SEAL BEACH, Calif. One of
steel plates most important emerging markets is bracing
for a "significant" drop in the fourth quarter due to the
threat of a year-end tax credit phaseout thats already
causing cutbacks, according to an executive of SSAB
Jeffery J. Moskaluk, chief
commercial officer of the Lisle, Ill.-based plate producer,
told an Association of Women in the Metal Industries meeting
that the end of a tax credit for renewable energy production
could put a serious dent in the construction of wind turbine
towerspossibly by as much as two-thirds, according to
some wind energy industry studies.
Federal legislation due to
expire Dec. 31 provides an income tax credit of 2.2 cents per
kilowatt-hour for the production of electricity from
utility-scale wind turbines.
Although various proposals have
been made in Congress to renew the credit, action isnt
expected until after the presidential election in November.
A wind tower typically consumes
some 120 tons of platelargely Grade 50 high-strength,
low-alloy steeland at a conservative estimate the sector
represents an annual market of 600,000 to 700,000 tons,
Moskaluk said. Uncertainty about the tax credit extension could
reduce market consumption to 50,000 tons or less in the fourth
quarter from around 150,000 tons.
But Moskaluk, who was also
interviewed briefly after his presentation, pointed out that
the damage in terms of the rest of the year has pretty much
already been done.
Wind towers not built by August
or September arent likely to qualify for the credit,
since the projects must not only be built but also installed
and in operation by the end of the year.
Moskaluk noted that Otter Tail
Corp. of Fergus Falls, Minn., agreed to sell assets of its DMI
Industries unit to Dallas-based Trinity Industries Inc. earlier
Otter Tail said that the market
value for DMIs assets had been significantly impacted by
reduced demand for wind towers due to adverse market conditions
affecting the industry. Among those factors was uncertainty
about the renewal or extension of the tax credit.
Germany-based Siemens AG said this past week it would release
about 615 workersmore than one-third of its U.S. wind
power employeesin Fort Madison, Iowa; Hutchison, Kan.;
and Orlando, Fla.
"Uncertainty" about the fate of
the tax credit was one reason cited in an announcement by
subsidiary Siemens Energy Inc., along with the growth of
competitive natural gas power generation and a