The Ethanol and Steel Price Connection

My corny blogging-partner-in-crime and spouse, Lisa Reisman, recently penned a well thought out entry on Metal Miner that suggests how a recent US farm bill will impact steel buyers. According to Lisa's entry, "We have been in discussions with a number of metal distributors (steel distributors to be specific) ... [and have heard] that much of the demand for steel products is coming from a gas pipeline project and ship-building." But it's also coming from other areas, according to Metal Miner. After all, as energy costs rise and as the Federal government continues to dish out new ethanol subsidies to farmers -- 45 cents per gallon in the latest farm bill -- the crops have got to go somewhere. And what better a place than a newly built ethanol refining plan (average cost: $60 million) which, you guessed it, is made in large part from steel. Who said you couldn't connect the dots between two loosely related commodities?

- Jason Busch

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