…Timna Tanners, a smart and savvy metals/mining analyst for Bank of America Merrill Lynch (and officially my new crush in the metals world), presented the viewpoint that “when you’re in an oversupplied market…the scrap price will set the steel price, and the margin should remain fairly fixed; this is not a permanent situation, but for now it’s important.”
Tanners also put her (and her firm’s) thumb in the air – which, according to her bio, has a killer track record – and came down with a long-term iron ore price forecast at around $95 per ton.
As far as raw material alternatives go, 20 million tons of DRI [direct-reduced iron] by the end of the decade in the US would have a massive impact on cost structure, according to Tanners. “It’s exciting, but change is disruptive,” she said…
…The world’s largest steel producer, ArcelorMittal, will no longer honor CRU + discounted contracts, claiming the practice has led to reduced profits and market manipulation.
We wonder if the distinction between CRU + discounts carries over to how companies use CRU from a long-term contracting perspective.
On the face of it, our own analysis suggests CRU pricing remains an accurate indicator of actual prices paid in the market, but the notion of discounting to CRU seems out of place with the exception of large-volume buyers…
…30,000 tons of steel have been used in the operation – more than four times the weight in the Eiffel Tower. Twenty-one pillars over 5 feet in diameter were driven 30 feet into the granite seabed to support the righted ship and brace the 56 chains (each 190 feet long and weighing 26 tons) used to pull the vessel slowly upright through 65 degrees.
Two blister tanks installed at the bow of the wreck provided buoyancy, measuring 75 feet long and 66 feet high – that structure alone weighed 1,700 metric tons. Meanwhile, a flotilla of 22 vessels and eight barges, plus more than 500 people of 26 nationalities worked on the joint US-Italian led project.
Fortunately, much of the diesel fuel had been pumped off months ago, but the stores still held a considerable quantity of perishable goods and liquids that would have caused environmental problems if the vessel was left indefinitely or if it had broken up on the reef.
The scrap value will be a fraction of the salvage costs to date and in practice may not even cover the cost of breaking the vessel up, but at least the eyesore on the Tuscan coast will soon be gone and the Italians can be proud of an immensely difficult salvage job well done…
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