US Stimulus Package

After Obama administration took charge of the remaking America there first priortity was to get back the economy on the right path and after one month on the Presidential seat Mr Obama has passed the stimulus bill of $ 789 Billion on 14, feb, 2009.

Lets see how the Obama administration has planned to distribute this amount

As we can see in the above chart most of the amount will be spent on strengthening the infrastructure as when there will be more construction of houses, bridges,schools etc then there will be automatic demand of steel and other building related tools thus help in balancing demand and supply.

So lets see how the govt wants to strengthen the infrastructure:

1) Around $ 140 billion will be construction spending

2)  There is also some question about whether this will be new work or will simply fulfill the ongoing operating and capital spending requirements of some states. It is likely to be a mix of the two and, therefore, the full impact will be partially diminished. For their part, however, it has to be recognized that many of the states are desperate for funds. Their revenues are falling dramatically and balanced budget mandates make it extremely difficult for them to get extricated from this mess.

3) Around $ 49.3 billion will be spent on transportation infrastructure which will include building new bridges,high speed rail corridors, assistance to ship yards etc.

4) Around 30 Billion will be spent on constructing housing facilities ,schools, developing rural communities facilities.

5) Another $30 billion will be spent on energy and technology

The extra money for schools makes sense on so many levels. Endowment funds have been ravaged by the decline in equity price on the major stock markets. Staying enrolled in a community college or a university is a fine way to pass the time until the economy improves again, especially since gaining more skills and knowledge will be essential in the internationally competitive workplace. And capital investments on educational facilities will showcase “green” jobs in fuel efficiency and life-cycle extensions.

The bottom line, however, is that probably most of the new construction will come in the area of civil and heavy engineering work. These projects are already subject to government appropriations for spending anyway. For this reason, the systems are in place to get this kind of work underway quickly. Roads, highways, water treatment projects, water and energy pipeline work and alternative energy projects (i.e., transmission lines to remote solar and wind farm sites) will all see more government money. And this will be spread across the country.

Deutsche bank has said that this bill could generate 15m tones of steel demand over the next three years and its also predicted that estimated $146bn in infrastructure spending called for under the legislation will represent 5m t/year of new demand – roughly an additional 4% of “normalized” US consumption – in each of the next three years.

Lets hope the above said plans are executed on time so that the economy comes back on track.

You can also read the full stimulus bill on http://www.recovery.gov

http://www.agc.org/cs/rebuild_americas_future

Recession:Door of Opportunity

When we talk of recession we say economy is slowing down,unemployment, depressed demand and ‘n’ number of things attached to it. But dont  you think that recession forces an entrepreneur to look for new business opportunity? Recession opens door for people who want to be entrepreneurs by showing them the gaps in the market and thus forcing them to think how to fill the gaps in the market.Entrepreneurs should take this period as boon rather than bane ,as recession gives them an ample time to think more creatively and try their hand in areas in which they wanted to enter but due to lack of time never able to convert it into realty.This period should be utilized in doing research on new products, new markets or even acquisitions and diversification…

For the people who always wanted to do business,  I would say that this time is the best to enter the market in fact many successful business today were started in economic downturn. Wikipedia foundation inc was also started post 9/11,Established in January 2001, the online encyclopedia had more than 100,000 entries by 2003. Today it is home to more than 2.5 million articles and continues to grow similarly Trader Joe’s, Disney and Hewlett-Packard were also started during recessionary period.

If you’re considering taking advantage of these economic times and embarking on your way to becoming an entrepreneur, stay focused with these steps:

Make a business plan and make sure to explain which market you are targeting by showing the gaps and telling how you are filling those gaps

Team work is always the best tool in start ups so if you are alone and also lack funds then I would suggest that try find people who have the same vision and passion as you have. If you have someone in your friend circle who is interested in your business plan  thats great and if not then dont worry you can find people from various blogs, networking websites, communities(Future Entrepreneurs at Orkut).

After this you need to do more research in that particular sector by analyzing the competitors behavior like what products they are offering/what not they are giving and which marketing channel they are using

Most important thing in any startup is the funds and most of the new entrants have ideas but they lake in better execution and lack of funds so I would suggest to look for a mentor and VC’s(Venture capital)/angel investors.This may sound simple but it would be most difficult task and the most fruitful as well as you need to prove infront of the investors why they invest in your plan?you can easily find the

Done lot of research and planning now execute your plans as planning without better execution is useless and within execution you will obviously encounter various challenges but if you have a team of like minded and knowledgeable professional you will be able to easily clear these hurdles

Remember, challenging times for some mean opportunities for others so get rid of your fear and come ahead and you will see that life is full of opportunities even in the time of slowdown.

SteelFast:Your Monthly Steel & Fastener Diet

In order to be more communicative with the industry counterparts and our valued customer we have recently started our monthly newsletter ‘SteelFast’.

The basic objective behind this is to provide our readers unbiased,transparent information in an easy to understand format. We would also try to bring latest news from the steel & fasteners industry at one place analytically.

We would like to use SteelFast as a tool to communicate with people who are zealous about steel & fasteners.

The first issue of SteelFast was published on Feb, 14,2009 and we will also upload the newsletter on our website. If anybody wants to have the first copy  as well as the subsequent issues  just write mail at steelfast@dubaiwire.com.

You can also view our newsletter by clicking on the following link

http://dubaiwire.com/DW/webroot/documents/dubaiwire_newletter_feb09.pdf

Why China Steel Prices Going Up?

China steel market is showing firming up of prices in exception to other major steel market in the world. Steel prices have now stabilized in most of the market during the month of December-January, however Chinese prices are firming up. The reasons that can be attributed for this can be: Relative better liquidity in the market & finance system as compared to other world, being an controlled economy; Stimulated Internal Demand – mainly because of stimulus infrastructural projects being implemented by government to over come the current recessionary trend world wide. Stimulus package of RMB 4 trillion + ($600 billion) was introduced by government during end 2008 of which RMB 2 trillion ($300 billion) is allocated for mass construction which is expected to generate more than 20 Mio tones of additional demand. Balance package is expected to be used for developing railways & highway projects. The flip side of this stimulated demand can be diluted by export uncertainties since during 2008 China has exported 40 million tones of steel, almost the same quantity the overall stimulus package would boost. Major steel producers have created, a sort of, cartel to control the supply by cutting down the capacities – which is not very difficult for them to sustain for short term being cash rich. For e.g. Baosteel, the largest steel produced of China, has kept its 6 Blast furnaces idle since October. Other producers are also operating at max 60-70%.

CONCLUSION:

Firming up of prices in China seems to be stimulated which is difficult to sustain in natural course of economy in long run.

Once the Chinese steel mills enhance their output to their build in capacities , the current balance between supply and demand would no longer exist and the price rise will end bringing Chinese price too in line with prevailing price structure the world over.

Jeffrey.J. Steiner: Takeover Artist

The Fairchild Corporation’s Chairman of the Board, CEO and Director, Jeffrey J. Steiner was born on April 3, 1937 in Vienna, Austria. Mr. Steiner has been the leading executive of The Fairchild Corporation since 1985. He is a prominent figure in the world, and a man of many faces. The corporate world knows him as a savvy business leader, and the philanthropic community as a generous patron of charities and the humanities.

He grew up in Istanbul during World War II, after his family fled Hitler’s advance into Vienna. At one point, he was an executive at Texas Instruments Inc., at another, an owner of a Paris-based engineering firm doing business in the Middle East.

The story of Mr. Steiner’s rise is the tale of a man who has used his international perspective and a nose for opportunity to profit from three business waves over the past two decades – the worldwide explosion in computers, the Middle Eastern oil boom and America’s merger mania of the 1980’s. It is from this last wave that Mr. Steiner has most benefited: He was then seen in good standing of a circle that includes Mr. Icahn, chairman of Trans World Airlines Inc., and Mr. Peltz, former head of Triangle Industries – both clients of Drexel Burnham Lambert Inc.

Mr. Steiner first joined Drexel’s farm club in the early 1980’s, after coming to America when plummeting oil prices dried up his Middle East construction business. At a cocktail party in New York, he met Mr. Icahn, who was bidding for Marshall Field, the department store chain, and needed cash. Mr. Steiner flew to Geneva and within a day lined up $20 million from Paribas bank. Plunging Into the Pool .

Mr. Steiner used his money well. With an initial $7 million of his own, and some $500 million of other people’s money that Drexel has raised over the years, he has bought companies, spun off their assets and, through various permutations, created an empire of aircraft parts and other industrial products. Mr. Icahn used to say that Steiner’s was great with capitalizing an opportunity around.

The big time for Mr. Steiner came when he bought into Banner Industries as an investment vehicle, after Banner’s chairman had suffered his third heart attack and was looking for someone to replace him. Using his own money and bank borrowings, in 1985 Mr. Steiner purchased a 20 percent stake in Banner for $15 million and became its chief executive.

Hardly a glamorous operation, Banner was in aircraft-related businesses – it made fasteners that hold planes together and supplied aircraft tires. After that he bought Rexnord, an industrial company that made ”Rex the King” mechanical chain belts and also had a hodgepodge of other businesses.

By now, Banner and Rexnord are not Mr. Steiner’s only investments. He has also done well on a variety of other deals. After the stock market crashed, he purchased Trans Continental Services Group, an investment fund listed on the London Stock Exchange. Around the same time, his aborted pass at Advel, a British airplane fastener company, netted him $15 million in profits when Textron got the company instead .

Mr. Steiner’s biggest disappointment so far has been the failure of his $467 million bid for Loral’s aircraft braking systems division. He contends that Loral’s auction of the division was anything but. ”It became apparent that the divisions were not as much for sale as Loral’s management said,” he said.

In 2002 Fairchild fasteners was acquired by Alcoa for $657 Million, Steiner said “This sale is very timely. It allows Fairchild to lessen dependency on a single industry, provides funds for new acquisitions and reduces debt to $31 million of non-recourse real estate financing and $5 million of other debt.”

He died in Nov 1, 2008 due to cancer. He would always be remembered as a leader, philanthropist and off course takeover artist.

EU Imposed new Anti Dumping Duty on China

A definitive anti-dumping duty is hereby imposed on certain iron or steel fasteners, other than of stainless steel, i.e. wood screws (excluding coach screws), self-tapping screws, other screws and bolts with heads (whether or not with their nuts or washers, but excluding screws turned from bars, rods, profiles or wire, of solid section, of a shank thickness not exceeding 6 mm and excluding screws and bolts for fixing railway track construction material), and washers, originating in the People’s Republic of China

Although the European Commission did send a proposal for ‘Imposing a definitive anti-dumping duty on imports of certain iron or steel fasteners originating in the People’s Republic of China’ to the European Council already on January 6th, it took more than 3 weeks before the final decision came through.

The 85% duty will be imposed on all companies located in Peoples Republic of China except for: Biao Wu Tensile Fasteners Co., Ltd. 69.9%; CELO Suzhou Precision Fasteners Co., Ltd. 0%; Changshu City Standard Parts Factory en Changshu British; Shanghai International Fastener Co., Ltd. 63.1%; Golden Horse (Dong Guan) Metal Manufactory Co., Ltd. 26.5%; Kunshan Chenghe Standard Components Co., Ltd. 79.5%; Ningbo Jinding Fastener Co., Ltd. 64.4%; Ningbo Yonghong Fasteners Co., Ltd. 78.3%; Yantai Agrati Fasteners Co., Ltd. 0%; Co-operating companies not included in the sample 77.5%.

For more info please see

http://www.bike-eu.com/news/3201/bike-industry-hit-by-new-anti-dumping-duty.html

Click to access Anti-dumping0202.pdf