the North American mills is substantially above the freight costs from Asian countries. Distributor demand is picking up in the US and Canada. These are the first customers to pull in imports to meet market requirements.
[...]
We believe that the balance of probabilities lies with the higher imports exceeding the improved demand by a small amount - pushing North American prices slowly down over the Winter and into the Summer months - albeit from a higher starting point.
Market sentiment for flat products has improved in recent weeks. The production curbs - amounting to 2.2 million tonnes (15 percent) in the second quarter are being extended to the end of 2005. Consequently, there is much less material now in the supply chain. Mill order books are much healthier because import volumes have so far not increased compared to 2004. These factors and higher scrap costs have prompted us to upgrade our forecast for the next twelve months.
We envisage a reasonably stable pricing picture as we enter the New Year. As Spring approaches we expect more import penetration, particularly from the Asian region. This could put negative pressure on prices because the current premium enjoyed by the North American mills is substantially above the freight costs from Asian countries. Distributor demand is picking up in the US and Canada. These are the first customers to pull in imports to meet market requirements.
[...]
We believe that the balance of probabilities lies with the higher imports exceeding the improved demand by a small amount - pushing North American prices slowly down over the Winter and into the Summer months - albeit from a higher starting point.
Nippon Steel sees output recovery by March
This is one of several similar "announcements" this week. I suspect they are as much for uninformed stockholders as anything else.
Basically, everyone is saying "profits are down, demand is down, the market is oversupplied, we cut back on production, by this time next year everything will be back to "normal" (whatever normal is) and we'll be able to raise prices and margins again"
Yada yada yada no real content.
Yahoo! Asia
Nippon Steel Corp. , the world's third-largest maker of the metal, expects to return to normal production levels by March next year after reducing domestic stockpiles, its president said on Tuesday.
Nippon Steel, which churned out 33 million tonnes of crude steel in its last fiscal year, has announced production cuts of 1 million tonnes in the second half -- double the cuts that had been planned earlier.
Steel makers worldwide have cut production after ample global supply of the metal pressured prices.
Basically, everyone is saying "profits are down, demand is down, the market is oversupplied, we cut back on production, by this time next year everything will be back to "normal" (whatever normal is) and we'll be able to raise prices and margins again"
Yada yada yada no real content.
Yahoo! Asia
Nippon Steel Corp. , the world's third-largest maker of the metal, expects to return to normal production levels by March next year after reducing domestic stockpiles, its president said on Tuesday.
Nippon Steel, which churned out 33 million tonnes of crude steel in its last fiscal year, has announced production cuts of 1 million tonnes in the second half -- double the cuts that had been planned earlier.
Steel makers worldwide have cut production after ample global supply of the metal pressured prices.
Wednesday, November 02, 2005
Stelco signs Letter of Intent to sell Norambar, Stelfil and Stelwire
Stelco Inc. announced today that it has signed a Letter of Intent concerning the sale of Norambar Inc., Stelfil Ltée and Stelwire Ltd. to Mittal Canada Inc., a subsidiary of Mittal Steel Company N.V.
The transaction is subject to a number of conditions, including the negotiation of a definitive agreement and the obtaining of Court approval. It is anticipated that, if all conditions are satisfied as planned, the sale will close early in 2006.
The transaction is subject to a number of conditions, including the negotiation of a definitive agreement and the obtaining of Court approval. It is anticipated that, if all conditions are satisfied as planned, the sale will close early in 2006.
Labels: stelco
