High Steel Prices Have Manufacturers Scrounging for Supplies

[mahatmakanejeeves]

Last edited Wed Sep 15, 2021, 03:42 PM - Edit history (1)

MARKETS | COMMODITIES

High Steel Prices Have Manufacturers Scrounging for Supplies

Companies hunt for metal and hire help to find supplies; steel industry says ‘we are producing as much as we can’

By Austen Hufford
https://twitter.com/austenhufford
[e-mail]
Sept. 15, 2021 5:30 am ET

Manufacturers are facing the highest steel and aluminum prices in years, another hurdle for U.S. companies already struggling to make enough cars, cans and other products.

Rapidly increasing metal costs are pushing manufacturers to take what steel they can get and hire more people to seek out available supplies, company executives said. The rising costs are flowing through to some producers of consumer goods: Campbell Soup Co. is paying more to get the cans it fills with tomato soup; Peloton Interactive Inc. is seeing prices rise for parts that go into its stationary bikes; and Steelcase Inc. is paying more to make metal desks and filing cabinets. Car makers like Ford Motor Co. and General Motors Co. are also dealing with rising metal prices.

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{ETA}

Full disclosure: I own shares of a steelmaker.

[doc03]

1. That is the result in relying on China to supply

us with steel. Our excess steel capacity was eliminated. We have the same dellema with computer chips. The steel industry and Union warned of this but were ignored. Steel is a vital industry for our national defense and should have been protected. It takes years to build new steel plants.

[mahatmakanejeeves]

2. Would the steel plants that were closed down in the '80s have been adaptable to

the standards of the '20s?

Let's say the plants across Pennsylvania had been mothballed and kept in exactly the condition they were in when they were shut down. Would it be possible for them to open up on a turnkey basis? I.E., someone turns a door key, walks in the door, turns the lights on, and they start warming up the furnaces to make steel all over again.

Thanks.

[doc03]

3. Yes the one I worked in built a new electric arc furnace

but we couldn't compete with $1 an hour wages in China even with state of the art equipment.

[mahatmakanejeeves]

4. Were electric arc furnaces typical of the closed plants?

IIRC, you were in the industry for some time.

I vaguely that electric arc furnaces were somewhat new technology forty years ago, and that existing plants were at a disadvantage.

I'm asking because I don't know, not to be snarky.

Thanks.

[doc03]

5. The steel industry did not have the money to

modernise because we ciuldn't compete with slave labor in China. They are just empty tracs of land now.

[elleng]

6. Thanks for info.

[doc03]

7. We had a blast furnace that was totally rebuilt and could

have been operated but it never started back up it was destroyed a few years ago.

[mahatmakanejeeves]

8. How is capacity measured? Is it so many million tons per year, or

is it broken down into particular kinds of steel?

[doc03]

9. Our plant had a capacity to produce about

3 1/2 million tons a year. But it was an old plant and we couldn't genarate the profits to modernise. It was a slow death started in the 1970s after Nixon started trade with China. We went though 2 bankrupies while I worked there.
I managed to get 39years and 10 months in.
We did have a state of the art plant in Mississippi I don't know if it still operates or not.

[mahatmakanejeeves]

10. Sort of related: Other Voices: Clairton is dead, long live Clairton

Other Voices: Clairton is dead, long live Clairton

CHRISTOPHER BRIEM | JUN 6, 2021 12:00 AM

U.S. Steel’s recent announcement that it would not proceed with an expected billion-dollar investment across its local plants has reignited old debates on the linkages between Pittsburgh’s past and its future. Yet what remains of steel production in the region is at best a shadow of the prodigious industrial output that came from southwestern Pennsylvania.

{snip}

The traumatic contraction of heavy industry across southwestern Pennsylvania now dates back four decades — the tail end of a much more extended period of decline. The painful truth is that the competitiveness of steel production across southwestern Pennsylvania peaked a full century ago. To understand steel’s inexorable decline here, you have to look back to the reasons steel first agglomerated in Pittsburgh and its environs.

{snip}

Ironically, the seeds of Pittsburgh’s future decline can be traced to the startup of the Clairton Works, one of the first and largest coke works ever constructed in the United States. The immense demand for industrial coke during World War I pushed the industry to evolve beyond the distributed production of coke in small beehive ovens that stretched across southwestern Pennsylvania. Larger byproduct coke works such as at Clairton not only took advantage of vast economies of scale but also could use coal sourced from a much wider range of regions across the country.

The decoupling of steel production from coal sourced from the Connellsville seam catalyzed the growth of steel production across the nation, growth that would become a direct threat to Pittsburgh’s industrial dominance. But by the middle of the 20th century, yet another threat to Pittsburgh’s competitiveness in steel production was growing. Later described by Harvard economist Clayton Christensen as a prototypical disruptive technology, the emergence of electric-arc minimills completely transformed the economics of the modern steel industry – soon becoming a direct threat to all legacy steel producers and the regions where those producers were concentrated.

Minimills rely on electric furnaces, which have no need for the coal and coke that is the crux of the integrated steel production of Pittsburgh. Instead of iron ore, minimills relied on scrap steel, which was sourced across the country. Smaller minimills were likewise less dependent on river transportation for both key inputs and the delivery of products, giving them a freedom of location far greater than the integrated steel plants of Pittsburgh.

As a result, new minimills have emerged in regions across the nation and the world, not dependent on the specialized supply networks that had evolved in Pittsburgh.

{snip}

Christopher Briem studies the Pittsburgh regional economy at the Urban and Regional Analysis Program at the University of Pittsburgh’s Center for Social and Urban Research. He lives in Bloomfield.

First Published June 6, 2021, 12:00am