<VV> Threat to Corvairs and Old car parts

[John Kepler]

> This goes back to what Bruce told me, that last fall steel was
deregulated,

Steel has NEVER been "regulated" since WW II!

> and since most of our steel is recycled and not mined,

Completely false!  While most steel-making consumes scrap, only about 25% is
recycled, the rest is virgin metal coming out of blast furnaces.

the cost has really gone
> up.  He told me that most of this is because since early winter, the
Chinese
> are buying up all the scrap steel they can.  Last fall it was going for a
> penny a pound, now, it is almost a nickel.
>
> Now, I don't know if the Chinese are buying up all the scrap steel,

The Chinese are NOT buying up scrap.  What HAS happened is that the Chinese
have largely quit exporting not only steel, but blast-furnace coke.  Roughly
30% of all the coke used by US steel-mills came from China (due to HIGHLY
restrictive environmental regs, the US, the OPEC of coal, has to import
roughly 40% of the coke used to refine iron and aluminum....there hasn't
been a coke oven built in the US since the mid-1950's).  This coke shortfall
is causing a MAJOR crisis in the US steel industry.  Not only is coke in
VERY short supply, but the coal to make it is virtually impossible to buy at
the present time.  Coke that was fairly available at $85/ton a year ago is
now impossible to buy at $250/ton.

There are growing shortages of structural steel, with tube and flat-rolled
getting tight as well.  Coke and the coal to make it is completely
unavaiable.....the entire uncommitted US supply of Low-Vol Met Coal would
fit in the back of my Dakota pick-up!  With new-mine start-up costs over
$250 million (most of it due to environmental regs), the cost of
metallurgical coal will have to more than double to make new mines
economically viable....and there's 2-years of lead-time before a single
pound of product comes out of the hole!

Short version:  Hang on to your butts......it's gonna be one hell of a rough
ride for the next 2-3 years!

 but I do
> know that steel has taken a tremendous jump in prices.

Todd, my man, you ain't seen NOTHIN' yet!


John Kepler
Pickands Mather & Co. (an engineering and raw materials support company to
the US steel industry for the last 130 years)