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| CIS slab exporters see market strengthening | ||
| The major CIS slab producers and their smaller contemporaries are enjoying an exceptionally positive market, as circumstances conspire to help them sell, several market observers tell Steel Business Briefing. As Corus’s Teesside plant in the UK is being mothballed, the balance is shifting and a certain shortage of imported slab is a real possibility in south-east Asia, one major producer's agent says. With Dongkuk's new plate mill on stream and Korean, Chinese and Japanese demand seemingly improving, slab export prospects into the region are looking strong, SBB is told. Meanwhile, Venezuelan energy rationing is affecting its major producer Sidor's output (crude production fell by two thirds last month, as previously reported), and the mill is seeking to import semis. Remarkably, its Q1 import requirement of several hundred tonnes of slab had to be declined by a major Russian exporter, due to the lack of available tonnages, SBB is told. The margins are said to be getting tighter for rerollers, and as raw materials prices are not looking to be weakening, the squeeze is likely to get even tighter. With China coming back to the market in the end of February and Q2 negotiations due to start at the same time, April-June should be a good quarter for slab producers, sources comment. | ||
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| Nippon Steel lifts H-beam prices despite weak demand | ||
| H-beam prices in Japan are much lower than those offered overseas and needed to be increased, Steel Business Briefing hears from Nippon Steel. “We know it is difficult to lift prices when demand is low, but we have to lift H-beam prices to play a responsible role as the major H-beam supplier in Japan,” a Nippon Steel spokesman says. He added that lifting H-beam prices is important to provide stable domestic supply. H-beam stocks held by Nippon Steel’s ‘Tokiwakai’ grouping of affiliated stockists at end-January fell by 6% on the previous month to 215,200 tonnes. Nippon Steel explained the decrease on production cuts rather than on any lift in demand. Nippon Steel raised prices of H-beams for ‘miseuri’ or spot contracts by ¥5,000/t ($56/t) for February contracts, and SBB believes senior sized H-beams reached around ¥77,000/t ($861/t). Rival Tokyo Steel Manufacturing increased its prices by ¥3,000/t for February contracts while its senior sized H-beam became ¥66,000/t ($738/t). “Nippon Steel’s price is higher, but the company is trying to raise market prices rather than increasing sales volume in Japan,” a trader noted. The current market prices of senior sized H-beams in Tokyo and Osaka are around ¥62,000/t ($693/t). The trader says the additional price increase by Nippon Steel may help lift market prices but demand is too low which is reflected in softer market prices. | ||
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| Saudi Arabian rebar prices look set to rise | ||
| Saudi Arabian market participants believe that rebar prices in the domestic market are set to increase, due to rising raw material prices. Rebar demand is seen as satisfactory, and new construction projects in the country support steel consumption. Market prices are already reported to have increased by SAR 20/tonne ($5.3/t) for regular sizes to SAR 2,000/t ($533/t), and prices below SAR 2,000/t are diminishing, market sources tell Steel Business Briefing. SabicHadeed is expected to keep its prices unchanged to be competitive against other rebar producers in Saudi Arabia. But the other producers are likely to push their prices up to reflect increasing billet and scrap costs. Saudi Arabia continues to import billet from Turkey. The recent visit of the Turkish prime minister in Saudi Arabia, and talk of closer co-operation between two countries, is creating an expectation in the steel business for improvements in the trade between the two countries. Saudi Arabia recently decided to impose a 5% import tax especially against Turkish and Far East imports of rebar. Average billet transactions to Saudi Arabia from Turkey for January bookings were $449/t fob. Saudi market players comment that they are not happy about the excessive imports of finished steel products in to the country, but import of semis and raw materials should be supported. | ||
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| Chinese HRC prices stable, inventories keep climbing | ||
| Chinese domestic hot rolled coil prices have been mostly stable this week. However, as traders have been gradually leaving the market for the Chinese New Year holiday, transaction levels have become very slow. As a result, HRC market inventories continue to rise this week, Steel Business Briefing notes. In Shanghai, Q235 5.5mm HRC is offered at around RMB 3,750-3,770/t ($551-554/t) with 17% VAT. Meanwhile in Guangzhou, similar materials are offered at RMB 3,850/t ($566/t) with VAT. Both of these prices remain almost unchanged from last Friday. Traders tell SBB that as there are few transactions in the market, they do not want to readjust their offer prices at this moment, but will wait to see where the market is going after the holidays which end on 19 February. However, as transaction levels slow down, market inventories keep increasing, which will put a lot pressure on the market after the holidays SBB notes. In Shanghai, HRC inventories have increased by almost 10,000 t from early last week to 1.5m t, while in the Guangdong Lecong steel market, the HRC inventory has reached 1.1m t, up by more than 10,000 t over the same period. | ||
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| European plate & rebar prices firming again: The Steel Index | ||
| The latest reference prices released by The Steel Index show that northern and southern European plate and rebar prices are all firmer since last week. However, the US plate reference price FOB Midwest mill was essentially unchanged at $678/s. ton ($747/t). The average US plate delivery time is shorter than last week at 6.3 weeks. Northern European plate ex-works reference price increased by €10/tonne to €469/tonne ($651/t). The average delivery lead-time is longer than last week at 7.1 weeks. The southern European plate reference price is also higher than last week’s level, and the average delivery time is just longer than last week at 5.8 weeks. The northern European rebar reference price rose by €8/tonne from last week, and the average delivery lead-time is longer at 2.7 weeks. The average LME Mediterranean billet price for last week was $427/tonne, making the spread to TSI's northern European rebar price $91/t. The southern European rebar reference price ex-works increased slightly from last week’s level to €389/t ($540/t). The spread to the average LME Mediterranean billet price fell by $24/t from the previous week. The average delivery lead-time for rebar is shorter than last week at 2.8 weeks. The Steel Index - which is owned by Steel Business Briefing - publishes coil, plate and rebar reference prices on a weekly basis. It also publishes two daily iron ore reference prices. Companies wishing to submit data, or receive the full set of reference prices published every week, can apply on the website www.thesteelindex.com . | ||
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| Ternium not receiving payments for Sidor | ||
| Latin American steel conglomerate Ternium has announced that it did not receive compensation payments for Sidor’s renationalization from Corporación Venezolana de Guayana (CVG) – a Venezuelan government entity. Steel Business Briefing learns from Ternium that these payments include a US$157.5m main installment, plus interest, and a US$141.4m mandatory prepayment, plus interest. Both were supposed to be paid on February 8. Apart from payments already made, and this latest installment just due, the Venezuelan government must still pay another US$1.02bn to Ternium, as per the agreement reached when the plant was nationalized last year, SBB notes. | ||
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| US Steel recalling workers at Lorain OCTG mill | ||
| US Steel’s seamless tubes mill in Lorain, Ohio, is recalling workers to resume OCTG production. According to a local media report in The Morning Journal, about 350 of 400 employees who were temporarily laid-off last December will be returning to the mill. The report cites a local union president as the source of the information. A USS spokeswoman declined to comment on operational conditions, Steel Business Briefing notes. | ||
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| Krakatau Steel plans November IPO and to raise output | ||
| Indonesia’s state-owned PT Krakatau Steel (PTKS) plans to hold an initial public offering of shares this November after the financial downturn derailed its plans for an earlier listing, company sources tell Steel Business Briefing. The Indonesian house of representatives has approved a maximum 30% divestment of shares in the steelmaker, implemented in several phases. PTKS plans to raise sales from finished steel output at its Cilegon plant in West Java by around 10% from its last year's 2.11m tonnes, on demand from new government infrastructural projects amidst improving economic conditions this year. While the 2009 sales figure represents a 5% dip in volume (from 2.21mt in 2008), in value terms sales fell 23.8% year-on-year to around Rp 16 trillion ($1.7bn). This year, PTKS plans to run its hot strip mill at its rated 2m t/y capacity. It also intends to produce around 700,000t of CRC and 250,000t of wire rod. The company estimates that domestic steel consumption will reach 9.05mt this year, up from last year's 8.38mt. Meanwhile, company president director, Fazwar Bujang, said that the zero duty on steel imports from China due to the ASEAN-China Free Trade Agreement – which took effect 1 January – will result in an inflow of cheaper Chinese steel imports and hurt local producers. Last month the Indonesian government wrote to the ASEAN Council to renegotiate the tariff reductions on 228 products including steel. A decision is expected within six months. The local steel industry has been lobbying for Chinese steel products to be placed on the “sensitive list” that would see import duties retained until 2018. | ||
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| Korean domestic car sales fall in January as incentives end | ||
| Sales of domestic passenger cars in Korea in January surged by 61%, or by 38,188 vehicles, to 100,844 compared with the 62,656 sold in the same month last year. Auto demand in January 2009 was adversely affected by the global financial crisis, hence the large year-on-year increase, Steel Business Briefing learns from the Korea Automotive Manufacturers’ Association (Kama). January auto sales from Hyundai Motor, the largest Korean carmaker, jumped 50% y-o-y to 269,841 vehicles for similar reasons. Of this total, the carmaker’s domestic sales and exports were 59,774 and 210,067 vehicles respectively. However, the ending of the government’s tax reduction scheme at the end of 2009 resulted in slower domestic sales for passenger cars in January, dropping 26% to 100,844 compared with 135,801 in December. Seoul launched its auto stimulus in May, which included tax on new vehicles being slashed by up to 70%. Meanwhile, hot-dip galvanized automotive sheet output in December from Korean steel makers led by Posco slightly increased by 11,505 tonnes to 199,223 t from 187,718 t in November, according to Korea Iron & Steel Association. But Korea’s total output from January to December plunged by around 800,000 t, or 30%, to 1.8m t last year compared with 2.6m t in 2008. This was due to massive production cuts in the first quarter of last year. | ||
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| Korean domestic rebar demand sluggish | ||
| Domestic rebar demand in Korea from local distributors and end-users is stagnant this week ahead of the country’s Lunar New Year holiday. The depressed rebar market saw a short recovery from late January to early February because domestic mills, such as Hyundai Steel, decided to lift their sales prices from February to offset high scrap prices, as Steel Business Briefing reported. Local consumers led by distributors increased their purchase volumes to accumulate stocks until last week, but the upcoming holiday and a lack of demand quickly undermined the brief upturn, a local dealer says. Due to speculative buying from consumers, January’s high rebar stocks held by Korea’s seven major producers plunged by 120-130,000 tonnes early last week from 220-230,000 t a month ago. But stocks have begun to climb again, reaching 300,000 t this week. Meanwhile, rebar output in 2009 totalled 9.68m t, a decrease of 5% compared with a year earlier. Total domestic sales dipped by 9% year-on-year to 9m t, while exports jumped by more than three times to 690,000 t during the same period, the Korea Iron & Steel Association notes. | ||
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| Xianggang's south China subsidiary starts up new converter | ||
| Xiangtan Iron & Steel (Xianggang) subsidiary, Yangchun New Iron & Steel in southern China’s Guangdong province, has commissioned a new 120 t converter last week, with a crude steel capacity of about 1.2m tonnes/year, Steel Business Briefing learns from the company. The new unit is set up to feed an 800,000 t/y bar mill inaugurated at the end of January this year, according to a company source. He says the rolling mill will mainly produce 18-25mm diameter rebar, and the company may also consider selling extra billets. These new facilities are both located at the company's new manufacturing base in Yangchun Nanshan Industrial Park in Yangchun city. SBB also learns that the company already started a second phase expansion at the same site, which will double the company’s capacity to about 2.4m t/y each of pig iron and crude steel within this year. Yangchun will also make its first foray into wire rod production through the expansion. The steelmaker has signed an EPC (Engineering, Procurement and Construction) contract with a domestic construction company to build a 1.2m t/y wire rod mill, which is set to start operation in late October this year. As Yangchun has started its facilities at its new plant, the company's old capacities in the centre of Yangchun city may face closure soon, a company source says. These capacities include 500,000 t/y of iron, 550,000 t/y of steel and 600,000 t/y of rebar, as SBB has reported. | ||
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| Taigang holds domestic prices, raises February export prices | ||
| China’s largest stainless steelmaker, Shanxi Taigang Stainless Steel, will retain its domestic list prices for 304 and 430 stainless products over the next two weeks, making this the fourth straight week of keeping prices unchanged. The company has also raised export prices for its stainless products by an average of around $50/tonne, company sources say. Taigang’s prices for grade 304 3-12mm hot rolled coil and 2B 2mm cold rolled coil will hence remain at RMB 21,620/t ($3,166/t) and RMB 23,120/t ($3,386/t) respectively, while its prices for 430 CRC 2B will stay at RMB 12,620/t ($1,848/t), according to a 9 February statement from Taigang seen by Steel Business Briefing. All prices are for the 9-22 February period and include 17% VAT. Market watchers note that trading in the Chinese spot market has been quiet since the start of February as businesses wind down ahead of the Chinese New Year holidays starting this weekend. Users are trying to avoid holding large amount of inventory over the period. Spot offer prices in south China’s Foshan market have remained stable since the start of February. The export price change is for orders made in February for March delivery, Taigang officials tell SBB. They declined to provide export list prices, noting they varied for different regions and customers. Taigang’s export price rise is not unexpected given that producers from other East Asian nations have either raised or intend to raise export prices, traders say. Offer prices for 304 stainless CR sheets for delivery in one-to-two months from these countries were heard at $2,800-2,900/t cfr China last week. | ||
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| Posco targets 22% rise in stainless output this year | ||
| Korea’s largest stainless steelmaker Posco expects to produce around 1.8m tonnes of crude stainless steel from its domestic operations this year, a company spokeswoman tells Steel Business Briefing. This will mark a 22% increase from 1.473m t in 2009. The official notes that the increase comes primarily from a low base, as the company cut production in the first half of last year because of weak demand caused by the global economic slowdown. Since the second half of 2009, Posco has restored output to full capacity, she adds. Posco’s crude stainless output – excluding that of its Chinese subsidiary, Zhangjiagang Posco Stainless Steel (ZPSS) – rose by just 2% in 2009, as SBB reported. The company is expecting to produce a record 34.4m t of raw steel, including carbon and stainless, this year on strong demand from key sectors, including shipbuilding and automotive. The completion of a revamp of its No.4 blast furnace in Gwangyang last year, which raised the unit’s capacity by 35% to 4.2m t/y, will also aid the increase this year. When the contributions of ZPSS and Posco Specialty Steel are added, Posco's consolidated output will top 36.1m t in 2010. | ||
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| Nickel stocks high in China but no panic selling | ||
| Nickel stocks are high in China but analysts say nickel prices are not at risk of plunging in the short-term as there are no signs of selling down in the market. There are currently stocks of 150,000 tonnes of nickel, including both nickel metal and ferro-nickel, in China, up from around 100,000 t in mid-2009, state-owned Chinese research firm, Beijing Antaike Information Development Co, estimates. The build-up follows strong imports for most of last year until September, driven by speculators and traders. “Fund houses do not appear to be overly concerned about the huge stocks and there are no signs of panic selling in the market, as prices are expected to rise again later,” says an Antaike analyst. Some traders have stocks but are reluctant to sell because of optimism about future prices, or because their purchase prices are higher than current prices, a Shanghai-based nickel analyst says. With ferro-nickel production costs in China currently around $17,000/t, there is also support for nickel prices, she adds. Three-month nickel prices on the London Metal Exchange have slipped below $18,000/t to $17,100-17,125/t on 8 February. But market participants expect prices to return to $18,000/t and remain at that level in the near-term. However, a Shanghai-based nickel trader tells Steel Business Briefing that the nickel market could slide after Chinese New Year holidays, as stainless mills' stockpiling activities for the holidays - which supported the market in January and early February - have ended. Antaike predicts China’s nickel demand from the stainless steel industry to reach 360,000 t this year, up 6% from last year’s 340,000 t. | ||
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| Vietnamese steel demand rose by 34% in 2009 | ||
| Vietnam’s apparent steel consumption in 2009 rose by 34.2% from the previous year to 11.77m tonnes, according to the Vietnam Steel Association (VSA). The country consumed 5.47mt of long products, 5.36mt of flat products and 944,000t of others including pipes, fabricated steel, ropes and stainless steel. For longs, production by VSA members amounted to 4.1mt and from non-VSA members 600,000 t. Imports of bars, wire rods, sections and wire reached 76,000t, 496,000t, 228,000t and 91,000t respectively. Exports of construction steel, sections and wire were 114,000t, 18,000t and 9,000t. For flats, imports and exports of hot rolled coil/sheet and cold rolled coil/sheet reached 5.274 m t and 114,000 t respectively. For coated steel, imports and exports were 360,000 t and 162,000 t respectively. Imports of others which totalled 1.07m t included 718,000t of fabricated steel/ropes and 287,000 t of stainless steel. Exports of fabricated steel/ropes and stainless were 61,000 and 30,000 t respectively. “It was a good year for all steel producers,” a VSA official tells Steel Business Briefing. The combined effects last year of the government’s $8bn stimulus package and a reduction in the value-added tax on steel products to 5% from 10% helped to boost steel demand. Sales of construction long products by VSA members in January fell month-on-month by 9.2% to 348,000t but rose by 98.5% compared to January 2009, the VSA says. January’s longs production reached 403,000t, a dip of 4.6% compared to December but an increase of 74.2% year-on-year, SBB understands. | ||
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| Leading Chinese mills in talks on possible 'cooperation' | ||
| Insiders close to eastern China’s Shagang tell Steel Business Briefing that it and Baosteel have been in discussions recently in a bid to discover areas for possible cooperation. According to the Securities Daily publication, asset assessments have already been started, and the two companies will take some substantial moves either late in the first quarter or early in the second quarter of this year. The paper also reports that currently Baosteel and Shagang are already considering personnel arrangements. Although the insiders contacted by SBB declined to indicate what kind of “cooperation” these two companies are discussing, some market sources suggest that it could be either exchanging shares or setting up joint ventures. “The possibility of Baosteel taking over Shagang is very small; it will be more likely Shagang and Baosteel are both seeking some strong partners in a bid to develop themselves,” one Beijing-based market source says. SBB notes that Shagang is looking to expand its influence by taking over some smaller mills. On 24 January, Shagang acquired Jiangsu Xixing Group, which has a crude capacity of 2.1m tonnes/year. Currently, Shagang is seeking more acquisition opportunities in northern China’s Hebei province. In 2009, Shagang Group produced 25.11m t of crude steel, while Baosteel produced 38.54m t. | ||
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| China’s Jiangsu closed 8m t/y obsolete capacity in 2009 | ||
| Eastern China’s Jiangsu province, one of China’s largest steel-producing provinces, closed 8m tonnes/year of obsolete iron and steel capacity in 2009, Steel Business Briefing learns from the provincial development and reform commission. Jiangsu’s closures last year, about 20% of the national total of capacity closures, are the second largest after the 13m t/y of iron of steel closed by northern China’s Hebei province. According to the province’s steel plan, Jiangsu will close a total of 11.86m t of old iron and steel capacity in 2008-2010. The province estimates it can save 4m t/y of coal and 100m t of water, and cut about 200,000 t/y of sulphur dioxide emissions when the decommissioning target is realized. According to data from the China Iron & Steel Association, Jiangsu province produced 54.9m t of crude steel in 2009, up 13% year-on-year, and 45.9m t of pig iron up 19% y-o-y. The province is starting to close those blast furnaces with volumes below 400 cubic metres and converters/electric arc furnaces below 30 t this year. But the province has yet to announced its 2010 decommissioning target. Beijing is more closely monitoring new investments in steel sector, and banned the provision of land to mills with outdated capacity. Meanwhile, the imposition of higher charges for electricity, water and other resources on outdated capacity will also be employed to facilitate closures, as SBB reported. | ||
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| China's Linggang posted 12% drop in '09 net profits | ||
| Lingyuan Iron & Steel (Linggang), in northeastern China's Liaoning province, posted net profits of RMB 298m ($44m) in 2009, down by 12% year-on-year, Steel Business Briefing learns from the company’s annual report released on 9 February. The company blames the profit decline on losses incurred in the first four months of 2009, though it became profitable again in May last year. In the first half of 2009, Linggang made a loss of RMB 26m ($4m). Linggang says it adapted to the market changes by supplying about 470,000 tonnes of construction steel to major infrastructure projects, such as the Beijing-Shanghai passenger railway link and Ha’erbin-Dalian railway. Rebar and bars have become a main generator of the company’s income, SBB understands. Revenues of these products have seen a positive growth of 23% from 2008 to reach about RMB 6.2bn ($0.9bn) last year, accounting for about 65% of the company’s total turnover of RMB 9.5bn ($1.4bn). According to its annual report, Linggang produced about 2.91m t of pig iron, 3.07m t of crude steel and 3.01m t of finished steel last year, up by 47%, 49% and 51% respectively from 2008. For 2010, the company plans to produce 3.3m t of crude steel and yield RMB 11bn ($1.6bn) turnover. Linggang already has a crude capacity of about 3.5m t/year and similar finished steel capacity, including rebar, bar and hot rolled strips. As SBB reported, it’s currently building a 500,000 t/y wire rod mill, which is expected to come on-stream by September this year. | ||
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| Turkish flat steel exports dropped by 58% in January | ||||||||||||||||||||||||||||||||||||||
Turkey exported a total of 49,442 tonnes of flat rolled steel in January 2010, less than half the January 2009 exports of 118,891t. Steel Business Briefing is informed by Istanbul Mineral & Metal Exporters’ Association (IMMIB) that the most significant decline was in cold rolled products, where exports fell by 83.6% to 4,000t from January 2009’s 24,394t. Turkey exported 29,897t of hot rolled flats in January 2010, 60% less than January 2009’s 75,018t. Greece was the biggest buyer with 4,527t. Coated flats export volume was 13,394t in January 2010, 18.6% less than January 2009’s 16,454t. Romania was the biggest export destination with 1,886t. A Turkish flats exporter says the decline in exports is because of the high stock levels in Europe and China; and also because the biggest Turkish producer Erdemir has not been giving sufficient export allocation since July. He thinks this decline in volumes will continue in February as well, but there may be a recovery in March. Turkey exported only 6 tonnes of slab in January 2010, 99.98% less than January 2009’s 27,729t. Koray Gunay, export sales manager of Colakoglu, tells SBB that demand for slab from the foreign markets is not strong at present. But with HRC prices rising, demand is expected to improve. He adds that Colakoglu’s current slab capacity is switchable between billets and slab, and that the company will be using its slab for its new hot strip mill that will start production in July. | ||||||||||||||||||||||||||||||||||||||
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| Polish service centre expands with new processing lines | ||
| Polish steel processor and distributor Maxstal has nearly completed construction of a new production hall at its service centre in Krakow, a company representative tells Steel Business Briefing. The company is installing a new slitting and cut-to-length line which will increase its throughput by 10,000 tonnes/month. The cut-to-length line will process hot rolled sheet up to 2.2 metres wide, 10mm thick and 20 metres long, and will begin operating later this month. The slitting line, for which Maxstal did not give any details when asked by SBB, will begin operating by the end of March. The new processing facility possesses its own overhead crane and railway siding and has cost PLN 20 million (€4.9m) to build. Maxstal sells cold rolled coils imported from Ukraine, the Czech Republic and Polish mills, as well as hot rolled coils and sheet, hot rolled strip, plate 6-50mm thick, closed sections, angles and channels. The company sold 110,000 tonnes of steel in 2008. | ||
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| GSW to seek €100/t more for HC rod for Q2 | ||
| Spain’s Global Steel Wire (GSW) is looking to increase its prices by over €100/t from Q2, the company tells Steel Business Briefing. This rise will affect all its wire rod products for industrial and automotive use including high carbon/drawing-quality, free-cutting and cold-heading qualities – but not mesh quality rod. The company's price increase is based on a rise in raw material costs of over €70/t in recent months. This includes scrap and DRI, GSW comments. “Raw material costs, coupled with the need for recovery of margins, are forcing us to implement these increases during Q2. Some have already been implemented for products that are not subject to quarterly prices such as pre-stressed concrete and free-cutting steel rods,” GSW tells SBB. The company claims that these increases will be readily accepted. As demand for industrial and automotive applications is consolidating, and inventories in the supply chain are low, we see a sustainable price recovery as possible, GSW concludes. Some customers also believe higher prices will eventually be accepted, "I think prices will increase, though not by as much as €100/t," one tells SBB. But after Chinese New Year, "the market will have to accept the increase,” he adds. | ||
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| Turkish longs exports halved in Jan, billet replaces rebar | ||||||||||||||||||||||||||||||||||||||||||
Serdar Kocturk, head of the steel exporters’ association, believes that Turkey is likely to continue replacing its rebar exports with billet exports, which are more profitable for the producers. Kocturk tells Steel Business Briefing that Turkish long steel product exports almost halved in January 2010 to 630,000 tonnes, compared to the same month last year. This is mainly due to the slowdown in demand in the Middle East. But Turkey exported 248,000t of billet in January, up from 223,000t in December. Due to the drastic drop in Turkish rebar exports (by 70% compared to January 2009) Turkish producers try to divert their capacities to billet exports. The UAE became the biggest market for Turkish billet exports in January with 68,800t. Morocco followed with 65,650t. Saudi Arabia continued to be one of the main destinations for Turkish billet exports with 28,300t. Taiwan became an important Far East destination for Turkish billet exports with 27,000t in January. Tunisia took 28,000t and Egypt 20,350t respectively. Although some cargoes were bought by Far Eastern and Latin American countries, it is too soon to say that Turkey could be a frequent supplier to such distant markets. Kocturk comments: "We have to follow the trend in the following months to say that these markets will be frequent buyers from Turkey." | ||||||||||||||||||||||||||||||||||||||||||
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| Structural market remains challenging: Bone Steel | ||
| Bone Steel, the Scotland-based structural steel fabricator, saw a steep fall in throughput last year amid a fall in demand for its products, Steel Business Briefing has learnt. Bone supplied around 30% less steel and says the market remains just as challenging because of continued slow demand. To combat this difficult environment it is aligning prices with the market and working hard to deliver projects for the price at which they were secured. It also looking outside of the UK and Europe for work, with an emphasis on the Mideast Gulf region. The company is working on one shift and using sub-contractors rather than “carrying headcount”, SBB understands. If the price increases being announced by steel producers are to stick, demand needs to increase or capacity drop out the market, a spokesman from the company suggests. “On a positive, the price increases may just ‘inspire’ developers – public or private – to kick projects off as the prices may start rising,” he says. The company has won around £10m in work so far this year, SBB understands. "Despite the difficult trading conditions which have affected everyone operating within the construction industry, there is still work out there to be won and this is reflected in our current pipeline of bid work, which stands at over £200m," the spokesman continues. | ||
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| Tube distributor Heléns takes over Denmark's Sonne | ||
| Scandinavian tube distributor Heléns Group has taken over the Danish tube stockist and processor Thos. Sonne Junr., combining it with its Danish subsidiary, Heléns Rør. According to Heléns, the move combines the two largest tube distributors in Denmark, with Heléns Rör in Aalborg and Albertslund and Sonne based in Middelfart. They are of about the same size, and will have a combined annual delivery of 20,000 tonnes, and combined sales of €30m Steel Business Briefing is told by Heléns Group’s ceo, Anders Ivarsson. “We wanted to expand our activities in Denmark, and Sonne is more into processing precision tubes for added value,” he says. Sonne claims to operate Denmark’s largest processing centre in this segment, with more than 30 machines. Heléns Group is headquartered in Sweden, and has operations in Scandinavia and the Baltic states. It is 75%-owned by Germany’s tube and components producer Benteler, through its subsidiary Benteler Distribution, while Finland’s Rautaruukki owns the balance. | ||
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| Cogne increases prices for stainless rod and bars | ||
| Italian stainless steel producer Cogne Acciai Speciali has just announced a rise in its wire rod and bar prices, Steel Business Briefing learns from the company. The increases will be of €100-150/tonne, depending on qualities, and is due to a revival in demand. “The improvement in stainless steel long products demand is helping the price recovery, following a long period of depression,” the company notes in a statement. Cogne Acciai Speciali will apply the above increments to all new orders delivered from 1 April. | ||
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| Slump in output hits profit at Turkish alloy steel producer | ||
| Turkish alloy steel producer Cemtas has reported a 38% fall in its turnover and a 95% drop in net profit for 2009, Steel Business Briefing learns from the company. The company’s sales totalled 86,662 tonnes in 2009 worth TL 110.7m ($73.2m). These included 35,903 tonnes (down 31% from 2008) of domestic sales and 50,759 tonnes of exports (down 19%). Its net profit for the year was TL 1.16m ($0.77m), which is 95% less than in 2008. Cemtas reported that, because of the effects of the global crisis starting in the last quarter of 2008, it reduced its production by 45% in the first quarter of 2009 and 40% in the second quarter. With the slowly recovering demand, it has produced at 70% of capacity in the third quarter and reached 97% in the last quarter. For the whole year the company’s production totalled 93,921 tonnes in its meltshop, which is 22% less than the previous year, and 86,789t in its rolling mill, down by 25%. | ||
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| Domestic scrap prices continue rising in Turkey | ||
| Domestic scrap prices in Turkey are continuing to strengthen under the pressure of the costlier imported scrap, Steel Business Briefing learns from the Turkish steel producers. In the local market, domestic scrap is currently being offered at TL 405-500/tonne ($268-331/t) which is TL 15-20/t ($9.9-13.2/t) higher than last week. The prices of domestic scrap already increased by TL 25-30/t at the beginning of February, as SBB reported. The long steel producer Çolakoglu and the alloy steel producer Asil Çelik both announced new scrap buying prices at TL 500/t, up by TL 20/t, effective from 9 February. Another alloy steelmaker, Cemtas, increased its purchasing prices by TL 20/t to TL 480/t, SBB learns. | ||
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| Decline in EU imports is set to reverse in 2010: Eurofer | ||||||||||||||||||||||||||||||
The declining trend in steel imports into the European Union in the past two years is set to reverse in 2010, steel producers’ federation Eurofer forecasts. It expects third country imports to increase by 12.5% this year and by 12% in 2011, roughly in line with projected growth in EU steel consumption. This follows a fall in imports of 47.3% in 2009. In quarter three last year the decline reached 59.7% year-on-year. Volumes thus dropped to their lowest level in recent years “in a reflection of overall weak demand and pricing conditions in Europe,” Eurofer says in its report sent to Steel Business Briefing. In the current opaque market situation, “steel buyers are biased towards ordering basically hand-to-mouth,” which has made them reluctant to commit to larger deals with third country suppliers with potentially longer delivery times, the federation notes. In Q4 2009, imports fell by a smaller 36.8% y-o-y, and increased by almost 22% quarter-on-quarter. Eurofer predicts a slight fall of 2.3% y-o-y in Q1 2010, and then a change in trend, with growth of 19.7% y-o-y in Q2. The import growth forecast this year and next is predicated on there being a reasonable balance between steel supply and demand globally. So far, rising global steel production has not resulted in a significant increase in imports into Europe. However, “if global demand would fail to follow the rising trend in steel output, temporary oversupply elsewhere could lead to import pressure building up in the EU more strongly than currently projected,” Eurofer warns. | ||||||||||||||||||||||||||||||
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| German crude output stable in January | ||
| In January German crude steel production stayed at the average level reached during the fourth quarter of last year, according to steel federation Wirtschaftsvereinigung (WV) Stahl. Output reached 3.4m tonnes, 28% higher than in January 2009. “The upward development of production over the recent months reflects the recovery of order intake,” WV says in a notice sent to Steel Business Briefing. It notes that only one German blast furnace is currently still idled, against six in summer 2009. In 2009 32.7mt of crude steel were produced in Germany, according to WV, with 21.3mt made via the basic oxygen route and 11.3mt in electric arc furnaces. The year-on-year drop in BOF production was 32%, against a 23% fall in EAF output. Last year production of rolled products totalled 29mt, of which 18.8mt was flat products and 10.2mt long products. | ||
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| ZMZ production set to increase in February | ||
| Zlatoust Metallurgical Works (ZMZ) is continuing to ramp up production. ZMZ plans to ship 25,300 tonnes of finished products in February, which would be a month-on-month increase of 7.2 %. A company spokesperson tells Steel Business Briefing that the plant has sufficient orders for February and that these should guarantee the continued operation of the company's open hearth furnace for now. ZMZ produces long products, such as bar and tool steels for the automotive, aerospace as well as the nuclear energy industries. For February, demand for the auto sector is up, whilst that for rebar is down. Three furnaces are currently operational at the plant: these include an EAF and an open hearth furnace, which is believed to have a capacity of approximately 800,000 t/y. ZMZ produced 20,100 t of crude steel in January, of which 12,300 t was made in the OH furnace. ZMZ, part of Estar holding, entered into a close strategic partnership with Mechel’s Chelyabinsk steelworks last August. Having previously filed for bankruptcy, the plant remained idle for two months. As reported in SBB, when the partnership came into effect Mechel's Rashid Nugumanov was appointed its director general. | ||
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| TMK to raise production in 2010 | ||
| The production outlook of Russia’s biggest tube and pipe manufacturer TMK remains strong, says Rob Edwards, managing director of metals and mining research at analysts, Renaissance Capital. "Domestically TMK is on a strong footing - its large diameter pipe business is almost fully booked,” he tells Steel Business Briefing. But Edwards adds that TMK Ipsco, the US branch of the pipe manufacturer, might have to wait a while longer for volumes to pick up. TMK made two major financial steps this month, which the analyst believes will ease the pressure of debt levels at home. Funds raised by a guaranteed convertible $425m bond offering (due in 2015) and an extension of a $450m loan from Vneshtorgbank (VTB) will be used to finance existing short-term debt, a TMK spokesman tells SBB. The company's level of expenditure rocketed after the acquisition of US-based Ipsco Tubulars two years ago, and continuing investments. Two major projects have been completed in Russia in 2009: a 600,000 tonnes/year PQF seamless pipe mill at Tagmet and a new 1m tonnes/year electric arc furnace complex at Seversky pipe mill. The latter feeds seamless pipe production at Seversky and Sinarsky mills. TMK's capacity for pipe and tubular products at its plants in Russia, Kazakhstan, Romania and the USA is 6.5m t/y. | ||
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| Mexico's rebar prices increase | ||
| As had been expected, Mexican rebar prices climbed this month in light of improved domestic demand. Steel Business Briefing learns from major domestic distributors that rebar prices currently are being negotiated at around 8,800-9,500 pesos/tonne (US$668-728/t) delivered, depending on the Mexican region. Rebar prices declined in the beginning of January, to roughly 8,400-8,500 pesos/t, since the early-2010 demand level was not strong enough to support a late-2009 price hike. According to SBB's sources, there are no price adjustments scheduled for the coming days, but March values for rebar are still uncertain. | ||
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| US market awaits March beam pricing | ||
| In light of stable US scrap prices, market sources tell Steel Business Briefing they anticipate sideways wide flange beam prices for March deliveries. Longs market leader Nucor apparently has yet to make a move on beam pricing. “I think they will probably keep prices flat,” said one trader. He added he is curious to see if ArcelorMittal “puts out another aggressive (WF) offer again, considering the warning shot from Nucor with the last price announcement.” Last month, a Nucor letter to customers stated the company would monitor import offers to be sure they are in compliance with trade laws. One domestic mill source said he is expecting flat prices, but is still uncertain. “I just don’t know right now,” he said. “We are evaluating.” He said he wouldn’t be surprised to see “a few tons” imported from ArcelorMittal “but we won’t know until it gets here in April.” The trading source added, “Demand is still weak so imports are still less of a problem than demand.” US mill WF beams prices are around $710-730 per short ton fob. | ||
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| Wheatland hikes US sprinkler pipe prices 10% | ||
| Pennsylvania pipe maker Wheatland Tube has announced its second sprinkler pipe price hike in two weeks. Effective with shipments yesterday, 1-6 inch diameter black and galvanized sprinkler pipe prices will increase by 10%, according to a customer notification letter. The previous 10% increase was effective with new orders placed on or after January 26, Steel Business Briefing has reported. Wheatland and sister company Atlas Tube are divisions of pipe firm John Maneely Co. “Continued and significant increases in coil steel material input costs and zinc necessitate this adjustment,” the letter states. “Announced price increases for flat roll steel continue while lead times for steel remain extended. Further, many steel mills have filled their order book into March and spot market prices are being dramatically raised to fill any open capacity.” As a result, Wheatland is instituting a “price-in-effect at time of delivery” policy for all new orders, effective immediately. “We continue to strongly recommend escalation and/or price-in-effect language be included in any job’s bidding for a continued period,” Wheatland suggested to its customers | ||
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| US pipe producers join to fight duty evasion schemes | ||
| Steel pipe and tube producers from nine US states, all members of the Committee on Pipe and Tube Imports (CPTI), announced yesterday the formation of a special industry task force with the goal of ending the evasion of AD and CVD duties on imports of tubular products from China. “Our company is prepared to take whatever actions are necessary to end these customs fraud practices and send a strong message to all of our trading partners that the US will not tolerate these assaults on our manufacturing sector,” said Barry Zekelman, president of the John Maneely Co. He noted in a statement seen by Steel Business Briefing that “duties were put into place to allow the industry to recover and allow our industry to contribute to the recovery of the US economy – instead we are losing ground to people who cheat.” One alleged evasion scheme is not new: importers claiming a false country of origin, such as Vietnam, Malaysia or Oman. Another scheme the task force now claims is being used is Chinese tube entering the country in containers that were categorized as another product. In one case, the containers were labeled as used books. US producers are urging all levels of government to not only make these illegal schemes a priority, but to use their law enforcement authority to prosecute the offenders. | ||
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| Coal giant aims to make big profits in US shale plays | ||
| Another major energy player has announced its intentions to exploit the natural gas locked in the eastern US Marcellus Shale formation, further bolstering domestic steel pipe and casing hopes. Coal producer Alpha Natural Resources announced in its annual earnings statement that it has partnered with Rice Energy LP to develop almost 20,000 acres of the shale play in southwestern Pennsylvania. Each firm will hold a 50% interest in the development. Four wells are planned for 2010, with drilling already underway, Steel Business Briefing learns. “Rice Energy brings technical and managerial expertise with extensive experience drilling and fracturing wells in the Marcellus, and this partnership enables Alpha to capture value from our Marcellus shale asset without diverting focus away from our coal business,” said Kevin Crutchfield, Alpha CEO. Alpha’s announcement follows Exxon Mobil’s December announcement of a $41bn buyout of Marcellus Shale player XTO Energy and a $2.25bn Barnett Shale formation joint venture announcement between Chesapeake Energy and Total E&P USA. | ||
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| Lakeside sees stronger sales to the oil & gas market | ||
| Canadian pipe maker Lakeside Steel is looking forward to stronger revenue in the current quarter due to increased demand from the oil and gas sector. Heightened OCTG demand and regular price increases due to raw material price hikes are expected to buoy Lakeside through the current quarter (its fiscal Q4 2010) and into fiscal 2011, according to a company earnings release. “Lakeside’s current order book provides a full production load in both of its mills until May 2010,” the release states. Lakeside recorded a net loss for fiscal Q3 ended December 31, 2009 of about C$3.8m (US$3.6m) on total revenue of about C$27m, Steel Business Briefing notes. “We expect to see a significant improvement in (fiscal) Q4 as a result of increased load and further cost reductions and therefore we anticipate revenue of approximately $40m for (fiscal) Q4,” said Lakeside CEO Ron Bedard in the earnings release. Lakeside recently participated in a US$75/short ton price hike on OCTG, commercial and industrial tubular products, effective January 25. The increase followed similar announcements by US Steel and Tenaris for ERW and line pipe. Lakeside also recalled temporarily laid-off workers in mid-January to bring its stretch reduction mill and 2-8 inch ERW mills to full capacity by the end of April. | ||
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| Auto gets specialty, stainless bar to a rolling 2010 start | ||
| The automotive industry is boosting the specialty and stainless bar market, despite rising scrap and ferroalloy surcharges. SBQ bar lead times remain at approximately 12-16 weeks with base prices holding steady at $480-560/short ton, fob mill, with an additional surcharge of $225-272/s.t. A scrap surcharge increase of about $20-40/s.t is anticipated in March. The rumored bubble in the automotive industry appears to be backed by solid demand so far, as some stainless bar sources have reported increased chatter between automakers and their suppliers. “In general, the demand has been quite healthy over the last several months,” said one bar supplier. “The year started out very well, and one major automaker sent out an announcement that Q3 and Q4 would be more of the same. They were pretty much saying, ‘Get ready, guys. We’ve got some business headed your way.’” Stainless ferroalloy surcharges are expected to leap in March due to volatility in the nickel and molybdenum markets, which could bring about a slight pause in buying, according to market sources. Barring a sudden drop in demand that some SBQ dealers fear may still occur in Q3, automotive buying should keep SBQ and stainless bar production strong, industry observers report. “A couple automotive guys have told me that their business has doubled since last summer,” a bar supplier told Steel Business Briefing. “At this time last year, who would have thought of automotive as a bright spot for steel?” | ||
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| US adjusts duties on stainless flats from Mexico, Japan | |||||||||||||||||||||||
| Some changes were made in the final results of an administrative review covering the one-year period ended June 30, 2008 to the antidumping order on imports of stainless sheet and narrow strip in coils from Mexico and Japan. The US Department of Commerce found final dumping margins of 4.48% for Mexico’s ThyssenKrupp Mexinox - a drop from the preliminary margin of 13.3% found in August but an increase from the 2.86% margin found in the previous administrative review. The "all others" rate for Mexican exporters and producers will continue to be 30.69%. For Japan’s Nippon Kinzoku Co, the final dumping margin was determined to be 0.54% - up from 0.23% in August's preliminary determination but a decrease from the 57.87% margin found in the prior administrative review. A 0% margin for Japan’s Hitachi Cable was confirmed in the final results. Other Japanese exporters/producers will still have dumping margins, which currently range from 40.18% to 57.87%, found in the previous administrative review, Steel Business Briefing understands. According to data from the US International Trade Commission reviewed by SBB, the US imported around 77,000 tonnes of the product from Mexico during the one-year period of review and around 19,000 t from Japan (see chart).
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| America's Enso Steel to provide HMS 1 to China | ||
| Arizona-based Enso Steel Inc has signed three contracts for the sale of No 1 heavy melting scrap to customers in China, Steel Business Briefing learns, with an aggregate sales price of $134.4m. Enso is teaming up with Natural Blue Steel, a wholly owned subsidiary of Natural Blue Resources, to pursue opportunities in the recycling business, according to the company. "Natural Blue Steel will continue its association with Enso Steel to seek out similar market opportunities and transactions in the future," according to a statement from Natural Blue. Enso president Robert Hunt said Natural Blue Steel could become a premier provider of HMS to China, “the world’s number one consumer of HMS recycled steel.” | ||
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| Kennecott on track to restart Michigan nickel mill | ||
| Kennecott Eagle Minerals has completed the permitting phase of bringing its Humboldt, Michigan, mill back online to produce nickel for the US stainless steel industry. Kennecott plans to invest $100m to refurbish the mill and put it back into production, according to a company press release. The mill is expected to be operational by 2013, Steel Business Briefing notes. | ||
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| Alpha Natural Resources bullish on met coal | ||
| US coal company Alpha Natural Resources has increased its 2010 shipment guidance range for metallurgical coal by 1m short tons to 11-13m s.t, Steel Business Briefing learns. Similar to other US met coal firms, such as Massey Energy and Patriot Coal, Alpha sees increasing demand for its product. “Recent indications suggest that the strength is likely to continue throughout 2010,” Alpha stated. Growing Chinese met coal demand and the subsequent “shift of seaborne coking coal supply towards Asia” should provide a significant opportunity for Appalachian producers in the US. Alpha is America’s largest met coal supplier and has substantial export terminal capacity. The company reported fourth quarter 2009 net income of $18m. For the full year, net income was $58m. It shipped 2.6m s.t of met coal in Q4 with an average price per ton realization of $97.18. Some 38% of its planned 2010 met coal shipments are unpriced, so spot deals for this portion will likely be settled at a much higher price. | ||
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| US output continues slow climb | ||
| US mills produced an estimated 1.6m short tons last week, up less than 1% from the prior week. Capability utilization was also flat at about 67%, Steel Business Briefing notes in weekly data received from the American Iron and Steel Institute. While still low, these levels are substantially above the industry’s performance during the first week of February last year. Output is up 52% from a year ago when the weekly total was just 1.06m s.t from 45% capability utilization. | ||
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| Mexico's January auto production increases | ||
| Mexico’s automotive industry seems to be getting back on track, after a severe downturn in 2009. Domestic vehicle output more than doubled in January in a year-to-year comparison, from 81,553 to 165,058 units. January vehicle exports came to 114,193 units in January, against only 51,061 vehicles during the same month in 2009, Steel Business Briefing learns from the country's auto group Amia. Domestic sales, however, declined 8% last month y-o-y, from 69,664 to 64,064 vehicles. As SBB previously reported, Mexico’s auto sector might rebound in 2010, according to a recent report from IHS Global Insight. Domestic output is forecast to increase by 20.2% this year, to around 1.8m units. | ||
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| Evraz NA exec to head US mill group SMA | ||
| US minimill trade group the Steel Manufacturers Association (SMA) has named Robert Simon, VP and GM of Evraz Rocky Mountain Steel, chairman of the SMA board of directors for 2010 and 2011. Simon has been with Evraz Inc NA and predecessor companies since 1992. Mario Longhi, president and CEO of Gerdau Ameristeel had served as SMA chairman for the past two years, Steel Business Briefing notes. Other SMA appointments include: John Ferriola, COO of steelmaking operations for Nucor, named first vice chairman, and Richard Teets Jr., executive VP of steelmaking for Steel Dynamics Inc, as second vice chairman. Russell Rinn was to take over the SMA chairman post, but he resigned from a top executive position at Commercial Metals Co last week. | ||
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| US steel caucus hearing postponed due to weather | ||
| The Congressional Steel Caucus hearing that was to be held today has been postponed due to inclement weather. Washington DC was hit with several feet of snow over the weekend and a second storm is predicted to dump another 8-12 inches in the nation’s capital over the next few days. The Caucus had been planning to meet with industry leaders and members of the Obama Administration to discuss the state of the US steel industry and what both sides hope and plan to do to help revitalize American manufacturing. A new date for the hearing has not yet been set, a spokesman for Caucus chairman Pete Visclosky told Steel Business Briefing. | ||
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| Brazil's flats distributors may profit from mill price hikes | ||
| Often critical of mill price increases, Brazilian flats service centers may profit from them if mills successfully implement all rumored new price moves. Strong demand over the past two or three months did not cause stockist inventories to drop. In fact, according to the country's flats distributors group Inda, stocks rose for most products last December. Steel Business Briefing learns from the group that hotrolled coil inventories grew 7% from November to December, to 407,400 tonnes. Meanwhile, hot-dipped galvanized sheet stocks increased 2.7% to 89,900 t and coldrolled coil inventories fell 5.3% to 147,800 t. However, all distributors appear eager to confirm mill price increases this quarter as a way of enlarging profits from low-priced stocks purchased in the second half of 2009. | ||
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| Brazilian slab exports recovering | ||
| Brazilian slab exports recovered a bit in January, reaching 308,314 tonnes, after two months at levels under 300,000 t/month, Steel Business Briefing learns from the government. In December 2009, exports totaled 278,120 t , nearly the same as in November. As reported, most of these exports were made by ArcelorMittal Tubarão through its associated traders in Europe and Asia. The average shipping price for slabs declared to customs was US$408/t fob Brazil, up from US$400/t fob in December. SBB notes, however, that cargos shipped last month were negotiated on average two months earlier. In the current spot market offers can reach as much as US$500/t fob Brazil. Meanwhile, ArcelorMittal Tubarão maintains it will restart its last idled blast furnace in April, while Usiminas relighted its Ipatinga No1 BF two weeks ago. | ||
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| Brazil's Usiminas to review mothballed slab project | ||
| Brazilian steelmaker Usiminas might review its greenfield slab mill project in Santana do Paraíso, Minas Gerais state, by June, Steel Business Briefing learns from the company. According to the mill, the project's resumption will be on Usiminas first half agenda, but further details, including any new construction schedule, weren’t disclosed. The company notes that it cannot ensure that any construction work will start soon. As SBB previously reported, the project for the new slab mill, which would be able to produce over 5m tonnes/year, was indefinitely suspended last July due to uncertain global steel demand conditions. | ||
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| Brazilian pig iron export prices quoted at US$400/t fob | ||
| As expected, Brazilian pig iron export prices increased again in February. Steel Business Briefing learns from a major pig iron maker in the northern state of Pará that it has just closed a deal with a Mexican buyer at US$400/tonne fob. During January, pig iron prices were being negotiated at around US$370/t fob. The source says, however, that producers are still waiting for better offers, as well as the settlement of iron ore prices. Moreover, the source says current dollar appreciation is becoming a significant factor for pig iron exports, pushing prices up and encouraging a more optimistic scenario, SBB notes. | ||
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| Saudi Hadeed SABIC raises flat product prices | ||
| Saudi Arabia’s biggest producer Hadeed SABIC has added $15-40/tonne to its flat product prices for April deliveries. Steel Business Briefing is informed by a company executive that demand especially for cold rolled and coated sheets is very good in the country and the company can hardly meet the demand. Hadeed SABIC is selling hot rolled coil at $630/tonne, which is $15/tonne more than the previous price of $615/t. CRC is now $750/t, $30/t more than the previous $720/t. The company’s HDG price is $850/t, $40/tonne more than the previous $810/t. The company is selling 0.35 mm thick 9002 code PPGI at $980/t. The Hadeed SABIC executive says another price increase depends on China’s moves after its New Year holidays. He says demand is very good and production costs are increasing, but high stocks in China and big export allocations may prevent price rises. Saudi Arabian flat steel market players were expecting a minimum $15/tonne increase to the prices, as reported. | ||
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| DGCX rebar futures contract may adapt to trading traditions | ||
| Trading in the Dubai Gold & Commodities Exchange (DGCX) rebar futures contracts has been inactive for more than a year, leading some market players to speculate that the contracts might be cancelled. The exchange notes that external factors have affected trading volume, and says that it will not cancel rebar futures for the moment. It continues work on the development of its offerings, but no timeline has been set for the rebar contract development, Steel Business Briefing was told. Rebar market players believe traditional trading patterns meant that it was not attractive to use the DGCX. Hedging is seen as a tool for the contractors to stabilise price fluctuations, but in Dubai most construction contractors act as traders themselves, one market source comments; this remains a big obstacle against using a futures contract to hedge against price risk. But if contractors were to leave the supply of steel to the traders, they could just be dealing with the issue of financing, and therefore they could start using more sophisticated tools like hedging, SBB was told. One trader comments that on-exchange hedging is “against the nature of the work that we do” because traders take positions in accordance with their view of the market: “if we make good decisions we make money”. “We prefer to do trading on our own way (without using the DGCX),” one market player adds. | ||
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| Iranian longs producer gets new managing director | ||
| The Iranian government’s mines and metal holding company Imidro has appointed Safarali Barati as the new managing director of the country’s principal long products producer, Esfahan Steel Company (Esco). Barati replaces Hokmolah Babaei, who has retired. Barati has a PhD degree in strategic management and has worked as managing director in private sector companies, mainly in the steel sector. As Steel Business Briefing has reported, Imidro is planning to increase the Iranian steel production capacity to 35m tonnes/year within the next four years, and this includes Esco increasing its capacity to 5m t/y from the current 2.2m t/y within this period. | ||
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| LME nickel price follows other metals downwards | ||
| The price of nickel on the London Metal Exchange has been falling off since last week and had dropped by around $1000/tonne by the start of business this week, Steel Business Briefing learns from LME data. The three-month price at the start of last week was $18,125/t; it fell to $17,400/t by the end of the week and was trading down to $17,100/t as of Monday. The nickel price had rallied over the past few months, and has now fallen off, one analyst tells SBB, just as aluminium and copper have done. The dollar firming and concern about the strength of Chinese growth – as well as concerns in Europe over the crisis in Greece – seem to have affected metal prices, and nickel in particular, he says. “There is no real major event that has caused the price to fall,” he says. There has been a lot of fund selling, but not much else has happened, he adds. “Stocks are still high and demand has not fallen,” says another analyst. “It’s just market activity, it’s more speculative pricing, rather than the fundamentals of the nickel market,” he concludes. | ||
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| LME Asia aims to help development of global billet contract |
| The London Metal Exchange is to establish LME Asia and open its first overseas office in Singapore in April this year, it announced yesterday. Liz Milan, currently commercial director at the LME and formerly head of its steel business, will become the managing director of LME Asia. She tells Steel Business Briefing that a majority of the LME’s members have a presence in Singapore, “so it’s crucial we are there to support them”. “The steel billet futures contract is standing on its own as a global contract already,” and the new office will help to promote its delivery locations all around the world, she says. LME Asia plans to engage more closely with its members and other market participants in the region to support the steel contract, as well as its other contracts, and also develop new futures contracts and partnerships. The LME’s Far East billet contract has not had much success in Asia and there has been a lack of acceptance of the principle of futures trading from mills in the region. Producers are easily able to sell directly to their customers and participants in the region don’t see the benefits of hedging price risk, as SBB has previously reported. The Far East contract has recorded zero business in 2010. |
