'Cash For Clunkers' to benefit steel firms
Auto sales-stimulus package awaits Obama's signature
Tom Stundza -- Purchasing, 6/19/2009 1:51:17 PM
The $1 billion cash-for-clunkers bill that is awaiting President Obama's signature is expected to increase car sales by 222,000 to 286,000 in the second half of the year, says the Goldman Sachs Group's Auto Research Team.
The bill will be a "positive for the steel sector" says Goldman analyst Sal Tharani--especially for U.S. Steel, AK Steel and ArcelorMittal's U.S. operations, all of which have "high exposure to the domestic auto industry." That means that a majority of their flat-rolled shipments go into motor vehicle manufacturing, which is severely depressed this year.
West Chester, Ohio-based AK Steel earlier this month warned investors that it's expecting a higher-than-projected second-quarter loss amid the automotive industry slowdown. The company in the first quarter lost $73 million because of steel-buying cutbacks by the automakers.
The cash-for-clunkers legislation will offer cash vouchers worth as much as $4,500 to consumers who trade in their old cars for new, more fuel-efficient models. It's intended to boost U.S. auto sales, reduce dependence on foreign oil and improve air quality.
The bill would require that trade-ins get no better than 18 miles per gallon, be a 1984 or newer model, and have been registered and insured during the past year.
If consumers purchased a new vehicle that gets an extra four miles per gallon or more, they would receive a voucher for $3,500. If they purchased a new vehicle that gets 10 miles per gallon or more than their trade-in, the value of the voucher goes up to $4,500.
Steel sheet prices going down
03/10/2009Molybdenum prices are sliding backwards
09/27/2009U.S. Steel may offer to buy AK Steel
03/02/2006Steel Shipments, Demand Way Off
02/11/2009
Now Playing: 
