WE HOSTED A CONFERENCE call featuring three scrap-industry panelists. The call focused on the near-term outlook for the U.S. scrap steel prices and the implications for the upstream U.S. steel producers.

After a well-known price increase in September (panelists believe $20-$30 per-ton price increase is likely in September), each of the three panelists predicted a decline in scrap prices during the fourth quarter. The fourth-quarter expected decline is driven primarily by expectations for increased scrap supplies and modest domestic demand growth. The panelists pointed to a lack of sufficient domestic demand necessary to drive mill-utilization rates sustainably higher, a potential moderation in export demand after the recent bounce in exports to Turkey, and the likelihood that the recent lift in scrap pries (up 38% in past 2 months) draws more supplies into the scrap yards.

However, one caveat to the weaker outlook...if Chinese steel production continues its recent re-acceleration, this could be sufficient to hold scrap prices steady, although even in this scenario, incremental upside to prices from here is limited.

The implications for upstream steel producers are not positive in our view. Given the tight relationship between scrap prices and finished steel prices, in our view if scrap prices decline in the fourth quarter, it suggests the recent lift in hot rolled coil (HRC) prices will also be short-lived, implying a near-term peak HRC price of about $630 per ton (versus recent trough of $560 per ton). To put this in perspective, the U.S. steel equities are trading on average at 5.0-5.5 times 2011 earnings before interest, taxes, depreciation and amortization (EBITDA), based on a $700 per-ton HRC price. While this is a reasonable valuation range for the steel equities in our view (not "cheap," but fair), the key is...if HRC prices end 2010 at about $600 per ton, there is more downside risk versus upside potential to 2011 estimates, given the low starting point in underlying prices versus our base-case estimate (i.e. $600 per ton versus our base case of $700 per ton), and excess capacity (both domestic and global) waiting to respond should prices eventually rebound.

Among the individual equities, in our view United States Steel (ticker: X) is most exposed to weaker-than-expected pricing, given the current relative valuation -- 5.4 times 2011 EBITDA versus 4.5 times 2011 EBITDA for AK Steel Holding (AKS) -- and given inherent EBITDA leverage for a given change in underlying prices.

Conversely, in our view Nucor (NUE) remains least exposed to declining finished steel and scrap prices, given mini-mill cost structure and embedded valuation.

Chinese wire decking product does not hurt U.S. industry, according to a final ruling by the U. S. trade authority on Thursday.

The United States International Trade Commission (USITC) determined Thursday to deny a ruling by the Commerce Department on final antidumping duties (AD) and countervailing duties (CVD) on imports of some 235.9 million dollar wire decking from China.

As a result of the commission's negative determinations, no antidumping or countervailing duty order will be issued on imports of this product from China.

The USITC said in a statement that "a U.S. industry is neither materially injured nor threatened with material injury by reason of imports of wire decking from China that the U.S. Department of Commerce has determined are subsidized and sold in the United States at less than fair value."

Four of the six-member commission voted in the negative. Two voted in the affirmative.

About a year ago, five U.S. companies filed petition to the U.S. trade authorities to seek protection. The USITC instituted the investigations on June 5, 2009.

The petitioners for these investigations are AWP Industries, Inc., ITC Manufacturing, Inc., J&L Wire Cloth, Inc., Nashville Wire Products Mfg. Co., Inc., and Wireway Husky Corporation.

The product covered by these investigations is welded-wire rack decking produced from carbon or alloy steel wire that has been welded into a mesh pattern.

The wire mesh is reinforced with structural supports and designed to be load bearing. Wire decking reinforced with structural supports is designed generally for industrial and other commercial storage rack systems.

U.S. imports of the wire decking were valued at an estimated 235.9 million dollars in 2009.

Soper’s Engineered Fabric Solutions. Soper’s is a leading turnkey manufacturer of Softwall Enclosures, Partitions, and Curtains custom-designed to solve common industrial and warehousing problems such as dust, fumes, noise, temperature, odour, cross-contamination, privacy, overspray, and welding flash.


Please visit there web site: www.sopers.com

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Forklift helps trappers move alligators
Gulfport, MS, United States

Trappers used a forklift to transport two large alligators from a bayou in a populated Gulfport neighbourhood.

“The trapping happened on 7 May, and I believe it lasted less than two hours,” says Ryan LaFontaine, public information officer with the city of Gulfport.

Licensed by the state, trappers Sam Searcy and Chris Husley were contracted through Ricky Flint, a specialist with the Mississippi Department of Wildlife, Fisheries and Parks to remove alligators that had become a nuisance.

A news broadcast of ABC affiliate WLOX in Biloxi, Mississippi, available on the station’s website, shows the trappers at work and the role of the forklift in moving the bull alligators and placing them on a transport trailer.

In addition to the forklift, the trappers used heavy roll to wrangle the 13-foot (3.9m) and 10-foot (3m) alligators from the Brickyard Bayou and then wrapped duct tape around each animal’s snout to prevent any bone-crushing bites. The alligators’ familiarity with humans requires the trappers to kill the animals rather than relocate them. The hides and the meat were sold.

Gulfport, the second-largest city in Mississippi, is the east coast home for the US Navy Seabees construction battalion.

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