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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: ild who wrote (10751)	3/23/2004 6:04:12 PM
From: ldo79	Respond to of 110194

Maybe we won't have worry about repo's soon. <g/ng> ========================================== Reuters UPDATE - High prices lift steel makers, squeeze customers Tuesday March 23, 5:52 pm ET By Michael Erman (Recasts throughout) NEW YORK, March 23 (Reuters) - Steel Dynamics (NasdaqNM:STLD - News) raised its profit outlook on Tuesday, the latest in a series of U.S. steelmakers to boost earnings forecasts due to soaring demand and higher prices that are squeezing their customers. Steel customers ranging from auto makers to construction companies are feeling the brunt of the recent boom in steel prices. In the last week, irrigation equipment makers Valmont Industries Inc (NYSE:VMI - News) and Lindsay Manufacturing Co (NYSE:LNN - News) warned that their earnings will fall below forecasts due to the hike in steel prices. "The disruption that is going on in the steel consuming industry is a blood bath, and it's resulting in terrible loss in an industry that already was suffering greatly from economic turmoil," said William Gaskin, president of the Precision Metalforming Association. The PMA represents nearly 1,300 companies that make products out of metal. Gaskin said 46 percent of the PMA's membership cited issues with steel prices and availability as disrupting business -- 18 percent critically, 28 percent significantly. Steel Dynamic's performance has improved during a period in which it and other steelmakers such as Nucor Corp. (NYSE:NUE - News), the largest U.S. producer, have imposed steep steel surcharges on its customers in order to offset climbing scrap steel costs. Fort Wayne, Indiana-based Steel Dynamics said quarterly earnings could reach 60 cents per share, compared with an earlier view of 35 cents a share to 45 cents a share. The outlook echoed similar forecasts from Nucor and Steel Technologies Inc (NasdaqNM:STTX - News) last week -- a trend analysts expect will reach most major steelmakers for the near term. U.S. steel prices in some grades have surged more than 30 percent since Jan. 1, driven in part by voracious Chinese demand for the metal. Including scrap and raw metal surcharges, some steel prices have nearly doubled since last year. AUTO INDUSTRY The current pricing climate is hitting the auto industry hard. Rising steel prices caused Deutsche Bank to cut its 2004 earnings estimates for General Motors Corp. (NYSE:GM - News), Ford Motor Co. (NYSE:F - News) and some leading automotive parts suppliers. GM is not taking the pricing changes lying down. The world's largest auto manufacturer said on Tuesday it is suing Steel Dynamics over the surcharge. While GM said it is currently paying the higher prices for steel, it is suing to return the prices to previously agreed-upon levels. "We are paying under protest. We did not want to have interruption of production at any of our facilities," GM spokesman Tom Wickham said. "We feel that we have a right to have the suppliers adhere to a contract they signed and we'll resolve that in court." GM has also filed suit against a Textron Inc (NYSE:TXT - News) unit that raised prices on steel fasteners it supplies GM. The steel companies argue the surcharges are necessary to offset increasing costs of scrap metal and other raw materials. Scrap prices have more than doubled since last year, according to the Emergency Steel Scrap Coalition, and prices of coke and other raw materials used in steelmaking are also surging. Motor home maker Winnebago Industries Inc. (NYSE:WGO - News) and truck manufacturer Navistar International Corp (NYSE:NAV - News), which are enjoying rising demand as the economy improves, believe they will be able to pass through higher materials costs to their customers by raising prices on their products. "At the present time, the increases have not affected us, because we had built in some long-term contracts," said spokesman for Navistar. "If we have price increases this year, we expect we will pass it on to our customers. We're doing all we can to try to minimize it." (Additional reporting by Michael Ellis in Detroit and Susan Kelly in Chicago) biz.yahoo.com