Posco resumes work on Indian project

Posco says it welcomes Monday’s decision of environment minister Jairam Ramesh to give approval for its 12m tonnes/year integrated steel complex to proceed. 

“We will now continue purchasing the land that we suspended last August,” a Posco spokesman in Seoul said. Posco says its needs 16.2m square metres for its planned works in Orissa but had managed to secure “only a very little” when it was forced to halt its purchases last year. 

The project begun in 2005 has been dogged by disputes and delays, with that last year springing from allegations that the project might be violating forest laws. An environment ministry-appointed committee of inquiry noted, for example, that Posco was granted clearances for only the first 4m t/y phase of the project but the Orissa government was acquiring land to accommodate the full 12m t/y.

In its determination Monday, the ministry specified 28 new conditions that it instructed the Korean firm must meet for its plant and 32 for the port it needs to serve the complex. These include guaranteeing that 25% of the complex land be set aside for green belt, for example, and that Posco builds a fishing jetty to compensate local fishermen for loss of their fishing grounds to Posco’s project. 

Posco must also sacrifice some of its industrial water for irrigation should neighbouring regions suffer a shortage, Steel Business Briefing notes.

Posco says it is yet to study the ministry’s pronouncement in detail, but says it intends to proceed as the project was initially envisaged. How much the ministry’s additional demands add to the project’s costs are to be determined.

Iron ore ends January near peak; monthly average up 6.7%

The reference price for 62% Fe iron ore fines ended January 9% higher than a month earlier, according to The Steel Index (TSI). The end-January price of $185.60/dry metric tonne CFR Tianjin port, China was $0.60/dmt higher than a week ago and $15.50/dmt above the price at the end of December. It was just below the twelve-month high of $186.50/dmt..

The reference price for 58% Fe content iron ore fines finished January at $159.40/dmt, more than 11% above the level of a month earlier. 

TSI also published its monthly average price for January. It was $179.63/dmt for the 62% Fe content reference product. This is used as the final settlement price for January for iron ore swaps and options cleared on the Singapore Exchange (SGX), LCH.Clearnet (London), CME Group (Chicago) and NOS Clearing (Oslo). The January settlement price is 6.7% higher than that for December. 

TSI's average 62% Fe price for the two months December-January is $173.83/dmt. This is 16% higher than the previous three-months lagged by one month average of September-November. The final three-month average, calculated at the end of February, will be used as a basis in many index-linked iron ore supply arrangements for the April-June 2011 quarter. If prices remained unchanged throughout February, the average would be $177.69/dmt, a further 2.2% increase.

TSI is majority-owned by Steel Business Briefing . Further details of the methodology and specifications for the two grades of iron ore can be found on the website www.thesteelindex.com.

Chinese steel prices stable, market quiet before holiday

In the week ahead of the Chinese New Year break that begins on 2 February, steel prices remained firm as most participants had already left the market for the holiday.

Prices of Q235 5.5mm hot rolled coil stood at RMB 4,780/tonne ($724/t) in Shanghai, while those of the same grade sat at RMB 4,800/t ($727/t) in Guangdong’s Lecong steel market and may climb higher after the holiday (See related article). Both prices (which include 17% VAT) are unchanged from the previous week. 

Steel Business Briefing notes that, despite that lack of activity due to the holiday, prices are still holding at high levels. This is because of high mill ex-works prices and market expectations that demand will return after the holiday.

Last week, Hebei Iron & Steel raised its ex-works prices by RMB 150/t for rebar and RMB 100/t for wire rod, taking its price for HRB335 rebar to RMB 4,770/t ($724/t) with 17% VAT, and its 6.5mm Q235 wire rod to RMB 4,750/t with VAT, as SBB reported. The reason given for the increase was the higher costs the mills are incurring for iron ore.

Those higher raw material costs caused the most liquid October rebar futures contract on the Shanghai Futures Exchange to reach a high of RMB 5,105/t Monday before closing at RMB 5,100/t.

The Steel Index’s 62% Fe fines reference price finished Monday at $185.60/dry metric tonne, up $0.30/dmt from Friday, as traders who were holding significant cargoes of iron ore sold ore to reduce their risk before the Chinese New Year holiday.

Egyptian troubles disrupt metal trade

The steel and scrap trade in Egypt has been disrupted by the political disturbances, sources in the country tell Steel Business Briefing. The curfew, reports of bank closures, communication problems and absent workers are all said to be affecting business. But the Suez Canal authority reported no disruption to shipping.

For political reasons, leading flat and long steel producer Ezz Steel is said to have become a target for the protestors over last weekend. Its chairman, Ahmed Ezz, has close ties with the ruling National Democratic Party of Egypt.

There have been reports that Ezz’s offices and steelworks have been attacked. But a spokesperson for the company tells SBB that “the plants are fine, and the business is running.” There was no confirmation about whether the plants are idled, but workers report that not much business is likely to happen before the end of this week.

A European scrap supplier making business with Egypt worries about the scrap trade flow during this political uncertainty. “What’s going to happen to that scrap if it isn’t going into Egypt? No one will send a ship of scrap to Egypt if it’s not going to come back,” he says. The Egyptian steel mills import around 4.5-5m tonnes/year of scrap.

Turkish steel producers are also concerned about losing one of their most important rebar markets, and are therefore waiting for the situation to calm down.

US sheet prices flatten in 'calm before the storm'

As the domestic market waits to see whether scrap pricing will be up, down or sideways for February, US sheet prices appear to have settled - at least temporarily.

Market sources tell Steel Business Briefing speculation that scrap could be flat has kept prices from rising since last week.

"It may be the calm before the storm," a midwestern US stockist says. "Who knows what the mills will do, (but) the scrap rumor of not moving much may just hold (prices) at this level this month."

Hotrolled coil remains around $840-850/short ton, while coldrolled is about $900-920/s.t and hot-dip galvanized is roughly $950-1,100/s.t - all spot fob. According to The Steel Index, a unit of SBB, the weekly fob mill reference prices for both HRC and HDG were up only $2 week-on-week, to $802/s.t and $935/s.t, respectively. CRC rose by $15 w-o-w, to $891/s.t.

"I think this shows that some of the speculative air is coming out of the balloon," another midwest source says. "Buyers stocked up, and likely no longer have the appetite for further speculative purchases. If scrap prices fall, finished prices may float down as well."

Still, with winter ice storms and snow forecast this week for the industrial US, scrap prices could spike without warning. Other issues related to steelmaking inputs also could curb production (see related article).

"The weather could give the big guys a reason to move upwards in prices," the stockist says. "This kind of weather plays havoc with the big mills."

Indian HR coil prices head towards $800/t

Indian domestic prices of hot rolled coils are rapidly heading towards $800/tonne ex-works from about $760-765/t, as local producers contemplate further increases in their base prices. These higher price levels could be achieved by mid-February, market sources tell Steel Business Briefing.

Early last week, JSW Steel lifted its prices for the third time in January and has since been offering 5mm thick commercial grade HRC at Rs 35,200-35,250/t (about $767/t) ex-works. The mill is contemplating additional increases for February. “We will wait and see how the market responds to our latest offer and then decide the next level of increase,” a company official tells SBB. “But $800/t is definitely achievable,” he adds.

“Indian prices have not risen as fast or as much as international levels,” an official with another leading west Indian mill tells SBB. For instance, he notes that ex-works prices for commercial grade HRC have already reached $880/t levels in the US and $830-840/t in Europe. Similarly, Indian domestic prices could rise to $800/t in line with international trends, he says.

However, he suspects that prices will then begin to decline. “The way prices are increasing, we seem to be heading for another fiasco like the one we witnessed in 2008. These price surges are definitely not sustainable,” he says.

A Mumbai-based trader says Indian prices are driven solely by the supply-demand scenario. “Domestic demand is high and inventory levels are low. Buyers continue to purchase material in anticipation of further price hikes,” he notes.

Lower HRC stock may push China prices higher after holidays

Chinese domestic hot rolled coil inventory in Shanghai and Guangdong’s Lecong steel market continued to decrease over the week of 24-28 January. Due to mills’ maintenance work, the HRC inventory is likely to continue declines into February, and thus help HRC prices rise further when traders resume business after the Chinese New Year holidays (2-8 February).

The HRC market inventory has decreased to around 1.73m tonnes in Shanghai and to 1.11m t in Lecong, down 20,000 t and 10,000 t respectively from 24 January. The reason for the declining inventory is mainly slow deliveries due to mills’ maintenance and lack of transportation during the holiday season. 

Meanwhile, in February, eastern China’s Shagang will lose about 300,000 t of HRC due to hot strip mill maintenance, while northern China’s Anshan Iron & Steel will lose about 200,000 t of iron due to blast furnace maintenance, which will affect its HRC and plate products in February.

As demand for HRC will improve after the Chinese New Year holidays, the limited supplies from those major steel mills are expected to put strong upward momentum on HRC prices in February, Steel Business Briefingunderstands. 

HRC prices are unchanged from last week as most market participants have left for the holidays. Q235 5.5mm HRC is currently offered at around RMB 4,780/t ($724/t) with 17% VAT in Shanghai and RMB 4,800/t with VAT in Lecong.

Posco insists no change to domestic prices

Posco says it has not changed its domestic prices, but admits to tweaking the frequency of its announcements to guard against speculation. 

In common with most steelmakers, Posco tables list prices and then offers discounts and other incentives to selected customers. It is these kinds of incentives that Japanese sources claim the Korean mill has adjusted to produce a price increase for hot rolled coil. “The actual price we charge depends on the customer but we have not changed this system,” a Posco spokesman in Seoul insisted. 

He was commenting on Japanese reports that said Posco had quietly told distributors it is removing the volume discount it had regularly offered, and that its actual selling price is now KRW 900,000/tonne ($807/t). Though no indication was given of the sorts of discounts Posco had been offering previously to distributors, the Japanese mills eagerly seized upon the news as it helps their efforts to squeeze higher prices for their HRC from Korean re-rollers, Steel Business Briefing notes.

Posco has changed its price announcements practice, however. In 2010 it adopted a quarterly pricing formula, but a concern that this might encourage speculation ahead of its scheduled announcement has prompted a change. “From this year we will announce a change in domestic prices whenever we need to,” Posco’s spokesman said. 

The company last made a domestic price announcement in late September for October-December prices, and that was to keep prices unchanged from July-September. The HRC price it announced at that time was KRW 900,000/t.

India's JSW Steel outlines plans for new 2.3m t/y CR mill

Indian steelmaker JSW Steel has announced plans to build a new 2.3m tonnes/year cold rolling mill complex at its Vijayanagar works in the southern state of Karnataka, Steel Business Briefing learns.

The proposed complex will have 2.3m t/y of pickling and CR capacity. It will also comprise two continuous annealing lines, each with a capacity of 950,000 t/y, and a 400,000 t/y galvanizing and galvannealing line, the company says. 

The project is proposed to be executed in two phases, with the first phase scheduled for completion by April-June 2014 and the second a year later. With the addition of this mill, total CR capacity at Vijayanagar will reach 3.3m t/y, SBB notes.

Japan’s JFE Steel will assist the Indian firm in selecting the technology and equipment for the mill, which will produce auto-grade steel, a JSW official confirms to SBB. This follows the agreement the two mills signed in July when JFE bought a near 15% stake in JSW.

Indian demand for auto-grade steel is likely to jump by about 40-50%, JSW Group CFO and joint md, Seshagiri Rao, told SBB in an interview last month. He noted that demand for CR coils from the domestic automotive sector stood at about 1.9m t in the April 2009-March 2010 fiscal. This is likely to rise to 2.75m t in 2010-11.

Baotou Steel starts testing new seamless pipe plant

Major Chinese seamless pipe maker, Baotou Iron & Steel Group (Baotou), located in northern China’s Inner Mongolia, began the initial testing of its 100mm seamless pipe plant earlier this month. The plant is located at its subsidiary Baogang Northwest Chuangye and has an annual capacity of 100,000 tonnes/year.

Construction of the project was started in mid-2009, with a total investment of RMB 140m ($21m), Steel Business Briefing learns from the company. Baotou has finished testing the plant’s rolling mills including the piecing, rolling and stretch-reducing lines, along with the cutting/inspection line, the company says in a release.

The project was scheduled to be commissioned by the end of 2010, therefore it is expected to start up soon. SBB was unable to get a comment from the company as to why the project was delayed or what its new commissioning date would be.

SBB notes Baotou is now building another 159mm seamless pipe plant with a capacity of 400,000 t/y. The company also has a 250,000 t/y 406mm seamless plant, which is likely to be started this year. Baotou is currently operating a seamless pipe capacity of about 900,000 t/y, SBB notes.

China’s welded pipe exports rose 6.5% in 2010

China’s welded pipe exports increased by 6.5% year-on-year in 2010. Customs data show welded pipe exports rose 14% in the fourth quarter (Q4) from Q3 in 2010, due to the improvement in new orders after the end of Beijing’s energy-saving campaign.

Last December's welded pipe exports continued rising to reach 278,041 tonnes, up 16% from November. Steel Business Briefing notes the increase in shipments in December was because mills production was affected in September and October by Beijing’s energy-saving campaign, which cut mills' deliveries. They picked up in November.

In line with Chinese mills’ continuous development of new markets and the global economic recovery, exports are expected to see further increase in 2011, some domestic mills say. However, increasing raw material costs and serious overcapacity in China’s welded pipe sector could have more negative effect in the future, they add.

Increasing exports can help mitigate domestic oversupply pressure, a mill source says. But it's hard to raise China’s exports to pre-crisis levels due to fierce competition over low value-added product exports and trade barriers in some overseas markets such as the US and Europe, he says.

Welded pipe exports totalled 2.69m t in 2010, up 6.5% year-on-year. The total domestic output last year was 32.37m t and rose by 6.5%, SBB learns from China’s National Bureau of Statistics (NBS).

Thai steel demand to rise by 9-14% in 2011: Isit

Apparent steel demand in Thailand is forecast to grow by 9%-14% in 2011, according to the Iron & Steel Institute of Thailand (Isit). This is equivalent to 15.27–15.97m tonnes of finished steel products, an Isit official tells Steel Business Briefing. Isit made this forecast based on the assumption of a GDP growth rate of 4.5% and strong growth in Thailand’s steel consuming industries.

“We forecast that for this year, the construction sector will expand by 10%-17%, the automotive sector by 10%-12.5%, the home appliance sector by 7%-10%, industrial and machinery sector by 5%-8% and the food canning sector by 3%-5%,” he tells SBB.

This growth in steel demand, will translate to an estimated 5.36m t of long products and 5.16m t, 1.58m and 3.19m t of hot rolled flat, cold rolled and coated steel products respectively, according to Isit. (see table below).

Apparent steel consumption in 2010 rose by 30.2% over the previous year to 14.01m t. Production of finished steel was up 7.6% to 7.48m t, imports were 56.3% higher to 8.09m t and steel exports saw an increase of 13.7% to 1.56m t.

China’s crude steel output drops in mid-January

In the second ten days of January, China’s crude steel output dropped slightly to 16.95m tonnes or around 1.7m tonnes/day, down 980,000 t or 5% from the first ten day’s 17.94m t, according to the estimate by the China Iron & Steel Association (CISA) on the output of its member mills during the period.

Steel Business Briefing notes that it was the first time since mid-November last year that China’s national crude steel output fell. The main reason behind mid January’s output decrease is the maintenance work by some major steel mills, SBB understands.

In January, eastern China’s Shagang, central China’s Wuhan Iron & Steel and northern China’s Benxi Iron & Steel all saw their crude steel output decrease by around 100,000-150,000 t due to their maintenance stoppages.

Meanwhile, the downward trend in China’s crude steel output is likely to continue into early February due to maintenance as well as the Chinese New Year holiday (2-8 February) factor. Anshan Iron & Steel has recently begun work on one of its blast furnaces, which will cause a total iron loss of more than 300,000 t from late January to the end of February. 

However, the decline in crude steel output is expected to be temporary as rising steel prices will encourage steel mills to speed up production as soon as their maintenance is complete.

CEO of Dillinger Hütte resigns unexpectedly

German plate producer Dillinger Hütte has announced the resignation of Paul Belche from his position as chief executive officer, citing private reasons. The company would not disclose further explanations for the unexpected departure to Steel Business Briefing.

Only one year ago, Belche had started his second five-year tenure as CEO of the company. The departure of the 58-year old chief comes without any prior notification. One insider confronted with the news was wondering whether ArcelorMittal could have had an influence on Belche’s move. 

Two years ago ArcelorMittal reduced its stake in Dillinger Hütte drastically to around 30%, but “maybe Mittal wanted to gain some more liquidity from it, and Belche disagreed; but then it is the Saarland state that has the last say,” he speculates. “Belche was a good man, and he hasn’t reached the retirement age yet,” he adds. 

Luxembourg-born Belche used to be with ArcelorMittal’s predecessor group Arbed, and in Germany previously headed its strip mills in Bremen and Eisenhüttenstadt. 

A successor will be selected in due course by Dillinger Hütte’s controlling board. In the meantime, Belche’s duties will be shared between the remaining executives, Norbert Bannenberg (technology), Karlheinz Blessing (personnel) and Fred Metzken (finances).

Turkish flat imports increase by almost 1m tonnes in 2010

Turkey imported 5,736,577 tonnes of flat rolled steel products in 2010, which is 17% more than 2009’s 4,886,734 tonnes. Steel Business Briefing learns from data provided by the Turkish Statistical Institute (TUIK) that the import figure of 2010 is still below 2008’s 7,215,000t.

Turkey imported 3,878,400t hot rolled flats in 2010, 13% more than 2009's 3,418,925t. Ukraine was Turkey’s biggest supplier with 923,681t. The country exported 71,861t of this in December 2010.

Turkey imported 668,776t of cold rolled flats in 2010, 15% more than 2009’s 580,540t. Russia was the biggest source with 276,657t.

Turkey imported 825,837t of coated flats in 2010, 36% more than 2009’s 606,918t. Romania was biggest source with 72,461t.

Turkey is becoming more self-sufficient in flat steel and the import volumes will not return to the levels seen before crisis, sources contacted by SBB think. Turkey exported 1,490,627t of flat rolled steel products in 2010. 

Currently there are four hot rolled flat producers in the country: Erdemir, Isdemir, Colakoglu, and Toscelik. A fifth, MMK Atakas, is going to start production in the second quarter of this year.

Romanian billet producer to commission new meltshop

Romanian billet producer Otelu Rosu, part of the Mechel group, expects to commission its reconstructed electric arc furnace meltshop in the first quarter of 2011, a representative of Mechel’s Eastern European Metallurgical Division tells Steel Business Briefing.

The new meltshop will have a capacity of 810,000 tonnes/year of crude steel and is costing Otelu Rosu €36m ($49.3m). Billets produced here are delivered for further processing to two of Mechel’s Romanian rolling mills, Ductil Steel Buzau and Campia Turzii.

The meltshop reconstruction work began in October last year as part of a $3.7bn group-wide investment programme from 2010 to 2012. The new EAF will be equipped with innovative continuous optimised shaft system (COSS) scrap preheating technology.

Last year, Mechel’s Romanian plants produced 827,000 tonnes of crude steel, up 38% on 2009, and 855,000t of hot rolled long products, up 46%. The Romanian division’s output of wire rod and other wire products rose by 38% in 2010 to 152,000t.

“The volume of crude steel production at Mechel Targoviste [Mechel’s largest Romanian plant] in 2010 reached pre-crisis levels, and at Otelu Rosu this indicator for 2010 exceeded all annual indicators in recent years,” a Mechel representative in Romania says.

Increased production in 2010 during a time of stagnation in the domestic market allowed for a greater share of exports in total deliveries and opened up new customer markets, the company adds.

Serbian pipemaker seeks investment to increase output

Serbian pipe and profiles producer Mersteel Profil is searching for new banks or strategic partners to invest in the company to enable it to increase production this year, “considering the fact that the demand exists” for its products, it tells Steel Business Briefing.

The company is struggling with working capital to fund input materials, it says. It followed its parent company, Slovenian home and industrial materials distributor Merkur, into insolvency in September last year, following a significant drop in liquidity and sales.

If Mersteel does not secure an investor, it expects its output to remain flat in 2011 compared to 2010, when it made 10,000 tonnes of pipe and 4,000t of hollow sections. It had been hoping to reach a target of 3,000 tonnes/month of steel products during 2010, but found it difficult to obtain financing from banks due to its insolvency.

The company began implementing a restructuring plan at the end of October last year, designed to reduce operating costs. “From the date of its establishment Mersteel has been very strongly affected by the severe global downturn in the field of metallurgy,” the company says. At the end of October Mersteel had debts of €68m, €50m of which it owed to banks and €18m to suppliers.

It carried out a programme of redundancies, cutting its staff from 240 to 130, to adapt to the reduced volume of business, which has been down 30% on its “best years,” but hopes formally entering receivership in October 2010 will help secure at least a stable volume of business this year.

Strong European stainless bar market sees rising base prices

Europe’s stainless bar producers continue to enjoy strong, stable demand and have recently been posting base price increases.

The market is tight, with delivery stretching from April to late summer and even year-end depending on grade, dimensions, finish, mill and country. Austenitic bright bar delivery is typically into September; hot rolled material is available sooner. Delivery on martensitics in particular is constrained by inadequate heat treatment capacity, Steel Business Briefing is told.

The indication is that the price increases, in steps of up to €100-120/tonne for mainstream grades, are mostly, but not always being fully achieved. “Prices are heading back to normal,” one mill comments. February transaction prices for a 25-80mm dia 304L bright bar are around €3,950-4,050/tonne, and for 8-25mm 430F bar about €2,150-2,250/t, SBB estimates.

Volumes are significantly higher than twelve months ago, and some northern mills say they are fully loaded. Some in the south are not, and SBB learns they are not intending to raise output to shorten delivery. 

Automotive remains the star market, still underpinned by strong German exports. Oil/gas continues to see shelved projects reactivated, the energy sector is good, machine building remains firm and the chemicals sector continues to improve. Sources comment on a net flow of steel from south to north due to slightly weaker southern markets.

Given the extended delivery, good market conditions through H1 seem assured. No one wants to speculate beyond summer, though there are hopes that 2011 could bring the market back volumes much closer to 2007-08. 

Stocks at northern mills and distributors are low, but are said to be more in balance in the south. Imports, particularly from India, continue, though with little apparent disruption.

Automotive demand boosts Turkish alloy steel imports

The firm demand from Turkish automotive and automotive supply industry continued to push up the country’s imports of alloy steels in the first eleven months of 2010. Especially alloy flat steel imports picked up since there is no alloy flat steel production in Turkey, Steel Business Briefinglearns from the market sources.

According to data released by the Turkish Statistical Institute (TUIK), Turkey imported 66,292 tonnes of alloy flat steel in November, up by 70% y-o-y and the eleven-month imports totalled 712,298 tonnes, 90% higher than the same period of last year.

Turkey’s alloy long steel imports were 9,252 tonnes, which is 17% less than November last year, while the January-November imports totalled 113,968 tonnes, up by 43% y-o-y, SBB understands from TUIK’s data.

Turkish stainless coil imports hit 300,000t in eleven months

Turkish stainless steel coil imports reached 300,000 tonnes in the first eleven months of last year, more than the total for the whole of 2009. Far Eastern mills continued to dominate the country’s imports, Steel Business Briefing learns from data released by the Turkish Statistical Institute (TUIK).

Turkey imported 29,982 tonnes of stainless coils in November, which is 23% higher than the same month of last year, but 19% lower than the 36,942 tonnes imported in October.

In January-November 2010, Turkish stainless coil imports totalled 299,284t, which is 32% higher than the same period of last year.

In November, South Korea supplied 5,624t of stainless coils to Turkey, followed by Taiwan (4,247t), Belgium (3,316t) and China (3,010t), SBB notes from TUIK’s data.

Ferro-molydenum price up in Europe, market slowing

The price for ferro-molybdenum in Europe has moved up as the market readies for an expected slowdown during the Chinese New Year, trading sources tell Steel Business Briefing.

“The price seems to have crept up and now it has stopped somewhat after slow trading last week,” a trader said yesterday (Monday). FeMo in warehouse is now selling for around $43.25-44/kilogram, which is up from $42-43/kg from last month.

“The price usually spikes before the Chinese New Year. China is now an importer of FeMo, so they will have bought material before the holiday, and we expect the price to steady with less buying,” he says.

“Consumers have returned and demand is up, but it is slowing and we can only attribute this to the holiday coming up,” another trader tells SBB. In the first weeks of January there was only inter-trade business.

Going forward the price “will be steady until the Chinese New Year, but then we expect it to creep up again after that”, so in mid-February prices should move up, the trader says.

BE Group expands capacity of Finnish plant

BE Group is expanding the processing capacity of its Lahti plant in Finland, the steel stockholding company tells Steel Business Briefing. 

“We have looked at the overall situation in Finland and the wider market and taken the decision to invest,” BE Group ceo Roger Johansson says.

The company refuses to comment on the site’s current capacity, but says laser cutting, plasma cutting and bending capacity will increase by around 20% after the investment, scheduled to complete by the end of the second quarter. Lahti offers cut-to-length and slitting, bending and blasting services, with laser, water jet, flame and plasma cutting lines. 

It handles thin sheets and coils, hot rolled sheets and plate as well as stainless steel and aluminium. While the plant primarily serves Finland, it can deliver into other business regions when necessary. 

“Our value-adding production service provides the opportunity to increase our service sales and improve our deliveries while also enabling us to strengthen our relations with the Group’s key customers,” says Matti Tiira, business area manager and president, BE Group Oy.

Construction continues to struggle in Italy

The construction sector in Italy is continuing to struggle, Steel Business Briefing learns directly from Ance and Cresme, the two main construction and infrastructure associations.

According to Ance and Cresme’s reports, investment in the construction sector in 2011 will slow down for a fourth consecutive year, which will have an effect throughout the supply chain.

Investment in construction dropped by €29 billion (or 17.8%) between 2008 and 2011. The hardest hit sector was new construction: in 2010, this dropped by 11.3% while it is forecast to increase by only 0.4% in 2011.

“The good news is that we will see a recovery in 2011 in investments in renewals in the residential (private and non private) sector. We expect infrastructure renewals to rise 1.4%”, Bellicini says to SBB.

According to some steel analysts, the report suggests the sector is beginning to recover, but its continuing weakness will weigh on the “shoulders” of longs producers. “The recovery is on its way. These data show that demand for long products from the construction sector will remain weak in 2011, albeit slightly stronger than 2010, because renewals use less material than new construction projects”, an analyst tells SBB.

“The growth of steel output in Italy is expected to slow in 2011 due to weak economic recovery. [It] is unclear if we are going to vote or not for a new government and this doesn’t help the beginning of the some public works that have been on hold for several years”, another analyst notes.

Saarland mills prepared for strong performance in 2011

Optimism for the current year appears to reign at the steelmakers in Germany’s Saarland state. On the basis of well-filled order books, Dillinger Hütte as well as Saarstahl are expecting a “very strong” year 2011, Saarstahl’s chief executive Klaus Harste told local newspaperSaarbrücker Zeitung.

Both mills are specialised players tending to operate on long-term contracts and serve larger projects. Of the plate made by Dillinger Hütte, some 70% goes to the energy sector. A significant share of the mill’s current production is allocated to the Nord Stream gas pipeline project.

Special steel bar and wire rod producer Saarstahl sells 60% of its output to the automotive industry. According to Harste, the company has been able to win new customers especially in the USA and Turkey.

The main concern shared by both mills is over energy costs and extra energy-related charges. Levies to support renewable energies will cost each mill around €25m this year, Harste estimates. The same amount is expected to be spent annually on CO2 certificates in the future, Steel Business Briefing understands.

Russia to decide on steel and iron duties ‘within a month’

The Russian government is to decide whether or not to impose duties on exports of rolled steel products and iron ore within a month, news agency ITAR-TASS reports, quoting a senior official at the economic development ministry. Sources close to the mills that would be affected by the duties confirm the information to Steel Business Briefing.

Any imposition of duties would be likely to negatively affect Russia’s largest producers of flat steel products, Novolipetsk, Magnitogorsk and Severstal, by forcing them to cut output, sources close to the mills say. It would not, however, lead to lower domestic steel prices, according to a report by Deutsche Bank analysts obtained by SBB.

A net exporter of steel, Russia last year exported 27.1m tonnes of steel products, or 46% of its total steel products’ output of 58.6mt, and remains “abundant in steel,” the report says.

Several mill sources in the country, including the not-for-profit Russian Steel organisation, representing the interests of the country’s largest steelmakers, say the Russian domestic market has no scope to absorb additional flat steel volumes. Thus, even if exports of these products became unprofitable, “we expect that companies would decrease production, and that domestic steel prices would remain unaffected,” one source says.

So far, the sentiment is that this proposal will remain just that, and the status quo will be maintained, SBB is told. “The government seems to have had enough of constant complaints from the automakers about high steel prices,” a source adds, summing up.

Ameron reports uncertain 2011 wind tower outlook

US fabricator Ameron International reported an uncertain outlook for its wind energy and water pipe products.

The steel and concrete tubulars business of Ameron, which also includes the company’s wind tower construction business, saw its fiscal fourth quarter sales fall to $29.4m, compared to $41.4m in the fiscal third quarter. The segment's fiscal Q4 operating loss was $1.5m.

“The bulk of the declines for the fourth quarter and the full year came from the wind tower business which suffered throughout 2010 because of depressed demand,” the company said. Full-year sales declined in fiscal 2010 to $137.9m, from $177.3m in 2009, with $33.9m of the decline from wind towers.

Construction of green energy wind towers has been seen as a growing segment for steel demand, Steel Business Briefing notes. 

"Until the wind energy markets improve and more financing becomes available to the wind industry, the group's wind tower activity is expected to remain depressed," Ameron stated. The company continues to monitor a number of major products, but is uncertain when they will get off the ground.

Ameron recently announced plans to invest $35m to build a steel pole production plant in Tulsa, Oklahoma.

Belarus’s steel production may grow by 10% this year

Belarus produced 2.67m tonnes of crude steel in 2010, up 9% on 2009, and 2.46mt of saleable steel products, up 7%, the country’s state statistical committee reports. Byelorussian Steel Works (BMZ) accounted for over 90% of national steel products’ output.

BMZ made 2.5mt of crude steel and 2.44mt of semi-finished and long rolled products last year, 6% more than in 2009. The steelworks sold roughly a quarter of its output domestically, exporting the rest. It shipped 30% of its products to Europe and one fifth to the CIS. The company expects to raise its sales volumes by 8-10% in 2011 to 2.6m-2.7mt, it tells Steel Business Briefing.

Notably, Belarus’s steel pipe output soared by 71% in 2010, when the country produced 177,100t.

Over 90% of the 2010 output - 165,000t of seamless and welded pipe - represents the combined output of Byelorussian Steel Works (BMZ) and Mogilyov Steel Works (MMZ), both part of state-controlled holding group BMZ. The remaining pipe, for water and gas transmission, was produced by privately-owned Molodechno pipe rolling mill, SBB understands.

BMZ alone more than doubled its pipe production last year to 97,000t, and aims to produce 150,000t this year, it says. The steelworks has been developing rolling technologies and ramping up output at its pipe mill in the past couple of years. It has also started expanding its finishing operations, SBB learns. BMZ has a pipe production capacity of 250,000 tonnes/year.

Output slowed at two US mills by disruption in gas supply

Production at two major midwestern US flats mills has been affected due to a disruption in the supply of industrial gases from a key vendor.

US Steel's Great Lakes works and Severstal NA's Dearborn works, both in Michigan, have been impacted, following a water line failure at a Praxair Inc facility in the same state, Steel Business Briefing learns.

"(On January 28) Praxair lost water to its Ecorse air separation units. The plants are shut down," a Praxair spokeswoman said. "We are working 24/7 to re-establish water supply, and we hope to have one plant up and running late (Tuesday). It is too early to say when the entire facility will be back to normal."

A USS spokeswoman confirmed yesterday "our facilities are idled and we are not producing steel at Great Lakes works." However, she said "limited production" is expected to restart by mid-week at the 3.8m short tons/year plant and full production is anticipated to begin early next week.

SNA also notified customers in a letter yesterday that the event "has impacted our ability to fully operate our primary steelmaking operations" at Dearborn, which has an annual capacity of 2.2m s.t. An SNA spokeswoman said the outage disrupted "a small portion of our production capacity."

"Severstal and the supplier have worked together to develop alternative supply methods, and we fully anticipate full production levels to be restored no later than the end of this week," she said.

Both companies are working with customers to minimize delivery disruptions.

US rod price hikes likely to stick, wire exec says

Despite continuing tepid demand from the US construction sector, the top executive of a major US wire producer says recent price hikes on rod are likely to stick.

Citing rising scrap costs, domestic rod producers have implemented increases of $60/short ton for January and then $75/s.t for February, even as their main end-use market struggles.

Insteel Industries CEO H.O. Woltz III, speaking during an analysts conference call monitored by Steel Business Briefing, said he expects lean times to continue in the near term. However, he predicted an upturn in construction spending toward the end of this year and for that trend to continue into 2012.

He also said the recent increases are being accepted by the market. Insteel and others in the sector that use rod as a main feedstock have implemented price increases of their own to account for the rising cost of inputs.

"At this point, we are optimistic this will stick," Woltz said of the hikes. "I think it's out of the question that any producer would not try to collect them...and more if possible."

LB Foster/SDI receives Iowa rail contract

LB Foster Co of the US received a contract from Cedar Rapids and Iowa City Railway to provide approximately 1,000 short tons of 115 standard rail for the upgrade of track, and for the construction of a new 10,000-foot siding for a unit train interchange, the company announced yesterday. 

Foster is a manufacturer, fabricator and distributor of products and services for the rail, construction, energy and utility markets, Steel Business Briefing understands.

The new rail was manufactured in lengths of 240 feet by LB Foster's partner, Steel Dynamics Inc at Columbia City, Indiana, and then welded into 1,650 foot sections.

ArcelorMittal, SunCoke settle coke pricing dispute

ArcelorMittal and SunCoke Energy have settled a dispute over the price of coke for ArcelorMittal’s Cleveland and Indiana Harbor facilities, Steel Business Briefing learns. 

As previously reported, the steelmaker alleged it was overcharged millions for coke; it filed a lawsuit in 2009. ArcelorMittal is SunCoke’s largest customer.

The settlement will allow SunCoke’s parent company, Sunoco, to move forward with its planned separation of SunCoke into a separate company, according to a Sunoco announcement. 

The settlement is retroactive to January 1, 2011 and includes a re-negotiation of the contract, elimination of the coal cost multiplier and an increase in fees. The pricing of coal will be based upon the third-party coal price at SunCoke’s Haverhill facility. 

Sunoco stated the settlement is estimated to reduce its earnings before interest, taxes, depreciation and amortization by approximately $60m. 

A Sunoco statement also said it will give addition information on its February 3 earnings conference call. 

"ArcelorMittal is pleased to have reached a settlement in this case," said a spokesperson for the steelmaker.

American mills see slight rise in output

US steel production and capability utilization continued to rise last week - but only slightly, Steel Business Briefing learns.

According to data from the American Iron and Steel Institute, weekly domestic raw steel output was more than 1.78m short tons, while mills operated at 73.7% of capability for the week ended January 29 - up from 73% capability utilization and almost 1.77m s.t produced the previous week.

US producers made slightly more than 1.55m s.t during the same week last year, when capability utilization was 64.2%.

Week-on-week production was up in five of eight US districts the AISI tracks. The midwest district registered the biggest w-o-w increase at 18,000 s.t, while the Indiana/Chicago region saw the biggest decrease at 14,000 s.t.

Overall production through January 29 was about 7.2m s.t, while capability utilization was 72.3%. Production totaled more than 6.4m s.t for the same week last year, when capability utilization was 64.2%, SBB notes.

US could review a variety of steel duties

Interested parties have until the end of February to request annual administrative reviews with the US Department of Commerce of the antidumping and countervailing duties on a variety of steel products (see chart for current duties).

AD duties on stainless bar imports from Brazil, India and Japan could be reviewed, as well as the AD duties on cut-to-length carbon plate from India, Indonesia, Italy, Japan and Korea.

The CVDs on the CTL plate imports could be reviewed for India, Indonesia, Italy and Korea, Steel Business Briefing understands, as well as CVDs on PC strand and hotrolled flat products from India.

US extends comment time for duty rule changes

The US Department of Commerce is extending the deadline for comments regarding its proposed new rules for calculating antidumping duties sans zeroing.

The original deadline for comments was January 17, but the DOC has now extended the deadline until February 18, Steel Business Briefinglearns.

After zeroing was found several times by the WTO to be ‘inconsistent’ with its global trade rules, the DOC is proposing new rules to bring its methodologies into compliance.

The DOC has proposed providing offsets in administrative reviews for non-dumped comparisons when using monthly average-to-average comparisons – a manner that parallels the WTO-consistent methodology the department currently applies in original investigations.

Usiminas to supply 13,000 t of plates to Transpetro

Brazilian steelmaker Usiminas won another public bid to supply plate to the country's state-owned logistics company, Transpetro.

The mill will supply 13,000 tonnes of plate to shipyards building Transpetro's new Panamax vessels. The first cargo will be delivered between March and April.

Steel Business Briefing learns that, so far, Transpetro's Promef fleet renewal program has already solicited bids for 168,000 t of plates. The program will require around 150,000 t per year through 2014. 

Accordingly, this new order brings the Usiminas amount to 66,000 t of steel to be supplied to Transpetro, which represents 40% of the total volume acquired, SBB notes.

Brazil's CSN to incorporate longs subsidiary

Shareholders of Brazilian steelmaker CSN approved a proposal to incorporate its longs subsidiary, CSN Aços Longos, Steel Business Briefing learns.

As a result, all shares of Aços Longos and all its rights, obligations, assets and liabilities will be automatically incorporated into CSN. CSN's capital stock will remain unaltered and there will be no need for an issue of new shares, says the company.

As previously reported, CSN is set to buy two longs mills from Spanish steel group Alfonso Gallardo. Under the agreement, CSN will acquire the shares of Corrugados Azpeitia and Corrugados Lasao, as well as cement producer Cementos Balboa, during the current quarter for an estimated €352-382m (US$482-523m), SBB notes.

Honduran rebar prices up despite builder protests

Prices for Honduran rebar are set to rise by around 15% due to increasing pressure from high billet costs, much to the dismay of the local construction sector which sees this as a threat to house pricing. 

While local producers had been threatening to impose rebar price increases for the beginning of the year, the moves were not applied till now with prices moving from around $775/tonne noted at the beginning of the month to now registering at $880/t, both prices excluding tax. 

“Prices are rising all over Central America and we are considering implementing some increases also. These hikes are directly reflective of rising billet prices on an international level,” one reroller tells SBB. 

The local Honduran construction chamber had claimed that rebar price increases were merely speculative and unlikely to occur during January, as previously reported in SBB, however the chamber now protests that with the new increases, house prices would rise by 4-5%. However local producers are quick to respond to the claims that housing is now out of the reach of the “poorer” population.

“In truth, in a home worth $15,000, the rebar that is used only represents around 1.5% of the total value of the house. Therefore if rebar rises by 10% the value of the house only increases by 0.15%, which in dollars accounts for $22.50 per home. What really affects the value of a house worth $15,000 to $300,000 is that of the cost of the land, development costs and interest on loans, etc,” the reroller tellsSteel Business Briefing.

Ternium to repurchase shares from Usiminas

Latin American steel group Ternium has entered into transaction and registration rights agreements with 14.3% shareholder Usiminas and its controlling holder Techint relating to sales of its shares and American Depositary Shares (ADSs), Steel Business Briefing learns.

The transaction and registration rights deal provides for an underwritten public offering of Ternium shares held by Usiminas - currently valued at US$1.09bn - minus the number of stocks that Ternium and Techint have agreed to purchase. Neither company will offer to sell any Ternium shares or ADSs in the public offering.

Under this agreement, Techint and Ternium have committed to acquire from the Brazilian flats maker, in a transaction intended to close concurrently with, and subject to, the consummation of the public offering, a number of Ternium shares equal to US$100m and US$150m, respectively. The public offering conducted by Ternium is expected to price in the second week of February, channeling the remaining US$840m.

As SBB previously reported, Usiminas has been considering raising funds for investment by selling its stake in Ternium. Late last year, CEO Wilson Brumer said “The company is still looking for the best strategy regarding its stake in the Latin American company," and that this decision should be made by May 2011.

According to an analyst at Credit Suisse, "Usiminas could use the money raised from the shares sale to improve its balance sheet (improving liquidity) and also to fund its capex program for the next few years."

Turkish flats market expects to escape Egyptian unrest

Egypt’s political unrest is not expected to affect the Turkish flat steel market because its import volumes from Egypt have been decreasing.Steel Business Briefing learns from Turkish importers that steel production is not expected to fall much in Egypt’s private steel mills, while the state owned mills may face some problems. 

“The situation is unclear and communication with the country is difficult because of internet cut, but we believe things will be clear in a week or ten days’ time,” says a Turkish importer.

Turkey imported 72,215 tonnes of flat rolled steel from Egypt in 2010, which is less than half of 2009’s 154,221t. Turkey imported 36,446t of hot rolled flats from Egypt in 2010, sharply down from 126,609t in 2009, according to data from the Turkish Statistical Institute (TUIK).

A Turkish importer says, Egypt is a good source for hot rolled coils because of the quality, comparatively good pricing, and geographical proximity. Besides, Turkey and Egypt have a free trade agreement. However, as Turkey’s flat rolled steel production is increasing, any disruption to supply from Egypt will not have serious consequences.

Some hot rolled coil from Egypt arrived recently to Turkey at $780-800/tonne cfr, SBB learns. There are some more orders waiting to be despatched, but are expected to be delayed as the banks and ports are not working in the country.

Iranian wide plate mill raises output, plans more capacity

Oxin Steel Company, Iran’s first producer of wide plate, is increasing production, Steel Business Briefing learns from the mines and metals state holding company Imidro.

It quotes Fatholah Tayebi, Oxin Steel's manager director, as saying that the company produced 280,000 tonnes in the first ten months of the current Iranian year (ended Jan 20), 20% more than planned, and expects to increase production to 600,000t in the next Iranian year (starting 21 March 2011).

Oxin Steel is an affiliate of Khouzestan Steel Co (KSC), a semis producer, and its nominal rolling capacity is to be increased in stages from 400,000 t/y at present to 650,000 t/y by March 2012, and then to 1.05m t/y a year later. 

In a second phase a 1m t/y slab casting steel plant and 1.2m t/y DRI unit are planned, though no timetable is given. Until this is completed slab will continue to be supplied from other steelmakers both locally – KSC and Mobarakeh Steel Co – and from mills in Ukraine, Russia and the EU.

Oxin, located in southwestern Iran, is able to produce plate in the range 1,100-4,500mm wide and 2,500-24,000mm long. It has some export business but is mostly designed to supply domestic needs for ship and wide pipe plates.

New Iraq rebar plant will have 1m t/y capacity

Italian plantmaker Danieli has confirmed that it is supplying a meltshop and rebar mill for Jordan-based Mass GLobal Investment’s new steelworks project in Kurdistan, northern Iraq.

The plant will have 1m tonnes/year capacity and start production in the first quarter of 2012, Steel Business Briefing learns from Danieli.

It will include a 120-tonne electric arc furnace, ladle furnace and five-strand continuous caster for 130mm and 150mm billets. Billets will be hot charged by linking the caster directly to the reheat furnace. The rolling mill will produce 10-32mm debar, and will have a 16-stand continuous mill plus a six-pass, high-speed twist-free finishing block.

S European HR coil & plate equal 12-month highs: Steel Index

The latest reference prices released by The Steel Index (TSI) show that all coil and plate prices in Europe have moved strongly upwards from last week’s levels. Turkish coil prices also increased sharply, with HRC rising 4% to $787/tonne ex-works. 

The HRC reference price ex-works in southern Europe is €10/tonne above last week’s level, while plate reference price ex-works increased by €36/t to €686/t ($937/t). Both these prices are equal to the peaks achieved in Q2 last year. HDG is now up to €696/tonne ($950/t), while CRC also increased strongly. Average lead-times for all coils are longer than last week. 

In northern Europe, HRC and HDG prices rose by more than 3% since last week, while CRC is now up to €670/tonne ($915/t). Average lead-times for all coils are longer than last week. 

The US HRC price FOB Midwest mill increased slightly to $802/short ton ($884/tonne), while CRC is nearly 2% higher than a week ago. All coil prices are now higher than the peaks achieved in April and May last year.

The northern European rebar reference price ex-works was just higher at €575/tonne ($785/t). The spread to the LME billet price rose to $229/t. The southern European rebar reference price ex-works increased by €36/t and the spread to the average LME billet price rose by $19/t. 

TSI is owned by Steel Business Briefing . Companies wishing to receive TSI's full set of reference prices every week or submit their own price data into the index calculations can apply on TSI's websitewww.thesteelindex.com .

China to lead stainless growth in 2011: Macquarie

China is expected to lead global stainless production with output of 14.2m tonnes and growth of 15.4% in 2011, up from an estimated 12.3m t in 2010, according to a Macquarie Commodities Research report seen bySteel Business Briefing. 

Macquarie is forecasting global output at 34.6m t this year, up 7.3% from estimated production of 32.3m t in 2010. Non-Chinese production – including that from the US, Japan, Europe, Korea and Taiwan – is forecast to grow much slower at 2.3% in 2011. This reflects likely further growth in Chinese stainless steel exports this year, said the report issued late last week.

Macquarie expects stainless output for Japan to decline by 2.3% to 3.3m t, and that for Europe to rise a slight 1.3% to 7.6m t.

The trend of substitution away from the nickel-containing grade is expected to continue. Substitution is albeit at a slower rate as nickel pig iron production in China helped ease a nickel shortage – which had then caused heavy substitution – in the mid-decade. 200-series production in China had risen to 3.3m t in 2010 compared to zero in 2000, while the West continues to move towards ferritic grades, it notes.