The billet import market in Southeast Asia is proving slow to pick up after the Chinese New Year holidays. “The market is still in a holiday mood,” a regional trader said this week. Import offers are very limited, trading and importing sources tell Steel Business Briefing.
In the Philippines, a trader’s position cargo of Russian billet was booked at $655/tonne cfr two weeks ago. Korean material, which enjoys a 3% import duty advantage, is offered at $685/t cfr.
“The biggest problem is that rebar prices cannot catch up with the replacement cost of billet. Re-rollers are becoming increasingly better off buying the finished product,” a Manila-based trader tells SBB. “Many re-rollers are themselves buying debar instead of billet because the local selling price of Grade 33 debar is even cheaper than the landed cost of a billet imported at $660 cfr,” another says.
Malaysian and Thai mills were giving export offers at $680-690/t fob and bookings were heard at $680/t fob to the Middle East. Malaysian-origin billet was booked at $685/t cfr Indonesia.
”We are taking time to assess the market,” says another source. The situation in the Middle East has caused some confusion, with both low and high prices heard in the market. He believes that market players will hold back for the next two weeks because prices have gone up and are now soft. “The market will want to see whether China holds up strongly," he tells SBB.
"It's very quiet. People want to see the direction of the market," a Thai trader observes, watching whether the political unrest in Egypt and Tunisia will affect the global steel market. A position cargo of Ukrainian-origin billet was heard booked last week at $660/t cfr Thailand.
Russian domestic scrap prices continue to strengthen
Wednesday, 09 February 2011
Prices of scrap in the Russian domestic market have increased by more than 10% since December, and are likely to strengthen more in March when Turkey is expected to come back to buying and Russian steel producers will be replenishing stocks for the beginning of the construction season, sources in the country tell Steel Business Briefing.
From the levels of 9,200 - 10,000 roubles/tonne ($315-342/t) CPT for the A3 grade (HMS 1&2 80/20 equivalent) in December, today prices range from 10,500 to 11,700 r/t ($359-400/t), depending on the region, sources say. And there is not much available: "MMK, for instance, had to increase its purchasing prices twice in the last ten days by 400 roubles/tonne ($14/t), to secure tonnages, they add.
Even as exports are limited and "would be below cost levels" for scrap processors, availability is tight, as scrap companies were struggling with procurement in the winter snow. Selling to Russian steelmakers remains more profitable, although once Turkish demand revives in March, scrap companies will have even more leverage to increase their prices. "Nothing points towards softening scrap in Russian in the next quarter," sources say.
Indeed, it is not just the lack of availability amid high demand that is pushing up scrap prices in Russia. Iron ore prices increasing by 30% month-on-month in February have also encouraged scrap processors to keep their prices high. "Steelmakers had to swallow a 30% increase on pellets, from 3,200-3,500 r/t ($109-120/t) in January to 4,200-4,500 r/t ($144-154/t) in February, and fines to 3,700-4,000 r/t ($127-137/t), FCA," one producer says.
Sheet buyers say US market cooling off - at least for now
Wednesday, 09 February 2011
Sources say they've seen a cooling off of white-hot US sheet prices, but most are unwilling to "call the market" just yet.
Spot fob mill list prices for hotrolled coil - after climbing as high as $850/short ton - have dipped to around $820-830/s.t. Though, one midwestern source tells Steel Business Briefing he's "hearing HR still at $800 is available."
"Mills have come down, and those extra tons they needed to fill out March have blossomed into price weakness for most others," he says. "Whenever scrap comes down, and now threatens to go lower still, buyers will hold off. It's the pack mentality."
Spot coldrolled and hot-dip galvanized prices also have fallen to around $890-910/s.t and $930-990/s.t, respectively, SBB understands. The declining sheet prices come as scrap prices have fallen, as well.
"I am not ready to call the market yet, as I still do not see the downside," a southern source says. "With that said, I believe that this is the point in the market where we lose momentum, pausing before either a retrenchment (leading to) further increase announcements or a loss of ground."
He says global demand levels remain high, "and the likelihood of offshore steel undercutting the currently booked prices of the (domestic) mills is low."
ArcelorMittal sees higher volumes & prices offsetting costs
Wednesday, 09 February 2011
ArcelorMittal expects its steel shipments and selling prices to increase in the first quarter of 2011 versus Q4 2010, "which should combine to offset the higher costs that we will also incur in Q1," the global steelmaker's chief financial officer Aditya Mittal said yesterday. In turn, the company expects its EBITDA to be in the range of $2bn-2.5bn in Q1, compared to $1.9bn in Q4.
Steel shipments should increase in Q1 "as the gradual underlying demand recovery continues and market sentiment improves," the company says. It also expects its capacity utilisation to rise to 75-76% in Q1, up from 69% in Q4. Average steel selling prices "are adjusting to rapid increases in raw material prices," the steelmaker adds.
"Selling prices are recovering, but positive momentum needs to be maintained, as we are facing acute pressure from raw material costs, which continue to be one of our biggest challenges," the company's chief executive, Lakshmi Mittal, cautioned.
ArcelorMittal's EBITDA in Q3, at $2.3bn, was higher than in Q4, so some of the expected growth in EBITDA in Q1 is recovery growth, Aditya Mittal added at the company's annual results meeting in Luxembourg. Weakening demand in Q4 caused some decline in selling prices, and "we could not pass on the full extent of the cost increases," he acknowledged during the meeting, attended by Steel Business Briefing.
ArcelorMittal's crude steel production rose to 90.6m tonnes in 2010 from 71.6m t in 2009, and its steel shipments rose to 85m t from 69.6m t. Its revenue increased to $78bn last year from $61bn in 2009, and its EBITDA went up to $8.5bn from $5.6bn.
Brazil's iron ore exports decline in already tight market
Wednesday, 09 February 2011
A significant reduction in Brazil's January iron ore exports has increased pressure on an already undersupplied market, Steel Business Briefing learns from Macquarie commodities analysts, who believe the scenario will remain tight throughout the first half of 2011.
The "calamitous" 20% month-on-month drop seen in January was somewhat related to the annual rainy season. However, sources tell SBB logistical issues have been a major factor in curtailing exports, as well.
"A derailment in rain-afflicted Rio de Janeiro state cut supply to Guaiba port, while damage at the Tubarão terminal caused a huge drop in shipments," Macquarie says. "These difficulties have led to a record level of port congestion outside Brazilian ore ports (over 10m tonnes), as cargoes were simply not available to load on schedule."
Brazilian exports to China declined 23% m-o-m, with other drops also registered in Europe, Japan and Taiwan. The 27.1m t exported last month "highlight that port stockpiles were not sufficient to cope with the shortfall in railings, suggesting a reasonable part of (the) Q4 export boost was destocking."
As previously reported, top domestic producer Vale said its iron ore output/exports weren't considerably affected by Brazil's rainfall, but a more significant loss was experienced in Australia, with disruptions of 500,000 t of iron ore and 600,000 t of coal.
Market participants believe prices will remain high, driven by a tight offer scenario in the near term. SBB notes the January 2011 drop in exports was the worst in the past five years – surpassing the 18% decline seen in 2008.
Baosteel auto sheet sales gain from luxury car growth
Wednesday, 09 February 2011
Baosteel, China’s largest auto sheet maker, enjoyed a strong boost in sales last year and expects further benefits this year from the fast-growing luxury car market. Baosteel sold 4.5m tonnes of cold rolled auto sheet in 2010 to record year-on-year growth of 36% – higher than the 32% growth rate of China’s auto sales – according to the steel producer.
“Our auto sheet order situation was satisfactory because of the strong auto market,” a Baosteel source tells Steel Business Briefing. “Though growth in auto sales is predicted to slow to around 15% this year, our auto sheet sales are likely to maintain better than 20% growth since the luxury auto market will continue performing well.”
The Baosteel official’s bullishness also reflects the optimism of the luxury car makers for 2011. At the end of last year, a senior sales manager of FAW-Audi – the China joint venture of Germany’s Audi group, predicted to local media that China’s luxury car market will see at least 30% growth this year.
Daimler, another German luxury car maker, announced last month that China sales of its Mercedes-Benz passenger cars surged 115% last year and that market prospects are excellent.
Baosteel has been providing auto sheet to FAW-Audi since 2002, and last year it became the only Chinese auto sheet supplier to Beijing Benz Automotive, the Daimler Group’s joint venture in China. Currently, Baosteel meets over 50% of Beijing Benz’s total auto sheet demand and the proportion may further increase this year, SBB learns from the company.
China’s HRC output soars in 2010 on capacity boost
Wednesday, 09 February 2011
The boost in hot rolled coil capacity witnessed in China through 2009~2010 prompted the country’s HR coil and sheet output last year to surge to 144.63m tonnes, according to National Bureau of Statistics data. This was up by a significant 25.93mt or 22% from 2009’s 118.7mt.
Steel Business Briefing notes that, in 2010 alone, a combined 14m tonnes/year of new HRC capacity was brought on stream, and this year a further 6m t/y will be commissioned. Indeed, China’s HRC output will continue climbing this year in any case as those newly-started hot strip mills gradually reach full operation.
Remarkably however, though HRC output is trending upwards, HRC prices have also climbed since early last September – driven both by Chinese inflationary pressure and by increasing raw materials costs.
Among Shanghai dealers for example, Q235 5.5mm HRC prices have reached RMB 4,780/t ($729/t) with 17% VAT, or RMB 4,085/t without VAT, up almost RMB 800/t from last September.
And because HRC supplies to the domestic market this month will be temporarily affected by maintenance stoppages at some mills, prices will likely climb further after traders resume business on 9 February after the Chinese New Year break.
For example, northern China’s Anshan Iron & Steel will lose about 250,000 tonnes of pig iron output this month due to blast furnace maintenance, denting HRC output as a result. Maintenance on one of its hot strip mills this month will lose east China’s Shagang about 300,000 t of HRC output. Angang and Shagang have informed their trading agents that their February HRC deliveries will only be 35% and 28% of contracted volumes respectively.
Rebar market prices in Tokyo and Osaka continue strengthening despite persisting weak demand, reflecting the bullish stance of producers. Current prices of base-sized rebars in both cities are ¥63,000-64,000/tonne ($768-780/t), increases of ¥2,000/t ($24/t) in Tokyo from end-January and ¥1,000/t in Osaka.
The climb also means that rebar prices in Tokyo have added about ¥5,000/t since end-December and about ¥9,000/t in Osaka, Steel Business Briefing SBB learns.
Rebar orders in January dipped but makers are refusing to accept prices below their target levels, forcing dealers to lift their prices in parallel, a Tokyo-based distributor says. The mills targeted ¥65,000/t for base-sized rebar for January contracts and ¥70,000/t for February, as SBB reported.
An Osaka dealer notes that some rebar makers in his area suffering tight scrap supplies are secretly lifting scrap buying prices. Some are offering ¥40,000/t ($488/t) for H2. The secrecy is needed because, he says, amid the weak rebar demand the mills could be stretched to pass on higher scrap costs.
Rebar orders are actually decreasing because of the surge of anticipatory buying late last year. “To secure sales producers may soon start accepting bar orders below their target price. Reaching ¥70,000/t could prove difficult,” he suggests.
Katsutoshi Kurikawa, chairman of the Non-Integrated Steel Producers’ Association, said on 7 February that construction demand has bottomed but building activity remains low. “We must produce rebars only to meet actual demand; target prices have to be at an adequate level,” he warned.
Construction starts on non-wooden buildings in Japan last year rose by just 3% from 2009, according to government data.
Chinese rail mills hope for boost from China-Laos railway
Wednesday, 09 February 2011
Construction of a railway to connect southern China’s Kunming city to Vientiane, the capital city of neighbouring Laos, could begin in late April. Chinese steel mills hope construction of a pan-Asian high-speed rail network linking China to Southeast Asia will boost rail exports over the next couple of years.
The stretch between the two cities is reported to be 1,131 kilometers long, with the part in Laos running a length of 421km. Construction could be completed in five years, according to local media reports. In the future, the railway could be extended further through Thailand and Malaysia to Singapore. No indication of the tonnage of rails and other steel products required was given.
As Steel Business Briefing has reported, preparations on the railway to run between Kunming and Burma’s Rangoon city are also underway. China’s Ministry of Railways is pushing for an early start on construction of railways to connect Laos and Burma.
Although China’s domestic railway investments are expected to continue to boom through the current fifth five year planning period (2011-2015), overcapacity is looming in the rail market and forcing mills to look beyond China's borders.
While major exporters like Panzhihua Iron & Steel are trying hard to maintain rail exports in sluggish overseas markets, new rivals such as Wuhan Iron & Steel are now looking to steal market share.
Customs data show China exported 356,869 tonnes of rails (heavy and light) in 2010, down by 30% year-on-year. Heavy rail output rose 3% y-o-y to 4.33m t, but output of light rails fell by 4% to 972,000 t.
ArcelorMittal ‘progressing’ on Chinese sheet piling venture
Wednesday, 09 February 2011
Global steelmaker ArcelorMittal is “making good progress” on its project to establish a joint venture with China Oriental Group to make sheet piling in China, ArcelorMittal chief executive Lakshmi Mittal told Steel Business Briefing in Luxembourg yesterday.
“We want a joint venture with China Oriental to produce sheet piles. ArcelorMittal has very strong technology on sheet piles which will be required in the Chinese market in the future,” Mittal said on the sidelines of ArcelorMittal’s annual results meeting.
“We haven’t defined the timeline for completing the project, but I do think we are making good progress,” he added.
As reported by SBB, ArcelorMittal holds a 29.6% stake in China Oriental, which produces flat and long steel products in China’s Hebei province. ArcelorMittal produces sheet piling in Luxembourg.
Shashi aims to double pipe capacity to 2m t/y by 2015
Wednesday, 09 February 2011
Shashi Steel Pipe Works of the Jianghan Petroleum Administration Bureau, a major Chinese producer of welded oil/gas line pipes, is aiming to lift its pipe capacity to 2m tonnes/year by the end of 2015 and start producing oil country tubular goods (OCTG) pipes.
"During the expansion, Shashi will push into the domestic OCTG market as Sinopec has large demand of these products”, Li Hong, director of the company told local media this month. The company is a subsidiary of Sinopec, the country’s top state-owned petroleum company.
The official did not give a breakdown of the type of pipes that will be produced from the new capacity but notes that Shashi is trying to diversify its products mix from its current large-diameter welded line pipes.
Its diversification plan saw the company start construction of a new electric resistance welded (ERW) pipe project last year, which will widen its scope of supply to refined oil pipelines, according to Li.
Shashi’s first ERW plant of 200,000 t/y capacity is scheduled to be commissioned by the end of 2011, boosting its combined welded capacity to 1m t/y, as Steel Business Briefing reported.
Located in Jingzhou city in central China’s Hubei province, Shashi is currently operating 800,000 t/y of large diameter line pipe capacity, including one JCOE-forming longitudinal submerged arc welded (LSAW) pipe mill and three spiral submerged arc-welded (SSAW) pipe mills, SBB notes.
Posco has elected to roll over its domestic list prices of austenitic stainless hot rolled and cold rolled coils for February after raising them by KRW 200,000/tonne ($181/t) for January.
Thus, the Korean mill’s price for 304 grade HRC (2-3mm) stays at KRW 3.8m/t ($3,444/t), while its price for 304 CRC (2mm) holds at KRW 4.07m/t ($3,688/t).
Posco says the home market for the material has not changed and that raw materials prices are stable. The company made no special announcement regarding its decision, but it is possible this was made before the company was aware of the spike in nickel prices over Chinese New Year.
Nickel's cash price on the London Metal Exchange surged around $1,600/t over the past week to finish at $28,700/5/tonne on 7 February, Steel Business Briefing notes.
Posco’s decision has surprised some market observers who had expected the Korean mill to lift prices. But perhaps Posco was focussed elsewhere. On Monday it restarted construction – after a near 18-month delay – on the No.3 steelmaking shop at its Pohang works.
Construction had stopped after complaints about the structure’s height, as SBB reported.
Thailand imported 8.09m tonnes of finished steel to support apparent steel demand of 14.01m t in 2010, according to the Iron & Steel Institute of Thailand (Isit). Apparent steel demand last year was 30.2% higher than the 10.76m t in 2009.
Last year’s massive jump of 56.3% for imports compares with 5.18m t in 2009. Domestic production rose by a more sedate 7.6% to 7.48m t, while exports grew 13.7% to 1.56m t.
The surge in steel imports, particularly for flat products, is largely due to strong growth of 53% in Thailand's automotive sector (see table below). The country’s output of cars and pick-up trucks in 2010 rose to 1.47m units compared with 960,000 units in 2009.
Most of the raw materials for the auto sector were imported with the majority of flat steel products coming from Japan, an Isit spokesperson tells Steel Business Briefing.
Production of long products - mainly destined for the domestic construction market - rose by 1.6% last year to 3.66m t. The slower rate of growth was in line with the weaker building and construction sectors, he notes.
The uncertain political outlook also dampened business confidence last year. Construction and infrastructure projects have been delayed in the country, as SBB reported.
Isit has forecast that apparent steel consumption in Thailand will rise by 9-14% in 2011, driven by expansions in the construction and automotive sectors of 10-17% and 10-12.5% respectively.
Infrastructure spend lifts Indian longs consumption
Wednesday, 09 February 2011
The overall strength of the Indian economy and the country’s spend on infrastructure and construction helped boost consumption of long steel products to 18.2m tonnes during April-December last year, up 10% from 16.5m t over the same period in 2009.
Industry data prepared by India’s Joint Plant Committee show that total Indian production of alloy and non-alloy finished steel climbed 8% during April-December to 47.3mt.
During the nine months, long products – bars and rods, structural steels, rails and railway products, and large dia pipes – were important drivers of the steel sector, with growth in apparent consumption averaging 9.6% year-on-year.
These four sectors accounted for 60% of India’s apparent steel consumption over the nine months. Apparent consumption of hot coils was up 6% to 10.3mt and that of cold rolled coils by 16% to 5.2mt.
Infrastructure accounts for 27% of India's industrial output, Steel Business Briefing notes. The country intends to double infrastructure spending to the equivalent of $1 trillion in its next five-year plan beginning April 2012.
But despite the strong domestic demand, India is still managing to nudge up its exports. During April-December last year, India’s steel exports surged 17% to 2.5m t, the JPC data show.
The shortage of cold reduced coil in the European and Turkish markets will continue further into this year, sources in the regions tell Steel Business Briefing.
“During the last months we have registered an increase in cold reduced enquiries and I expect this to continue further,” a producer source says. “Mills have invested too much in the galvanising lines during the last years; this has created an important overcapacity of HDG in the market, leaving a shortage of CRC,” he adds.
A major northern European producer source recently told SBB CRC is the tightest of strip products, as evidenced by its premium over HRC.
Base prices for HDG and CRC are currently at the same level all over Europe, whereas galv is usually a little more expensive. “Since November last year HRC prices have increased by around €160/t, while the base price for HDG has risen by €120/t. Currently HDG is the most difficult material to sell,” he adds.
In southern Europe traders confirm a shortage of CRC. “We have registered this situation, together with a shortage of pre-painted coils ... While HRC capacity in Turkey has increased massively, CRC production hasn't,” a source explains.
CRC imports into Spain and Italy are now at €700-730/t ($957-998/t) cfr, and likely to reach €750/t cfr by the end of February. Certain producers are not offering at present, which is creating more upward pressure, sources suggest.
ArcelorMittal to invest €100m in its Spanish plants in 2011
Wednesday, 09 February 2011
ArcelorMittal is set to invest around €100 million ($137m) in its Spanish facilities during 2011, Steel Business Briefing learns from the comments given by Gonzalo Urquijo, member of the board of directors, to the Spanish press, on the sidelines of the annual results presentation.
The official didn’t specify exactly what these investments would be for, but mentioned that part of it could be used to reconstruct the coke batteries at the Gijon plant, in northern Spain.
The unions have alleged the batteries are in need of substantial investment for over a year, SBB understands. The company confirmed to SBB that it is assessing the batteries' condition and that a technical study is being undertaken. A final decision is expected from the group's management on the batteries once the report is submitted.
Turkey receives higher import offers for Russian coil
Wednesday, 09 February 2011
Russian producers are asking $850/t cfr for hot rolled coil and $950-960/t cfr for CRC to Turkey. Steel Business Briefing is informed by Turkish sources that these prices are too high compared to current price levels in Turkey. The country’s producers are asking $830-850/t for HRC.
Some sources say Russian producers will decrease their offer prices as they won’t be accepted in the market. On the other hand, some say demand in Russian domestic market as well as Europe is good; so prices won’t be reduced even if Turkey does not accept these prices. There are some traders who believe Turkish producers will increase their prices after seeing high import offers from the CIS region.
Demand for flat rolled steel is better compared to last week in Turkey but is still not very good, sources say. The high prices keep the buyers away from buying as some expect a price fall because scrap and long product prices are falling.
Fiat's Serbian joint venture to increase sheet demand
Wednesday, 09 February 2011
Car manufacturer Fiat Automobili Srbija (FAS) has agreed a €500 million loan with the European Investment Bank (EIB) in aid of modernising and expanding production capacity at its Kragujevac factory, in central Serbia. The company plans to increase its output over ten-fold in the long-term, an FAS representative tells Steel Business Briefing.
“Fiat Automobili Srbija is intensely working on the complete renovation and modernisation of 1.4 million square meters of an outdated and obsolete factory,” the company says. “The renovation works stretches across all segments,” it adds. New production technology is set to arrive from Japan, Italy and Germany in April.
The carmaker – a joint venture between Fiat and the Serbian government - currently only produces the Fiat Punto Classic model at a rate of 15,000 vehicles per year. As a result of the investment, the factory is set to produce 200,000 vehicles per year, meaning it will need to source some 160,000 tonnes/year of steel sheet (800kg per vehicle), the company tells SBB.
Production of two new models – that will be exported to the European and US markets - is set to begin in spring 2012, although the supplier has not yet been agreed. The company declined to tell SBB where it currently sources steel; however, US Steel Serbia is based only some 70km to the north in Smederevo.
ArcelorMittal to restructure Luxembourg longs producer
Wednesday, 09 February 2011
ArcelorMittal plans to restructure its Luxembourg long products producer Rodange & Schifflange to tackle its negative financial performance, ArcelorMittal group management board member Michel Wurth said yesterday.
“Rodange & Schifflange is primarily centred on construction steels, rebar and merchant bar, and we have observed negative results in this company over 2009 and over 2010,” Wurth commented at ArcelorMittal’s annual results meeting.
“Faced with this situation, you have two options: you can leave it to go downhill, or you can say to yourself ‘no, we want to keep these operations going’, and in this case you must restructure, you must lower costs,” he added at the meeting in Luxembourg.
ArcelorMittal wants to continue producing rebar and merchant bar in the Grand Duchy, and so has decided on the approach of restructuring, Wurth said. The company has set up a working group with local trade unions to examine the ideas for restructuring in detail, and to try to reach agreement on the way forward, he revealed at the meeting attended by Steel Business Briefing.
Rodange & Schifflange operates an electric arc furnace in Schifflange and two rolling mills in Rodange. Production capacity is currently over 1m tonnes/year, but output in 2009 was less than 600,000t. According to the Luxembourg press, unions believe 262 jobs are at risk as a result of the proposed restructuring.
Long prices in Italy start showing signs of weakness
Wednesday, 09 February 2011
Rebar prices in northern Italy decreased slightly between mid January and last week, while other long products have remained firm, Steel Business Briefing learns from data published by the Brescia chamber of commerce.
The base price for rebar fell slightly by around €10/tonne, and currently stands at €320-340/t ($437-464/t) ex works, while wire rod (mesh quality) remained firm at €580-590/t ex works.
As in other markets in southern Europe, the corrections are mainly caused by a softening of scrap prices at the international level, SBB notes. The outlook remains unclear but further corrections may well be seen in the next weeks, SBB understands.
Nevertheless, other long products are performing better, in terms of prices, mainly in response to an improvement in demand on the domestic and international markets. Section prices have increased by €10-20/t between mid-January and last week, according to the data. Base prices for small IPN and IPE are now at €350-370/t ex-works.
The Turkish domestic rebar market has come down by another TL 60-70/tonne ($38-44/t) this week following the fall in scrap prices to TL 1,150-1,180/ ($728-748/t).
In Marmara region (western Turkey) the official producer price is announced as TL 1,230/t ($779/t) from the previous TL 1,350/t ($855/t) but did not indicate a real price for the market. The new price just confirms the already reduced prices at traders.
Market sources tell Steel Business Briefing in Marmara region prices are available at around TL 1,180/t and in Iskenderun region (southern Turkey) this price comes down to TL 1,150/t. Demand is reported to be extremely slow.
Traders do not expect further fall in prices, but still how far the scrap prices will decline is uncertain, therefore market prefers to wait and see what the market trend will be for the next couple of weeks.
Croatian rebar works Zeljezara Split could enter into bankruptcy this week or next, with a view to finding a new investor to restart production at the company, a Zeljezara Split representative tellsSteel Business Briefing.
The rebar mill’s current majority shareholder, Polish steelmaker Zlomrex which owns a 95.9% stake in the company, has thus far failed to find a buyer for the Croatian mill. In November last year there was talk of Zlomrex voluntarily terminating its privatisation contract for Zeljezara Split in return for compensation of €1-10m from the Croatian government; however, this did not materialise.
The Croatian government is currently said to be in talks with a potential investor – rumoured to be Zagreb-based scrap metal group CIOS – but nothing concrete has yet been agreed. Mechel, Beltrame and German firm Technocom all expressed their interest in acquiring the rebar mill but were put off by its mounting debts, which now total HRK 300-400m (€41-54m).
It is hoped that the process of finding an investor for Split will be speeded up by the mill going into administration. The government is likely to appoint an administrator who will meet Zeljezara Split’s creditors to persuade them to allow the mill to continue operating, rather than to liquidate it. “The majority of creditors are government-owned so it’s in everyone’s best interest for production to restart,” SBB is told.
Zeljezara Split, which can produce 200,000 tonnes/year of rebars and round bars of 10-25mm in diameter, as well as mesh, remains idle.
Aperam sees better Q1 stainless prices; idles Isbergues mill
Wednesday, 09 February 2011
Bernard Fontana, ceo of Aperam, the recently spun-off stainless steel operations of ArceorMittal, expects European coil base prices to move up by €100/tonne or more during first quarter 2011. The new company is seeing signs of improvement in the market, but it cautions that pricing levels are likely to remain “moderate” throughout 2011 due to overcapacity in the industry.
As if to underline the capacity point, Aperam confirms that last week it suspended operation of the 100,000 t/y cold mill at Isbergues, northern France. This unit represents 7% of its European downstream capacity, Fontana told Steel Business Briefing.
Clearly this is the company’s least competitive European rolling mill, and it has assumed something of a swing capacity role, having already been idled for about 12 months during the worst of the recent market downturn, restarting around mid-2010, as previously reported. The more modern 250,000 t/y cold mill on the same site continues to operate.
Reporting 2010 results, the company, which also has stainless and electrical steel production in Brazil, said sales increased to $5,604m off shipments of 1.74m t. This was up from $4,235m/1.45m t in 2009. Annual operating incomes were $93m in 2010 against a loss of $207m in 2009. Capacity utilisation in last year was 65-70%, Fontana says.
Some indication of how far there still is to go to recover pre-recession financial performance can judged by 2010’s EBITDA figure of $410m compared to the $1,178m achieved in 2007. Nonetheless 2010 does show a marked improvement on 2009’s EBITDA of $226m.
The company’s total flat rolled stainless capacity is put at 2.5m t.
Apart from European stainless producer Aperam’s agenda for capital investment and enhanced profitability announced at the time of its flotation last month, the company this week approved a spend of $28m on a new induction furnace and electro-slag remelting furnace at its special alloys plant in Imphy, France. It says the aim is to “increase revenue and improve competitiveness”.
Steel Business Briefing notes that electro-slag remelting enables the production of very high purity metals. Apart from a meltshop, Imphy operates a wire mill, and bar and cold rolling facilities, SBB understands.
Already announced by the new company is a $62m investment in the hot annealing and pickling line at the Gueugnon mill in France, and conversion of blast furnace No.2 at its Timoteo works in Brazil from coke to charcoal.
ArcelorMittal’s stainless, electrical and speciality steel operations have been launched into this new existence in the belief that a separate business will benefit from a higher visibility in the market, its shares should trade at a premium to those of carbon and diversified steel companies, and the company should be in a better position to attract and allocate capital, access third party funding and create value for its shareholders.
Rotterdam FOB scrap prices slide as Turks step away
Wednesday, 09 February 2011
North European scrap traders say the export market is too quiet to call. The region’s key buyer, Turkey, needs to wait and see what will happen in the Middle East, including Egypt, and is trying to push prices down, sources say.
On Friday 4 February, EU offers fell “another $10/tonne” to $475/t cfr for HMS 1&2 80:20, SBB's sources say. This week, the Turkish mills are still not interested despite reports out of Belgium that “HMS 1&2 70:30 is being shown very aggressively at $465/tonne cif”.
It may be that this offer is being overplayed to put downward pressure on the market, warns a UK trader. But other exporters note lower numbers. “I wouldn’t like doing $460/t cfr [Turkey], but it would be OK,” one trader tells Steel Business Briefing.
This equates to $435/t fob Rotterdam, he adds, compared to the peak over three weeks ago when fob levels were up to $495/t. Turkey’s lack of interest can be summed up as follows, a source notes: “If pressed, they’ll bid $425/t cfr. That’s way too low. They’re not serious.”
However, other traders are more optimistic. On the demand-side, Asia will be waking up after the New Year celebrations, and on the supply-side, the blizzards could hamper scrap exports out of North America, a German source says.
There have been no known contracts out of northwest Europe to Turkey since late January, when a mixed HMS cargo sold from Sweden at $497/t cfr, adds a trader. With freight at over $25/t, the fob equivalent was around $470/t, he notes.
Turkish mills still out of scrap market, offers drop by $15
Wednesday, 09 February 2011
Turkish steel producers are still out of the global scrap market, and the prices have softened on the latest offers from the overseas suppliers, Steel Business Briefing learns from the market sources.
There have been no significant imports reported this week so far. US offers are now at $480/t cfr for HMS 1&2 80:20, $485/t cfr for shredded scrap and $490/t cfr for bonus scrap, which are $15/t lower than the last week’s offers.
An EU supplier is asking $457/t cfr for HMS 1&2 70:30 but this cargo did not find any buyer yet.
In the CIS region, suppliers are following the global price trend; A3 grade scrap is being offered between $450-460/t cfr, which is also $15/t less than the last week’s prices, SBB learns.
Saarland mill technology provider sold by Danish owner
Wednesday, 09 February 2011
In a management buy-out, German engineering bureau FLSmidth Wadgassen Walzwerkstechnik has separated from Danish parent FLSmidth. The new company plans an expansion of activities in its field of rolling mill technology Steel Business Briefing learns.
New owners and managing directors Wolfgang Gerhard and Gerhart Hölzl have taken over all the unit’s 43 employees, and an order book worth above €50 million.
Relocating from Wadgassen to Rehlingen within Germany’s Saarland, the company has renamed to “H&K Industrieanlagen”, a name owed historically to predecessor companies Koch Transporttechnik and Hoestemberghe & Klütsch, both founded more than 60 years ago.
H&K focuses on long products technology, predominantly standard and special sections and steel bars, designing rolling as well as ancillary equipment manufactured by fabricating partners. The company pursues international expansion, has created 11 new jobs, and recently signed a new order for a straightening and sawing line worth several million euros from China.
Former parent FLSmidth is mainly active in cement and minerals technology.
TK’s service centres expect range of services to increase
Wednesday, 09 February 2011
The scope of services rendered by service centres is likely to increase, particularly as steel prices fluctuate wildly, Steel Business Briefing hears from a manger of ThyssenKrupp Steel Service Centres.
“In the second quarter, steel prices will go up again by a three-digit figure,” Detlef Schotten, managing director of ThyssenKrupp SSC, forecast at a recent industry gathering. Consequently, customers will be less and less keen on keeping high inventories, “which is something we need to do for them, and need to get paid for,” he said.
In addition to inventory management in models like consignment warehouses, Schotten believes that the wider range of services offered by SSCs should encompass purchasing, logistics and intra-works transport. The traditional processing services have been taken by TK SSC to the point of five-year cooperation partnerships with bus and lorry manufacturers. Here, TK SSC provided solutions with different materials for different production lines, Schotten says, but underlines his caution about “to which point you can intrude into the customer’s value added”.
ThyssenKrupp SSC operates ten sites in five European countries, mainly Germany and the Iberian peninsula. With 850 employees, it processes 1.4m tonnes of steel annually, and has sales of €1.1bn.
Metal powder producer Höganäs had its best fourth quarter ever in 2010, buoyed by its performance in emerging markets, according to the Swedish company's annual results seen by Steel Business Briefing.
Sales volumes in India and China reached new record levels in Q4 despite some customers reducing inventories. This offset a slight dip, quarter-on-quarter, in North America and seasonal weakness in Europe. Höganäs’ sales into Asia grew from SEK 514 million ($80m) in Q4 2009 to SEK 613m in the final three months of last year, SBB notes. Group sales rose 18% on the preceding year to SEK 1.6bn, while sales for the year reached SEK 6.6bn.
Over the whole of last year the effect of discontinued car scrappage incentives in Europe was somewhat countered by increased export demand.
“The market is expected to remain strong in Asia and South America, while a gradual recovery, albeit at an uncertain rate, is expected in North America,” the company says in its results. “However, Höganäs judges that underlying demand in Europe will remain weak,” it continues.
In Q4 South Korea’s Sinteron started manufacturing powder-forged connecting rods using Höganäs’ chromium alloyed Astaloy. Sinteron supplies the car industry and Hyundai is a key customer, SBB notes.
Ukraine's pipe output up, braced for higher export duties
Wednesday, 09 February 2011
Ukraine produced about 1.75m tonnes of pipes last year, 11% more than in 2009, Steel Business Briefing learns from industry association Ukrtrubprom. The country's largest producers – Metinvest's Khartsyzsk Tube Plant, Interpipe and Lugansk Tube Plant – accounted for 75% of the country’s total pipe output, it says.
Exports to CIS countries amounted to 900,000t, just over half of total output, and comprised 390,000t of seamless pipes, 270,000t of welded pipes of medium and small diameters and 280,000t of large diameter pipes.
Russia imported 600,000t of Ukrainian pipes, 65% of the tonnages shipped to the CIS customers and 50% of all Ukrainian total export volumes, which amounted to 1.29mt or 76% of total output.
Meanwhile, the Russian authorities are keen to reintroduce and increase anti-dumping duties on imports of Ukrainian pipes for five more years. The suggested duty for imports of casing pipes is 18.9%, and 19.9% for oil well tubing, and two separate duties are proposed for distribution pipes: 19.4% for Interpipe products and 37.8% for others, as previously reported. If adopted, these duties are likely to have negative effect on Ukrainian pipe exports to Russia.
SSAB Americas said its transaction prices for all non-contract plate and hotrolled products greater than 72 inches wide will increase by $100/short ton, effective with new and existing orders acknowledged to ship the week of February 27 and beyond.
"This increase applies to the above products made at our two US steel mills, as well as product from our three North American coil processing lines," the company said in a letter to customers seen bySteel Business Briefing.
SSAB added the increase "should be considered in addition" to the company's March raw materials surcharge, which will be announced on February 15.
The latest hike follows a $75/s.t transaction price increase announced late last month by the Illinois-based flats maker for orders shipping January 30 and beyond, and if fully absorbed by the market, would bring spot prices for A36 plate material to about $980-1,000/s.t, sources said. The Steel Index, a unit of SBB, says its current A36 reference price is $887/s.t, up $13 week-on-week.
One southern trader said he wasn't surprised by SSAB's increase. However, he added, "I do not see the momentum behind this," as scrap prices fall and buyers remain cautious.
An eastern market source added the latest increase "may help importers of commodity grades to penetrate the market."
Nucor says it will keep transaction pricing flat for March shipments of rebar and merchant bar, Steel Business Briefing learns from a letter to customers.
The North Carolina-based steelmaker will lower its raw materials surcharge on these products by $15/short ton, following a $15/long ton decrease in a key scrap benchmark price to $455/l.t. At the same time, Nucor will increase its base prices by $15/s.t for no change in the transaction prices.
Rebar is currently about $800-$820/s.t, while merchant bar is around $935-$955/s.t on the spot market, SBB notes.
Nucor is also maintaining prices for wide flange beams (see related article).
US steelmaker Nucor will keep its transaction pricing flat for March shipments of wide flange beams, Steel Business Briefing learns from letters to customers.
The company will lower its raw materials surcharge by $15/short ton, following a $15/long ton decrease in a key scrap benchmark price. However, Nucor will raise its base price by $15/s.t - effectively maintaining current transaction prices, which are around $890-$910/s.t for medium sections.
One market observer told SBB he was not surprised by the move. "I think scrap will continue to mainly climb during the balance of the year," he said. "Global markets are just starting to improve, and steel demand should start rising for long products within a few months, just as it already has started to rise for flat-rolled. I think current steel prices are a good deal compared to where they may be in three to six months."
North Carolina-based Nucor is also keeping prices flat on other long products, such as rebar and merchant bar (see related article).
Nucor is dropping the monthly surcharge for its special bar quality product line by $10/short ton, Steel Business Briefing understands.
The surcharge, effective with March shipments, will be $315, following a dip in a key published scrap price used by Nucor and other mills to set raw materials surcharges.
Applicable alloy surcharges will continue to apply, the company says.
Mexico's TenarisTamsa to commission new mill by June
Wednesday, 09 February 2011
Mexican seamless pipe and tube producer TenarisTamsa is expected to commission its new seamless pipe mill at Veracruz city by June,Steel Business Briefing learns from a source at the company.
The rolling mill, with a nominal capacity of 450,000 tonnes/year, will be able to produce tubes two to seven inches in diameter. In addition, it will be integrated to heat treatment and finishing lines for OCTG and line pipe. The producer's current seamless capacity is around 700,000-800,000 t/y.
The new seamless line is part of a US$1.6bn investment aimed at doubling Tamsa's steelmaking capacity to 1.8m t/y. This goal may be reached by the end of the year, according to the company.
In the meantime, the plant's new seamless mill will be fed with semis from both the Veracruz plant and from Ternium's works in Puebla. TenarisTamsa and Ternium are controlled by the Techint Group, SBB notes.
Laser buying $6m s.t of line pipe for Susquehanna gas line
Wednesday, 09 February 2011
Midstream natural gas firm Laser Northeast Gathering Co is installing almost 5,000 short tons of steel line pipe into a gathering system in Pennsylvania.
New Milford, Pennsylvania-based Laser officially began construction of its 30-mile Susquehanna Gathering System on February 1.
When completed this summer, the 16-inch OD line will transport Marcellus Shale formation gas to an interstate pipeline in Broome County, New York, Steel Business Briefing learns.
While the line's pipe alone cost more than $6m – or an average of about $1,200/s.t – the total value of the project to the Pennsylvania economy could already be upwards of $20m, Laser said.
US stainless pipe producer Synalloy Corp expects to continue seeing higher transactional prices and volumes for its commodity products over the first quarter.
Synalloy's metals segment posted an operating profit of $3.77m on total revenue of $108.5m for the year ended January 1. In 2009, the company posted a $12,000 loss in the metals segment, Steel Business Briefing notes.
The bulk of the recovery was due to "aggressive" marketing of Synalloy's commodity stainless products, as well as a steady increase in stainless surcharges over the course of 2010, the company reports.
That trend should continue through Q1, keeping operating profits in the black, despite a dip in the company's specialty product volumes, Synalloy notes.
"The 12-month sales increase was comprised of a 50% increase in unit volumes combined with a 2% increase in average selling prices," Synalloy says in a release. "The huge unit volume improvement was essentially the result of increased commodity pipe sales resulting from an aggressive effort to gain market share, combined with a modest increase in non-commodity products."
Canada's largest iron ore pellet producer is spending C$289m (US$291.7m) to add 1.3m tonnes of capacity to its flagship works in Labrador City, Newfoundland and Labrador.
Over the next two years, the Iron Ore Co of Canada (IOC) will expand its magnetite processing facility and associated rail lines to boost annual production from its current 22m t to 23.3m t, Steel Business Briefing learns from the company.
The expansion is slated to begin immediately and conclude by the end of 2012. The project was originally slated to begin in 2008, but was tabled due to the uncertain economic climate.
Cline unit leases space at Texas port for met coal exports
Wednesday, 09 February 2011
The US subsidiary of Canada's Cline Mining Corp has reserved 18 acres at the port of Corpus Christi, Texas, to facilitate metallurgical coal exports to Europe, Brazil and Asia.
New Elk Coal Co of Colorado's storage lease becomes effective February 8 and can be extended after the initial five-year period for up to 25 additional years, Steel Business Briefing understands. The parties did not disclose the cost of the lease agreement.
New Elk’s mine in southern Colorado is anticipated to produce 3m short tons of met coal by the end of 2011.
ArcelorMittal's Americas flat unit improves sales, shipments
Wednesday, 09 February 2011
ArcelorMittal's flat carbon Americas segment reported much improved fourth quarter and full-year 2010 sales and shipments, and CEO Lakshmi Mittal says he expects "gradual underlying demand recovery" and improving market sentiment to continue in the first quarter of this year.
Revenue for the segment topped $19.3bn for 2010 and neared $5bn for Q4, compared to $13.3m in 2009 and almost $4.1bn in Q4 2009, Steel Business Briefing notes.
Average flat carbon Americas selling prices were up in Q4 and for the full year. Q4's average price was $769/tonne - up from $719/t in Q4 2009, but down from $826/t in Q3. For 2010, the average price was $781/t, an increase over $698/t the year before, the company says.
"Sales increased primarily due to higher steel shipments (+9.1%), partly offset by lower average steel selling prices (-6.9%)," ArcelorMittal said in a release.
Operating income for the segment totaled more than $2bn for 2010, up from a $757m loss the year before. Q4 operating income was $378m, an increase from $180m in Q4 2009.
ArcelorMittal expects its overall global production volume to increase in the first quarter, as capacity utilization rises to about 76% versus 69% in Q4 2010.
US high-speed rail to get billions more in government money
Wednesday, 09 February 2011
Building on the President's goal of giving 80% of Americans access to high-speed rail within 25 years, the Obama administration has proposed dedicating $53bn over six years to continue construction of a national high-speed and inter-city passenger rail network.
About $8bn already is included in the President's 2011 fiscal year budget. Half would be slated for the building of new infrastructure, stations and equipment, and the other half for system preservation and renewal, Steel Business Briefing understands.
This new federal funding would be in addition to the $8bn included for high-speed rail in the 2009 economic stimulus plan and $2.5bn from the 2010 budget. All these investments "will create jobs not only in the manufacturing sector, but also in the small businesses that open near modernized train stations," the White House says.
The administration maintains these investments clarify the long-term federal role in passenger rail development and provide states and cities with the certainty needed to also make long-term transportation plans.
Strong "Buy American" requirements will be included to ensure the creation of "tens of thousands" of construction, manufacturing and rail operations jobs, as well as the use of American-made steel, the administration contends.
As SBB has reported, US producers such as Steel Dynamics Inc have been making investments in rail to take advantage of the expected spending increases in such infrastructure projects. SDI recently completed $1.2m in upgrades for its rail testing and inspection unit and plans to spend a further $17.5m to streamline processing in the rail mill finishing area.
ArcelorMittal Q4 shipments impacted by Brazilian operations
Wednesday, 09 February 2011
ArcelorMittal says fourth quarter carbon flats results for its Americas segment were negatively impacted by lower shipments from its Brazilian operations, due to reduced distributor inventories and competition from imports. However, the decline in Brazil was offset by factors such as improved performance by the company's Mexican mills.
Steel Business Briefing learns from the company that Q4 domestic flats shipments fell quarter-on-quarter because Brazilian producers were impacted by "continued de-stocking by distributors and lower priced imports." Meanwhile, its South American and Mexican operations increased slab deliveries.
Q4 Americas carbon flats shipments totaled 5.43m tonnes, including 1.55m t from its South American operations. In Q4 2009, South American units accounted for 1.56m t of the 4.83m t shipped.
ArcelorMittal also says its Q4 Americas flats output was negatively impacted by a November disruption in the coal handling port used by its South American operations - the Praia Mole Terminal in Espírito Santo state. As SBB previously reported, the company's slab and coil producer, ArcelorMittal Tubarão, was forced to reduce its steel output from 6m t/y to 5m t/y because of a lack of coal deliveries.
The Americas segment includes operations in North, South and Central America, SBB notes.
Domestic market unfazed by Argentinean flats price freeze
Wednesday, 09 February 2011
The apparent price disagreement between the Argentinean government and flats producer Ternium Siderar has left local market participants mostly unfazed, as the controversy is occurring during the traditional summer lull, sources tell Steel Business Briefing.
"I don't think the situation will get too aggressive. The market is used to the government having these types of agreements and holds over prices, plus it's pretty quiet at the moment," a local market expert tells SBB. "By mid-March we will witness the revival of the market and demand will rise until the end of the year."
As previously reported, the Argentinean government held that Ternium violated a purported agreement limiting the frequency with which it can raise prices through November 2011. As a result, the government instructed Ternium to rescind its February price hike.
"I think the government was trying to mirror the iron ore quarterly pricing system. However, steel prices here tend to change month-on-month," another market source says. "I'm guessing there may have been some upheaval from the automotive sector because of increasing steel prices, since it plays an important role in the economy."
While Ternium Siderar has not made an official comment regarding the government-imposed price freeze, the national steel chamber has stated its disapproval, as SBB has reported.
ArcelorMittal's Brazilian stainless division, Aperam, accounted for 45.7% of the company's total stainless shipments in the final quarter of 2010. However, shipments from the division declined by 11.5% compared with the previous quarter, Steel Business Briefinglearns from the company’s latest financial results.
According to the company, its Brazilian stainless and electrical steel segment shipped 157,000 tonnes of material in Q4 2010 - down from 164,000 t in Q3.
"The decrease in volume was primarily driven by the seasonal slowdown that traditionally takes place in the fourth quarter in both South America and Europe," the company says. On the other hand, lower shipments were partially offset by a higher average selling price, primarily the result of higher nickel prices, it adds.
Aperam also announced new initiatives, including a tube asset optimization plan, a fixed-cost base improvement plan and connection to a natural gas supply. The connection likely will require an investment of around US$25m and be aimed at reducing its liquefied petroleum gas use by 30% and also reducing CO2 emissions by 37,000 t/year.
Brazil's CSN sees recovery in iron ore exports in January
Wednesday, 09 February 2011
Brazilian steel making and mining group Companhia Siderúrgica Nacional (CSN) apparently experienced a January recovery in iron ore exports at its private terminal at Itaguaí Port, Rio de Janeiro state.
Barclays Capital analyst Leonardo Corrêa tells Steel Business Briefing last month's shipments (including one from a third party) reached 2.36m tonnes - a 37% increase over the 1.72m t exported in December and comparable with the port's 2010 average monthly rate of 2.1m t.
According to Corrêa, the December decline in CSN's exports was driven by a conveyor belt maintenance issue. Queried by SBB, CSN declined to comment on its iron ore output or exports.
While CSN showed an improvement in exports, Brazilian customs data shows overall January iron ore exports for the country came to 22.7m t, down from 32.2m t in December.
"While it is common to see a fall in January for seasonal reasons, the large amplitude has only increased the pressure on an already undersupplied iron ore market," Macquarie Research says in a separate report.
Production within the Chilean metallurgical sector has fallen short of what was previously anticipated for 2010, according to trade association, Asimet.
The association previously told Steel Business Briefing it expected overall production to register a 5% increase compared with 2009. However, the final total was only 3.7% higher. The iron and steel sector saw a 14.1% decrease.
Asimet president Ernesto Escobar attributes the lower total to fallout from last year's earthquake, as well as currency valuation issues. Ongoing difficulties this year include energy costs, the dollar's valuation and lower productivity, Escobar indicated to SBB earlier this year.
Still, Escobar is confident the industry will recover, driven by demand in the construction sector, which should see 10% growth this year.
"We still expect 2011 to be a very positive year for our businesses, owed mostly to the strength of our national economy, which will continue to grow at a steady pace," Escobar says. "The metallurgical sector will grow by 8% this year."
After the mills restarted production and the companies started working, flat rolled steel trading is resuming in Egypt. However, Egyptian traders are postponing their import orders as they want to see the value of Egyptian pound versus the dollar. Steel Business Briefing is informed by Egyptian sources that transport of steel between the cities is still difficult because army officers are conducting detailed checks of the trucks.
The country’s biggest steel producer Ezz Steel has not changed its hot rolled oil price for February; it is still EGP 4,000/t excluding 10% sales tax ($668/t).
Hadisolb, the state owned flats and longs producer, said the company did not stop production at the time of the crisis and is continuing its domestic and export sales as usual.
Egyptian traders say the market is expected to improve in 2-3 weeks’ time, when the USD/EGP exchange rate will be determined.
AMSA may wait for DMR case to finish before buying ICT
Wednesday, 09 February 2011
ArcelorMittal South Africa continues its arbitration process with Kumba Iron Ore over the disputed 6.25m tonnes/year iron ore supply at cost plus 3% to AMSA from Kumba's Sishen mine. AMSA is also assessing documents held by the Department of Mineral Resources relating to the dispute with Imperial Crown Trading (ICT), which AMSA says "cannot ignore" in light of the fact it may buy ICT, AMSA ceo Nonkululeko Nyembizi-Heita said in a media call with Steel Business Briefing.
Last year AMSA offered to buy ICT for $110m, conditional upon ICT retaining the disputed 21.4% mining rights to the mine, which Kumba is contesting. Nyembezi-Heita said AMSA will consider materials that have been presented to the DMR regarding ICT's allegedly "fraudulent" application for the stake, and says AMSA may wait until the case is resolved before proceeding with the takeover of ICT.
AMSA said it remains in talks with Kumba and "hopes to make progress" soon through the arbitration process, however she could not give a timetable of when this dispute would end.
The cost of AMSA’s iron ore from Sishen in 2010 rose 119% from 2009 due to the dispute with Kumba.
Ezz Steel, Egypt’s largest steel producer, is expected to make a statement to the stock exchange when it reopens detailing the status of its plants in the aftermath of two weeks of political disturbances. Company officials have declined comment up to now. Local reports indicate the exchange will reopen on 13 February.
Unconfirmed reports have indicated that Ezz’s offices and plants have been the targets of violence and disorder because its chairman, Ahmed Ezz, is a political ally of president Mubarak. Ezz Steel has also been accused of involvement in political corruption and attempting to monopolise the Egyptian steel market.
Mohamed Sayyed Hanafi, general manager of the Chamber of Metallurgical Industries, tells Steel Business Briefing: “although Ahmed Ezz owns the majority of shares in the company, the company is registered with the stock exchange and managed by professionals, so it will remain active in the steel industry regardless of the political decisions.”
On the accusations of monopoly, Hanafi says that Ezz Steel controls 40% of the rebar market, and there are other big suppliers such as Beshay Steel and Suez Steel; in addition, new licences to produce are being issued, which will bring even more competition the market.
Hanafi also adds that “in the last two years, imports have been dominating the market, not the local mills”.
Another local producer adds that the pricing of Ezz Steel has generally been in line with international prices, and recently was even lower than import offers.
Steel prices and demand to rise in Q1 2011, AMSA says
Wednesday, 09 February 2011
Demand for steel is expected to rise higher in Q1 2011, both in South Africa and globally. "We can expect to see higher international steel prices" on the back of higher raw materials costs, ArcelorMittal South Africa ceo Nonkululeko Nyembezi-Heita said in a conference call monitored by Steel Business Briefing.
During 2010, real demand for flat products in the USA remained "lacklustre, but a short-term surge was evident due to re-stocking", she said. EU consumption was slow with European demand for longs poor as "the construction industry continued to languish." Domestic demand in China remained firm in Q3 2010 and steady in Q4 2010.
In South Africa growth in steel consumption slumped in Q3 2010 as investment spending slowed, particularly in the public sector, and the rand strengthened. Demand for flats and longs in the rest of Africa remained steady throughout Q4 2010.
AMSA saw a 13% rise in its steel sales volumes in 2010 from 2009 to 5m tonnes while average net realised steel prices (in rand terms) rose by 3% from the previous year.
Flat carbon steel product sales rose to 3.3mt in 2010 from 2.9mt in 2009 and long carbon steel product sales increased 5% to 1.7mt, AMSA said.
AMSA doesn't fear importers despite its recent price hikes
Wednesday, 09 February 2011
ArcelorMittal South Africa remains confident about steel prices rising in Q1 2011 as prices continue to strengthen globally. The company also doesn't fear losing business to importers after it announced further price rises for the second time in less than a month.
"Today our prices are in favour of the domestic market and we don't believe anyone could import cheaper than we (sell)," AMSA ceo Nonkululeko Nyembezi-Heita tells Steel Business Briefing. She said South Africa saw an increase in imports in Q3 2010 because of the higher rand and uncertainty in the market over its dispute with Kumba. "At this time the price of steel was in favour of importers", but this is no longer the case.
"We monitor the situation carefully and don't consider our market share to be falling", despite AMSA's recent increase which will see prices rise 7% for flat products and 11% for longs from March. Nyembezi-Heita says she does not know if AMSA will raise prices further in April. "We want to see what happens in China first", when the market resumes business after the New Year holiday, before deciding on more price rises.
She also says AMSA remains unaffected by coal shortages resulting from the disruption to supply after flooding in Queensland. However, Nyembezi-Heita says if shipments out of Queensland don't start flowing by May/June then AMSA "will have problems as will the rest of the world".
World oil and gas drilling activity continues its almost unbroken upward movement of the last nine months, industry data indicates, to now record the highest number of operational rigs for over two years. However, the US market appears to have levelled off in January (see table).
Canadian activity is rising in line with its usual annual cycle on improved drilling conditions, as winter temperatures make access to remote locations easier.
Rig numbers in the Latin American region in January 2011 were the highest for more than two years, and you would have to go back to 1985 to match last month’s rig count in the significant Asia/Pacific region.
The smaller European arena last month recorded the highest number of active rigs for more than 13 years, according to Baker Hughes figures.
Despite media headlines about $100/barrel crude oil, prices generally continue to oscillate around the $90/bbl level, while natural gas prices remain unexciting, Steel Business Briefing notes.
ArcelorMittal to increase iron ore, met coal output in 2011
Wednesday, 09 February 2011
ArcelorMittal intends to increase iron ore production by 10% in 2011. Talking at a press conference yesterday attended by Steel Business Briefing, chairman and ceo Lakshmi Mittal said: “raw material costs were one of our biggest challenges in 2010 but we expect 2011 to be better”.
He added: “2010 iron ore production increased by 30% compared with 2009, but at 48.9m tonnes it fell short of our 50m t target due to poor offtake in Algeria and Kazakhstan… we remain on track for 100m t/y by 2015”.
Cfo Aditya Mittal reported an increased stake acquired in the Canadian mining project Baffinland, saying: “As of yesterday [Monday] we have acquired 90% of Baffinland together with Nunavut… For 2011 our focus is to conduct an exploration and feasibility study.”
The acquisition is not included in the target production of 100m t/y by 2015.
On overall mining strategy the cfo said: “Due to an improved outlook for 2011, which we expect to be better than 2010, we have also dramatically increased our capex budget by more than 50%, to $5bn for 2011; $1.4bn of which is dedicated to mining projects”. The company confirmed that its Liberian project is to start production later this year.
On metallurgical coal, Lakshmi Mittal said the company’s production is also growing. “Production in Q4 was 1.8mt, taking us to 7mt for 2010, basically flat compared with 2009”. He continued: “For 2011 we expect a 20% increase in coking coal production; we remain on track to reach 12mt by 2015”.
Industry sentiment seems to be strengthening again, according to the latest market survey results from The Steel Index (TSI). Expectations of higher demand by companies in Europe have increased, and more companies globally also expect prices to rise in the next three months.
52% of European companies expect higher demand in the next three months, up from 44%, with an unchanged 44% foreseeing steady demand. Sentiment is firmer among US companies, where 79% predict higher offtake in the next three months and 21% expect unchanged demand. Globally, 58% of respondents expect higher demand while 40% predict stable offtake and only 2% forecast lower demand.
In Europe, the number of companies expecting higher prices has risen to 68% from 64%, with 20% foreseeing stable prices in the next three months. The number of North American companies expecting higher prices was also higher at 74%. Globally, 69% of companies expect prices to be higher and 21% expect unchanged levels.
28% of companies globally reported higher stock levels than the previous week, up from 24%, while 46% noted unchanged levels, down from 52%. 24% of US companies had higher stocks than a week earlier, down from 48%. 33% of respondents in Europe reported higher steel inventories, up from 16%, while 47% had stable stocks.
More information about TSI - which is majority-owned by Steel Business Briefing - is available on its websitewww.thesteelindex.com .
