cheapie

Steel prices are going apesh$t. we are getting slammed because of the increases passed on to us. domestic steel mills are at capacity and the prices are skyrocketing. i don't know how much i can say about how it's hurting us right now because it's confidential but i think it's going to slow down the economy a bit. at least hurt the automotive market.

the cause is that china is sucking up all of the excess capacity and there won't be any new mills online until 06 or 07.

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70% of the world is covered by water. The rest is covered by Bob Sanders

Nija

My industry has nothing to do with steel, or it's prices. However, if everyone started sueing people over steel, we'd have a hell of a lot more work

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"Nija is the dark soul of gotapex. We don't like to talk about him." - LPMiller

cheapie

my advice to people is that if you're thinking about buying new cars, do it soon. when the automakers start feeling the pain, the incentives and special financing will have to go.

johnnymk

Automakers keep close eye on rising steel prices around the world

JOHN PORRETTO
Canadian Press

Wednesday, March 03, 2004

GENEVA (AP) - Rising steel prices are causing major automakers to brace for an increase in the cost of building vehicles, a development that likely will force them to trim expenses even further.

Automakers largely avoided drastic cost increases during recent steel-price hikes because of long-term contracts with producers and the large quantities they buy around the world.

But top executives for two of the world's largest automakers say even extended contracts and other factors may not protect them from current rising prices. Steel prices have risen roughly 30 per cent in the past few months, thanks to a weak U.S. dollar and intense demand from China.

"We have contracts in place, but steel costs are a problem," John Devine, General Motors Corp.'s chief financial officer, said Wednesday in an interview at the Geneva International Motor Show.

He noted that prices of other materials used in car production, such aluminum, are up too.

However, Devine said he didn't anticipate higher material costs to result in more expensive vehicles for consumers.

"The cost structure and revenue structure are two different things," he said. "We have to find a way of offsetting it, and that's what we're going to do."

What makes the timing so bad for automakers like GM, Ford Motor Co. and DaimlerChrysler AG's Chrysler Group is they've already slashed expenses by billions in recent years in the wake of increasing competition and tight profit margins, if not losses.

The situation is tough for auto suppliers too, who are under intense pressure from automakers to lower their costs.

U.S. President George W. Bush revoked protective tariffs on steel in December, but so far that has not helped prices to stabilize.

"It just shows you the magnitude of the impact of China," said Christopher Plummer, a steel industry consultant at West Chester, Pa.-based Metal Strategies Inc. "Within the last 12 to 18 months, that country's government had a policy that was very strongly promoting growth in construction and in industry. They basically just opened the floodgates."

Plummer said the most common steel product, hot-rolled sheet, now costs about $500 US per tonne including surcharges, compared to an average over the last 15 years of about $310. Steel prices have been fluctuating wildly since 1998, he said.

"We were very successful in recent years to avoid any of those economics to hit us," said Chrysler chief executive Dieter Zetsche. "This time it's getting tougher and tougher to stand firm."

"When this hits us," he said, "we have to offset it by more savings across the board."

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Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it. - Ronald Reagan (1986)