The need for alternative fuel sources is a
fact of life-one becoming painfully evident as fossil fuel
reserves fade while costs rise and emissions continue to tax
the environment. Enter biofuels, which are energizing demand
for the stainless steel used to fabricate refinery machinery
and bulk storage tanks.
Specialty materials manufacturers like
Allegheny Technologies Inc. (ATI), Pittsburgh, and AK Steel
Corp., West Chester, Ohio, are reaping the benefits of the
biofuels boom as companies that make equipment and supplies to
produce ethanol and biodiesel fuels requisition material that
can withstand the fuel's potential for corrosion.
ATI sees strong growth within the energy
market, including ethanol, Richard J. Harshman, the company's
executive vice president of finance and chief financial
officer, said during a recent presentation to analysts at a
Bank of America forum. Harshman noted that 22 percent of ATI's
sales are to the chemical process industry/oil and gas sector,
which often presents environments that are highly corrosive.
The specialty alloys and metals that ATI produces work well in
these cases, he said.
The same holds true at AK Steel, where the
company's 300-series stainless sheet and tube are sold to the
biofuels market for piping and ancillary equipment, Alan H.
McCoy, AK Steel's vice president of government and public
relations, said. "The emphasis on alternative fuels has created
strong demand for stainless products in general. Some of these
fuels can be corrosive, and stainless is well-suited for that
Both companies refused to quantify the volume
of stainless produced for biofuels industry consumption or the
level of growth seen.
"We've talked about it since last year
through (the) first half of this year, particularly in the
flat-rolled products segment, that sales have been benefiting
from the rapid build rate of plants and storage," Dan
Greenfield, ATI's directorof investor relations, said. "We
haven't publicly forecast what's going forward."
ATI and AK rely on various information
sources to gage future industry needs.
"We have people in the United States and all
over the world watching the market very closely," Greenfield
said. "They are connecting the dots and doing triangulation,
talking with customers and industry experts about alternative
energy, biofuels, etc."
AK Steel's management looks at economic data
from a number of sources, McCoy said. "The stainless market is
so diverse that we really end up looking at a broad spectrum of
the economy in general. With regard to public policy, we keep
an eye toward how that could affect our future business."
There are a number of federal and state
government mandates relating to ethanol.
In 2005, for example, President Bush
committed his national energy policy to developing alternative
fuel sources to reduce America's dependence on foreign energy
sources. The American Petroleum Institute (API), Washington,
also cited several examples-Minnesota and Hawaii currently have
statewide ethanol mandates in effect; legislatures in Illinois,
Michigan, Oregon and Pennsylvania are considering bills that
include ethanol mandates; and ethanol mandates will take effect
in Missouri and Washington next year. The API also said that
Louisiana and Montana have ethanol mandates with triggers
contingent upon in-state ethanol production volumes, and Iowa
and Kansas have laws imposing tax penalties on retailers if
renewable fuel quotas are not met.