Japan’s 2010 steel exports break all records

Thursday, 03 February 2011

Last year’s grumbles from the Japanese mills about rising export competition from countries such as China and a stronger currency amounted to nothing when the country’s steel exports reached an all-time record high of 43.4m tonnes. The Japan Iron & Steel Federation (JISF) admits that stronger Asian demand allowed exports to soar 26% year-on-year.

By category, carbon steel exports rose 31% from 2009 to 29.31m t and special steel exports by 61% to 7.78m t. The JISF notes the export volume of special steel looks strong because shipments abroad dropped markedly in 2009. Auto and home electronics demand also recovered quickly in 2010, producing the large increase.

Semi-finished exports last year dipped 11% y-o-y to 5.19m t, chiefly because mini mills were bullish to export billets in 2009 – to cover low product demand – but this need declined last year, the JISF tellsSteel Business Briefing.

By country, steel exports to Korea increased by 11.5% y-o-y to 10.9mt, those to China by 16% to 7.51mt and for Thailand by 62% to 4.8mt. A JISF spokesman says that the large increase to Thailand must be because many Japanese-invested auto and home electronics firms there lifted production.

Meanwhile, Japan’s steel imports in 2010 increased by 56% to 7.2mt. Ordinary carbon steel imports rose by 47% to 3.66mt and special steel imports increased by 61% to 292,600t. “The Japanese yen’s appreciation didn’t influence steel exports much but it did have an impact on steel import volumes,” the JISF spokesman observed, though adding that the small recovery in Japanese demand might have attracted imports too.

Indian rebar producers hike prices further

Thursday, 03 February 2011

Indian producers of thermo-mechanically treated (TMT) rebars have raised prices again, further complaining about higher input costs,Steel Business Briefing learns from market resources. 

“Raw materials prices have shot up in the past few weeks. Also, the secondary producers keep increasing their prices and we have to keep up a marginal difference,” a Steel Authority of India (Sail) official tells SBB. 

Sail increased its prices by Rs 2,000/tonne ($43/t) on 1 February and is currently selling 10mm TMT rebars at an equivalent base price of Rs 38,000/t excluding excise duties and VAT, and 12mm TMT rebars at Rs 37,600/t in Kolkata.

Another state-owned company, Rashtiya Ispat Nigam Limited (RINL), further increased rebar prices by Rs 750/t on 1 February after lifting them by the same margin on 20 January. RINL is selling 8mm TMT rebars for Rs 40,950/t including 10.3% excise duty but excluding VAT at Visakhapatnam in southern India's Andhra Pradesh state. 

Secondary steel producers have also increased prices by Rs 500-1,000/t over the past two weeks. Nationwide, secondary producers are selling both 10mm and 12mm rebars in a price range of Rs 33,500-36,000/t ex-works excluding VAT and duties.

“Prices will continue climbing but at slower rates for the next few weeks, due to good demand from the infrastructure sector and high raw material prices. We might lose customers if prices go up much further,” a secondary producer based in Chennai tells SBB.

Turkish rebar exporters seek new markets to replace MidEast

Thursday, 03 February 2011

Turkish rebar producers are on their guard following the political instability in some of their major Middle Eastern markets such as Egypt, Tunisia and Lebanon which import rebar from Turkey. Now exporters are in search of new markets, Steel Business Briefingwas told.

One producer tells SBB: “We did not have big tonnages going to Egypt in the last couple of months, but still there were some export tonnages being consumed by Egypt, so the companies selling to Egyptian market will have some extra tonnages and this might depress the market.”

Another exporter says that “we find the situation in Lebanon more serious, and at any time another social and political crisis may start there, so we are not relying on exports to those markets anymore.”

Market sources also comment that these troubled markets might cause problems for Turkish steel exporters in the short term, but in the medium and long term producers see steel import demand increasing in these countries because of the interruption of local production. In addition to that, governments are expected to announce more infrastructure and housing projects to get public support, which might also trigger more rebar demand, SBB was told.

Turkish rebar export offers are reported at around $695-700/t fob, and billet offers are quoted at around $640-650/t fob. Turkish market is trying to replace its Middle East exports with transactions to Canada, Singapore and Iran.

CIS slab prices heat up some more, as supply dwindles

Thursday, 03 February 2011

Although CIS slab exporters are out of the market at the moment, the cloud of expectations of increasing prices is hanging over the market. In contrast to billet and long products prices, the flat product and slab market is continuing to move up, underpinned by higher costs and continuous genuine shortage of availability, industry sources tell Steel Business Briefing.

"It is hard to pinpoint exactly which one of these factors is playing the biggest part in current slab bull run, but we are dealing now simultaneously with increasing costs, weather cataclysms affecting coal supply, increasing genuine end-user demand in the CIS, and most importantly, the explosion of prices in the USA," a seasoned market observer says. 

Admittedly, it is the latter that is likely to cause the market to crash eventually, but the longer the end-user demand improvement goes on, the farther away the eventual collapse will be, he says. For now, though, it looks like slab market will continue strong through spring, he concludes.

Indeed, with Evraz out of the market for March casting and Novolipetsk experiencing increasing internal slab demand, two major Russian exporters are practically out of the market, sources say. "Ukrainian producers will have an advantage, which they will not want to waste," one source says. He adds that already Alchevsk is reported to have sold at $685/t fob Black Sea last week, and higher bids have been heard of, which were not accepted, afterwards.

The mills are expected to come out with March allocations next week, after the Chinese New year holidays are over.

Argentina orders Ternium to freeze flats prices

Thursday, 03 February 2011

Ship plate and cut sheet prices rise in SE Asia

Thursday, 03 February 2011

Ship plate from Ukraine was booked one to two weeks ago at $820/tonne cfr Singapore, up from $750/t cfr in early January. This reflects the rising market trend for flat steel products because of increasing raw materials prices. 

Offer prices from Indonesia are heard at $830-840/t cfr Singapore. Some trading sources tell Steel Business Briefing that they have heard of a small volume booking made last week at $840/t cfr but others were not able to confirm. 

Indian-origin ship plate is being offered at around $800/t cfr. “In general, market interest is very thin at these price levels,” a regional trader says. He tells SBB that buying would be confined to demand from specific projects and there will not be much inventory building.

Meanwhile, boron-added cut sheet from China was last heard at $730-740/t cfr Singapore compared to $720-730/t cfr in mid-January. Most traders tell SBB that they have not heard of recent bookings. 

“There are no clear signs of market direction,” a trader in Singapore says. Others say that flat steel prices will remain firm because coking coal and iron ore prices cannot come down.

Posco alone in silicon sheet project in India

Thursday, 03 February 2011

Posco has decided to build a 300,000 tonnes/year plant in the Vile Bhagad industrial area in India’s western state of Maharashtra to produce non grain-oriented silicon sheet, the company has announced. Posco is also continuing discussions with the Steel Authority of India (Sail) relating to a grain-oriented sheet project,Steel Business Briefing learns.

The Vile Bhagad project in Raigad district, approved by Posco’s board Tuesday, will cost $140m and should be completed by August 2013. Construction will start within this year.

Posco plans to complete a 1.8m t/y cold rolling mill also in Vile Bhagad by December 2013, and CRC from this mill will be used for non-GO electrical sheet production, SBB understands.

The Korean mill’s decision to proceed alone in Maharashtra seems to put its plans for a similar project with Sail in doubt, but officials from the two mills insist talks are continuing. 

Last June, then secretary of the steel ministry Atul Chaturvedi, said Sail and Posco were working together to establish a mill in the eastern state of Jharkhand for producing GO sheets. The new mill could help “replace imports of nearly 300,000-400,000 tonnes/year” of the sheet, Chaturvedi said.

The location tipped then was inside Sail’s Bokaro in Jharkhand, More recently last September, Sail and state-owned heavy engineering firm Bharat Heavy Electricals Ltd were talking with an unnamed “foreign collaborator” for a GO sheet project.

The plant would be built at an existing Sail works and though Posco was believed to be the prospective foreign partner, the steel ministry was also reportedly in talks with Russia’s VIZ Steel and an unnamed Italian steelmaker for the project.

Turkish trader starts steel service center in Iskenderun

Thursday, 03 February 2011

Kucukbakirci Steel Service Center, a Turkish trader and steel service center, has opened its second plant in Iskenderun, southern Turkey. Steel Business Briefing learns from a company spokesperson that the plant has two decoiling lines – one of 2,200mm width and 2-10mm thickness, and the other 1,800mm width and 0.50-5mm thickness.

The service center will process 30,000 tonnes of hot rolled, cold rolled, galvanized and other flat steel annually.

Kucukbakirci also has a steel service center in Konya, central Anatolia. This plant also processes about 30,000 tonnes/year of flat products.

The company sources its steel from Turkish domestic production as well as imports. The new steel service center will be serving the automotive industry and other users in the region.

Russia’s Severstal gets closer to supplying Hyundai and Ford

Thursday, 03 February 2011

Russian steelmaker Severstal is moving forward in its efforts to gain approval to supply automotive sheet to two foreign carmakers, it says.

South Korea’s Hyundai Kia Automotive Group has just approved a test sample of cold rolled coil in high-strength micro-alloyed steel from Severstal’s Cherepovets mill. The coil will be further tested in the production of stampings for the Hyundai Solaris car model this month.

If these tests are successful, Severstal will gain supplier status for Hyundai Kia and start delivering coil to the group’s car manufacturing plant in St Petersburg, Severstal comments.

The steelmaker is also advancing in its attempts to secure supplier status for Ford Motor Company, it says. The US carmaker is assessing strip products from Russian mills, including Magnitogorsk Iron & Steel Works, with a view to supplying its car plant in Vsevolozhsk near St Petersburg, as reported by Steel Business Briefing.

US auto makers still on a roll

Thursday, 03 February 2011

Double-digit year-on-year sales growth defined the month of January for Detroit's Big Three automakers.

Both General Motors and Chrysler Group posted 23% increases from January 2010. GM said overall US sales for its four brands totaled nearly 178,900 vehicles - driven by a 36% rise from its retail division. Chrysler registered almost 70,120 sales for the month,Steel Business Briefing notes.

Ford also had improved January sales, realizing a 13% gain - to nearly 127,320 vehicles. Retail sales were up 27% y-o-y, the company said.

The positive January gains followed double-digit y-o-y growth for all three carmakers in 2010, as SBB has reported. GM led the way with a 21% y-o-y sales gain last year, with Ford and Chrysler posting increases of 19% and 17%, respectively.

Strong auto demand helped US sheet mills rebound in production and sales last year and the industry is hopeful of a relatively strong 2011 auto market as well.

Vale slab plant Alpa to operate in 2014

Thursday, 03 February 2011

Brazilian miner Vale confirms for early-2014 the start-up of its new slabmaking venture – Aços Laminados do Pará (Alpa) – in the country’s northern state of Pará. Mill construction is set to begin in June, Steel Business Briefing learns from company. The plant was originally scheduled to be put into operation in November 2013.

Despite the rainy season, which had slowed progress at the site, around 80% of Alpa's earthmoving work has already been completed. In June, plant's civil construction will be comissioned, company says.

With an investment estimated at R$5.8bn (US$3.4bn), Alpa will be able to produce over 2.5m tonnes per year of slabs. 

As reported, Vale and domestic service center and steel importer Aço Cearense signed a memorandum of understanding last year to build rolling and coating lines at Alpa designed to produce around 1.3m t of hotrolled, coldrolled and galvanized coils. 

The remaining slab output might be exported to North American flats and pipes producer California Steel Industries (CSI). CSI is a 50-50 joint venture between Vale and Japan's JFE Steel, SBB notes.

Brazil's CSA investing $60m to reduce dust emissions

Thursday, 03 February 2011

Brazilian slab mill Companhia Siderúrgica do Atlântico (CSA) announced a R$100m (US$60m) investment that includes measures to help control problematic dust emissions at its facilities in Santa Cruz city, Rio de Janeiro state. 

Last month, CSA agreed to pay a fine of R$16.8m (US$10.1m) related to air pollution from the plant, Steel Business Briefingnotes.

SBB learns from CSA that the investment plan includes the installation of a system able to retain the graphite dust generated in the steelmaking process, as well as the construction of a second conveyor belt to transport pig iron to the converters and another system for slag removal. 

Most of the improvements are expected to be finished within the next eight months. However, the conveyor belt will not be put into operation until 2013, SBB notes.

The Vale-Thyssenkrupp joint venture is still waiting for state environmental authorities to approve an audit, currently under way at its facilities, so that it may receive its operating license. The environmental authorities tell SBB that the audit will be concluded in a week, and further decisions will be made at that time.

As previously reported, CSA is expecting its final license to be granted this month.

UAE strip buying slow, but price increase expected

Thursday, 03 February 2011

Demand for flat rolled steel in the United Arab Emirates is slow because the stock levels in the country are sufficient and there aren’t many new projects announced. Local flat steel prices in the market are lower than import offers, as the stockists had made bookings at $100-200/tonne lower than today’s prices.

Steel Business Briefing is told by a Dubai-based trader that demand is coming from only maintenance for the buildings, and some other sectors. But the main consumer of steel in the country, construction, is very weak.

Hot rolled coil is still offered to the UAE at $750-800/t cfr but it is possible to find HRC at $730/t in domestic market.

Local HDG producer Al Ghurair has filled its order book until May and is accepting orders for May production at $988-1,000/t.

UAE market players think flat steel prices will not decrease because the supply from China has decreased due to Lunar New Year holidays, and the supply from Egypt is under threat because of the political disturbances there. However, possible Egyptian production cuts do not directly affect UAE market, sources note.

Beltrame mourns chairman

Thursday, 03 February 2011

Giancarlo Beltrame, the chairman of Beltrame group, Europe's largest merchant bar producer, passed away on Tuesday evening,Steel Business Briefing learns from the Italian company.

As a mark of respect, all the mills in the group suspended their production for a day of mourning from 10.00 a.m. yesterday. Production was due to restart this morning, but the group's mills will temporarily suspend their production again on Friday morning while the funeral will take place. 

The funeral will be held in the Duomo of Vicenza at 10.45 a.m.

Gallardo appoints new director general

Thursday, 03 February 2011

Grupo Alfonso Gallardo, the Spanish steel group, is restructuring its management as part of a new strategic plan for the company to meet 'future challenges', Steel Business Briefing learns from the company.

It is appointing Juan Luis López Cardenete, the former managing director of Unión Fenosa, a gas ane electricity company, as director general of the group. Cardenete will report directly to the current ceo, Juan Sillero. Other appointments will be announced in the next few weeks, the company adds.

The company also announced that Gallardo is not planning to sell off any further units. Once the sales of rebar producers Corrugados Azpeitia and Corrugados Lasao to Brazilian steelmaker CSN are completed in the first quarter of 2011, the company’s finances should be put on a stable footing, it adds.

Peru's rebar price stable after early-2011 pick-up

Thursday, 03 February 2011

Peruvian rebar prices are stable after registering an increase at the beginning of January due to higher raw material costs.

Domestic rebar prices are at 3,450 nuevos soles/tonne (US$1,229/t) delivered for 12mm products, while 10mm rebar is being negotiated at 2,862 soles/t (US$1,019/t) del, the same values seen in early last month, Steel Business Briefing is told by domestic distributors.

Sources say that although Peruvian mills have been pressured by increased raw materials prices, there was no room for a new price hike this month, since local construction activity is usually not that strong at the beginning of the year, SBB notes.

Life stops in Egypt, steel market is idled

Thursday, 03 February 2011

In the current troubled situation in Egypt, daily activities have ground to a halt; no banks or shops are working, and therefore the steel market is expected to be closed for an uncertain period of time, until the country reaches political stability. The internet was reported to be back working again yesterday.

All steel plants are reported to have stopped production, and Ezz Steel’s plant in Alexandria is reported to have been attacked. SBB could not independently confirm these reports. Ports are also not working; a 30,000 tonnes scrap cargo is reported to be stuck at the port. Since the banks are closed no payment can be processed at the moment.

One local steel market source tells Steel Business Briefing: “we do not even know what is the value of Egyptian Pound now, so business will be damaged severely; we can only access to the basic services, food and medicine, even hospitals are just working for emergency cases.”

Polish distributor’s stake in pipe insulator is diluted

Thursday, 03 February 2011

Polish steel distributor Stalprofil’s stake in pipe insulator and distributor Izostal has shrunk from 95% to 60%, after Izostal debuted on the Warsaw stock exchange last month, Steel Business Briefing learns from Izostal.

The number of Stalprofil’s shares in fellow Polish company Izostal, however, remains the same, as Izostal increased its share capital from PLN 41.5m (€10.6m) to PLN 65.5m (€16.8m) when it listed on the exchange.

Izostal, which produces corrosion-resistant insulated steel pipe, carried out its initial public offering (IPO) of shares in January.

Stalprofil has high hopes that Izostal will participate significantly in the extension and modernisation of Poland’s gas transmission network, as well as in the European Union’s programme of creating an integrated network for natural gas transmission.

OCTG increases could be 'too much, too soon'

Thursday, 03 February 2011

Rising OCTG prices in the North American market are predicated on rising raw material costs, but creeping inventory growth and imports from Asia could soften the transactional impact of the hikes.

A Gulf-area market source tells Steel Business Briefing that the $100/short ton minimum increases announced by domestic producers in recent weeks could be "too much, too soon."

While demand is fairly healthy in the NA market, it's debatable to what extent OCTG buyers will absorb the announced increases, he said. 

"I'd say (demand) is better than what it was, but it's not gangbusters. Every now and then you see certain sizes get short, but it's nothing like how it was in past markets."

OCTG import licenses increased in January to 210,700 tonnes from 142,500 t in December - a 48% jump. Much of that growth came from Korea. January OCTG import licenses from Korea doubled month-on-month, though December's figure of 28,300 t was a nine-month low. 

Tang Eng raises local austenitic prices by $103/t

Thursday, 03 February 2011

Taiwan’s second biggest stainless producer, Tang Eng Iron Works, has raised domestic prices of its 300-series hot and cold rolled stainless sheets and coils by TWD 3,000/tonne ($103/t) on rising nickel prices. But it is delaying announcing its export prices until after the Chinese New Year holidays.

The increase takes Tamg Eng’s list prices to TWD 110,000/t for grade 304 hot rolled coils and to TWD 114,000/t for 304 cold rolled coils 2B 2mm. “We’ll decide on export price changes after the holidays so that our prices will be closer to the market,” a Tang Eng official tells Steel Business Briefing.

Tang Eng continues to produce at 80% of its 30,000 tonnes/month capacity at its Kaohsiung works in southern Taiwan.

Tang Eng’s domestic price change is in line with Yieh United Steel Corp's local price adjustment for the month. Yusco has raised its grade 304 prices by TWD 3,000/t and austenitic export prices by $170-280/t, as SBB reported.

Weak European stainless demand weighs on Outokumpu results

Thursday, 03 February 2011

European stainless demand improved last year compared to 2009, but remained weak, according to Outokumpu’s yearly results statement sent to Steel Business Briefing.

“The market environment in 2010 continued to be difficult in our home market, Europe. Demand for stainless was well below the pre-crisis levels, especially for investment-driven applications,” says company ceo Juha Rantanen.

Weakness from the investment-driven sector particularly affected Outokumpu’s specialty stainless business, which suffered an operating loss of €76 million ($105m) last year, and €62m in Q4 alone: the general stainless business made a profit of €14m for 2010, while the group overall made an operating loss of €83m. Because of poor demand for specialty grades, plants such as Avesta, geared up to higher grades, were producing standard stainless. 

Outokumpu worked at 75% of capacity last year, which Rantanen says was the “main reason” for the weak profitability. Low utilisation meant higher costs/tonne and the market weakened in the summer months. Base prices fell, particularly in southern Europe because of Asian imports, and distributors destocked because of softening metal prices. 

However, the new year has seen better sentiment. Base prices have increased and Q1 volumes are likely to be 10-20% higher than in Q4, when 336,000t were delivered. Lead times for standard grades are lengthening, Rantanen continues. 

The company still sees its commercial focus in Europe as a business risk, as do some analysts, with Europe accounting for 75% of sales last year. Its plate service centre in Kunshan, China, was inaugurated last year, SBB notes.

Sandvik to move away from "standard" stainless market

Thursday, 03 February 2011

Sandvik, the vertically integrated Swedish special steels and tools producer, says it sees the market for “standard” stainless becoming increasingly contested. 

This, and the associated “negative developments” in pricing, meant Sandvik Materials Technology (SMT) “stepped out of the business” during the last quarter of 2010, said outgoing president and ceo Lars Pettersson during the company’s latest annual report presentation.

SMT will be looking to reduce its exposure to standard products and is unlikely to compete in that section of the market “in the long term”. Currently these products account for less than 20% of its turnover, Pettersson added.

The commodity grade stainless market suffers from overcapacity in Europe, Steel Business Briefing notes.

Demand for SMT’s products has been driven by the mining and energy segments, with Asia and Europe both strong, Pettersson said. Demand from the nuclear industry is also important. Sandvik is currently testing lines and training staff at its recently expanded generator tubes line in Sandviken, Sweden, SBB notes. 

SMT reported profits of SEK326 million ($51m) in 2010. Despite solid growth turnover remained 10% lower than 2008, although it was expected to surpass that level by the end of 2011 or in early 2012, Pettersson concluded.

Stainless surcharges to increase 7-10% in March

Thursday, 03 February 2011

Stainless surcharges are slated to increase 7.2-10.3% for major commodity grades in March, according to announcements by North American Stainless and AK Steel. 

Bellwether product type 304 coldrolled coil will increase about 7.8% month-on-month to about $1.25/pound, Steel Business Briefingreports. 

Type 316 CRC will increase about 7.2% to $1.79/lb, while type 430 CRC will increase 10.3% to $0.32/lb.

Queensland met coal sector should escape cyclone's worst

Thursday, 03 February 2011

Queensland’s coking coal operations were expected to escape the worst of cyclone Yasi, set to reach the northern part of the state at midnight on Wednesday.

The severity of Yasi has been upgraded to the maximum category 5 cyclone, but it should pass several hundred kilometres to the north of coal port infrastructure. Australia’s Bureau of Meteorology predicts the cyclone will be at its most severe between the northern towns of Cairns and Townsville. Coal terminals at Dalrymple Bay and Hay Point are located near Mackay, which is 327km south of Townsville, and 590km, south of Cairns.

However, Dalrymple Bay remains closed, Hay Point has ceased loading ships, while Abbott Point – located some 170km further north – was set to shut on Wednesday afternoon. Gladstone port continues to operate. The Goonyella and Newlands railway lines between the ports and coking coal mines in the Bowen Basin remain closed.

Commonwealth Bank of Australia analyst Lachlan Shaw noted in an email to Steel Business Briefing that “coalfield assets should escape the worst of wind and rain damage.” If there is no further damage, he predicts 1-1.5m tonnes of coal shipments could be delayed by the 3-5 day 'shut-in.'

RBC Capital Markets analyst Chris Drew said that unless the cyclone changed direction he did "not anticipate a major negative impact on the mines”, but rains brought by Yasi could disrupt post-flooding recovery in the northern Bowen Basin. Goldman Sachs said that shipments from Gladstone – serviced by the flood-affected Blackwater line – fell almost 4m t in January to just 1.89m t.

Japan’s Meti hastily convenes summit on coal supply

Thursday, 03 February 2011

As fears grow about the massive cyclone off north-east Australia and possible further disruptions to coal exports, some of the largest consumers of that coal – Japanese steel mills – will muster on 4 February to discuss raw materials security.

Convening the so-called “steel raw material liaison conference” is Japan’s Ministry of Economy Trade & Industry (Meti). Chairing it will be Masaki Koito, Meti’s most senior iron and steel division bureaucrat.

Though Japanese officials try to dispel perceptions that the gathering is in any way a crisis summit, the government’s purpose is nevertheless to grasp the present status of coal procurement among steelmakers, their stock levels and current supply conditions in Australia's flood affected areas. Attending will be representatives of the Japan Iron & Steel Federation, integrated mill managers and coal traders.

The steelmakers started securing coal from alternative sources such as Russia and Canada from end-December and some have stocks until end-March, a JISF official assured Steel Business Briefing. But some Queensland mines remain under force majeure and, given that February is the cyclone season, supply conditions may worsen, he admits.

“This conference is for concerned parties to share information about coal supply. But as Japan has no state stockpile for coal, all the government can do is warn mills to respond quickly to all developments,” he noted.

Last month 134,531 tonnes of US met coal arrived at Kashima port in two cargoes, plus 61,956 t at Tobata and 69,399 t at Sakaide, Japanese customs data show. Kashima serves Sumitomo Metals, Tobata Nippon Steel’s Yawata works, and Sakaide can serve Mitsubishi Chemical’s coke plant and JFE Steel’s Kurashiki works, SBB notes.

Ferro-manganese price in Europe strengthens

Thursday, 03 February 2011

The market for ferro-manganese in Europe remains quiet, but the price has strengthened a little despite limited activity, trading sources tell Steel Business Briefing.

The price for FeMn in Europe has moved up from last month’s levels around €1,000-1,030/tonne to around €1,010-1,040/t.

“There isn’t much trading going on. Most steel mills are covered for Q1, then at the end of the month we expect to see Q2 orders coming in,” a trader tells SBB.

Steel production is expected to slowly improve in Europe this year, so prices will likely go up rather than down, an analyst says. “We won’t see material around €1,000/t for a while and it should rise around 20-40/t in the coming weeks.”

Prices could reach as high as €1,100/t when buying returns to the market in a few weeks time, SBB is told.

Turkish scrap imports hit record high in 2010

Thursday, 03 February 2011

Turkish scrap imports hit a record high in 2010, reaching 19.2m tonnes with the support of large imports at the end of the year,Steel Business Briefing learns from data released by the Turkish Statistical Institute (TUIK).

According to the TUIK’s data, Turkey imported 2.2m tonnes of scrap in December, which is 64% higher than the same month last year and also 31% higher than the November imports. December imports mostly cover November and December bookings when Turkish steelworks resumed buying to replenish their stocks and continued bookings until mid-January, as reported.

December imports were worth $856.5m, approximately $388/t cif, which is slightly higher than the $384/t cif in November.

In the whole of 2010, the increase of more than 20% year-on-year secured Turkey’s place as the world’s largest scrap importer.

In 2010, USA remained as the largest supplier of Turkey with 4.27m tonnes, which is 22.3% of the total imports. Romania (2.24mt) and Netherlands (1.81mt) followed (see table).

Kazakh miner sees strong ferro-alloys output in Q4 2010

Thursday, 03 February 2011

Kazakhstan raw materials producer Eurasian Natural Resources (ENRC) saw its ferro-alloys production higher in the last quarter of 2010 than the previous year and effectively operating at full available capacity during the period.

Total ferro-alloys production was up 5.6% in Q4 2010 to 473,000 tonnes from 448,000t in Q4 2009. All its FeAl output was up, except for ferro-silicon, which decreased 10.4% to 12,000t because of a planned repair of one of the five furnaces between mid August and the end of November 2010.

Ferro-chrome production rose to 373,000t in Q4 2010 from 351,000t in Q4 2009.

ENRC’s iron ore division saw a recovery in pellet demand towards the end of Q3 2010, and the proportion of pellet in the saleable mix increased further in Q4 2010, although not reaching Q4 2009 levels, it tells Steel Business Briefing in a press release.

Iron ore concentrate production was 4.3mt in Q4 2010, around the same levels as in 2009, and pellet production reached 2.13mt in Q4 2010 down from 2.29mt in Q4 2009.

ENRC ceo Felix J Vulis said, “The Group continues to be focused on optimising production levels, as well as taking steps to maintain its advantageous cost position”.

LME nickel price hits 34-month high

Thursday, 03 February 2011

The London Metal Exchange nickel price reached $27,650-27,655/tonne (cash) yesterday, marking the highest level since April 2008. An analyst tells Steel Business Briefing the upsurge is based more on investment buying than on any supply/demand imbalance.

“This is not because of fundamentals in the nickel market but is rather a result of hedge funds buying,” he says. “Nickel has not performed badly but has not been as strong as copper, which has reached its all-time high; it appears speculators are looking to buy something that is on its way to reaching its all-time high”.

Conversely, it would seem that factors such as the Voisey’s Bay nickel mine coming back on stream, as reported yesterday, could prove to be a dampening factor on price rises. Additionally, stainless producers, although seeing some pick-up from Q4, are not overly optimistic for 2011 (see today’s article on Outokumpu).

Stainless steel making accounts for two-thirds of nickel consumption. One respected analyst, Markus Moll of Steel & Metals Market Research, thinks stainless steel production is likely to see a 7% growth during 2011 after reaching a record high in 2010. He was quoted by Reuters yesterday as saying that stainless steel production had increased by 7% to 11.8m tonnes in China and 12% to 2.9mt in India in 2010, compared with 2009.

Japanese cool to Thai steel project delay

Thursday, 03 February 2011

Japan’s Nippon Steel and JFE Steel could muster little interest in news from Bangkok that Thailand’s long-discussed mega steelworks project is at least six months away from approval, or that the plant might even be located abroad. 

Each Japanese mill had expressed interest in supporting the project when Bangkok firmed up plans in 2007 for a huge industrial complex incorporating a steelworks and end-user industries such as auto manufacturing, as Steel Business Briefing reported.

But after several years and false starts with the plan, the Japanese mills have reacted coolly to comments late last month from Thai industry minister Chaiwuti Bannawat that a decision on the steel plan would be made within six months. 

Saying any further delay in a decision might hinder the planning of automakers trying to identify future sources of raw materials, Chaiwuti said the National Industrial Development Committee would review the project and submit its recommendations to Cabinet by July. 

Introducing a further complication Chaiwuti suggested that Thailand might consider locating the works in neighbouring Burma or Cambodia, given opposition at home from environmental groups and local residents to locations Bangkok has nominated. 

The Thai Iron & Steel Institute itself has cited Koh Kong in Cambodia and Dawei in Burma as possible locations. 

“If Thailand builds in a neighbouring country, we will decide whether we are still interested in joining after we receive formal notification from the Thai government,” a Nippon Steel spokesman said. A JFE spokesman told SBB his company had nothing to say on Chaitwuti’s comments.

China's General Steel to test run new facilities at Longmen

Thursday, 03 February 2011

New York-listed Chinese steelmaker General Steel Holdings is to begin trials on new sintering and steelmaking equipment at its Longmen joint venture in northwestern China’s Shaanxi province. The new facilities, when formally commissioned, will add about 2.9m tonnes/year of pig iron capacity and 3m t/y of crude steel capacity. 

In a 31 January statement, the company said it would test run two newly constructed 1,280 cubic metre blast furnaces, two 120 tonne converters and one 400 square metre sintering machine. However,Steel Business Briefing was unable to reach the Beijing-headquartered company to confirm when trials would be taking place.

The Shaanxi Longmen mill, 60% owned by General Steel, currently operates around 4m t/y of crude steel capacity. The addition the new facilities will bring the subsidiary’s total crude capacity to 7m t/y – a target the company set in January last year, as previously reported. 

Construction of the new equipment was funded by Shaanxi Iron & Steel Group. General Steel says it is currently in negotiations with Shaanxi Group to enter into an agreement whereby General Steel will lease the equipment from the former. During the trial period General Steel will be able to deliver steel produced during the trial run to its customers. 

The trials are expected to last until the agreement with Shaanxi Group is finalised. 

General Steel produces around 6.3m t/y of steel products from its operations in Shaanxi and Guangdong provinces, as well as its facilities in Tianjin and the Inner Mongolia Autonomous Region.

German distributors determined to pass on mill’s price hikes

Thursday, 03 February 2011

German steel distributors gathered at the Stahldialog meeting near Düsseldorf this week largely agreed that the recent surge in steel prices needs to be, and will be, passed on to their customers.

“We should be able to gradually translate the producers’ price targets into our own pricing, given adjusted stock levels and a revival of the market,” Oliver Ellermann, president of distributors’ federation Bundesverband Deutscher Stahlhandel, said at the beginning of January. Prices have since continued to rise by an unexpected degree, but the distributors’ stance is unshaken.

“We must move in line with our purchasing costs, and our challenge is to pass on the mills’ higher prices to the end-users in the market,” Martin Müller-Frerich of Knauf Interfer affirms, albeit noting that the hike in onward selling prices will have to be implemented in stages.

Convincing customers of the sharp upwards trend “was more difficult just two to three weeks ago,” Müller-Frerich told Steel Business Briefing on the sidelines of the meeting. “I believe every consumer sees the large wave coming towards us by now and we do not have to convince them anymore,” he commented.

He appeals to distributors to maintain pricing discipline, and not to go for quick cash with bargain offers, which he calls “sheer nonsense”. “We make most of our money for the year by 30 June, and the chances are better than ever,” he added, pointing at “enormous price hikes from the steelmakers for the second quarter,” which he estimates at €100-150/tonne for hot rolled coil.

MEPs to discuss legality of ETS benchmarks

Thursday, 03 February 2011

The European Parliament may decide in the coming months that the European Commission's proposed benchmarks for the steel industry's greenhouse gas emissions are illegal. A resolution saying this is understood to be in preparation for discussion at the parliament's environment committee.

The resolution is said to question the way the benchmarks were set and could force the commission to propose a new set. For the hot metal benchmark, it reportedly disputes the way in which free credits for the use of waste gas to produce power have been allocated. Eurofer has said that steelmakers should receive full credit for the carbon dioxide emissions saved by this process, as previously reported, and the resolution is thought to reflect this position.

The resolution is being made by members of the European Parliament’s Committee for the Environment, Public Health and Food Safety. Although the committee has been notified, the resolution has not yet been formally submitted, Steel Business Briefing is told. It is due to be be voted on by the committee in mid-March and by the European Parliament in April. 

The benchmarks will decide the amount of free carbon credits allocated to European steelmaking facilities from 2013 under the Emissions Trading System (ETS). From 2013, steelmakers will increasingly have to pay for their carbon emissions by buying credits.

The ETS benchmarks, and how they will affect your business, will be under discussion at SBB’s Green Steel Strategies conference in Brussels on 5-6 April.

Polish distributor expects price correction, better demand

Thursday, 03 February 2011

One of Poland’s largest distributors, Konsorcjum Stali, expects the rising trend in steel prices to undergo a correction soon and sees the Polish scrap market stabilising, the company tells Steel Business Briefing.

“I do not fear further price rises throughout the course of the year,” says the distributor’s chief executive Robert Wojdyna. “We ought to shortly expect a correction,” he predicts. “Construction steel, mainly rebar, has gone up in price the most – by over 20%. We can also see a significant increase in the area of flat products, cold formed profiles and hot rolled shaped beams,” he notes.

The main reason for the recent steel price increases has been the rising cost of scrap for Polish producers, caused by strengthening scrap prices in the global market and a winter scrap shortage in the domestic market. However, the Polish scrap market now appears to be stabilising.

“We are seeing this jump in prices with products that are produced on the basis of scrap,” says Wojdyna. “Currently the [scrap] market is stabilising and in my opinion there should not be any further price rises,” he adds. “The condition of distribution companies is improving… this will be a good year for the whole of the steel industry,” he believes.

The company is also upbeat about the prospects for Polish distributors this year, pointing to its recent signing of contracts worth PLN 43m (€11m) to supply two large construction firms with reinforcing steel. “We can see an ever greater revival in the construction sector. We are counting on a large demand for constructional steel,” Wojdyna says.

Mordashov met creditors to discuss Lucchini’s debt

Thursday, 03 February 2011

Russian tycoon Alexei Mordashov, Lucchini’s majority owner, and Lucchini’s creditor banks met in Moscow yesterday, seeking to reach an agreement over the restructuring of the Italian steelmaker’s debts. The company and banks are now closer to signing a final agreement and an official press release could be published today (3 February), Steel Business Briefing understands.

Mordashov was joined by the representatives of banks Lazard and Rothschild along with managers from Unicredit, Banca Intesa and BNP Paribas. Lucchini’s nine creditor banks are all scheduled to hold a discussion today in order to see if the proposed new agreement is acceptable to all the creditors.

Meanwhile, Ascometal, Lucchini’s French steelmaking subsidiary, has officially signed a binding agreement to sell four of its hydroelectric power plants to BKM FMB Energie, one of Switzerland’s leading energy providers.

If the deal receives official approval from the French authorities, Russian steelmaker Severstal, which co-owns Lucchini with Mordashov, could receive up to €60m from the sale, which could be used to partially repay Lucchini’s debt.

All regions of the US see output improvements

Thursday, 03 February 2011

All regions of the US saw year-on-year production increases as US mills produced 38% more steel in 2010 than in 2009. Michigan and Illinois saw the greatest rises with output more than doubling.

Mills in Michigan increased output by 113% from 2009 to 6.12m short tons last year. In Illinois, production was up 105% to 4.33m s.t, according to American Iron and Steel Institute data supplied toSteel Business Briefing.

Production was greatest in Indiana at 22m s.t, followed by the southern region of Alabama, Tennessee, Mississippi, Arkansas and Kentucky with 19.42m s.t. Those regions saw 20% and 54% year-on-year improvements, respectively.

Overall, American steel mills produced 88.7m s.t of raw steel last year, up from 2009 production of 64.2m s.t. Yearly capability utilization improved from to 70.4% from 51.4% in 2009.

Blast furnace production rose 48.5% y-o-y to 54.4m s.t in 2010, while EAF production was up 40% to 34.3m s.t. Pig iron production increased 41% y-o-y to 29.6m s.t, according to the AISI data.

CSN's strategy on Usiminas still uncertain

Thursday, 03 February 2011

CSN's move to acquire 5.03% of the common shares of Usiminas last week has raised much speculation and uncertainty about its real intentions. However, unlike most, analysts from the Barclays Capital see CSN's stake in Usiminas as a financial investment only.

Steel Business Briefing learns from a Barclays's report that a consolidation of the flat steel industry in Brazil would be a positive for the sector as a means of increasing pricing power, raw material sourcing and potentially reducing import pressures. "Nonetheless, our opinion is that it is unlikely that CSN enters Usiminas' control block, and consequently, we view synergy potential from this passive transaction as reduced," it says.

Also, Barclays' analyst Leonardo Correa points out that it is very likely that Nippon - which owns 27% of Usiminas shares - would exercise its rights of first refusal if one of the controlling parties at Usiminas were to decide to sell its stake. "At most, CSN would share control with Nippon," he says. "For now, we see CSN's stake in Usiminas as a financial investment only."

CSN's total investment in Usiminas now amounts to around R$1bn ($600m) - the 5.03% stake in common shares and a 4.99% stake in preferred shares, SBB notes.