USA: Hurricane floods may drive steel prices up
Hurricane Katrina has already brought higher gasoline prices in its aftermath, but the auto industry could be squeezed further as steel prices rise. The price of steel for auto manufacturing and industrial equipment could rise by as much as 20 percent as flooding in New Orleans has limited the supply of raw materials such as liquid hydrogen and scrap, the Wall Street Journal reported on Wednesday.
The newspaper said the increase would be in addition to roughly 20 percent price increases by steel makers including U.S. Steel Corp. and Nucor Corp. that became effective on September 1 for shipments of products such as hot-rolled coil.
Liquid hydrogen is used to make higher-quality steels such as galvanized or cold-rolled coils, which are used in products from auto panels to garage doors. Scrap is used to make new steel.
The newspaper said that as buyers stockpile to avoid higher prices and shortages, prices could escalate by as much as $80 a ton on such products. Currently, hot-rolled coil costs about $500 a ton. Concrete reinforcing bar, used in construction, is also expected to rise.
The report said some larger automakers may look to ship extra supplies of steel from abroad. It quoted Dave Elshoff, a spokesman for the Chrysler group, as saying the company is monitoring the situation, but "as of this time, all our suppliers have found alternate sources" of hydrogen.