China’s rebar export prices slightly increased over the last week ahead of the Chinese Spring Festival, and most market participants were anticipating further price increases on their return from the holiday.

Although the rebar export market was generally slow through the week, one deal for China-origin 16mm diameter and up BS460B/HRB400 rebar was heard concluded at $580/metric ton CFR Singapore theoretical weight, according to market sources. Two weeks ago, there were deals made at about $570/mt CFR for same destination.

A trader in eastern China noted that some Chinese mills were offering rebar at about $585/mt CFR Singapore this week, and a discount of $5/mt was quite reasonable if both sides wanted to seal the deal.

Another trader in Shanghai commented that, given bullish sentiment towards the post-Lunar New Year market and high production costs weighing on mills, a price of $590/mt CFR Singapore could now be workable for him.

But mill sources implied that, despite the improved market outlook, it would be difficult to achieve a large price hike just before the holiday, with buyers in Southeast Asia probably not prepared to accept much higher prices at present and many were also already away from the market for the holiday.

Following the higher concluded deal, Platts' assessment price for 16mm and up BS460B/HRB400 actual weight rebar was up $5/mt from last week to $565-570/mt FOB on February 7.

CIS bar/rod mills strive to keep export prices firm in March

CIS wire rod and rebar producers are determined to maintain export prices for March production at levels very close to transactions they achieved this month, market sources said Thursday.

Ukrainian producer Metinvest, which sold February output of 5.5-12.5mm mesh quality rod at $600-605/metric ton FOB Odessa, is aiming at $610/mt for March, according to two traders in CIS and Europe. Customers, however, are taking their time to assess the market. “There’s one party eager to place an order for March, but at $580/mt, which is surely unattractive, but there are no alternatives so far”, one of the traders noted.

Ukraine’s Kryviy Rih steelworks, part of ArcelorMittal, is said to be contented with somewhat less this time and is asking $600/mt FOB Black Sea for late March shipments of 5.5-8mm wire rod, according to one trader. “This is slightly lower than what the mill gained for February production – the new level takes into account the recent softening in scrap”, said the trader.

Distributors who would normally source from Moldova Steel Works (MMZ) told Platts the mill is unlikely to resume production this month as it intended to.

Unlike Metinvest, which is undertaking yet another $5-10/mt month-on-month increase and ArcelorMittal Kryviy Rih, Byelorussian Steel Works (BMZ) is holding its ground, aiming to consolidate what has been achieved this month.

For now, BMZ is rolling over its February export prices for 12-32mm rebar and has launched March tenders at $575/mt FOB Black Sea; this month it is exporting minute quantities through Black Sea at $570-575/mt, to destinations other than Russia and Europe, one distributor noted. What the mill is forwarding to Europe, has fetched $575-580/mt DAF Polish border.

Korean steelmakers raise HRC prices for March shipments

Korean hot rolled coil steelmakers have lifted their sales prices to local retailers for February orders of March shipments, retailers said Thursday. Posco recently informed the retail market that it would increase prices by Won 20,000/metric ton ($18/mt) effective from the fourth week of February, a retailer told Platts. Another major steelmaker, Hyundai Steel, has already lifted its HRC prices to distributors by the same margin for February orders, a company official said.

“In total, steelmakers have lifted Won 40,000/mt for orders during January-February to domestic retailers,” the retailer source added. Market sources warned that further hikes in HRC prices are expected for March orders among Korean steelmakers after the Lunar New Year holidays.

There have been virtually no bookings of Chinese coil to Korea given the "absurdly" high export prices, a Korean trader said. “Therefore, Korea’s HRC consumers are likely to turn to buying domestic materials instead,” he added. Export offer prices from Chinese tier-one mills were heard at $650/mt FOB for boron-added SS400B 3mm-thick HRC this week.

However, industry sources said that the market’s direction would not become clear until mid-next week as the country will celebrate Lunar New Year holidays during February 9-11, and perhaps for one-two more days after that.

Local dealers' retail prices for Posco-origin 3.0mm thick SS400 commodity grade HRC were hovering at around Won 780,000-800,000/mt ($710-728/mt) as of February 7.

Ailing construction sector hits Lebanese rebar market

Rebar traders and stockists in Lebanon are feeling the pinch from sluggish consumption in the construction sector, which has been hit by falling investment as a result of domestic political disputes and the continuing civil war in neighbouring Syria, to which Lebanon is closely tied economically and politically.

Newly issued construction permits in Lebanon declined 11.7% year-on-year in 2012; and 2013 has not started any better, with rebar consumption reported to be weaker than in January and February of last year. This factor, along with the dip in Turkish rebar and CIS billet prices in the last two weeks, has hampered buying. “We started to feel the decline in rebar demand, especially at the start of 2013. Lots of construction occurred in the past five years and supply [of housing] now outstrips demand,” a large local trader observed.

Chinese rebar and wire rod prices have now become uncompetitive after cheap imports from the Far Eastern nation flooded the Levant in September-December last year. A major Ukrainian supplier is instead said to be offering aggressively to Lebanon at $600/metric ton CFR Beirut for end-February production, pushing for large tonnage bookings. “It’s controlling the market now and trying to reclaim its share from the Chinese,” one local trader said. Turkish producers, meanwhile, were last week offering at $605/mt CFR.

Few, if any, deals are said to have been concluded so far in February owing to the fragile political condition of Lebanon. Opinions differ on the future outlook. “I can’t see a better 2013 [than 2012] because of the political uncertainty. The market is slow and shows no signs of upward price movement,” one trader said. Another countered: “I firmly believe prices will increase soon. Rebar will have to follow the strength in flat products.”

US surcharges slide, but longs market expects no change

A steel industry benchmark shredded scrap price used to set surcharges on US long products settled down $9/lt on Thursday, but some say that the drop in the key scrap price isn’t enough to warrant a reduction of long product transaction prices.

Sources expect mills to raise base prices to offset the decrease in the scrap surcharge, keeping prices the same as they have been since December 1 shipments.

An eastern US service center source said, “Prices are definitely not going down,” referring to heavy sections, merchant products and rebar. He said imports have not been significant with the exception of some rebar at the docks. He believes published prices will hold steady, but he said some deals on structurals can be had for large spot buys.

Michelle Applebaum, managing partner for Chicago-based Steel Market Intelligence, said in a report, “Despite a sharp pick-up in long product imports in January, we expect domestic steelmakers to keep pricing unchanged for a third straight month as seasonally stronger construction activity is near, which should drive improved order activity.”

A southern US wire rod buyer said, however, that he could see rod prices decrease “a little bit.” He said this would be more of a reflection of rod import competition than the cost of scrap. He has not booked a rod order for three weeks, waiting to see how scrap prices would settle in February.

Paraguay's Acepar halts steelmaking operations

Acepar, Paraquay's sole steelmaker, stopped operations this week, a well-placed source at the Villa Hayes plant said on Thursday.

According to the source, issues began at the longs mill about two weeks ago, when the rolling mill was paralyzed due to a lack of billets. Later, the single blast furnace operating at Acepar also had to be shut off.

The BF stopped producing because there were problems with the melting pot, refractories and chimney, as well as a shortage of iron ore feedstock. Acepar has another BF that has been offline for three years.

"We are not producing anything right now. The company wanted to give us forced vacations, but we rejected (this plan)," said the source, who works in the rolling mill and is a member of the steelmaker's labor union.

"We currently have no billets and iron ore in our inventories. But the company's directors told us that a Brazilian cargo of iron ore will land in Paraguay in 20 days."

Last week, Acepar also faced issues with the delivery of charcoal because it was behind on its payments. Acepar owes Guanari 7 billion ($1.7 million) to its suppliers, which decided to stop shipments nearly two weeks ago. The company paid the charcoal suppliers part of the debt and shipments resumed last Wednesday.

Last month, Paraguay's minister of industries and commerce Diego Zavala said studies will be undertaken to decide Acepar's fate. Currently controlled by the Tasselli Group, control of the steelmaker could pass to another operator.

China's HRC market closes for holidays with prices high

Business on the Chinese domestic hot rolled coil market had almost ceased by Thursday, with the export market also quiet, as the Spring Festival holidays (February 9-15) approached.

Just ahead of holidays, eastern China's Shagang increased export offers for 3mm-and-up SS400B to $650/metric ton FOB for March delivery. The increase reflected their anticipation of a strong domestic market in March, but there were no immediate takers, a company official told Platts.

Prevailing offers from most traders and some steel mills were still around $605-615/mt FOB, unchanged from late January. Some mills were no longer making offers until the end of the holidays. However, some traders said prices should be readjusted, most likely upwards, after holidays following steel mills’ new prices.

Platts SBB was told some small-volume deals for 3mm-and-up SS400B HRC had been made in late January at around $610/mt FOB. However, one Shanghai-based trader said one of these deals was under 2,000 mt, too small to be representative. Export price hikes after the holidays will depend on both the domestic market situation and on overseas demand, he added.

Another eastern Chinese steelmaker agreed, saying that, if the domestic market continued trending upwards after the holidays, it would increase export offers from $610/mt FOB currently, even if there were fewer takers.

Most traders had already left the domestic market on Thursday. The remainder pegged Q235 5.5mm HRC prices at Yuan 4,200-4,250/mt ($674-682/mt) with 17% VAT in Shanghai and Yuan 4,250-4,270/mt with VAT in Guangdong's Lecong steel market, unchanged from early this week.

Hebei I&S targets jump to 3.55 million mt of exports in 2013

China’s largest steel producer, Hebei Iron & Steel (Hegang), plans to almost double its finished steel export volumes to 3.55 million metric tons in 2013, according to a company statement. A source close to Hegang told Platts that the export increase in 2013 should be around 1.5 million mt contributed by Hegang subsidiary Tangshan Iron & Steel (Tanggang).

Most of the increase in exports could be hot rolled coil. Tanggang recently signed a sales deal with an international trading company for the export of 1.5 million mt of HRC, he noted. This deal has allowed the trading company in question to achieve more competitive prices from the steel mill than other traders, Platts was told.

Tanggang is no longer making export offers until after the Lunar New Year holidays on February 15. Tanggang was previously offering at around $610/mt FOB for 3mm-and-above SS400B HRC. Export traders believe the producer might raise its export offers after the holidays should the domestic steel market continue trending upwards.

Hegang's total crude steel production, including that of non-consolidated subsidiaries, fell 2.81% year-on-year in 2012 to 69.23 million mt. It remained the largest steelmaker in Hebei province, which produced some 172 million mt of steel last year.

Posco building two autosheet coil centers in Mexico

Posco has now revealed that over the past few weeks construction began on not one but two new coil centers in central Mexico to meet rising auto-sector demand there for processed sheets.

On February 1, the company had held a groundbreaking ceremony for a 110,000 metric tons/year autosheet processing center, named Posco-MPPC, in Celaya City in the state of Guanajuato, as Platts reported. This center is to provide processed sheets to carmakers and automotive component manufacturers with plants in the area and would start operations from October.

Now Posco has revealed that one day earlier, on January 31, a groundbreaking was held for another a 110,000 mt/y autosheet processing center in the Nissan Supplier Park, Aguascalientes City in the state of Aguascalientes. This center, named Posco-MAPC and located about 180km north of Guanajuato, should commission in September, Posco said.

In January last year Nissan Motor announced plans for a new greenfield $2 billion auto assembly plant in Aguascalientes that will have a capacity to supply body, trim and chassis components for up to 175,000 vehicles annually. The plant is scheduled to begin operations in late 2013, Nissan said.

Posco already hosts two coil centers in Mexico, at Puebla and San Luis Potosí, each with a capacity of 170,000 mt/y.

Chinese FeCr prices stable ahead of New Year holidays

Trading of high carbon ferrochrome has become quiet in China’s domestic and import markets as Chinese New Year approaches. The post-holiday outlook is mixed, industry watchers said Thursday.

Offer prices of Indian-origin high carbon ferrochrome (6-8% C, 58-60% Cr) were heard at 95-97 cents/lb CFR China on Thursday, as compared to 95-98 cents/lb CFR a week earlier. No import deals could be confirmed but sources reckoned tradeable prices are likely to be unchanged at 93-95 cents/lb CFR.

Market participants said there could be some suppliers in need of cash selling at lower prices in the domestic market before Spring Festival starts, but mainstream Chinese spot prices should be unchanged week-on-week at Yuan 7,800-7,900/metric ton (equivalent to 94-96 cents/lb) on Thursday.

Chinese sellers reckoned that domestic and import prices could remain stable or ease after the holidays. “China’s ferrochrome imports in January were high and this may pressure domestic prices lower. Besides, as prices have already increased a lot, there could be some correction,” said an official with an east China stainless mill.

A Shanghai-based trader noted that chrome ore prices are already under pressure this week and ferrochrome prices could lack support after the holidays. But an Indian exporter believed prices would rise instead as supply has become tighter after ferrochrome producer Tata Steel halted operation of its Sukinda chromite mine in Odisha after its lease expired. He estimated that this has curtailed Indian ferrochrome supply by 10-15%.

Indian media reported in late January that Tata Steel had applied for a temporary working permit to operate the mine and the company was hopeful of a restart around the second week of February. Tata Steel officials could not be reached for comments.

Rises tipped in Japanese scrap auctions next week

Prices of Japanese ferrous scrap for export will likely receive a further lift when scrap dealer groupings in Tokyo and Osaka hold their auctions for H2 grade material next week, industry sources in Tokyo said on Thursday.

The Kanto Tetsugen group of scrap dealers serving the Yokohama, Chiba and Saitama areas will hold its auction on February 13 and the Kansai Tetsugen of Osaka dealers is scheduled to hold its sale the day after, the sources said.

Both groups will be offering H2 material for export in March and, of the two results, that of the Kanto tender will have the greater impact on export market trends as most Japanese scrap for export is shipped through Tokyo. Nearly 60% of Japan’s total heavy melting scrap exports last year of 2.52 million metric tons were shipped through the Tokyo Bay ports of Kawasaki, Chiba and Yokohama, according to Japanese finance ministry data.

“The final goal for the Kanto dealers is ¥40,000/metric ton ($427/mt) but they will probably settle for under this to start with,” a Tokyo-based scrap trader said.

In last month’s Kanto Tetsugen auction for current month exports, the highest bid for H2 material was ¥32,850/mt FAS (equivalent to about ¥34,000/mt FOB), an increase of ¥6,130/mt from the winning bid in the group’s December auction.

On Wednesday, Tokyo Steel Manufacturing raised its scrap buying prices by ¥500-1,000/mt for deliveries from February 7, taking its price for H2 grade material at its Utsunomiya works in the Kanto region north of Tokyo to ¥31,500/mt.

India braces for threat from global oversupply

In news doubtless welcomed by Indian steelmakers, New Delhi has acknowledged the threat that global steel oversupply poses to the domestic industry. The government has thus promised to monitor steel import tariffs and free trade agreements (FTAs) especially with nations with “mature steel industries”, according to a draft of the National Steel Policy 2012 released by the steel ministry Tuesday.

Imports of carbon and alloy steel products into India presently attract a 7.5% tariff. But imports from Japan and Korea, which enjoy FTAs with India, are taxed at much lower rates and these would progressively be reduced to zero within the next three-to-four years.

“While deciding on import tariff levels for steel, implications of possibilities of global oversupply due to slowdowns in major steel producing countries and predatory pricing shall be kept in sight,” the policy said.

On the subject of FTAs, it added that steel would not be included in the list of items for preferential or free tariff regime – especially when such agreements are being inked with partner nations hosting “strong and competitive steel industries.”

Although Indian steelmakers have long been lamenting the surge in imports from Japan and Korea, it is unclear whether the existing FTAs with these nations would be revised.

New Delhi is also advocating an “aggressive export strategy” for Indian producers. The policy noted that Indian steel exports to developed nations do not “look promising” and that markets such as Africa, Latin America and the Asean nations appear more attractive. India’s steel exports are estimated to reach about 10% of the 275 million mt of crude steel that the country is forecast to produce by the 2025-26 fiscal year.

Hebei Jingye targets 43% hike in 2013 steel output

Hebei Jingye Group, a privately owned steelmaker in northern China’s Hebei province, plans to raise its crude steel output in 2013 by 43% to 10 million metric tons in response to expectations of improved demand, a company source told Platts Thursday.

The company said it was confident that the new leadership in Beijing would rolled out expansionary policies to spur stronger economic growth, lifting demand for steel and lending support for steel prices.

Two 1,260 cubic metre and two 1,080 cu m blast furnaces were brought on stream by end-2012 after two 450 cu m units were permanently closed in Q3. "We are taking heed on government directives to replace the smaller and inefficient furnaces with bigger ones to improve production efficiency," said the company source. "And with new furnaces in operation, we have the capability to increase our crude steel output for this year."

The steelmaker now has a crude steelmaking capacity of around 11 million mt/year. It produces mainly hot rolled coil and rebar. In terms of blast furnaces, the steelmaker currently has three 1,260 cu m units, five 1,080 cu m units, three 580 cu m units and three 450 cu m units in operation at Shijiazhuang in Hebei province.

According to the source, 50% of the company's iron ore requirements are currently obtained through term agreements, 30% are purchased in the form of concentrates and pellets from domestic mines and the remaining 20% are from port stocks and spot seaborne iron ore. This will remain the same in 2013, he added.

East Asia scrap import market flat, bookings scarce

The scrap import market was quiet and flat in East Asia this week, trading sources said Thursday. Importing mills in the region were staying away from the market because they were preparing to close for the Lunar New Year holidays which begin this weekend.

The bulk scrap import market was nearly silent other than a Korean booking of US scrap early this week. Hyundai Steel booked two bulk cargoes of West Coast US material for March shipment at $415/metric ton CFR Korea for HMS 1. This is around $5/mt lower than similar bookings in the region at end-January.

Scrap import prices in Taiwan were stable and transaction prices of containerized HMS 1&2 80:20 from West Coast USA were unchanged from last week’s $385/mt CFR, according to Taiwanese and regional traders. However, the deals involved were understood to amount to only a small tonnage.

Some traders in Taiwan reported hearing the bullish view in the market that new US scrap import offers would rise to $390-395/mt CFR after the New Year holidays. This view was supported by rising domestic scrap prices in Japan as well as firm iron ore and finished steel prices in China.

“Japanese scrap would no longer be cheap,” said a regional trader, adding that Japanese scrap suppliers are withholding export offers in anticipation of future price gains. The regional market is just waiting until after the New Year before making a move. The mills have accumulated some inventory and no one knows where prices will head, he said.

Compact mills to overcome India's land acquisition issues

The Indian government has recognized that land acquisition remains one of the most significant impediments to the addition of greenfield steelmaking capacity in the country, and this week has proposed a solution.

In the steel ministry’s draft of the National Steel Policy 2012 released Tuesday, it proposes that steelmakers opt to build “vertically arranged facilities in compact designs”. On its part, the government expects to introduce transparent processes and systems to eliminate procedural issues and bureaucratic delays in acquiring land.

The draft policy acknowledged that building compact mills would entail very high capital costs, however. “As land becomes more expensive, it is expected that the plants will use this resource more efficiently and that there will be some substitution of land by capital at the margin,” it said.

The ministry has also proposed encouraging the formation of steel “clusters” especially for small and medium sized units, plus service centers and steel processing units that would share common infrastructure.

These recommendations echo observations made by the authors of the India Steel Vision 2020 report released last October.

Historically about 3,000-4,000 acres of land has been used for every 1million metric tons/year of crude steelmaking capacity. But this requirement can be reduced to about 1,500 acres as newer technologies and more efficient production units allow the construction of more compact steelworks, the ministry said.

Turkish galv market still slow on weak end-use demand

Hot-dip galvanized coil market activity in Turkey remains slow owing to weak demand from end-use sectors, including automotive, white goods and construction. Buyers remain cautious and are waiting for a downward price adjustment, but producers are unrelenting because their production costs are high, Platts learned from market sources on Thursday.

“0.5mm thick HDG is still sold at $800-830/metric ton ex-works in the domestic market. This price is for commercial quality base material. Export demand is somewhat higher, but a wait-and-see mode is dominating the export market too. The latest HDG offers I heard were at $820-840/mt to the Middle East on an ex-works basis,” a major trader said.

“Significant improvement in the HDG market is not expected until the second quarter. End-use demand will begin to rise after winter as usual. Although stock levels are low, I don’t think buying will resume before then,” the trader added.

Meanwhile, Turkish mills’ hot rolled coil offers to the local market are at $620-640/mt ex-works. Producers are asking for $720-740/mt ex-works for cold rolled coil, and $930-950/mt ex-works for 0.5mm thick 9002 code colour-coated galvanized coil (PPGI), Platts heard.

Belgian LSC upgrades decoiling unit for thicker material

The Belgian cut-to-length coil service centre, Limburg Staalservice Center (LSC), has upgraded its HRC and CRC decoiling capacity to enable its unit in Bree to process material of up to 25mm thick and 2,100mm wide, the company told Platts.

This new upgrade, operational since the beginning of the year, also enables the unit to process high strength steel S700MC up to 20x2,100mm.

Following the closure of Tata Steel's Namascor service centre in the Netherlands, which will be concluded at the end of Q1, LSC will be the only heavy decoiler in the area to process coils of up to 25mm thick, the company said.

LSC is currently producing at 2 shifts, with an output calculated at some 120,000-140,000 metric tons/year; the facility could lift the output to 200,000 mt/y adding one shift, but in the current market situation this is not required, it said.

LSC is controlled by the German coil supplier Vosta Stahlhandel and started operating in 2009.

Tata Steel invests in high strength steel in IJmuiden

Tata Steel has announced a €2.3 million investment at its IJmuiden steelworks in the Netherlands, to develop next-generation steels for the automotive industry.

The investment is for a new facility aimed at developing crash-resistant steels designed to make cars safer and more fuel-efficient. The new unit incorporates a hot press forming line that presses heated steel sheets into vehicle parts.

“This investment comes out of discussions we have been having with our automotive customers about their visions for the vehicles of the future. This upgraded facility will enable us to work more closely with them, not only to develop the new, advanced steels they increasingly require, but also to help them improve their performance when they process these steels using their own equipment,” Henrik Adam, chief commercial officer of Tata Steel Europe said.

Greek Halyvourgiki has no plans to restart output: sources

The Greek rebar mill Halyvourgiki has no current plans to restart production at its works near Athens, as the output has stopped completely since beginning of January, sources in the market told Platts.

The mill, which can produce at full capacity over 800,000 metric tons/year of finished light long products, is currently out of the market, delivering some small quantities of material from its stocks only to a handful of domestic clients. Nevertheless, according to one source, this stock is expected to be exhausted soon.

A trader in the market noted that the mill has not exported rebar for a number of months now, as it struggled to sell at acceptable prices. He added that the stoppage is believed to be linked to cash-flow problems and the difficulties to make a profit on sales during 2012.

Sources confirmed that the workforce of the mill has not been dismissed yet, despite the fact there are no plans for a restart of production at the moment.

Halyvourgiki is one of the three domestic rebar and wire rod producers in Greece. The Greek market continues struggling significantly in terms of domestic demand, but producers can export their output to other Balkan countries as well as to Algeria, competing with Spanish and Italian suppliers.

A comment from Halyvourgiki was not available before press deadline.

Kardemir cuts bar prices on softening scrap

Turkish integrated long steelmaker Kardemir has reduced its domestic bar prices owing to the softening scrap market, Platts learned from the company.

Kardemir’s new sales price for round bar is at TRY 1,092/metric ton ex-works ($619), down TRY 36/mt ($20) on its previous list price. Its rebar price is down by the same amount to TRY 1,075/mt ($609) ex-works, valid from February 7.

Kardemir’s list price for billet remains at $532-547/mt ex-works, while bloom is still at $650/mt ex-works. The company’s order book for billet is currently closed. All prices mentioned exclude 18% VAT.

Fellow Turkish long product producer Icdas also reduced prices of bar and wire rod by $26-29/mt at the beginning of this week, owing to the dip in scrap prices, as reported.

CEO of Duferdofin takes over as interim commercial director

The chief executive officer of the Italy-based sections and merchant bar producer Duferdofin Nucor, Domenico Campanella, has additionally been appointed commercial director of the company, Platts learned from a company executive. This follows the departure of Federico Guiducci who is to became the chief financial officer of the Swiss trading company Trasteel

Campanella will stay in this role until a new commercial director is named. The move is designed “to give a sign of continuity to our clients, and to take time to choose the right person for such crucial role, in particular in a phase of market so critical as the one in which we are now”, the executive said.

Large tenders in Turkish market for billets, rebar settled

Turkish local buyers booked significant tonnages of billet and rebar from Kardemir and an integrated producer in the South on Thursday, as semi-product prices held level on the start of the week, market players told Platts.

Kardemir sold 40,000 metric tons of rebar at TRY 1,075/metric ton ($609-611) ex-works Karabuk, excluding 18% local VAT, while the mill in the South sold 40,000 mt of billet at $543-545/mt ex-works Iskenderun to local re-rollers.

"Today Iskenderun was so quiet, but maybe after these sales to the local market, some price increases can be made," one local re-roller said.

Re-rollers were still looking for billet imports at $535/mt CIF Marmara from the CIS, but mills in the Black Sea were holding off from these levels, with some even increasing their offers. Producers bidding for the Saudi trade done on Wednesday from the CIS were asking for $570-572/mt CFR Jeddah, for instance.

"Mills in Turkey are running at relatively low capacity utilization: if demand stabilizes then price rises can be supported fairly quickly," one Istanbul-based trader said.

Voestalpine at full capacity, but unsure of price increases

Austrian steel making and processing group Voestalpine does not intend to reduce capacity utilisation in the coming months despite its doubts that recent price increases will stick, CEO Wolfgang Eder told a press conference yesterday.

Announcing its results for October-December 2012 (its fiscal third quarter), Voestalpine confirmed it had been operating at 100% capacity since April. “That will not change in the next few months,” Eder said. “There is no demand problem – we are fully booked until May.”

However, Eder was doubtful that the recent upturn in prices, driven by the low inventories seen at the end of 2012, would continue. “We have some doubts that this is a sustainable upturn. We have to wait until the April-June quarter for a better picture – it’s still too early to give an indication,” he said.

Voestalpine attributed its 10% y-o-y increase in pre-tax earnings during October-December – to €174 million – to the “much stronger performance of the steel division,” which rose from just under €10 million in 2011-12 to €42 million this financial year.

Voestalpine said its fiscal third quarter had been dominated by “cautious anticipation” and that any real improvement of the economic situation seemed “quite improbable prior to the second half of 2013.” Nevertheless, the group still expected to meet its pre-tax earnings target of €800 million in 2012-13, Eder said.

UK domestic scrap cut softened by weak pound

UK domestic scrap price settlements are likely to head down in February with Tata Steel, the major buyer in the market, looking for a £5/metric ton cut in the price of shredded. However, market players suggested that the decrease would have been larger if sterling were stronger.

Last month the UK scrap prices were up by £10/mt to £235-240/mt delivered, but whilst at the time that equated to €284-290/mt, it is now just €275-281/mt as the pound continued to weaken. All the sources contacted by Platts agreed that a £5/mt cut was fair.

“Prices should come down a bit, there’s weakness in international prices on the back of low demand,” one source said. With finished steel prices stalling, producers are unable to pass on increasing scrap prices.

UK exporters have seen heightened interest with Turkish buyers coming back into the market and sales of shredded in India heard at $416-418/mt CFR Nhava Sheva.

Latvian rebar mill wants scrap export limits in the EU

Latvian rebar producer Liepajas Metalurgs is endorsing the introduction of blanket EU restrictions on ferrous scrap exports to third countries as a measure to protect the European Union’s steel industry, the company's representative told Platts.

The steelworks, which is currently facing short-term liquidity problems, has tabled the scrap limit proposal for the consideration of the Latvian government. "We are responding to the European Commission's resolution on the support to the European steel industry. This is our proposal," the source in LM commented. As Platts has reported, the Commission is currently preparing an “action plan” to help the industry.

The mill's meltshop can process 80,000 metric tons/month of scrap, mainly procured in the Baltic states, Russia and Poland. It is concerned with the outflow of the local scrap to destinations outside the EU, in particular Turkey and Russia. This has a negative impact on the scrap availability for domestic steelmakers and drives their input costs up, Platts was told.

The steelmaker has also protested against paying the higher surcharge for electricity. "The payment for the obligatory electricity surcharge in the year 2013 will reach LVL 9.2 million (€13 million), if the planned increase will come into force", it explained. With a view to protect its competitiveness, the company decided to entirely terminate payments of the surcharge.

In response, the Latvian ministry of economy said it has started to seek “horizontal solutions (which would cover all producers, not just Liepajas Metalurgs) to limit the increase of energy prices and hinder competitiveness of our producers”, a press secretary to the prime minister told Platts.

Italy saw imports shrink in 2012, exports rise

In 2012 Italy’s steel imports from non-EU countries plunged by 32.9% to 5.88 million metric tons compared to 2011, while exports outside the EU increased by 19.1% to 5.89 million mt, according to the latest data from the local steelmakers' federation Federacciai.

“The demand for steel due to the economic crisis hit the importers more than the domestic producers, which managed also to do well in exports. The export is in fact slowing down, but has still a major role in the Italian steel industry”, an analyst said.

From January to November total Italian imports from EU and non-EU countries were down by 20.2% to 13.13 million mt, while exports were up by 7.7% to 17.11 mt.

In the same period exports to other EU countries increased by 2.5 % to 11.62million mt, and those to non-EU countries jumped by 20.8% to 5.49 million mt, continuing the upward trading registered in the previous months. Italy’s imports from the EU fell by 6 % to 7.57 million mt, while those from non-EU countries dropped by 33.7% to 5.56 million mt, Federacciai reported.

Looking at the first eleven months of the year, the products that triggered the export within the EU and outside the EU were flat rolled. In Januaary-November both flat and long product exports (7.72 million mt and 3.69 million mt) overtook the figures recorded in the whole of 2011 (respectively 7.38 million mt for flat and 3.49 million mt for long products).

Turkish automotive sales up in Jan, steel demand still weak

Turkish domestic automotive sales increased notably in January, mainly due to low interest rates in the country which encouraged borrowing among buyers, Platts learned from the Turkish Automotive Distributors Association (ODD).

Sales of domestic passenger and light commercial vehicles rose 20.2% year-on-year to 35,520 units in January. Passenger car sales experienced the steepest rise (22.6%), numbering 25,840 units, while light commercial vehicle sales grew 14.4% to 9,680 units.

ODD forecasts total (domestic and export) Turkish automotive sector sales to reach 790,000-840,000 units in 2013. This would represent an increase from 777,761 units last year.

A Turkish automotive steel supplier told Platts that although auto sales were up in Jan, steel demand from car producers is still weak and is not expected to pick up till the second quarter.

Coil export prices from CIS go up as March offers are out

Buyers in Europe and the Middle East are receiving new higher offers for hot rolled coils coming from Russian and Ukrainian steelmakers, Platts heard in the market this week.

The export level sought by Magnitogorsk Iron & Steel Works (MMK) is “minimum” $580/metric ton for the March HRC output, while CRC is pegged at $680-700/mt, both FOB Black Sea, a source in the company told Platts. "I think it is a realistic plan", he added. Trading sources have seen even higher HRC offers standing at $590-600/mt FOB Black Sea.

Ukrainian Metinvest is trading its March HRC output at present, seeking to achieve $575-580/mt FOB or $595/mt DAP with European customers. Part of the allocation has been booked at these levels already, a source in the mill said, although an Eastern European distributor argued this was unlikely to become the widely accepted level in the mill’s deals this month. "Ukrainians are offering very different prices to different customers and I think $560/mt is more likely", he added.

A Middle East-based trader mentioned Metinvest’s quotation at $630-635/mt CFR Jebel Ali for S235 grade. The CIS exporters are supported by weaker dollar recently although it might change as the dollar began picking up again, a purchaser noted.

Severstal had not come back in the European market with February campaign yet, Platts heard yesterday. Official offers are expected to be known on Monday, although sources in the Middle East have already seen new quotations, as reported.

Platts daily HRC price assessment went up $5/mt to $555/mt FOB Black Sea on Thursday.

EU Commission approves Severstal-Mitsui JV for auto sheet

The European Commission has granted approval to a joint venture project called Severstal-SSC-Vsevolozhsk between the Russian mining and steelmaking company Severstal and Japanese trading house Mitsui, Brussels said on February 7.

The companies were seeking regulatory approval for their plans to build a steel service centre in Vsevolozhsk, Russia’s Leningrad region. In September 2011 they agreed that Severstal would take 75% and Mitsui 25% in the 970m rouble ($32m) project and the companies’ investments would split accordingly, as previously reported.

The previously agreed terms and commitments remain in force, the project is on track and the centre is expected to be commissioned as scheduled in the second or third quarter this year. Once operational, it will make autobody blanks, processing up to 170,000 metric tons/year of coils, and supply these to a body-in-white stamping and assembly plant owned by Severstal and Gonvarri’s Gestamp, also in Vsevolozhsk.

US plate prices fall on declining scrap prices, weak demand

American plate prices further declined this week as falling scrap prices offered little support for finished product pricing and waning demand brought lead times to less than three weeks.

Multiple plate buyers report prices for commodity plate around $720/short ton now being available from steel mills on a delivered basis with a number of large service centers also heard offering plate for that much as well.

The Platts assessment for A36 commodity grade plate falls to $690-710/st ex-works southeastern US mill. Plate prices continue to fall even with import levels likely reaching a 26-month low in January and few import offers for commodity-grade plate being heard available in February.

“We’ve seen (prices) pull back a bit on plate over the last week,” one Midwest plate buyer said. “I personally think it’s very correlated with the predicted pullback in scrap. We’ve seen the mills more willing to make deals as well but they seem to have their limits and aren’t excited to drop more than $20-30/ton.”

Early settlements for February scrap purchases in cities throughout the midwest represented drops of $15-20/long ton.

Plate mill delivery lead times have been reported at around three weeks. Some mills have limited availability for February deliveries.

One Northeast plate buyer indicated that mills were “digging their heels in” at prices close to $700/st ex-works but conceded they were willing to listen to other quotes for large tonnage project orders.

Sheet pricing flat, but US sentiment points to upward trend

The US flat-rolled market remains steady, and, despite an expected $20/long ton dip in scrap prices, some players believe it’s poised to improve.

A top-tier mill source said Thursday that demand is good and hot-rolled coil won’t follow scrap south. “I think this thing is trending higher,” he said.

A northern trader said input costs other than scrap may contribute to a bump up in pricing.

“We expect things to go up, but we don’t expect things to go up based on demand,” he said. “It’ll really be based on input costs. Look at your own gas bill.”

An eastern trader said he’s seeing steady market fundamentals but worries that sentiment could hold back pricing.

“Joe Buyer watches scrap,” he said. “He doesn’t watch any other input costs.”

He added that it’s unlikely pricing will dip from its current level if it fails to advance.

“The mills don’t want to lose more money, so they won’t go down,” he said. “And I don’t think there’s a huge amount of demand. Can a mill really afford to sell at lower prices?”

Platts’ HRC assessment stands at $620-640/short ton, while its cold-rolled coil assessment is $730-750/st. Hot-dipped galvanized sheet is still transacting at $785-800/st. All pricing is ex-works, normalized to a Midwest mill basis.

ArcelorMittal's flatroll profits stumble in North America

Weak North American flats pricing in the fourth quarter cut into global steel firm ArcelorMittal’s regional EBITDA despite both quarterly and yearly improvement in shipment volumes.

ArcelorMittal recorded North American EBITDA of $42 million for Q4 and $1.28 billion for full-year 2012, compared with $166 million in Q3 and $1.62 billion in 2011 total.

Shipments, however, rose from about 4.21 million metric tonnes in Q3 to about 4.35 million in Q4, and from 17.1 million mt in 2011 to 18 million mt in 2012.

“Lower profitability in 4Q 2012 was due to a price-cost squeeze, primarily driven by North American operations, as lower average steel selling prices were not fully compensated by lower costs,” the company’s earnings report stated.

ArcelorMittal NA longs shipments steady in 2012, EBITDA up

ArcelorMittal’s North American long products segment shipments were relatively even in 2012, compared to 2011, though fourth quarter shipments picked up.

In 2012, ArcelorMittal’s North American longs segment shipped 4.58 million metric tons of long products, virtually even with 2011.

Fourth quarter 2012 shipments were 1.19 million mt, a nearly 16% increase from shipments in the year-ago quarter of 1.03 million mt.

Despite relatively even shipments in 2012, EBITDA increased. The North American longs segment’s EBITDA was $142 million for 2012, an 8% increase from $131 million in 2011. Q4 2012 EBITDA was $28 million, up 155% from $11 million in Q4 2011. Q4 EBITDA reflects a 133% increase over Q3 2012 EBITDA of $12 million.

The company noted that Mexico was a point of strength for the company’s steel shipments, helping to offset marginally lower shipments in Europe.

HSS price increase fails to take hold in US market

Bull Moose Tube has pulled back its increase on A500 hollow structural sections, market sources report.

The $50/short ton increase was slated to take effect February 1, but market sources said Thursday that pricing actually decreased following the announcement.

“It just doesn’t seem the right time to be doing that,” said one northern US market source. “There’s a lot of coil out there, and I know the tubers are getting a good deal on it. I can’t imagine they think they’re going to get something right now.”

This source expressed hope for an increase later in the year. Bull Moose declined to comment on its pricing.

Wheatland also supporting higher A53 prices

Wheatland Tube of the US is lending its weight to the push for higher standard pipe base pricing.

Wheatland is increasing its base pricing for A53 products by $40/short ton, market sources report.

Standard pipe pricing has remained steady in the US market, despite a small uptick in hot-rolled coil pricing, remaining at $950-970/st ex-works for domestic product and $820-830/st ex-dock, duty paid for imports.

Wheatland is a division of Chicago-based JMC Steel Group.

DOC releases prelim countervailing rates for Chinese OCTG

As part of an administrative review, the US Department of Commerce preliminarily found that two Chinese OCTG producers received countervailable subsidies during the period of review.

The DOC’s preliminary net subsidy rate for Wuxi Seamless Oil Pipe Co. is 7.33%, while the net subsidy rate for Jiangsu Chengde is 1.84% for the period of review, calendar year 2011.

Within 120 days, the DOC will release the final results of its administrative review.

ArcelorMittal S. American flats shipments jump 44% in Q4

ArcelorMittal’s South American flat product shipments rose 43.7% in the fourth quarter of 2012, compared with Q3, but declined 5.5% from the year ago quarter, according to the company's financial results released earlier this week.

In Q4, about 1.18 million mt of flats were shipped from ArcelorMittal SA operations, versus 821,000 mt in Q3 and 1.25 million mt in Q4 2011.

For the full year, the South American operations shipped a total of 4.26 million mt, down 17.4% from 5.16 million mt in 2011.

The company's EBITDA in Q4 shrunk year on year to $51 million from $71 million in Q4 2011, but recovered from a loss of $30 million seen in Q3. For full-year 2012, EBITDA plunged 67.7% to $160 million from $494 million in 2011.

ArcelorMittal's S. American longs shipments down in 2012

ArcelorMittal's longs shipments from its South American operations fell in both quarterly and yearly comparisons in 2012. The company's South American longs shipments totaled 5.3 million mt last year, down 6% from 5.66 million mt in 2011, according to ArcelorMittal's financial results released this week.

In the fourth quarter of 2012, the drop in shipments was even larger, down 10% to 1.2 million mt from 1.4 million mt in Q3.

ArcelorMittal's EBITDA for its South American longs operations also was down year on year by 2.3% to $917 million from $939 million in 2011. Meanwhile, the Q4 figure showed an increase of 4% to $217 million from $208 million in Q3.

Brazil extends deadline for electrical steel dumping case

Brazil's foreign trade bureau Secex has extended by six months the deadline for its antidumping probe into imports of non-grain-oriented (NGO) electrical sheet from China, Taiwan and South Korea.

A decision is now slated to be made in the investigation, which began in May of last year, in October. Initially, the decision was scheduled for April 15.

The probe follows a request made in 2011 by South American specialty steels producer Aperam, the country's sole producer of electrical steel, which supplies 65% of the domestic market.

A preliminary analysis last year by Secex showed dumping margins for South Korea at 20.1% ($231.40/mt), for China, 39.3% ($432.95/mt) and for Taiwan, 58.6% ($567.16/mt).

According to Secex, the investigation into injury caused to the domestic industry is for the period from January 2007 to December 2011, while the dumping investigation is for the period from January 2011 to December 2011.

Secex will determine whether injury has occurred to the domestic industry. An affirmative decision would lead to the levying of AD duties.

Brazil postpones decision on proposed scrap export tax

Brazil’s national foreign trade ministry Mdic has requested more time "to deepen its technical analysis” of a proposed export tax on ferrous scrap in the country.

A deadline for completion of the analysis has not been disclosed by the ministry, which will determine whether to levy the tax.

The tax was proposed by Brazilian steel institute IABr because of concerns about reduced availability of domestic scrap due to growing exports. IABr maintains that another motivation for the tax is to impose a barrier against countries that block Brazilian finished steel exports.

As reported, ferrous scrap dealers are concerned that a scrap export tax could price them out of the export market while lowering their home market prices.

In 2012, Brazil exported about 444,365 mt of ferrous scrap, a jump of 71.7% from 258,767 mt in 2011.

Sidor's January crude steel output below expectations

Venezuela integrated steelmaker Sidor produced about 157,258 mt of crude steel in January, an increase of 18.2% year on year and up 89% from the previous month. However, the January figure was 45% below the company's targeted mark of 287,000 mt for the month.

The latest production figures have already dented Sidor's plans for a monthly crude production of 370,830 mt and a total output of 4.4 million mt for full year 2013.

In 2012, Sidor's total production reached 1.72 million mt compared with an installed capacity of 5.1 million mt/year.

Company management held a meeting at the beginning of this week to discuss issues that have been hampering Sidor production, as well as to consider future investments in the flats, longs and tubes producer.

As previously reported by Platts, sources have said Sidor’s poor results during 2012 were connected to a lack of investment, which resulted in shortages of supplies, spare parts, personal protective equipment and other items that were needed to ensure productivity.

Argentina’s auto production down 28% m-o-m in January

Argentina’s automotive production in January was remarkably lower in a month-on-month comparison, closing 2013’s first month 28% below the December 2012 figure, according to data released by the country’s auto association Adefa.

In January, Argentina cars makers produced 44,061 units, against 61,023 units in December. In a year-on-year comparison, the January figure represents an increase of 4.9% from 42,011 units.

Shipments in 2013’s first month reached 58,070 units, 34.4% less than the previous month's 88,323 vehicles. The January 2013 figure was 7.7% lower than the 62,941 units shipped in January 2012.

Exports also showed a downtrend at the beginning of the year. Argentina exported 24,195 units in January compared with 39,705 vehicles the previous month. Year on year, exports were down 8.2% from 26,344 units.

According to Adefa, “January’s exports represented 54.9% of the entire production for the month.” Of Argentina's automobile exports, Brazil received 91.4% of the total in January, followed by Mexico with 2.2%; Colombia, 1.8%; Uruguay, 1.6%; Europe, 1.5%; Paraguay, 0.9%; Chile, 0.3% and Central America, 0.1%.

South African steel trader loses financing

South African steel merchant Alert Steel has lost its financing by domestic bank Nedbank. The latter has sold its Alert debt to third parties AKM Sons Property Trust and Southern Palace Investments, according to announcement by Alert late last week. It added: “The requirements of the new creditors are unclear at this stage”.

The local steel industry has suffered recently from volatility in steel prices, high electricity charges and reduced demand. Alert saw headline losses of ZAR 58 million ($6.43 million) in the twelve months to June 2012, down from ZAR 1.18 million in the previous twelve months. The company has 15 branches throughout South Africa handling steel and related products.

According to the company, CEO Johan du Toit has resigned from the Alert Steel board with immediate effect, but will serve his notice until 28 February 2013. Company founder Wynand Schalekamp resigned as non executive deputy chairman in December, and the company has also lost its finance director.

No one at Alert Steel or Nedbank was available for comment at the time of writing.

Lisco resumes most production, output nears 50,000 mt/month

Libyan Iron & Steel Co (Lisco) is moving closer to normality with four out of six electric arc furnaces in operation and having produced 12,199 metric tons of slabs and 37,232 mt of billets in December, a Lisco executive told Platts this week. All long and flat product mills are working with the exception of the hot-dip galvanizing line and double-strand line.

In December Lisco produced 36,884 mt of bars, 655 mt of sections, 27,895 mt of hot rolled coils and 3,776 of cold rolled coils. Lisco has resumed exports of hot-briquetted iron to Europe and Turkey, and since February 2012 it has exported around 240,000 mt of HBI.

The company has also resumed some development projects. The new pellet stockyard stacker/reclaimer 1&2 are under provisional acceptance, while stacker/reclaimer No.3 is expected to commission during 2013. At the port the new berth is already finished, as is the dredging of 18.35 meters draft.

Lisco has commissioned a project for the electricity supply to the melting shop, and has restarted discussions with contractors to resume project activities.

On the production units, the new bar mill, the new cold mill and the wire rod mill are under discussion and are expected to resume by mid-2014. It is planned to prepare a tender during the first half of this year for the expansion of melting shop No.1 and the review of the DRI modules 1&2.

Arrium takes A$474m writedown, seeks buyer for tube mills

A high Australian dollar and weak demand for steel has seen miner and steelmaker Arrium Ltd take a A$474 million (US$489 million) writedown of its steel assets, the company said late Wednesday. These include an impairment of A$431 million at its OneSteel steel manufacturing unit and A$43 million at its distribution segment.

Arrium said the company has chosen to write down these assets due to "the impact of an increase in market consensus forecast for the Australian dollar, as well as a forecast continuation of the difficult external environment and generally weak construction markets."

The manufacturing writedown includes the goodwill for its Australian Tube Mills which it is looking to sell as part of a review of its steel business. Arrium said it does not expect to realize the value on a sale of the tube business. The writedown in distribution relates to the carrying value of the company's mid-market ARC steel reinforcing brand.

"These impairments are non-cash in nature and have no impact on operations," Arrium said, adding that it expects to provide further details when it releases its financial results for its half year ended December 2012.

Arrium, formerly known as OneSteel, rejected a A$1.2 billion takeover offer from a consortium led by Posco and Noble Group in October last year saying the offer was too low. However, Arrium said at the time it would consider any future takeover offers that would be beneficial for the company's development.

Global steel markets recover slowly on business confidence

Despite the modest advance in most manufacturing PMIs for January, doubts remain about the extent to which the rebound in world business sentiment is fuelled by restocking, or by a serious upturn in end-use activity, whether in manufacturing, construction or elsewhere. Steel prices nonetheless strengthened, with January’s Platts World Steel Price Tracker rising 2.2% month-on-month.

Chinese post-New Year expectations have been among the most buoyant globally and helped support the unexpectedly high January spot 62% iron ore price, which averaged $150.49/dry metric ton cfr China, up 16.8% m-o-m, according to The Steel Index (TSI). The other main strengthening factor continues to be the weather-related tightness in supplies from Australia and Brazil, as well as domestic mines.

For the rest of the world, softer scrap prices were more indicative of the uncertain trends, noted Roger Manser of Kestrelman, a steel-economic consultancy. TSI’s weekly average import scrap price to Turkey was $396/mt CFR, down $6/mt w-o-w. Platts also cut its Turkey rebar export price by $7/mt to $593/mt FOB as a result of weaker domestic and Middle East demand and softer scrap. Similarly CIS and Eastern Mediterranean billet prices were down by around $5/mt.

And whilst Chinese rebar exports were soft last week, reflecting quiet regional markets, domestic rebar and HRC prices firmed on the bullish expectations. However, Beijing’s proposed RMB 650 billion ($105 billion) investment in rail construction and its target of 5 million public housing starts are among the few clearly defined elements in the country’s 2013 growth forecast. Both targets are slightly down on 2012; Beijing is also unlikely to relax its restrictions on real estate purchases.

US GDP contracted by an annualized 0.1% q-o-q in Q4, following 3.1% growth in Q3, mainly due to a 15% decline in federal government expenditure. Steel prices were relatively unchanged: rebar buyers said mills were holding prices steady, though some deals were well below prevailing levels. In contrast, HRC was seen as moving up slowly.

The same trend was noticeable in northern and southern Europe, with HRC rising €5/mt last week to €500/mt ($682/mt) base ex-works, on mills sticking to their asking prices. Demand remained slow: indeed Germany’s economy contracted slightly in Q4. CRC and HDG have so far been slower to respond, in part due to the stronger euro and competitive imports. Rebar prices were unchanged, despite softer scrap.

However, the strip market may be helped by the CIS producers raising March list prices by some $10-25/mt to $600-650/mt FOB Black Sea or more, depending on quality, and the Turkish mills looking for $640-660/mt FOB.

This market analysis report is taken from the February 6 issue of Platts SBB’s World Steel Review.