Came across this interesting blog, and a posting about the impact of steel prices on the cost of a new car.

A few years ago, high(ish) gas prices and fierce competition had Detroit automakers talking about the “perfect storm” that the domestic industry was facing. Fast forward to 2008 and the entire auto industry, not just U.S. automakers, is in a full-blown tsunami. Gas is $4 per gallon, the U.S. is muddling its way through some seriously wobbly financial times, and now the price of steel has nearly doubled in five months to $1,035 per ton. Since just this January, the cost of steel in your automobile has risen $500 per car.

Well worth “popping” over to read the full article. The world is changing for us all for ever, as scarcer resources have be shared between an ever increasing market of hungry consumers. For a long time the automotive manufacturers seemed to consider their suppliers as their “inflation hedge”, the main route to controlling costs. In the past a “supply partnership” with an automotive company meant in reality that they gave the orders and the supplier conformed or “went under”. Maybe now is the time for real partnerships. For a a great take on the current situation pop over to Supply Excellence and read the posting on The End of an Era in Detroit.

WHEELING, W.Va. (AP) - Steelmaker and distributor Esmark Inc. is asking stockholders to wait until mid-June before agreeing to sell shares to Russian metals and mining company OAO Severstal.

SYMBOL LOOKUP

Severstal officially started offering to buy shares of Esmark for $17 apiece Friday. In response to the tender offer, Esmark says it’s going to give an opinion to shareholders by June 13.

Esmark agreed to an identical $670 million takeover by India’s Essar Steel Holdings last month, prompting Severstal’s rival offer May 20. Severstal says it has the support of the United Steelworkers, which opposes Essar’s offer.

The USW contract allows the union to reject deals that change control of Esmark.

Esmark stock rose 20 cents, or 1.1 percent, to $18.90 Friday.

The government’s move to temporarily reduce import taxes on 26 commodities, including food items, medical products and cotton, will help reduce inflationary pressure, analysts said Thursday.
The Ministry of Finance said that:
Tariffs on frozen pork will be lowered from 12 percent to 6 percent from June 1 to the end of the year.
Temporary tariffs on frozen fish will be reduced to 5 percent from 10-12 percent during the same period.
Tariffs on baby food will be lowered to 5 percent from 10-15 percent.
Tariffs on soymeal and peanut meal, two major livestock feed products, will be reduced to 2 percent from 5 percent during the same period.
Tariffs on coconut oil and olive oil will be lowered from 10 percent to 5 percent, effective June 1 to the end of September.
Tariffs on medical products have also been cut. No tariffs will be levied on blood product antiserum, vaccines and antibiotics from June 1 to the end of December. The previous level was 3 percent.
Cotton imported in excess of annual quotas will be levied 357 yuan (52 U.S. dollars) per ton from June 5 to October 5. The previous level was 570 yuan per ton.
Hu Yijian, an economist at Shanghai University of Finance and Economics, said the revisions mainly target quake-relief efforts in Sichuan, which was hit by a devastating earthquake on May 12. The reduction of tariffs will help imports of commodities that are badly needed in Sichuan, Hu said.
Other analysts, however, believe that the move is to help control domestic prices, which rose by 8.5 percent year-on-year in April, the second highest in the past 12 years.
Economists and senior officials broadly agree that it is hard to attain the goal of keeping inflation below 4.8 percent - the central government target - this year.
“It does not have much to do with the earthquake,” said Ma Hongman, a Shanghai-based economist. “The move is targeted at helping control prices.”
Wang Li, researcher at the Chinese Academy of International Trade and Economic Cooperation of the Ministry of Commerce, added: “Failure to bring inflation under control could undermine efforts in quake reconstruction and hosting the Olympic Games.” (Source: China Daily)

Sharp increases in steel prices — up as much as $500 per vehicle since January — have left automakers and suppliers reeling. Tensions are rising as steel makers tear up contracts and demand immediate price increases. Steel and automotive executives say that ArcelorMittal — the world’s largest steel maker — and other steel mills notified the Detroit 3 last month that they will impose surcharges as high as $250 a ton.

Headline from Automotive News.

The automotive industry has been protected in the past due to fixed price annual contracts. In fact the auto manufactures have for many years operated a “cost down” supply model, causing big problems for component manufacturers and steel suppliers alike. My only surprise is that it has taken the industry this long to “wake up”. Welcome to the world that the rest of the steel using industry live in.