April 2004

Spikes in steel | Focus

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Spikes in steel

by Ambika Puniani Bailey
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In March, NRCA issued a Special Report warning its members about expected price increases in steel-related products, as well as copper. The price increases are in response to increased global demand and a weak U.S. dollar.

The Special Report states: "These price increases are attributable to several factors. First, there is increased global demand for steel products. China, especially, is buying more prime steel and scrap steel. Second, the weak U.S. dollar makes U.S.-produced steel more attractive to foreign buyers. And third, steel companies are facing rapidly increasing costs, especially for transportation and energy. The same kind of price pressures applies to aluminum and copper."

For example, and perhaps as a result of such price pressures, Butler Manufacturing Co., Kansas City, Mo., a major provider of building systems and architectural aluminum systems and components, has announced it will be acquired by BlueScope Steel, Melbourne, Australia, the largest steel producer in Australia and New Zealand. The Australian company produces steel slab, hot and cold rolled coil, plate, tin plate, and metallic painted and coated steel products.

BlueScope Steel is paying nearly $204 million for Butler Manufacturing ($22.50 per share for 6.4 million common shares and a debt assumption of $60 million). Pending shareholder and regulatory approval, the acquisition should...

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