The year ahead in metal raw materials

Dec 31, 2012 | 07:00 PM | Bill Beck

Tags  iron ore, metallurgical coal, 2013 outlook, Peter Kakela, Michigan State University, Cliffs Natural Resources Inc., Bill Beck

Even though demand for iron ore and metallurgical coal has been sluggish recently, U.S. producers predict that 2013 will be a solid year for the raw materials that provide the feedstock for North America’s steel mills.

Minnesota’s taconite producers, which supply the iron pellets that fuel many of the blast furnaces on the lower Great Lakes, produced an estimated 40 million tons last year, according to the state’s department of revenue, the highest tonnage since 2005.

Production should remain stable this year, according to Peter Kakela, professor of resource development at Michigan State University in East Lansing, Mich. “The U.S. economy is edging up from the recession,” he said.

Stronger North American vehicle sales are a major reason for his rosy outlook for iron and steel. Car and light truck sales exceeded 14.5 million in 2012, up from 12.8 million in 2011, and analysts expect sales to top 15 million in 2013.

Kakela conceded that the North American steel industry has entered a period in which it must rationalize production with sales. In November, Cleveland-based Cliffs Natural Resources Inc. announced a plan to idle two of the four lines at its Northshore, Minn., operations in 2013.....

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