TPT July 2008

From the AmericaS

No timeline was announced for construction and completion. It is expected to be at least 10 years before gas begins to flow. Even so, with so many regions in continental US off-limits to oil and gas development, a gas line from an Alaska to the heartland is an attractive prospect worth the wait. Of related interest . . . › Alaska Native and environmental protection groups on May 5 sued to stop exploration this summer in Arctic waters, challenging US permits that allow Shell Oil Co and BP PLC to search for oil and gas with the use of powerful acoustic devices. The technology, known as seismic exploration, examines the geologic makeup of the seabed. According to the nonprofit law firm Earthjustice, for the plaintiffs, the federal government violated US laws by failing to study the effects on marine animal life before permitting the companies to project ‘noises as loud as a rocket or a volcanic eruption’ into the sea. For almost a decade, London-based BP has been the only company producing offshore oil in Arctic Alaska. But receding sea ice has drawn other companies to the region, with Shell Oil emerging as the largest new player. In February, the US-based affiliate of Royal Dutch Shell paid the US government $2.1 billion for oil and gas leases in the Chukchi Sea, which spans Russian and American territory. The company had already spent more than $80 million for federal leases in the Beaufort Sea, about 450 miles to the east. Steel To recoup surging energy and raw materials costs, ArcelorMittal raises some US prices The mid-April announcement by ArcelorMittal, the world’s largest steel maker, that it would raise prices on some steel shipments in the US by $250 a ton boosted the fortunes of a number of American steel makers. US Steel, based in Pittsburgh, added $8.74, or 6 per cent, for a record close on April 16 of $155.37. AK Steel (West Chester, Ohio) also reached its highest value ever, gaining $2.35, or 3.6 per cent, to close at $68.50. Other beneficiaries included Nucor (Charlotte, North Carolina) and Steel Dynamics Inc (Fort Wayne, Indiana). As reported by Dale Crofts of Bloomberg News, according to an internal memo ArcelorMittal was to add the surcharge to all orders

of flat rolled steel for shipment 5 May and later. The Luxembourg- based company will not add the charge to spot sales or contracts that already allow prices to fluctuate, the memo said. The US producers were cagey about their response to the news from Europe, despite the lift it gave them. US Steel will work to get ‘the market price’ for its metal, spokesman John Armstrong told Bloomberg . He declined to say whether the company, which sells about 50 per cent of its steel under contract, would follow ArcelorMittal’s move. “We will continue to honour our contracts,” said Alan McCoy, a spokesman for AK Steel, the No 3 US steel maker. “Most of our contracts for the last seven years have had a variable pricing component.” Global steel prices have gone up 40 per cent since the beginning of 2008; and, according to Purchasing magazine, US prices for flat rolled steel rose to $740 a ton in March from $665 a month earlier. Mr Crofts wrote, “ArcelorMittal wants to take advantage of soaring global demand to pass on higher costs for iron ore and the energy to produce and ship the metal.” • AK Steel had already generated good news of its own, reporting that first-quarter profit rose more than 60 per cent, aided by soaring global steel prices and favourable labour contracts. The Ohio-based maker of flat rolled carbon, stainless, and electrical steel, and carbon and stainless tubular products, posted net income of $101.1 million for the period ended 31 March, compared with $62.7 million a year earlier. Sales totalled $1.79 billion, compared with $1.72 billion in first-quarter 2007. A company spokesman noted that, while many such traditional customers of American steel mills as those in the automotive sector have been hit by the country’s economic slowdown, other markets – commercial construction, energy – continue to generate strong demand. AK Steel has streamlined itself to take advantage of these opportunities. The company has about 30 per cent fewer employees system-wide than it did five years ago. Elsewhere in steel . . . › Cleveland-Cliffs Inc, North America’s largest producer of iron ore pellets, said first-quarter profit fell 49 per cent after a loss on a Brazilian iron ore project. Net income was $16.7 million in the three months ended 31 March, down from $32.5 million a year earlier, the

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J uly 2008

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