Hello, I am Nicole Busken with the February edition of the United Performance Metals' Update.
Integration Update
Today I am joined by the founder of Ferguson Metals - Wayne Ferguson. Mr. Ferguson is currently the Director of United Performance Metals. We wanted to take this opportunity to ask Mr. Ferguson a few questions on the recent merger and creation of United Performance Metals. Can you tell us more about the events that lead to the creation of United Performance Metals? What are the synergies that have been developed as a result of the merger? What's in the future for United Performance Metals?
Service Spotlight
Each month we intend to focus on a specific product or service offered by United Performance Metals. This month, we are spotlighting our leveling and sheet processing capabilities. One of our strengths is the ability to process both sheet and coil product. The continued growth of our sheet product prompted large-scale investments in 2006, including a state-of-the-art Red Bud Leveling Line and a precision measuring table for sheet product.
United Performance Metals' Sheet Segment Manager, Brian Bick, comments, "The proliferation of waterjet and laser technology throughout our customer base has placed an increased emphasis on delivering our sheet product to tighter tolerances, with an increased emphasis on flatness, surface and edge condition. The capabilities of the new machine, coupled with the ability to precisely monitor these tolerances on the measuring table, has placed us in a better position to meet our customers' needs."
The new Red Bud Leveling Line delivers increased processing speed and flexibility, including the ability to process lengths between 12 inches and 144 inches. It is capable of line speed of 150 feet per minute and features an air flotation feature that produces better quality when working with lighter gauges.
Another part of United Performance Metals investment in its sheet processing capabilities was the addition of a measuring table. Sheet Production Lead, Chris Blackburn, states, "The addition of the measuring table allows us to be much more accurate. Now we're able to more precisely measure squareness, flatness, edge wave, and even crown. Although not every customer requires that level of precision, we're ready to accommodate those who do."
United Performance Metals is well positioned to address your specialty stainless, high-temperature alloy, and cobalt alloy sheet requirements.
Constrained Supply Could Influence Future Pricing
As we move through 2008, many experts are predicting no radical changes in stainless steel and specialty alloy base prices. While all indications point toward a consistent domestic demand, supply appears to be constrained. In a recent report, the Metals Service Center Institute reported that January shipment declines were small despite the weak economy, suggesting there is more strength in metals' end-user markets than was previously thought. It doesn't appear that domestic mills are producing any less, but rather that less steel is being imported. The strength of several global markets, coupled with a weak U.S. dollar, makes it difficult to attract imports.
In a recent article, analyst firm Goldman Sachs stated that even in a severe recession, the United States must import about 25% of the steel it needs. Additionally, industry analyst Michelle Applebaum states, "The inventory data continues to support our view that service centers will have to pay dramatically higher prices for steel moving forward, as foreign tonnage has all but dried up, with pricing at a steep premium - when imports can be found." United Performance Metals' International Segment Manager, Jeremy Pearson, comments, "I have certainly seen increased interest in our metals from abroad. I have to believe that this is because our metal represents a value for international buyers right now." The end result is that if less is being imported and more is being exported, there is less metal available for domestic consumption.
In today's market buyers are encouraged more than ever to monitor the balance of imports and exports.
Closing
This is Nicole Busken and on behalf of United Performance Metals, I would like to extend our warmest wishes to all our customers and partners. We hope you will continue to check our monthly updates for information and market trends. Please contact your representative if you have questions or comments about this webcast, or suggestions for topics covered in future updates. United Performance Metals is looking forward to bringing you more in 2008!