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ONE OF SLOVAKIA'S BIGGEST INVESTORS SEES MARKET REVIVAL IN HIGHER DEMAND

US Steel Košice looks at Czech and Serb acquisitions

DESPITE fears of a trans-Atlantic trade dispute, US Steel Košice (USSK) is planning to expand on projections of increased demand.
Besides proceeding with acquisition targets in the Czech Republic, investigating opportunities to invest in Serbia, and adjusting to the recent US decision to impose import tariffs on steel, USSK has raised prices on some products due to what it sees as a recovery on world steel markets.
On March 19, USSK announced a 20 euro per ton price increase on its flat rolled steel products. According to company spokesperson Jozef Marko, the increase will take effect in June.


US STEEL wants to make strategic investments in the Sartid plant, Serbia, which was bombed by Nato in May 1999.
photo: TASR

DESPITE fears of a trans-Atlantic trade dispute, US Steel Košice (USSK) is planning to expand on projections of increased demand.

Besides proceeding with acquisition targets in the Czech Republic, investigating opportunities to invest in Serbia, and adjusting to the recent US decision to impose import tariffs on steel, USSK has raised prices on some products due to what it sees as a recovery on world steel markets.

On March 19, USSK announced a 20 euro per ton price increase on its flat rolled steel products. According to company spokesperson Jozef Marko, the increase will take effect in June.

In mid-March, USSK announced a six-month production deal with Serbian metallurgical company Sartid. Under the deal, USSK materials will be processed at Sartid under USSK supervision while the Slovak firm conducts due diligence prior to their expected entry into Sartid as a strategic investor.

USSK remains interested in the Czech Republic despite disagreements with the Czech government. USSK auditors were recalled in early March from the Vitkovice facility, one of a number of plants up for privatisation, because due diligence was not being conducted according to USSK's plans. The company still wants to enter the Czech market, either through their original plan of buying the entire metallurgical industry outright, or by acquiring companies piecemeal.

The Slovak Spectator spoke with USSK director John Goodish on March 20 about expansion, US import tariffs and USSK's perspective on the future.


The Slovak Spectator (TSS): USSK has recently begun the process of investing in Serbia's Sartid facility. What are the concrete plans?

John Goodish (JG): We don't know that yet, we just started our information gathering down there on March 10 or so. But our intention is to make a strategic investment there very similar to what we made here.


TSS: What effects will the US's recent imposition of steel import tariffs have on USSK and the European steel market in general?

JG: We see that as having more of an effect in Europe and in the United States. First, we currently don't have any significant shipments to the US. Secondly, Slovakia is a developing country so it's excluded from the tariffs.

We're just going based on the rumours we're hearing from the EU. We're just going to have to wait and see what kind of action they take. It looks like Arcelor [formed from the merger of Spain's Aceralia, Luxembourg's Arbed and France's Usinor] is encouraging the European Commission to act with restraint and not cause a trade war. Corus [Europe's largest steel producer] seems to be the group that is most actively pursuing trade sanctions. They're talking about quotas up to a certain level and tariffs after that. We'll have to see what comes out of it.


TSS: On March 19, USSK announced price increases on rolled steel products due to a market revival. To what extent do you see the market improving?

JG: We have a mill that's full right now, and our order book is full now through June, that's why we announced the price increase. We're seeing growth. We have customers coming to us telling us they're seeing growth and demand so therefore we're having price increases.


TSS: How are your plans to expand into the Czech Republic coming along?

JG: We're still attempting to get involved in the privatisation process in the Czech Republic. We've had several contacts with banks, we've had discussions. It will probably take another 30 days or so before we know for sure what's going on there.


TSS: USSK saw profits reach $123 million last year, while the mother company US Steel posted a $257 million net loss. How important is USSK to US Steel?

JG: You'd have to ask US Steel about that. One year doesn't really make a trend. The facility is performing pretty much as we had projected, but the fourth quarter was a little weak because of the market. US Steel in the US has some longer range plans. I'm sure they recognise the experience the company's had and what it's done for them in the past year, but we're only 30 per cent of their capacity. I know that they're working on other world strategies. It's best to ask somebody in Pittsburgh that question.


TSS: Is USSK seeking other central European investment destinations?

JG: Not at the moment. Our plate's full. But we have a couple areas we would like to target in six months or so, or if we can get one of these deals done.

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