issue: August 2008 APPLIANCE Magazine
Metals and Metal Service Centers
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by Jill Russell, Contributing Editor
Metal suppliers are challenged to help OEMs deal with record-high metal costs.
Prices have gone up faster and higher than ever in history,” says Matt Lofton, head of Innovative Strip Products at Thomas Steel Strip Corp. (Warren, OH, U.S.), a subsidiary of Corus Group (London; www.corusgroup.com). “The demand is there, but the weak dollar prevents imports from coming in. It’s an amazing situation that no one had to deal with in the past.”
Blue Blade Steel says its oscillated-wound steel coils are designed to increase efficiency. The coil-winding pattern creates successive layers of steel to form a dense, compact coil that replaces up to 25 ribbon-wound coils. Blue Blade says a single oscillating coil can service production for an entire day, eliminating multiple starts and stops for setup, in addition to splicing operations and changeovers for scrap waste.
Lofton isn’t exaggerating. Aluminum prices soared in the United States to US$3137 per metric ton, increasing 6.7% in one week alone. Stainless steel has moved from $4000 to more than $8000 per metric ton, and was 76% higher in May 2008 than the prior year, according Stats SA. Copper has seen rises, as well—it increased 2% to $8490 per metric ton in June 2008 after the U.S. Federal Reserve left interest rates steady.
What are metal suppliers doing about the sky-high prices?
“We’re paying,” says Lofton. “Every appliance maker is paying the increase, and as a result, they’re now getting their customers to pay.”
The proof is in the pricing. AK Steel Corp. (Middletown, OH, U.S.; www.aksteel.com) imposed a $225 per ton surcharge earlier this year on invoices for electric steel products. The steel maker blamed higher energy costs and higher raw-material costs.
OEMs Feeling Price Pressures
The appliance industry is hurting, and metal prices are one of the causes.
When Whirlpool Corp. announced its first-quarter earnings—$94 million, down 24% from $124 million in the prior year—it attributed the loss to increased energy and raw-material costs.
“The combination of unprecedented material cost increases and seven consecutive quarters of lower U.S. demand have resulted in one of the most challenging operating environments we have seen in three decades,” said Whirlpool chairman and CEO Jeff Fettig in a statement. “The macroeconomic challenges, primarily material and oil-related costs, have intensified.”
Whirlpool is not alone. Carrier Corp. increased prices up to 6% on its Carrier and Bryant brand residential and commercial heating, ventilation, and air-conditioning equipment sold in North America. The increase was implemented in mid-July.
New Zealand–based Fisher & Paykel Appliances (F&P) announced price hikes on its white-goods appliances, effective September 2008, due largely to rising steel prices. Like other OEMs, the appliance manufacturer absorbed some of the cost increases rather than pass all of it on to customers. Steel is, of course, one of the most used components in many F&P major appliances. With steels costs up 70%, F&P plans to raise retail prices less than 10%.
The steel industry continues to consolidate, and this is said to be helping the industry regulate supply and demand, preventing costs from nose-diving and spiking. Russian steel company OAO Severstal acquired the Baltimore Sparrows Point steel mill, Esmark Inc./Wheeling-Pittsburgh Steel Corp., and WCI Steel in Warren, OH, U.S.
One of the most active steel firms has been Nucor Corp. (Charlotte, NC, U.S.; www.nucor.com). Nucor recently bought a majority stake of Harris Steel Group Inc. (Stoney Creek, ON, Canada; www.harrissteel.com). Harris Steel, for its part, agreed to the $185 million purchase of Ambassador Steel Corp. (Auburn, IN, U.S.; www.ambsteel.com).
Nucor is also expanding the old-fashioned way—by building more capacity. The company is currently getting permits and other preliminaries out of the way for a proposed facility in St. James Parish, LA, U.S. The new company would be Nucor Steel Louisiana. Nucor said in May the site decision was not definite, but St. James Parish was the only U.S. site still under consideration. Other sites outside the United States were still under consideration as of May.
A New Wave of U.S. Steel Expansion?
In fact, if the project is ultimately built in St. James Parish, it would be the first greenfield pig iron facility built in the United States in three decades.
“Nucor would build one of the most modern iron-making facilities in the world to produce 3 million tons of pig iron, employing the latest technologies to reduce emissions,” said Nucor chairman and CEO Daniel R. DiMicco. He said the facility would create hundreds of jobs and demonstrate the effectiveness of new technology to protect the environment. “At the same time, this project would help Nucor achieve our long-term goal of increasing control over our raw-materials supply.”
Rolling Up Next…
A major development for both the metal and appliance industry this year was the approval of copper as an antimicrobial. The U.S. Environmental Protection Agency (EPA) recently approved the registration of naturally antimicrobial copper alloys as a supplement to standard preventive measures in eliminating specific disease-causing bacteria.
The Copper Development Association (CDA) says copper is the first solid-surface material to receive this type of EPA registration, which is supported by extensive antimicrobial efficacy testing. Independent laboratory tests confirmed that copper alloys eliminate more than 99.9% of bacterial contamination within two hours of exposure. More than 300 copper alloys were registered as antimicrobial materials that kill disease-causing bacteria. Copper, including brass and bronze, proved to be particularly effective against Staphylococcus aureus, Enterobacter aerogenes, methicillin-resistant Staphylococcus aureus (MRSA), Escherichia coli O157:H7, and Pseudomonas aeruginosa.
The U.S. Environmental Protection Agency (EPA) recently approved the registration of naturally antimicrobial copper alloys as a supplement to standard preventive measures in eliminating specific disease-causing bacteria. Although not in practice yet, copper may become the next “stainless” for consumers with its antimicrobial properties and unique finish. Photo courtesy of Luvata.
“We have only scratched the surface of possible copper applications directly targeted at improving public health,” said Warren Bartel, senior vice president and senior adviser for copper supplier Luvata Group (London; www.luvata.com). “When considering the cost of preventive measures or treatment for these diseases, copper may likely become the low-cost, environmentally friendly solution.”
Studies have shown that cleaning a surface does not eliminate all bacteria. Copper alloys, however, continually eliminate bacteria. The intrinsic antimicrobial properties of copper alloys cannot wear off or be removed. Homogeneous and solid copper alloys therefore provide a lifetime of efficacy. Copper alloys are the first and only commercially available solid-surface material with EPA public health registration allowing manufacturers to claim antimicrobial efficacy.
The registration permits the marketing of antimicrobial copper alloy products with public health claims and was granted to CDA based on tests conducted at a laboratory working under EPA-approved good laboratory practices (GLP). Starting with 3000 copper alloy samples of copper, cartridge brass, phosphor bronze, copper nickel, and nickel silver, EPA tested each sample’s efficacy as a sanitizer, its residual self-sanitizing activity, and its continuous reduction of bacterial contaminants. EPA confirmed efficacy of all three tests.
In response, Luvata, which makes tubes, coils, and coolers for the HVACR industry, is developing new technologies and recently broke ground on a $40 million copper tube manufacturing plant in Guadalupe, Nuevo León, Mexico. The plant is said to increase Luvata’s capacity in North America by an estimated 50,000 tons per year, and is scheduled to begin production in September 2008.
Luvata is investing in copper-based technologies for new appliance applications. “Preliminary testing has proven copper effective against other harmful fungal and microbial organisms, including Aspergillus niger (black mold), Influenza A, and Legionella pneumophila,” says Bartel. The company is performing new trials at Memorial Sloan-Kettering Cancer Center, Medical University of South Carolina, and the Ralph H. Johnson VA Medical Center to determine the efficacy of copper in new applications.
The appliance industry is still searching for ways to achieve what is now considered the “standard” stainless-steel look of appliances, only without the costs associated with stainless.
Apollo Metals Ltd., of Bethlehem, PA, U.S. also a subsidiary under Corus Group, is offering a nickel-plated Type 304–grade stainless steel. Due to lesser grade, the price is up to 30–40% less than higher-grade stainless steels. The steel is coated with a clear-bake enamel to eliminate annoying fingerprint marks. Apollo says potential applications include wraparound side and top panels for refrigerators and face plates on stoves, ovens, dishwashers, and other appliances. The material is reportedly easier to form and stamp than stainless, and is available in thicknesses from 0.012 to 0.050 in., in 30.50-in. master coils.
Corus Special Strip and Thomas Steel Strip also offer metal replacements for stainless steel and copper with its FX-SA and FX-CA products, respectively. The FX-SA steel replacement reportedly offers high strength and durability, but at a lower cost. The FX-SA can also be coated with brass, copper, rubber, or Teflon for various applications. The FX-CA offers the same benefits and is used with connectors to help save on final production costs.
“With no end in sight as far as price goes, appliance makers will increasingly look for lower-cost alternatives to achieve the stainless look consumers have now become accustomed to,” Lofton says. “We’ll be creating it for them.”
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