[This is the second in a projected series of short posts I have inaugurated over at Fire on the Mountain. They will focus on one or another particular aspect of the economic situation and are designed as a corrective to the “out of sight, out of mind” approach of the mainstream media to the deepening meltdown. Feedback about the idea is solicited.]
The prospect of $4 a gallon gas, falling real incomes and the growing recession are obviously hitting the US auto industry hard. Other recent developments suggest things are going to get appreciably worse for Ford, GM et al, fast.
For one thing, the runup in commodity prices is sinking its teeth in. Netherlands-based AcelorMittal, the world’s largest steel company, has announced a $250-a-ton “surcharge” on steel it has contracted to sell its US customers. Other steelmakers, hit hard by higher raw material and fuel prices, are expected to follow. The spot market price of steel is up 40-50% from last year. (Hot-rolled sheet steel now runs about $1000 per metric ton at spot, to give you a comparison point). Supplies have tightened further as countries like Egypt, China and Brazil cut exports to ensure their domestic supply. (Need I mention that Hugo Chávez is renationalizing Sidor, Venezuela’s largest steelmaker?)