| South European coils prices stable; import values decline | ||
| South European coils prices are stable for local production, but some decreases have been seen in imports due to the exchange rate. Together with the overall poor demand, this is putting pressure on the domestic mills, which nevertheless are still trying to increase their asking prices. Imported HRC and CRC are reported still less competitive than the domestic product, and buyers – still risk-averse –are preferring to buy locally for the small amount that they need. For HRC in Spain ArcelorMittal is still officially asking around €500-510/metric ton base ex-works for March-April delivery, but transaction are reported around €10/mt less. HRC imports are not lower than €510/mt up to 520/mt CIF effective, although with some exceptions – it is possible find coil from a Middle East steelplant as cheap as €483/mt CIF Spanish ports effective. China at the moment is out of the market due to the New Year, but there are expectations of new increases as soon as it comes back. “HDG is a different story than HRC or CRC; import offers are in fact competitive at €610-615/mt CIF effective for April shipment”, a Spanish trader said. Another trader confirmed prices for HDG at €600/mt CIF effective, and €550/mt CIF effective European ports for CRC. In Italy, the largest coils producer Ilva is still quiet, but after restarting some of its rolling mills at Taranto is expected to resume quoting prices next week. The other domestic producer and traders are offering HRC at around €500/mt base ex-works, but transactions have been reported at €10/mt less than the official prices. On HDG and CRC Marcegaglia has been reported quite competitive with prices respectively at around €550/mt base ex-works and €560/mt base ex-works. As in Spain the demand is still lackluster; buyers are starting to consider the import options but for the moment are still mainly buying domestically.
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| SE Asian HRC import market enters pre-holiday lull | ||
| The hot rolled coil import market in Southeast Asia has been slow for the past 1-2 weeks because of the approaching Lunar New Year holidays, traders said Wednesday. Supplying mills are seeking new price gains and buyers want to monitor the market after the holidays before making bookings. Deals for 2mm base SAE 1006 HRC for March/April shipments transacted at $640-650/metric ton CFR Southeast Asia, unchanged from the past two weeks. Deals were concluded at this level for Russian, Indian, Taiwanese and Korean material. Commercial quality 2mm HRC from Korea concluded at $635/mt CFR Vietnam, a local trader said. Deals for 2mm SPHC/SS400 HRC from the abovementioned origins were transacted at $540-650/mt CFR SE Asia, traders reported. However, many supplying mills have since raised their offer prices for 2mm base HRC to $660-690/mt CFR depending on destination port and mill origin. Chinese offers were prevailing at $610-615/mt FOB last week or $630-645/mt CFR Southeast Asia. Importers in Vietnam were willing to pay only $615-620/mt CFR. “There is no mood now because it is near the New Year holidays,” a Chinese trader said. The market would rather wait and see till after the holidays, he said. Some Chinese steel mills have already closed too. Chinese origin 2mm SAE 1006B was recently offered at $660/mt CFR SE Asia. Buyers are not taking this up because they deem it too high-priced, a regional trader said. "It will be quiet for the next two weeks because of the holidays," he said. The return of market participants after this lull could cause prices to rise. "But prices could go up and then down," he said.
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| China's wire rod export price stable, with little buying | ||
| China’s wire rod export market remained deathly quiet on February 6 with only days to go until the Chinese Spring Festival holiday. Market sources pointed out that hardly any deals were heard concluded this week as buyers in major destinations such as Southeast Asia were also shutting down to observe the Lunar New Year. Traders in Shanghai told Platts that most Chinese mills had ceased receiving new orders or stopped providing offers on Wednesday, and they might only resume export business after the end of Spring Festival (official holidays end on February 15). Although there was little interaction between buyers and sellers this week, prices for China-origin SAE1008B wire rod were at a similar level to last week, assessed at around $565-570/mt FOB to Southeast Asian markets. But traders pointed out that the price level was mainly for material sourced from non-mainstream producers. A trader in Shanghai insisted buyers could accept higher prices than the above level, especially in the South American market. He said that transactions had been concluded with South American buyers at $590/mt FOB this week. Unanimously, market participants expected China’s domestic and export prices to gain further after the Lunar New Year, in light of the high pressure on mills because of raw material costs.
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| ArcelorMittal posts 2012 $3.7bn loss, sees improving signs | |||||||||||||||||||||
| ArcelorMittal, the world largest steelmaker, reported 2012 net losses of $3.7 billion on Wednesday, down from net income of $4.8 billion in 2011, as group sales fell by over 10% to $84.2 billion. The group reported significantly lower margins for each ton of steel sold in the market during 2012. It calculated that it made an EBITDA of $85/metric ton, down from $118/mt during 2011. The second part of the year was the most challenging for the company in terms of margins, as it recorded an EBITDA/mt of $67. "2012 was a very difficult year for the steel industry," CEO Lakshmi Mittal said "particularly in Europe where demand for steel fell a further 8,8%". During 2012 the company took further steps to rationalise its crude steel production in Europe, closing some of its less competitive sites in the continent, such as Florange in France. As a result crude steel production at its Flat Carbon Europe unit was down some 2 million mt to 27.4 million mt in 2012. Globally crude steel production of the group stood at 88.2 million mt, down from 91.9 million mt in 2011. Out of the company's six units, four recorded an operating loss in 2012, while only the Mining and the Flat Carbon Americas units registered an operating profit, of $1.1bn and $517m respectively. Nevertheless both units saw their operating results falling by more than half compared with 2011. Looking forward, ArcelorMittal expects 2013 EBITDA to increase compared with the $7bn EBITDA reported in 2012. Steel shipments are also expected to increase some 2-3% in 2013 compared with the 83.8 million mt despatched in 2012. "We have recently seen some more positive indicators, which combined with the measures we have implemented to strengthen the business, are expected to support an improvement in the profitability of our steel business this year," Mittal said.
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| Reliance Steel to purchase Metals USA | ||
| In a combination of two large North American steel distributors, Reliance Steel & Aluminum and Metals USA have reached a definitive merger agreement whereby Reliance will acquire all outstanding shares of Metals USA for a total enterprise value of $1.2 billion. The transaction is expected to close in the second quarter of 2013. Bank of America Merrill Lynch analyst Timna Tanners said in a research note that the buy isn’t typical of Reliance, but is likely to be about 8-10% accretive. “Reliance normally targets fixer-uppers, where it can leverage its size and business model to create value. We believed Reliance had been looking for non-carbon, higher margin products with specific end markets, such as aerospace and energy and away from the oversupplied sheet market. But, Metals USA is a more carbon, commodity steel play.” Analyst Chuck Bradford of Bradford Research Inc. said he wouldn’t be surprised to see more consolidation in the US service center industry going forward. He added, however, that Reliance and Metals USA appear to have complementary businesses and little overlap, leading to little short-term change in the market. Reliance is North America's largest service center chain with annual sales of about $8 billion. Metals USA has annual sales of about $2 billion.
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| ArcelorMittal Brazil expansion projects remain on hold | ||
| ArcelorMittal said poor operating conditions continue to prevent it from resuming planned expansion projects at its Brazilian longs unit Monlevade and flats mill Vega do Sul, both on hold since year-end 2011. The parent company of ArcelorMittal Brazil gave the update this week as it released its fourth quarter and full-year 2012 results. The wire rod production expansion in Monlevade, in Minas Gerais state, would increase finished steel capacity by 1.5 million mt/year to 2.7 million mt. Work at Vega, in Santa Catarina state, would increase hot-dip galvanized production capacity by 600,000 mt/y and cold-rolled coil by 700,000 mt/y. Current production tonnages at the flats plant are not known. Contruction delays due to unfavorable market conditions has been a recurring theme regarding the Brazilian projects. In late 2012, ArcelorMittal Brazil CEO Benjamin Baptista said the parent firm is waiting for better market conditions to unfreeze its steel expansion projects in the country. In 2012, ArcelorMittal had total revenues of $84.2 billion and crude steel production of 88.2 million mt, representing approximately 6% of world steel output.
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| Korean mills face price cuts from car, appliance makers | ||
| Korea’s Posco and re-rollers are determined to lift their sales prices of cold rolled coil and coated sheets to local consumers such as retailers and construction companies by some Won 50,000/metric ton ($46/mt) between February and March to offset higher input costs, industry sources said Wednesday. However, plans to hike prices for end-users such as carmakers and home appliance manufacturers are unlikely to be realised because these users have instead asked for lower prices given the sluggish health of their businesses, they added. “I heard that carmakers have already requested Posco to reduce autosheet prices by around Won 50,000/mt,” a steelmaker source told Platts. Overall, demand from two major end-users – the automotive and home appliances sectors – are not in good shape and no strong rebound in demand is likely to be seen in the short-term, he added. Meanwhile, a source with a Korean re-roller said his company was aiming to raise prices for galvanized sheet and other re-rolling products for its customers in the construction sector. It plans to hike prices, by Won 50,000/mt for sales during this and next month. “We have started informing our clients about the price increases,” he said. Spot prices of coated products imported from China are gradually firmer in Korean domestic market, and therefore consumers may have to accept the price hikes, he added. However, he also doubted that steelmakers would be able to achieve any price hikes for supply to the carmakers and home appliance producers for this quarter.
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| Korean billet export markets slightly soften | ||
| Korea’s billet export prices have been steadily weakening during last month due to poorer appetites among the foreign buyers. “Most billet consumers have secured sufficient volume during earlier January so they are not in a hurry to book at present,” a billet producer told Platts on Wednesday. He added that unstable scrap prices trend from both overseas and domestic market is another reason for soft billet exports prices. This week a Korean trading company contracted 10,000 metric tons of 130mm square billet at $565/metric ton FOB from a local mill, Platts is told. The destinations for the cargo are for both the Philippines and Thailand for late February-early March shipments. Also, some 20,000 mt of billet exports to Iran were concluded last week at $575/mt FOB also for late February-early March shipments. Meanwhile, there was no conclusive result heard for Hyundai Steel’s tender held last week. Korean trading sources said that, as bid prices were below its target export price of $565/mt FOB, the mill is unlikely to award the tender. During last calendar year, Korea’s total billet exports climbed to 1.31 million mt, up 11% y-o-y, according to Korea Iron and Steel Association statistics. The Philippines was the largest importer of Korean billet with 615,800 mt, down 2% y-o-y. Iran took 361,400 mt, a huge increase of 362% y-o-y, and Bangladesh 172,100 mt, down 48% y-o-y.
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| China's Fangda puts more emphasis on engineering steel | ||
| Shanghai-listed Fangda Special Steel Technology (Fangda), a major long steelmaker based in eastern China, is braced for a tough steel market this year, according to its annual report published on February 6. The mill expects to lift its crude steel production by a just 2% to reach 3.35 million mt, it said. In 2012, Fangda’s crude steel output soared by 25% to 3.28 million mt, according to the company’s statement. Last year too, Fangda’s net profit reached Yuan 523 million ($84 million), a decrease of 28% year-on-year but representing a better performance compared with those of many other listed steel mills for 2012. Previously named Nanchang Iron & Steel, Fangda is based in eastern China’s Jiangxi province and is a major producer of spring steel flats. Its products also include wire rods and rebars. Steel consumption in China is unlikely to grow markedly this year, in light of the country’s forecast stable economic growth, Fangda said. It noted that this year will see new capacity added to the market for both spring steel flats and rebar, which could intensify market competition further and undermine prices. As such, Fangda intends to produce more steel for the engineering sector to survive the trough in the market, it said.
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| Inner Mongolia sees new bar mill start up | ||
| Desheng Metals Products Co, in northern China’s Inner Mongolia, has started trials on its newly installed bar mill, with a designed capacity of about one million metric tons/year. The rolling mill is the downstream part of the company's first integrated steelworks project. A 1,260 cubic meter blast furnace and a 120 mt converter to feed the mill have already been put into operation. Output from the new mill will be sold primarily within Inner Mongolia, a company source told Platts. The project also claimed to be the first steelworks in Inner Mongolia’s Ordos city. It started construction in September 2011 and cost an estimated Yuan 5.3 billion ($850 million). A further expansion has been planned to boost the company’s integrated steelmaking capacity to around 3 million mt/y. But the source said it remained unclear when the company would begin construction on the next phase of the project, with more details probably unveiled after the Chinese New Year. Desheng Metals Products Co. is part of Desheng Industrial Group, a conglomerate active in coal mining and real estate development. The group boasts an annual crude coal output of about 4 million mt, including both thermal and coking coal, as well as 1 million mt/y of coking capacity.
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| Baosteel ready to start its seamless pipe mill in Thailand | ||
| Baoshan Iron & Steel Co is on the verge of inaugurating its first overseas seamless pipe plant in Thailand, an important step towards its goal of avoiding anti-dumping and countervailing duties for oil country tubular goods in North and South America. The mill in Thailand began hot trials on January 30. Baoshan I&S is the listed arm of major Chinese steelmaker Baosteel Group. The 273mm seamless pipe rolling mill will have production capacity of 200,000 metric tons/year. A new company named Baoli Steel Pipe has been established by Baosteel and its partner Zhejiang Jianli Co, a 500,000 mt/y bearing tube maker based in eastern China’s Zhejiang province. The Thai project, which actually consists of a mill relocated from Jianli, is likely to be commissioned by the end of March, a source at Jianli told Platts. Last year, the entire production line was moved from Jianli’s works in Zhejiang’s Shaoxing city. The plant was originally planned to be built in the USA in 2010, but this plan was scrapped as the project failed to get environmental permits. The new plant will mainly produce OCTG including casing with couplings, plain-end casing, linepipes and mechanical tubing, according to data from Baosteel. Baosteel’s pipe division is one of China’s major seamless pipe producers, with a combined capacity of 1.4 million mt/y at two subsidiaries located in eastern China's Shanghai and Shandong province.
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| NSSC lifts stainless CR prices on weak yen | ||
| A slight climb in nickel prices in January and the slide in the yen’s value against the dollar have led Nippon Steel & Sumikin Stainless (NSSC) to raise its domestic prices for austenitic and ferritic stainless cold rolled coils by ¥10,000/metric ton ($108/mt) for February contracts. “The main reason was the weaker yen,” a NSSC sales official said Wednesday. The increases apply for ‘miseuri’ or spot contracts, he added. According to the company’s calculations, the price of nickel edged up by 2 cents/pound in January while that of chrome climbed by 2.5 cents/lb. In parallel, the yen weakened substantially – from an average of 84.64 to the dollar in December to 90.24 last month – which rendered the company’s dollar-based raw materials imports more expensive. As a result, for February contracts NSSC decided to keep its base prices of 300 series stainless CRC unchanged but is adding ¥10,000/mt to its alloy surcharge. Meanwhile, the climb in chrome prices led NSSC to add ¥5,000/mt to its alloy surcharge for ferritic grades and another ¥5,000/mt to base prices. NSSC does not reveal its CRC list prices. “We cannot say that orders are very strong at the moment but they are OK,” the sales official said, adding that inventory levels at dealers and stockists are slightly on the high side. He also agreed with concerns expressed Monday by the ministry of economy, trade and industry that a shortage of skilled laborers was hampering quake reconstruction work in northern Japan. “It’s the carbon steel makers that are primarily affected by delays in construction projects but stainless makers suffer too with slower orders for items such as kitchen goods,” he said.
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| China’s stainless output rose 14% in 2012, usage up 16% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| China’s crude stainless steel output rose 14% to 16.1 million metric tons in 2012, the Stainless Steel Council of China Special Steel Enterprises Association (SSC) announced on Tuesday. The growth is a slowdown from the sizzling output growth of 26% seen in 2011. The Chinese stainless steel industry was plagued by soft prices and demand for most of last year, with mills reporting production cuts around the second quarter of the year. Stainless exports fell by 8% to 2.1 million mt last year, while imports also dropped by 14% to 772,000 mt. Overseas demand had generally been weak last year due to the global financial crisis, according to Chinese exporters. The country's stainless self-sufficiency ratio increased 3.25 percentage points to 94% last year, noted the SSC. Apparent stainless consumption in China reached 12.9 million mt last year, a 16% increase from 2011 but a slight slowdown from the 17% growth recorded in 2010. The SSC also said on Tuesday that it had revised upwards its 2011 production and consumption data to 14.1 million mt and 11.1 million mt respectively after widening its scope of data collection. Analysts had previously said that SSC’s original production figure of 12.6 million mt for 2011 was under-reported as it had not included data from some steelmakers.
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| Meti tips higher Q1 special steel output in Japan | ||
| The weaker yen and confidence in the performance of Japan’s auto-manufacturing sector have persuaded the country’s Ministry of Economy, Trade and Industry (Meti) to predict a near 4% rise in special steel production this quarter from October-December last year. Tabling its forecast Monday, Meti predicted that special steel production including that of stainless would reach 4.51 million metric tons (hot rolled base), up from the Q4 2012 total of 4.35 million mt. Though this total would be 13% lower year-on-year, output during Q1 last year was strong as steel makers rushed to catch up production following Thailand's disastrous floods in late-2011 that badly affected auto and auto-parts manufacturing in the country. Specialty production for export at 1.64 million mt would account for over one-third of output this quarter, and Meti noted that, should the yen remain weak, production for export might increase. Japan Iron & Steel Federation data released last Friday showed Japan’s calendar 2012 special steel exports (excluding stainless) climbing 3% year-on-year to 6.68 million mt. Crucial to the industry’s performance will be the health of the auto sector and Meti’s confidence is not shared by the automakers. After a strong 2012 – which saw Japan’s output of cars, buses and trucks surge 18% from 2011 to 9,942,711 units – the Japan Automobile Manufacturers’ Association (Jama) predicts that 2013 domestic auto sales will drop nearly 12% y-o-y to 4.74 million units. The decline would partly reflect last year’s jump in sales before an incentive for eco-friendly cars was scrapped in September. But Jama doubted that the planned rise in Japan’s consumption tax from 2014 would spur vehicle sales this year because an auto acquisition tax is to be scrapped at the same time.
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| Subscriber note: Platts to publish iron ore lump premiums | ||
| Following industry feedback, Platts proposes to launch from March 1, 2013, contract price premiums agreed between suppliers and Chinese steelmakers for Australian lump iron ore. The lump premium would be published quarterly, in line with the frequency of most extant agreements between producers and consumers. The lump premium would be published on a dollar per dry metric ton unit basis, and would represent the most commonly traded brands like Pilbara Blend, Mining Area C and Newman lump. Platts is inviting feedback on its plan to publish the premiums that it understands most Chinese mills have agreed. Premiums that are settled under known, special circumstances, would be reported in news articles, but would be excluded from the published premium. The proposed lump premium would be published in a range. For example, for the first quarter of 2013, the range would be $0.115-0.116/dmtu, as per Platts December 21 2012 report on the matter. Lower contract price premiums of $0.10-0.110/dmtu were obtained by one particular buyer, but they would not be reflected as they may not be representative of the prices reached with the broader market. The lump premium would be published in Platts SBB Steel Markets Daily, Platts Metals Alert and the Platts SBB Price Analyzer. It would supersede the SBB Hamersley Pilbara Blend Lump 63.5% Fe FOB W. Australia Port (SB01111) assessment in the Platts SBB Steel Price Analyzer, which is a quarterly calculation of the price of lump based on the price of fines and the lump premium. Separately, due to there being limited liquidity in the spot market for lump, Platts continues to review the feasibility of publishing a spot price assessment for it, and invites industry feedback on the matter. Please address any feedback or questions by February 22, 2013, to Keith Tan, keith_tan@platts.com with a copy to iodex@platts.com and pricegroup@platts.com .
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| Tokyo Steel raises scrap prices, other mills follow | ||
| The need to support product prices and to counter pressure from domestic competitors has led Tokyo Steel Manufacturing to announce an increase in scrap buying prices of ¥500-1,000/metric ton ($5.4-10.7/mt), sources said Wednesday. The increase, effective at all the mini-mill’s works for February 7 deliveries, takes Tokyo Steel’s buying price for H2 grade material at its Utsunomiya works in the Kanto region north of Tokyo to ¥31,500/mt. The company last adjusted its prices on January 22. Tokyo Steel’s move prompted other mini-mills in the region including Itoh Iron & Steel and Kyoei Steel Group subsidiary Kanto Steel to raise their buying prices by ¥500/mt as well, sources said. Purchasing department officials at Tokyo Steel were unavailable to comment on their decision to raise prices but industry watchers suggested several reasons. These ranged from the need to support steel prices – Tokyo Steel added ¥3,000/mt to its domestic steel prices for February contracts citing higher input costs including scrap – to competition for scrap supplies. Adding weight to the contention that its scrap price increase was partly aimed at domestic steel buyers is the fact that two of Tokyo Steel’s works – its Kitakyushu works and its Okayama works – are idled this week for regular maintenance, sources noted. They would not need to encourage scrap deliveries. “Also, some mills in western Japan are paying up to ¥34,000/mt for H2, which makes Tokyo Steel’s price too cheap,” a Tokyo-based trader said, noting that the mini-mill was obliged to raise its scrap prices at its Tahara and Utsunomiya works to ensure that these plants received deliveries. Mills in western Japan are offering much higher prices than mills in eastern Japan as they scramble to accumulate scrap to beef up production ahead of higher power costs, sources said. Next month eight of Japan's ten major power companies will raise their electricity rates to household and industry users to offset higher prices for imported crude oil.
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| Special Report: China mills target deliveries to end-users | ||
| Chinese steel mills aim to increase direct deliveries to end-users in 2013 in a bid to circumvent the poor spot market and guarantee market share. Eastern China’s Maanshan Iron & Steel (Magang) has set its direct delivery target at around 60% of sales for 2013, up from 2012’s 53%, a company official told Platts. Meanwhile, according to local media reports, Hebei Iron & Steel’s 2013 direct delivery target will also increase from around 50% in 2012 to 60%. A Guangzhou JFE Steel Sheet (GJSS) source also said boosting direct deliveries to circumvent the sluggish spot market would be a priority for 2013. Mills said they had been strengthening relationships with end-users, partly to help guarantee sales volumes and profit margins and partly to counteract less buying by traders. Under pressure from depressed demand and tight credit, traders decreased their bookings or even exited the mills’ agent system in 2012. The Magang official admitted that some major customers had slashed monthly volumes to just 10,000-20,000 mt from the usual 100,000 mt since the third quarter last year. However, some traders contacted by Platts noted that, while steel mills had made efforts to increase direct deliveries to end-users, they still had to cooperate with traders as a key to mills' cash flow and to share the inventory burden. Major Chinese steel mills tend to agree their trading agents' annual contracted volumes for the coming year in advance. Traders must pay a deposit to secure the annual contract and follow a delivery-after-payment policy for each month’s deliveries, therefore being important contributors mills’ cash flow. One Hebei I&S subsidiary plans to double export volumes this year by signing a contract to supply around 1.5 million mt of steel products to a trading company.
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| New Indian steel policy stresses need for ore export limits | |||||||||||||||||||||||||||||
| India’s steel ministry has reiterated its stance against exports of steelmaking raw materials such as iron ore, manganese and chromite ores against the background of its predicted nearly four-fold jump in domestic crude steelmaking capacity between now and the April 2025-March 2026 fiscal year. In a draft of the National Steel Policy 2012 it released Tuesday, the ministry said that continued exports of iron ore from the country would lead to ore imports in large quantities which “may jeopardize the long term competitiveness” of the steel industry. The steel ministry has hence proposed to the establishment of an inter-ministerial committee that would plan for “phased reduction of iron ore exports to a moderate level”. The iron ore requirement of the domestic steel industry is slated to grow to as much as 452 million metric tons/year by FY 2025-26, from about 115 million mt last fiscal. Priority would be given to the allocation of captive iron ore mines to steelmakers in a transparent manner through a process of open bidding, the policy said. Among other suggestions, the government has also proposed that steelmakers who presently hold captive mining leases but have not yet developed mines or begun operations would have to relinquish these leases for bidding by other steel producers. The government has also proposed to incentivize beneficiation of low-grade iron ore fines with “special emphasis on manufacture of pellets”. Similarly, in the case of manganese and chromite ores, the policy said there was a need to “curb unfettered direct export of mined ores” for both these raw materials. It aimed to restrain ore exports, especially of high-grade ore, while also encouraging investments in beneficiation of low-grade ore.
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| India braced for continued reliance on coking coal imports | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| India’s coking coal requirement is set to reach 173-200 million mt/year by the April 2025-March 2026 fiscal year from about 43 million mt in FY 2011-12 according to a draft of the National Steel Policy 2012 released by the steel ministry Tuesday. The increase is in line with a nearly four-fold jump in crude steelmaking capacity forecast over this period [see other article]. Given its limited proven resources of indigenous coking coal in the country, India would remain dependent on imports, continuing to source about 85% of its requirement from overseas, the policy said. The steel ministry has proposed that coking coal mines presently operated by state-owned Coal India Ltd (CIL) be de-merged and transferred to a separate state-owned entity. It proposes that idle assets lying with CIL be offered to other state-owned companies for exploitation. Virgin, undeveloped assets held by CIL could be auctioned to steelmakers, who could develop the mines for captive consumption or merchant sales, the policy recommended. Promoting investments in washing and beneficiation of low-grade coking coals is among other measures proposed in the draft policy. See also "China takes spot coal market forward", Platts SBB Insight, January 31
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| Indian government sees four-fold capacity jump by 2026 | ||||||||||||||||||||||||||||||||
| India is planning a nearly four-fold jump in domestic crude steelmaking capacity to 300 million metric tons/year by the April 2025-March 2026 fiscal year from an estimated 88.4 million mt/y in 2011-12, according to a draft of the National Steel Policy 2012 released by the steel ministry Tuesday. The new policy is being formulated to better reflect the changing needs of the industry given changes in domestic and global economic environment since the last policy was formulated in 2005, the ministry said. It has sought comments from the public and stakeholders on the draft policy within fifteen days from February 5. The policy envisages India’s crude steel production soaring to 275 million mt by 2025-26 from 70.4 million mt produced in 2011-12. Domestic demand for finished steel is slated to grow from 70.92 million mt last fiscal to about 202 million mt by 2025-26 – assuming annual GDP growth of 7% over the period – or to 233 million mt should GDP grow at 8% per year over the period. The policy assumed that projected demand over this period would be met primarily by domestic production, accompanied by a “zero trade balance” wherein steel imports and exports balance out. Data from the steel ministry’s Joint Plant Committee showed that India imported 6.8 million mt of finished steel and exported about 4 million mt in FY 2011-12. The policy also called for restrained exports of steelmaking raw materials such as iron ore, manganese and chromite ores in order to conserve these resources for the domestic steel industry [see related stories].
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| Tata Steel seeks higher prices for flat products in UK | ||
| Tata Steel on Wednesday (February 6) sent a letter to its UK clients announcing a £30/metric ton increase on all new orders for flat products in the country. In the letter the company explained that this increase is to align prices with global levels. “Since writing to you in the last quarter of 2012, prices in the UK have moved up, but not kept pace with increasing raw material prices. This combination of factors means we need to increase our prices,” the letter stated. Sources in the market noticed that HRC for March delivery from Tata Steel are expected to be offered at some £465-480/mt DDP depending on the width of the coil, at the same level as the new offers coming from importers currently. One trader reported the lowest offers available currently in the market from foreign suppliers being at £465/mt DDP from Turkey, while European offers verge towards £475/mt DDP and Egyptian material is pegged at £490/mt DDP. Despite the latest announcement by Tata Steel, the last transaction levels heard in the market for HRC this week stood at some £435-445/mt DDP, some £20/mt below the new expected Tata Steel offers, market sources noted. While the exchange rate is the main factor behind this new increase, it is also understood the latest news regarding the Mir Steel UK and Mechel Service UK supply of HRC in the domestic market could help Tata Steel to achieve its asking levels. “Mechel will have zero impact on the market from March,” a major stockholder said referring to the news on Mechel Service UK ceasing the sale of Mir Steel HRC output.
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| Europe plate market keeps believing in short-term price rise | ||
| The European heavy plates market still believes that prices should increase in the short run, even though January showed that the market was too weak to sustain any price recovery, Platts was told this week. Some market sources believed the shorter availability and rising prices of slabs will imminently push plate prices up in Europe. The real demand to support a more sustainable uptrend is not there yet, they agreed. Russian steelmaker NLMK sold its February slabs export allocation at $500-510/metric ton FOB Black Sea and is looking to achieve up to $30/mt more for March output, a source close to the mill told Platts. Meanwhile northwest European plate producers remain bullish with some €20/mt hikes sought for Q2, a German producer commented. “The mills are still aggressive with Tata topping the list, then ArcelorMittal and the Italians being the least firm”, a major trader noted. Still, transaction levels heard this week have not changed on last week’s reports of €520-530/mt ex-works for S235 and €550/mt for S355. Imports offers from third countries are going up, with the Chinese looking to achieve “a bit more” before they wind down for the New Year holidays. Material pegged at $600-620/mt FOB for S235 grade was available but only for orders of at least 5,000 mt, a large stockist noted. The scale of the increases is however offset by the favourable euro/dollar exchange rate, “but only partially”, another market player noted. Platts daily plate price assessment stayed unchanged at €537.5/mt EXW Ruhr and €500/mt CIF Antwerp for the EU-origin and imported material respectively.
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| Weak demand erodes Turkish pipe exports in January | ||
| Turkish steel pipe exports declined 1.6% year-on-year and 39% month-on-month in January, owing to low demand especially from USA, Platts learned from market sources on Wednesday. According to Turkish Steel Pipes Manufacturers’ Association (CEBID) data, Turkey exported 122,633 metric tons of steel pipe in January, down slightly on the 124,664 mt seen in the corresponding month of last year. The revenue generated from these exports totalled $115.5 million, down 0.1% y-o-y and 38% m-o-m. US orders totalled 8,592 mt in January, down sharply from 26,488 mt in the same month of 2012. Turkish pipemakers expect demand from US to recover in the coming months. Iraq was the main buyer of Turkish pipe in January, purchasing 37,000 mt. Algeria (12,315 mt) and United Kingdom (11,565 mt) followed. Full-year 2012 pipe exports totalled 1.91 million mt, up 15.8%.
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| Turkish stainless coil imports up 0.8% in 2012 | ||
| After three consecutive months of increases, Turkish stainless steel coil imports declined in December as buying weakened. However, these imports should begin to rise again in the coming months owing to a recovery in demand, Platts learned from market participants on Wednesday. According to Turkish Statistical Institute (TUIK) data, Turkey imported 26,690 metric tons of stainless coil in December, down 12.5% on the corresponding month of 2011 and 10.5% less than the 29,795 mt imported in November. In full-year 2012, Turkish stainless coil imports numbered 355,540 mt, up 0.8% year-on-year. However, the value of these imports decreased by 13.5% to $917 million. Taiwan remained Turkey’s largest stainless coil supplier in 2012, providing 84,770 mt. The East Asian nation again took advantage of its lower prices compared to European mills. South Korea was second with 43,390 mt, followed by Italy (39,710 mt).
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| ArcelorMittal sees EU apparent steel demand down 1% in 2013 | ||
| ArcelorMittal expects apparent steel demand in 2013 to fall by a further 1% in the European Union, following a decrease of some 9% in 2012, CEO Lakshmi Mittal said on Wednesday. He added that Europe is likely to remain in recession during 2013, but in a less severe way than in 2012. ArcelorMittal’s forecasts are in line with the Eurofer outlook published this week, predicting a 0.7% decline in apparent steel demand in the EU for 2013. Meanwhile ArcelorMittal’s Flat Carbon Europe (FCE) unit recorded a high operating loss during Q4 2012, as the company was impacted by the decision to permanently close rolling mills and coating lines in Liège, Belgium. The company's management added during a presentation that the essential components of the restructuring process have been announced, and therefore further closures are not expected. Currently the company is operating in Europe 16 blast furnaces. Q4 operating losses for the FCE unit accounted to $2.9 billion, while for the whole of 2012 the unit reported losses of $3.7 billion. During the full year sales were significantly lower than 2013, falling by some 12.5% y-o-y to $27.1 billion. During Q4 the unit noted a recovery in terms of EBITDA per metric ton sold; nevertheless for the full year of 2012 this figure remained below the average 2011 level. EBITDA/mt sold in Q4 stood at $52, 57.5% higher than in Q3 2012. See also "World steel market outlook 2013", Platts SBB Insight, January 17
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| Italian scrap prices forecast to decrease for Feb settlement | ||
| The Italian monthly scrap settlement for February is likely to go down by around €20/metric ton from the top end of last month’s price range, due to the difficulty for local mills to sell their finished products and make margins, market sources told Platts this week. On the spot market prices went down over the last ten days by a few euros, anticipating the trend for the monthly contracts, sources noted. “Mill buyers are cautious as demand remains slack on thin sales and short order books. The trend is then for prices to go down for February – and the strong euro against the dollar could accentuate it”, a trader said. In January the average settlements were closed at: grade E3 (heavy melting) €295-300/metric ton, E8 (new arising) €315/mt and E40 (shredded) €325/mt, all delivered to mill. These were little changed from December, with some increases on a weekly basis at the beginning of the month and decreases at the end of month, depending on the mills’ precise needs and the scrap grades. According to a trader’s report, the year started with substantial import arrivals at Italian ports with about 58,000 mt for scrap, 100,000 mt for pig iron and about 105,000 mt for HBI. The high pig iron and HBI arrivals helped the mills replenish their stocks. The last pig iron price offers are around $420-425/mt CIF for March shipment. HBI arrivals have been reported from Black Sea, Libya and Venezuela. The last HBI price indications are in the range of $365-370/mt CIF.
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| German mills' order intake stabilising: WV Stahl | ||
| The level of incoming orders for German steel makers has begun to stabilise after falling year-on-year for six consecutive quarters, according to data released yesterday by German steel association WV Stahl. Order intake during the last quarter of 2012 came to 9.3 million metric tons, an increase of 1% compared with Q4 in 2011. Of the total, domestic orders went down by just over 1% to 5.6 million mt, while export orders increased by 5% to 3.7 million mt. Actual deliveries during Q4, however, declined y-o-y by 1%, and by 10% compared with the previous quarter, to 8.3 million mt. This was due to the weak economy and restrained demand from distributors, WV Stahl said. Nevertheless, the level of outstanding orders stood at 8.3 million mt at the end of December, an increase of 12% compared with September. “Traders, service centers and end users must therefore have had low stock levels by the end of the year,” WV Stahl said. “Boosts in demand because of restocking are therefore likely in the first quarter of 2013.”
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| Turkish steel exports down 5.5% on-month in January | ||
| Turkish steel exports increased 1.5% year-on-year in January to 1.57 million metric tons; however, this was down 5.5% on December, according to Turkish Steel Exporters' Association (CIB) data obtained by Platts. The Middle East (472,300 mt) remained the main destination for Turkish steel exports in January, followed by the European Union (221,700 mt) and Central and South America (96,100 mt). January exports by product were as follows: 567,100 mt of rebar, 200,000 mt of billet, 126,500 mt of wire rod, 124,400 mt of hot rolled coil and 122,900 mt of sections. The revenue generated from these exports numbered $1.16 billion, down 8% on-month and 5% y-o-y. Turkish steel exports in 2012 reached 19.9 million mt, up 9.6% compared to the previous year, as reported.
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| Billet sold to Saudi Arabia, Turkey buys Feb shipments | ||
| Large cargoes of billet were sold to a major Saudi Arabian buyer on Wednesday, while Turkish re-rollers booked prompt shipments from the Black Sea at low levels, market participants told Platts. One 30,000 metric ton cargo from a Turkish mill went at $560/metric ton CFR Jeddah to a major Saudi buyer, while a bigger cargo was also rumoured to have been sold at the same price from the CIS. The Saudi buyer had been targeting early March shipments on Tuesday. Meanwhile, Turkish re-rollers had successfully booked February shipments at $535/mt CIF Bartin, and were looking for the same level to Aliaga. However, while offers at these levels from the Black Sea were prevalent earlier in the week, the sales to Saudi Arabia could give more credibility to the bullish offers from CIS mills for March. Mills were all targeting $525/mt FOB Black Sea as a minimum, and offering on a 100% pre-payment basis for March output. BMZ was giving an indication for the same amount. Therefore, while February shipments are trading at or below $520/mt FOB Black Sea, fresh production is not available at this price. Platts daily assessment consequently remained at $522.50/mt FOB Black Sea ports on Wednesday.
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| Russia's newest mini-mill set to start up in March | ||
| Russia’s Urals Mining & Metallurgical Co (UGMK) is completing the construction of its electric arc furnace-based mini-mill in the Tyumen region in the Urals and aims to commission the new plant in March, a company representative confirmed to Platts. The new works is equipped with a 70-metric ton EAF, ladle furnace, vacuum degasser, four-strand continuous billet caster and a rolling mill. The plant, supplied by Italian plantmaker Danieli, is designed to produce up to 566,000 metric tons/year of crude steel, 562,000 mt/y of 130mm and 150mm square billet and 550,000 mt/y of 10-42mm diameter bar/rebar and also angles, channels and 10-40mm square bar. The company intends to sell its finished output primarily in the Tyumen region, where just over half of small diameter bar and rebar is sold to steel distributors, about 20% go to the construction sector with the balanced absorbed by steel fabricators and reinforced concrete structures manufacturers. UGMK made a decision to build this mini-mill because it saw the region didn’t have its own steel production but had a potential to develop one; the mill was projected to take advantage of the region's plentiful scrap stocks and the fact it depends on its steel producing neighbours to cover its demand for construction long products. In the 2010-12 period, Tyumen supplied between 870,000 and 1 million mt/y of scrap to feed steelworks in the nearby regions of Chelyabinsk and Sverdlovsk. At the same time, the region was buying 175,000-250,000 mt/y of bar and rebar with 97% of these tonnages provided by mills in the Kemerovo, Chelyabinsk and Sverdlovsk regions, Platts was told.
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| Ukraine to use 3% less scrap to make 2% more steel in 2013 | ||
| Ferrous scrap collection in Ukraine (excluding steelworks’ own arisings) may reach 5.7 million metric tonnes in 2013 and thus fall 5% from 5.98 million mt collected in 2012, Kiev-based analyst UkrPromZovnishEkspertiza forecasts. Even though national crude steel output may grow to 33.7 million mt, up 2.5% from 2011, Ukrainian steelmakers’ demand for scrap is likely to decrease to 5.5 million mt from 5.75 million mt in 2012. “If iron ore and coking coal prices weaken in line with the last year's trend, steel mills will try to substitute scrap with pig iron to the maximum possible extent, as it will be more economical to buy pig iron. Their scrap use may therefore decline”, noted Yury Dobrovolsky from UkrPromZovnishEkspertiza. “Last year, mills used pig iron to substitute for 800,000-1 million mt of scrap. Otherwise, the actual demand for scrap would have come to 6.5 million mt. This year steelmakers will stick to this practice. The same necessity will rather support Ukraine’s imports of direct reduced iron than its scrap imports. The latter will remain negligible, at 95,000-100,000 mt/year”, added the analyst. Ukrainian steelmakers may encounter a shortfall in scrap supply that UkrPromZovnishEkspertiza estimates at 310,000 mt, even though Ukraine will help home consumers by tightening scrap export regulations. The country practically suspended scrap exports in the second half of 2012. It exported only 370,000 mt of scrap last year, less than half of the 780,000 mt it shipped outside in 2011. Although external shipments should resume this year, the export volume is unlikely to exceed the 2012 figure and may even well fall below it, to 300,000 mt, UkrPromZovnishEkspertiza said.
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| Russia forecast to use more steel in construction this year | ||
| Demand for flat and long steel products from the Russian commercial construction sector has been forecast to show a further increase this year. In 2013, commercial property construction in Russia should grow by another 5.2 million square metres on top of last year’s 5 million, Lada Belaychuk of real estate consultants Cushman & Wakefield told a conference organized by Ukraine’s Business Forum agency in Moscow last year. This amount of construction will require 115,000-230,000 metric tons of rolled steel products, 3% up from the 110,000-225,000 mt that commercial property developers consumed last year, estimated the structural steel manufacturer Steel Solutions, part of steel group Severstal. “The use of steel in commercial construction varies between 22 kg and 45 kg per square metre... such parameters as height, floor and roof load and architectural concepts vary considerably from one project to another and hence does their steel intake”, Vladislav Vasilyev, director general of Severstal Steel Solutions, told Platts this week. Some 85% of new warehouses and half of offices to be built in Russia in 2013 will be within the Moscow region. “There is a thin chance we will see notable office and warehouse construction elsewhere in the immediate future, although Yekaterinburg, Perm, Novosibirsk may attract more commercial property projects further down the line”, said Belaychuk. However, retail property development is more evenly spread across Russia, with the exception of the Far East. According to Steel Solutions, hot rolled and coated coil comprise 50-60% and 20% respectively of total steel weight used in office blocks and shopping centres with the remaining 20-30% being sections, whilst warehouses have 50:50 coil to section ratio.
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| January US plate imports fall to 26-month low | ||
| The US continues to import fewer tons of steel plate. US imports of cut-to-length plate likely declined for a fifth consecutive month in January, according to US import license data. January import licenses for cut-to-length plate totaled 45,186 mt, reaching their lowest level since November 2010. After reaching a 2012 peak of 132,023 mt last August plate imports declined in September (106,648 mt), October (93,572 mt), November (61,350 mt) and December (53,382 mt). The drop has come at a time of declining US domestic plate prices and market discussion of potential trade cases being filed against major exporters to the US. The majority of overseas US plate import licenses in January were from Korea (5,803 mt), Brazil (5,311 mt), Japan (3,549 mt) and Germany (2,992 mt). Plate imports from Canada have totaled 11,223 mt in December, with January licenses numbering 14,326 mt. Canada has been the top exporter of plate to the US the prior four months. Market participants indicate there is currently a large availability of plate inventory from Canada's Essar Steel Algoma.
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| Nova Tube lifts pipe pricing | ||
| Nova Tube, a division of North America's Novamerican Steel, has increased its welded pipe price, Platts learned Wednesday. Effective with new orders February 5, Nova lifted ERW grade B schedule 40 and 80 pipe pricing by $40/mt. Concurrently, Nova lifted ERW A-795 schedule 10 pricing by 4%. Nova attributed the price hikes to “recent increases in raw material.”
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| DOC amends AD margin for OCTG from China | ||
| The US Department of Commerce amended antidumping duties for OCTG from China to correct a ministerial error. The new weighted-average dumping margins for Jiangsu Chengde, Yangzhou Chengde and Taizhou Chengde is 162.69%, replacing previously announced duties for the Chengde Group of 172.54%. The coverage period is May 19, 2010-April 30, 2011. The DOC said a transcription error caused the department to send interested parties a notice with an incorrect weight-averaged dumping margin. The China-wide AD duty is still 99.14%. Current CVD rates remain at 10.49-15.78%.
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| US steel import licenses rise 11% in January | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
US imports of carbon and alloy steel products are expected to have increased by 11% month on month in January, according to recently released Department of Commerce data. Total licenses in January were for 2.27 million metric tons of imports, compared to December’s preliminary import level of 2.05 million mt. January’s import licenses, however, represent an 8% decrease from January 2012’s steel imports of 2.64 million mt. The rise in January import licenses comes after an 10% drop in import licenses in December when compared to November's final count of steel imports. Some of the break-out changes among finished steel imports included OCTG with 284,652 mt licensed in January, a 90% increase from 149,461 mt imported in December, and rebar with 131,149 mt licensed in January, a 143% increase from December’s 53,934 mt imported. Line pipe imports licenses in January were 200,367 mt – a 27% increase from 158,385 mt imported in December. Total imports from Korea surged to 334,172 mt, according to January licenses, which is a 174% increase from December’s 121,845 mt. Michelle Applebaum, managing partner for Steel Market Intelligence, said in a research note, “January tonnage was 19.9% higher than the 2012 monthly average, which for the full-year was a new high record. The pick-up was driven by OCTG tonnage rising more than four-fold to the highest level ever as well as increases of 104.7% and 49.9% for line pipe and hot-rolled sheet/coiled plate.” Turkish steel licenses increased by 227% month on month to 144,955 mt, compared to December’s 44,334 mt. Meanwhile, Russian steel import licenses dropped by 73% to 79,592 mt.
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| Metals USA avoids margin cuts, stays profitable in 2012 | ||
| Metals USA opted to preserve its margins rather than trim pricing in the fourth quarter, keeping the newly acquired company in the black for full-year 2012. Metals USA recorded net profit of $3.7 million in Q4 on sales of $437.5 million, down from $14 million on sales of $455.7 million in Q4 2011. Full-year profits totaled $52.7 million on sales of $1.98 billion in 2012, down from $64.6m in earnings on sales of $1.89 billion in 2011. “During the fourth quarter the market continued to be impacted by too much steel chasing too few orders,” said CEO Lourenco Goncalves in the company’s earnings review. “A prevailing weak business environment, compounded with typical seasonality around the holidays, forced us to choose between preserving margin or sales volumes, and we chose to maintain margin. As a consequence, our Q4 gross margin of 23.2% was consistent with margins achieved throughout 2012.” Concurrent with its earnings review, Metals USA announced that Reliance Steel & Aluminum is in the process of acquiring the company for $20.65/outstanding share, or about $766.1 million. The total enterprise value of the deal is roughly $1.2 billion. (see related story).
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| Fire knocks out caster at Venezuela’s Sidor | ||
| Venezuela’s largest integrated steelmaker Sidor was forced to take its No. 3 continuous slab caster out of service following a fire on Monday. While the fire was quickly extingiuished by the company’s fire department, the caster now needs to undergo repairs. No date has been set for its return to operations. Until then, a company source said Sidor will operate at less than 50% of its total production capacity. Sidor does not release its slab casting capacity. Sidor typically operates three slab casters, however, at the end of 2012, the company was operating with only one slab caster due to a lack of lime/limestone and pellets. Also, during 19 days in November-December, production at the slab mill was completely stopped and only resumed after a lime/limestone delivery at the end of the year. The company is currently operating two slab casters. Slabs cast by Sidor's casters are further processed into hot-rolled and cold-rolled coils.
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| Rebar shipments jump 15% in Chile in 2012 | ||
| Chilean rebar consumption totaled 625,145 mt in 2012, according to data from the Chilean Construction Chamber (CChC). This represented an increase of 15% compared with 2011's total of 542,340 mt. In December, rebar shipments totaled 45,066 mt in the Andean country, a 3.1% drop month on month and 13.5% less than in the same month of the previous year. According to domestic distributors, December's trade level was below expectations, a trend that continued in January. Sources indicated that while rebar demand from the mining sector remains high because of long-term supply contracts, many projects in the construction sector are delayed pending the issuing of licenses. This market sentiment was confirmed by data released on Wednesday by CChC (see related article). The slow pace of the Chilean steel market did not prevent price increases by domestic producers CAP Acero and Gerdau Aza. The mills are offering rebar to domestic buyers at $820-880/mt delivered, without the 19% IVA tax. Both companies dedicate almost 100% of their production to the domestic market.
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| Chilean construction sector grows 10.5% in 2012 | ||
| The Monthly Index of Construction Activity, Imacon, measured by the Chilean Construction Chamber (CChC), grew 10.5% in 2012 compared with 2011. However, the construction sector - which is the one of the main drivers of longs demand in the country, besides mining - is trending downward on a monthly basis. In December, the index dropped 0.8% versus the previous month. The CChC said construction activity in December was lower for the fourth consecutive month, which is consistent considering the lower amount of approvals for buildings, among other factors. For the coming months, construction should remain steady. "The (Imacon) results confirm that the activity is in the process of normalization," explained Javier Hurtado, manager of CChC research. Chilean distributors recently contacted by Platts indicated that stagnation in the construction market is harming rebar shipments, which were 3.1% lower in December than in November, but ended 2012 with a 15% increase (see related article).
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| Venezuela tubemaker resumes production after 3-month outage | ||
| Venezuela's Tubos de Acero de Venezuela (Tavsa), now called Batalla de San Félix, has resumed production after a stoppage that lasted more than three months due to a lack of steel feedstock from state-owned steelmaker Sidor. Rubén Yáñez, general secretary of the steel industry workers union Sutiss, said, “Sidor will provide a limited amount of billets for the current production of Tavsa, at least for Q1.” Currently, only one of three shifts is scheduled to work at the tubemaker. The former Tavsa mill is part of the state oil and gas company Petróleos de Venezuela (PDVSA) and is undergoing a transfer of control to state-owned steelmaker Sidor, as determined by President Hugo Chávez in August 2012. Tavsa, located in Bolivar state, was part of the Techint group until November 2009, when the company was nationalized and made part of PDVSA. The mill has capacity to produce more than 80,000 mt/year of seamless tubes.
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| Brazil auto production increases 32% y-o-y in January | ||
| Brazil’s auto production reached a record high in January at 279,300 units, a surge of 32% compared with the same month in 2012. In a month-on-month comparison, the figure represents a 7.7% increase, according to domestic automakers association Anfavea. The increase in vehicle production was attributed to a boost in manufacturing activity because of a low industrialized products (IPI) tax. The Brazilian government announced in mid-December that the tax will gradually return to normal, higher levels by July. Vehicle registrations rose 16% in January to 311,500 units compared with the same month in 2012, but slid 13% versus December's total. Anfavea expects Brazil's auto market, the world's fourth largest, to expand by between 3.5% and 4.5% in 2013.
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| LatAm imports of Chinese steel-containing goods up 11% | ||
| Shipments of steel-containing products from China to Latin America reached an estimated value of $45.6 billion in 2012 and represented 7% of worldwide Chinese exports of these products. The figure also was 11% higher than the 2011 total of $41 billion, said Latin American steel association Alacero. During 2012, the main steel-containing imports from China were cars and commercial vehicles ($6.88 billion), office machines ($6.6 million) and machinery and equipment ($5.4 million). These three categories combined represented 42% of the indirect steel trade from China to the region. According to Alacero, the imports of steel-containing goods that increased most between 2012 and 2011 were railway products (+364%), cans and metal packing boxes (+139%), and boilers and steam generators (+131%). The dollar value and/or tonnage figures for these goods were not available. The countries that received the highest volumes of steel-containing exports from China last year were Brazil ($11.2 billion), Mexico ($9 billion) and Venezuela ($4.6 billion). These countries represented 55% of the indirect trade flow from the Asian country to the region. The Latin American countries that had the highest increase in their imports of Chinese steel-containing goods in 2012 were Venezuela (+48%), Mexico (+19%) and Chile (+17%). Again, specific value and volume figures were not available.
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| Ezz Steel rejects capital increase to fund new works claims | ||
| Ezz Steel does not need to carry out a capital increase to finance its new direct reduced iron-based steelworks in Sokhna-Suez, contrary to recent reports in the Egyptian press, the steelmaker said in a stock exchange filing this week. Local media had claimed Egypt’s largest steel company would need to raise capital by 40% to EGP 1 billion ($149 million) to enable it to settle the licence fee with the Industrial Development Authority (IDA) for its new works. However, the plant will continue to be financed by banks, Ezz Steel said. As previously reported by Platts, the firm reached an agreement with the IDA in November to pay a 15% downpayment of the EGP 330 million ($54.1m) licence fee. It was thereafter given an 18-month grace period before it must pay the remainder over five years in instalments. The Sokhna-Suez works will comprise a 1.85 million metric tons/year DRI unit and 850,000 mt/y meltshop at Ezz Rolling Mills’ new site adjacent to Ezz Flat Steel (EFS). Ezz remains in talks with IDA over a licence for another new DRI plant and meltshop at EFS.
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| AMSA makes bigger loss for 2012, sees improving market signs | ||
| ArcelorMittal South Africa (AMSA) has posted a Headline loss of ZAR 518 million ($58 million) for the full year 2012. This is a considerable drop of over 11% from the previous year’s loss of ZAR 52 million. EBITDA also fell, by 35% to ZAR 1.12 billion from ZAR 1.72 billion in 2011 “due to a modest drop in domestic steel dispatches and a substantial decline in commercial coke sales”. The company said that liquid steel production was down by 7%, with capacity utilization standing at 66%. This is marginally lower than the 68% achieved in 2011. Additionally, capacity fell from 8.0 to 6.5 million mt per annum owing to the combination of both environmental legislation and high electricity price increases (by 16%) that resulted in the closure of of three electric arc furnaces in Vanderbijlpark during October 2012. Chief executive of AMSA, Ms Nonkululeko Nyembezi-Heita said: “As anticipated, 2012 was a very tough year with subdued economic activity and poor demand”. She added that: “We expect the loss making position to be reversed in first quarter, amid signs of improved domestic sales volumes as well as marginally higher prices”. For Q4 year-on-year, AMSA saw revenue decrease by 5% to ZAR 6.9 billion, total steel shipments were down slightly; domestic shipments fell 4% and exports rose 9%. Flat steel shipments dropped 13% and long steel products rose 53% “reflecting a strong recovery from the production outage affecting the 2011 corresponding period”.
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| Distributors complain of Gerdau Aza delivery delays | ||
| Despite completing work on its computer systems in early December, enabling full resumption of deliveries, Chilean longs producer Gerdau Aza is said to continue delaying some orders placed in January, domestic distributors said. "We still have some problems and delays with Gerdau Aza because of maintainance (in the computer systems). It is in the minimal portion of the deliveries, but it has happened once or twice since January," said a source that purchases rebar from the mill. Gerdau's press office in Brazil denied that the Chilean subsidiary is still facing problems because of work on the company's computer system. "The deliveries from the Chilean unit occurred normally following the foreseen schedule for January," stated the company. "At the end of 2012, the company implemented a new commercial management system and the required adjustments in delivery deadlines were done at that time," explained Gerdau. In early December, the Brazilian steelmaker confirmed that in October it requested distributors advance their purchases because of the planned computer system work, which began in November. Located in Santiago, Gerdau Aza supplies the local construction and metalworking industries with long products.
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| Saudi Arabian HRC prices stable, market lacks direction | ||
| Increased hot rolled coil demand in Saudi Arabia since mid-January has seen import transactions concluded at $620-650/metric ton CFR Dammam in the last two weeks. However, fluctuating global HRC prices and the imminent Chinese New Year holiday are clouding the outlook on future market direction among Saudi market participants who spoke to Platts on Wednesday. European HRC prices have been steadfast the last ten days despite weak demand in their home market, while CIS and Korean offers are soon expected to see hikes, and Turkish export prices remain stable despite a downward correction in domestic levels. Many mills, especially in East Asia, are justifying their offers by pointing to the persistently firm price of iron ore; however, coil traders in the Arabian peninsula are not convinced that end-use demand supports this. The situation is causing confusion among participants and rendering buyers reluctant to take positions on significant tonnages. “There is no consistency in the market,” said one trader; “people have no courage to buy,” bemoaned another. SS400 grade 2mm thick and above HRC import offers are reported by three traders to remain in the range of $620-650/mt CFR Dammam for April shipment, with Korea and China offering in the higher end and India in the lower end of the range. CIS suppliers are not offering at present. However, one trader suggested he received offers this week of $690/mt CFR Jeddah from Korea and Taiwan, with $620/mt CFR no longer workable. “I’m getting two conflicting pieces of news each day,” another trader said. What is clear is that HRC prices remain on an upward trend. Traders concurred the market would likely see a further $30-50/mt hike before the end of the second quarter. Despite reluctance to buy now, Saudi buyers will soon have to place orders in order to catch April shipments. The outlook will become clearer once China returns from holiday.
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| Iran to investigate Esfahan Steel expansion project delay | ||
| Iran’s parliament is launching an investigation into delays in steelmaker Esfahan Steel Company (Esco)’s capacity expansion project, according to domestic news agency reports. Mehr News agency quoted Majid Mansouri, a member of parliament, as saying the Iranian state-owned long steelmaker must answer questions about inexplicably long delays in carrying out projects, most notably its crude steel capacity increase from 3.2 million metric tons/year to 5 million t/y. Esco is the only remaining large Iranian state-owned steel producer. A steel specialist told Platts that Esco’s main problem is a cash shortage rendering it unable to import its coke and coking coal requirements. Most Iranian steel producers tap into domestic natural gas reserves to produce direct reduced iron; however, all of Iran’s blast furnaces belong to Esco. Importing coking coal and coke under the current economic sanctions is very difficult, sources observed. The Iranian Privatization Organization (IPO) has tried to transfer Esco’s shares to a private investor on several occasions, but could not find a buyer. An Esco executive said the company is unable to complete its projects because of a cash shortage and lack of technology supply. The firm’s new coke making plant will soon come on stream, he added.
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| Qatar Steel secures power supply for new meltshop | ||
| Qatar Steel has signed a $138 million ($38 million) deal with Siemens that will see the German engineering company build a new high-voltage electricity substation to meet the increased power requirements of the steelmaker’s expanded Mesaieed works, south of Doha. The Qatari producer’s fifth electric arc furnace, due to come on stream in July, will increase liquid steel capacity from the current 2 million metric tons/year to 3 million mt/year. Following the expansion Qatar Steel will produce up to 2.8 million mt/year of billet to feed its rolling mills in Doha and Dubai; the former site is capable of producing up to 1.5 million mt/year of rebar, while the latter can roll up to 300,000 mt/year of rebar and 250,000 mt/year of wire rod. “The new substation will be used for the increased power requirements for EAFs, including EAF No.5; we expect EAF No. 5 to be operational from July 2013,” a company representative told Platts on Wednesday. Qasco also has a 2.3 million mt/year direct reduced iron capacity spread over two units.
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| Qatar rail network seen needing 800,000 mt of steel | ||
| Construction of Qatar’s $37 billion integrated rail network will consume around 800,000 metric tons of steel products, providing a strong opportunity for steel suppliers, according to chief executive of Qatar Rail Saad Al Muhannadi. Qatar is constructing a metro and two light rail transit systems in Doha, as well as a long-distance passenger and freight train track linking the country with Bahrain and Saudi Arabia. Total track distance will be around 700km. Deutsche Bahn is technical consultant for the project. The first contracts are set to be awarded by March-end, with track work starting in the second quarter of 2014. The network is scheduled to be completed in full by 2026. Al Muhannadi urged potential foreign component suppliers to contact Qatar Rail. “There is an opportunity for steel,” he told this week's Middle East Rail conference in Dubai attended by Platts. The company will hold a workshop in Doha next month to clarify investment opportunities in its rail projects. Although rail suppliers have not yet been determined, Austria’s Voestalpine is already an active supplier to the Gulf Cooperation Council (GCC) market. GCC governments are spending around $100 billion laying an estimated 6,000-8,000km of new railway track up to 2020, in a move that will eventually see all six GCC member countries linked by rail.
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| ArcelorMittal expects 20% rise in ore despatches this year | ||
| Steel and mining group ArcelorMittal said Wednesday it expects a 20% increase for iron ore shipments in 2013 as new projects complete in Canada, after shipments rose 5.4% to 54.4 million metric tons in 2012. Its mining operations shipped 28.8 million mt of iron ore at market prices in 2012, 2.6% up on year, the Luxembourg-based company said in an earnings statement. Projects in Canada to boost iron ore mining and concentrator capacity are set for completion in first half of this year. In Liberia, the phase 2 expansion project at its iron ore mines is earmarked for completion in 2015; this will raise production capacity to 15 million mt/year of concentrate and replace the first phase’s 4 million mt/y direct shipping operation. A new iron ore product of 66% Fe will command a premium to reference prices versus discounts on the DSO sold to date, it commented. The group posted weaker Q4 2012 results for mining operations, with both iron ore and coal shipments dropping against the preceding quarter and year-earlier totals, along with lower prices and demand. ArcelorMittal said that earnings before interest, tax, depreciation and amortization (EBITDA) attributable to mining in Q4 more than halved from Q4 2011 and fell 19.4% to $315 million as compared to Q3 2012 "due to the effect of lagged pricing in iron ore [with] a portion of iron ore shipments from Canada and Mexico reference quarter-lagged prices, as well as lower coal realizations driven by weaker seaborne market prices."
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