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With Low Oil Prices, U.S. Mills Lose Relative Energy Advantage
10/04/2016 - Not only have falling oil prices lowered the demand for steel pipe and tube, they’ve dulled a cost advantage U.S. steel producers had over their counterparts elsewhere in the world, according to an industry consultant.
Speaking during the CRU North American Steel 2016 conference in Chicago, Matthew Poole, head of ferrous consulting for CRU, said the relative cost competitiveness of U.S. mills has slipped as energy prices have come down for the world. Lower raw material costs and a strong U.S. dollar have further helped to erode their competitiveness, based on CRU modeling, he said.
However, he said that over the next four years, U.S. mills probably will regain some lost ground as oil prices gradually improve and as global iron ore prices are expected to rise faster than captive ore prices.
But he said the mini-mills will likely improve their cost competitiveness more so than the integrated mills, which are projected to solidly remain at the top fourth of the global cost curve.
However, he said that over the next four years, U.S. mills probably will regain some lost ground as oil prices gradually improve and as global iron ore prices are expected to rise faster than captive ore prices.
But he said the mini-mills will likely improve their cost competitiveness more so than the integrated mills, which are projected to solidly remain at the top fourth of the global cost curve.
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