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| ArcelorMittal revives emerging market capex projects | ||
| ArcelorMittal is increasing capital expenditure by 43% for 2010 against 2009 to $4bn (€2.9bn), the global steelmaker’s chief executive Lakshmi Mittal said this week. It has decided to “reinitiate” several growth projects in emerging markets and mining, as the recovery in steel demand begins. Almost 40% of its sales in value were in emerging markets in 2009, Mittal noted: 23% domestic sales and 16% exports into these markets. The revived projects include the 350,000 tonnes/year hot-dip galvanising line in Vega do Sul, Brazil, which should be completed in the first half of 2010, and expansion of long products capacity by 1.15m t/y in Monlevade, Brazil, by 2012. In joint ventures, ArcelorMittal will invest in the 600,000 t/y seamless pipe mill in Al-Jubail, Saudi Arabia, and in 1.2m t of capacity for automotive steel and 0.3m t of capacity for electrical steel in China’s Hunan province, all due to be completed in 2012. It will also invest in mining operations in Liberia, Canada and the USA. It aims to increase slab capacity by 630,000 t/y at Dofasco, Canada, in H1 2010, by optimising primary steelmaking, and from 6.7m to 7.5m t/y at Dunkirk, France, by H2 2010, by modernising a slab caster. ArcelorMittal is not currently focussing on a previously planned longs mini-mill in Russia, and in Ukraine it is only focussing on longs although it had announced plans to diversify into flats, Mittal told Steel Business Briefing at the company’s annual results meeting. | ||
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| East Asia seeing few spot offers of slab | ||
| There are few spot offers of imported slab to Southeast Asia, and regional traders have not heard of any recent transactions. Offers in early February for CIS slab were heard at $510-520/t cfr Southeast Asia, trading sources tell Steel Business Briefing. Adverse weather in the CIS has caused logistical difficulties for inland and port transportation, delaying shipments in and out of the Black and Baltic Seas. Steel production is also lower. “There are disruptions to deliveries. Mills are seeking 2-3 month extensions,” another trader says. Exports of billet, hot rolled coil and plate from the CIS is also being affected, he adds. “There is strong demand here but not many offers available in the market," a regional trader tells SBB. Some suppliers are blaming the cold weather for some of their non-performance or late shipment cargoes, he acknowledges, but says his Black Sea shipments are not affected. Higher profits may also be behind the lack of slab offers. “Hot rolled coil prices have risen to around $600/t cfr levels. So the mills would now prefer to make and export HRC,” says a trader. A Korean trader says there is no current market price because buying interest in Korea is limited. The country’s major slab importer, Dongkuk Steel Mill, is fully covered for the first quarter having finalised its quarterly contractual requirements earlier on. At the same time Hyundai Steel has started its new blast furnace; Hyundai’s last slab purchase was in November. Another trader suggests that, were any Brazilian slab being offered now, it would be priced at $525-530/t cfr Korea. | ||
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| Argentina's steel demand rebounding strongly | ||
| Argentina’s flats and longs demand has jumped around 90% so far this year, Steel Business Briefing learns from major domestic distributors. According to the sources, this is solid growth, based on a huge recovery reported by several domestic industries, including the automotive and agricultural sectors. “For the balance of 2010, the trend is even more positive and steel sales might hit a record,” a source says. Moreover, a distributor says that this improved demand scenario has already affected Argentinean flats and longs prices, which were increased in early-2010. This upward trend might continue in coming months, SBB notes. Learn more about the Argentinean steel industry at SBB's Steel Focus Argentina on March 19 in Buenos Aires. | ||
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| Flat steel trading looks brighter in UAE | ||
| Demand for flat rolled steel in the United Arab Emirates is increasing, although import volumes are not picking up yet. Steel Business Briefing is told by traders that most market players prefer to wait for the Chinese New Year holiday to be over because Chinese product prices and export allocations may change all the market trends. Hot rolled coil from the CIS is being offered to the UAE at $600-640/tonne cfr, while latest Chinese offers are $570-580/t cfr. For hot-dip galvanized coils, demand is very good in the UAE, and there is some shortage of thinner coils (0.3-0.4mm). UAE traders say Indian HDG is offered at $825-900/t cfr, and China is asking $800/t cfr and up. UAE sources say that there are some rumours of a new oilfield find, close to Dubai, which is expected to improve the financial condition of the emirate. | ||
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| Mills seek higher prices, but doubts abound on demand - WSR | ||
| Though many producers are now seeking much higher finished prices for Q2, they admit privately that it may be tough to achieve them immediately. In markets where inventories are minimal, distributors and end-users may grudgingly pay more, but transaction volumes are likely to be low as demand in many places is only growing slowly. The expected raw material cost increases impacting integrated producers, without captive mines, could well be about $100/t, or 15-20% of current levels, depending on product. These and associated finished product price increases may well prolong the steel market’s recovery in mature economies. Elsewhere the cost increases will be similar, but as demand is steadier and stronger, buyers may be more willing to accept rises. The higher costs reflect rising demand for iron ore, coal/coke and scrap: growing demand, particularly in Asia, is expected to mean tighter markets in all three products. Spot iron ore prices are rising again after a brief lull. But for 2010, it is unclear to what extent Beijing will restrict its fiscal stimulus, and so limit domestic consumption. BHP Billiton recently sounded a word of caution on this. Existing and future overcapacity among China's producers could see them using exports as a safety valve. Meanwhile, producers in Europe are looking to raise Q2 prices by at least €70/t ($96/t). In the USA, prices have typically already risen in recent months by $100-120/st ($110-132/tonne), whilst CIS billet too has gone up by $50/t since early December. However overcapacity, particularly in more mature markets, means some prices such as US hot band have already started to weaken. This weekly analysis of global markets is an edited version of a report from Steel Business Briefing's World Steel Review of 10 February. | ||
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| Brazil's Vale reports its lowest profit since 2004 | ||
| Brazilian iron ore giant Vale saw its 2009 net profit fall 52% year-on-year, from R$21.2bn (US$11.4bn) to R$10.2bn. This is its lowest profit since 2004, Steel Business Briefing learns from the company. Fourth quarter net profit came to R$2.62bn, against R$2.44bn during the same period in 2008. Compared to the previous quarter, however, Q4 2009's profit fell 13%. Meanwhile, Vale reported 2009 revenue of R$49.8bn, a 32% drop from 2008. Q4 2009 revenue reached R$12.04bn, down 32.7% and 10.8% from Q4 2008 and Q3 2009, respectively. According to Vale, Q4's poor revenues are mainly related to reduced sales as a consequence of tight supply. The miner also reported its 2009 iron ore and pellets shipments (see related article). | ||
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| Distributors having trouble with US line pipe price hikes | ||
| Distributors of carbon line pipe are questioning recent scrap-based mill price hikes as US demand continues to flounder. A dealer of secondary line pipe said he doesn’t think many announced ERW or line pipe price increases will stick beyond the first half of 2010 if demand doesn’t improve. “The mills are wanting more for even their secondary steel just because of the scrap,” he said. “But we’re not paying those prices.” He went on to say that he’s seen bids for a lot of 1,100 short tons – or about 17,000 feet – of 24-inch line pipe with a 1/2-inch wall thickness that are 25% or more below the spot market price. “We’re seeing more bids like that around,” he said. “This is what I’m competing against.” Market sources report prices for common sizes of line pipe under 30-inches in diameter to be about $900/s.t for prime ERW. Secondary prices are about $620-770/s.t, Steel Business Briefing finds. One line pipe trader said the recent increases of up to $75/s.t by US Steel and Tenaris echo the crash of oil-country tubular prices last year. “Everybody’s saying, ‘I wonder if the mills are going to hold the prices.’ But the mills don’t care because they’re not running at capacity, anyway. You get a hungry mill, and all of a sudden you get a different price.” | ||
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| NZ's Steel & Tube Holdings sees interim profit plunge | ||
| New Zealand distributor Steel & Tube Holdings has seen its interim profit dive 30% on “soft trading conditions” caused by the global financial crisis. The company, which is headquartered in Lower Hutt, north of Wellington, reported a NZ$3.2m (US$2.23m) profit for the six months to end-December, down from NZ$17.6m (US$12.3m) for the same period a year earlier. Weaker steel prices and lower demand over the half resulted in sales plummeting to NZ$83.1m (US$58.7m) compared with NZ$190.6m (US$133.2m) the year before. "Commercial construction approval values declined, while residential approvals increased but off a very low base,” Steel & Tube told the New Zealand stock exchange, adding that manufacturers were being impacted by the volatile exchange rate. The company warned that any improvement in demand remained uncertain as “economic conditions show varying growth rates across our trading partners." Australian steel maker and iron ore producer, OneSteel, owns almost 51% of the New Zealand company and was set to buy the balance in 2009 before pulling out due to the weak economic climate, as Steel Business Briefing reported. Steel & Tube operates some 50 service and distribution centres in New Zealand. | ||
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| Fortescue senior executive Rowley resigns | ||
| Fortescue Metals Group executive director Graeme Rowley is stepping down from his role as executive director but will continue to act as non-executive director on the Australian iron ore miner’s board. The move takes effect from 2 March. His operational responsibilities are being transferred to Paul Hallam, the company said on Thursday. The Perth-based company noted that Rowley had been instrumental in guiding the company from an “idea” in 2003 to what the company says is now the world’s fourth largest iron ore miner, with a market capitalisation of more than A$14bn (US$12.4bn). “During the last two years, Graeme has assisted the transition of Fortescue from a construction project to a fully commissioned operation,” the miner said. In January last year, Fortescue gave Rowley sole responsibility for public policy and corporate affairs, with fellow executive director Russell Scrimshaw running sales and marketing for the iron ore producer, as Steel Business Briefing reported. | ||
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| Three Gorges Quantong's 3.2m t/y CR, colour project | ||
| Privately-owned Three Gorges Quantong Colored & Galvanized Plate Co. located in Hubei Province’s Yichang city in central China, is completing the final components on its ambitious 3.2m t/y cold rolled and coated steel project. Quantong had already commissioned the cold strip mill and two hot-dip galvanized lines last year as part of the project, and will soon complete installation work the two colour-coating lines. These should be brought on stream in May this year. The cold strip mill has a capacity of 3.2m t/y, and half of the throughput will feed the two HDG lines that have a combined capacity of 1.6m t/y. Meanwhile, the two colour lines will have a total capacity of 800,000 t/y. The hot rolled coil substrate for Quantong’s cold strip mill is mainly sourced from local mills in northern China’s Hebei province, such as Guofeng Iron & Steel, Steel Business Briefing learns. | ||
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| Posco plans new galvanising line for Gwangyang works | ||
| Posco is planning to add a new hot-dip galvanizing line at its Gwangyang works west of Busan. The new line, the No.7 continuous galvanizing line (CGL), will have a capacity of 500,000 tonnes/year and will mostly target the automotive sheet market, Steel Business Briefing learns from industry sources. To be built for a total cost of KRW 300bn ($259.2m), the CGL is slated to be commissioned by March 2012. Behind Posco’s strategy seems to be a keenness to create a new outlet for upstream products such as hot rolled coil. This has become an issue given the arrival of new domestic HRC competitor Dongbu Steel, and the expansion of existing HRC competitor Hyundai Steel, an industry source tells SBB. Hyundai is aiming to produce 3.8m t HRC this year, an increase 1m t/y from last year, following the commissioning of its 4m t/y blast furnace in January. Dongbu will make around 2.5m t/y of HRC this year, a large increase from last year’s 600,000 t. Posco commissioned its 400,000 t/y capacity No.6 CGL at Gwangyang in June 2006, as SBB reported. The facility is producing over 90% galvannealed sheet and at the time took Posco’s total hot-dip galv capacity to 2m t/y. | ||
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| Japanese billet exports show shift in grades | ||
| Despite the slump in Japanese construction steel demand last year, the country’s mini mills were able to maintain cashflow – and keep their furnaces operating – by exporting billets, as Steel Business Briefing has reported. But just released Customs office data reveals a mysterious tweaking of grade. During last calendar year, Japan exported 602,000 tonnes of billets with a carbon content below 0.25%. Of these, 303,700 t went to Korea. During 2008, Japan shipped out 879,400 t of this grade of billet of which 446,500 t were delivered to Korea. Yet the same data show that Japanese exports of billets with a carbon content more than or equal to 0.25% surged to 583,300 t last year, from 403,600 t in 2008. Of the former, 240,200 t went to Korea. Consequently, total billet exports last year dipped only slightly to 1.18m t, from 1.28m t in 2008. Vietnam was the second largest buyer of Japanese billets last year, taking 255,000 t of which those under 0.25% C accounted for 141,700 t. This compares with a total of 221,000 t in 2008 of which under 0.25% C accounted for all but about 16,000 t. Traders could volunteer no clear explanation for the slight grade shift. “Under or equal to 0.25% doesn’t mean very much,” one told SBB. But he suggested billets with a higher carbon content could more readily be rolled into larger diameter rebars much in demand as buildings in countries such as Korea and Taiwan become taller. “Korean re-rollers have changed their requirement to produce higher tensile rebar which Japanese are able to accommodate,” another suggested. | ||
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| China’s crude oil output to rise slightly: CNPC | ||
| China’s oil country tubular goods (OCTG) makers may benefit from the improvement in new exploration activity this year as the petroleum industry recovers from the global economic downturn. China’s largest oil company, China National Petroleum Corporation (CNPC), predicts that domestic crude oil production may rise to 193m tonnes this year, up by about 2% from 2009, according to a report released by the company’s research subsidiary. CNPC Research Institute of Economics and Technology (RIET) delivered the outlook in its 2009 domestic and overseas oil/gas industry report this month. RIET says China’s domestic oil demand will return to pre-financial crisis levels and see an increase of more than 5% to 427m t. This is preconditioned by the country’s GDP reaching 9%, Steel Business Briefing notes. According to data from National Bureau of Statistics (NBS), China produced 189.4m t of crude oil in 2009, ranking fourth in the world after Russia, Saudi Arabia and USA. The 2009 production fell from an output of 189.7m t in 2008, as the domestic industry and transportation sector both suffered from the global financial crisis. Faced with plummeting oil prices, China saw a major slowdown in new oil exploration activity last year. Oil fields cutting production and the deferment of exploiting new wells led to domestic demand for OCTG falling last year, SBB is told by mills. Meanwhile, RIET predicts production of natural gas will see faster growth than that of oil this year. Production might reach close to 100bn cu m, compared to the 83bn in 2009. | ||
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| Stand-off continues in Asian stainless market | ||
| The standstill in Asia’s stainless steel market continued into this week as buyers kept resisting new offer prices while mills refuse to drop them. Also contributing to the impasse are upcoming Chinese New Year holidays and the recent fluctuation in nickel prices. New offer prices for 304 stainless CR sheets for delivery in one-to-two months that were put out by steel mills from Taiwan, Korea and Japan in the past 1-2 weeks are holding at $2,800-2,900/tonne cfr China. No deals could be confirmed this week. Transacted prices were at $2,700-2,800/t in late January. “Mills would rather wait till after the holidays to do any business as they know there is no point in cutting prices now because no-one is buying. On the other hand customers have no urgent need to buy as they have sufficient stocks,” says a trader in south China. A Taiwanese source adds that customers are holding back after nickel prices recently slipped below $18,000/t. “Buyers think nickel prices will drop further but the mills are thinking they are going to go higher,” she tells Steel Business Briefing. But market participants predict another rise in offer prices after the holidays on word that mills are considering raising prices by $150-300/t, post-holidays. Fuelling the bullish sentiments are also major Chinese stainless mills who this week announced increases to their February export prices. These took their new offer prices for 304 stainless cold rolled coils to around $2,900-2,950/t fob China, sources say. | ||
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| Vale plans iron ore port and stockpile in Malaysia | ||
| Brazilian iron ore producer Vale is planning to build an iron ore port terminal in Teluk Rubiah, Malaysia, in order to improve its iron ore distribution to Asian countries. The terminal may be commissioned by the first half of 2013, Steel Business Briefing learns from the company. The US$900m project, which is yet to be approved by the miner's board, proposes constructing a terminal capable of handling 400,000 dwt bulk vessels, and with stockpiles having an initial capacity for 30m tonnes/year of iron ore. In a subsequent phase capacity could be expanded to 90m t/y. The move could be the first step towards setting up an iron ore pelletizing plant in Southeast Asia, as mulled by Vale in the past, SBB understands. Asia was Vale’s largest market for iron ore and pellets last year, taking almost 180m tonnes. Of this China accounted for 140mt, Japan 22mt, Korea 11mt and the rest of Asia 6mt. | ||
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| Korean scrap imports from Japan to surge this month | ||
| Scrap imports from Japan to Korea are expected to surge in February. During the first seven days in this month, imports from Japan jumped to 116,546 tonnes while those in January reached only 9,202 t. At the same time, the average import prices for the first seven days of February increased to $350/t fob compared with January’s $309/t fob over the same 7-day period, according to the Korea Iron & Steel Association. The strong domestic scrap prices in January and low inventories at steelmaker yards at the time were the major reasons for the increased booking volume from Japan, Steel Business Briefing learns from market sources. Hyundai Steel, Korea’s largest scrap consumer, last week purchased Japanese H2 grade scrap at a base price of ¥30,500/t fob ($339/t) which is identical to Hyundai’s earlier purchase level. In the domestic Korean market, scrap prices quoted by major local mills such as Hyundai have weakened by KRW 10,000/t ($8.6/t) from 8 February, but some mills have not lowered their buying prices yet. “The scrap market is confusing at the moment, and we heard some mills may freeze their buying prices rather than follow Hyundai,” a local dealer tells SBB. He adds that his company is monitoring market trends carefully and then will make a decision whether to deliver to yards or hold shipments. | ||
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| Rio 'very concerned' by indictment of China iron ore staff | ||
| Rio Tinto says it is “very concerned” by the indictment of four of its Shanghai-based iron ore sales staff for bribery and violating commercial secrets. “We are very concerned about the nature of these charges; however, as this is part of an ongoing legal process, it is inappropriate to comment any further,” Rio iron ore chief executive Sam Walsh said in an 11 February statement. The Anglo-Australian miner said it continued to hope for a “transparent and expeditious” legal process for its employees, who have been detained since early July last year. The company said it did not know when the four will face trial. According to the prosecutor’s office, the four “exploited their positions to seek gain for others, and numerous times either sought or illegally accepted massive bribes from a number of Chinese steel firms,” Xinhua reported on Wednesday. The Rio staff have been accused of taking “personal inducements and other improper means to obtain commercial secrets from Chinese steel firms, causing serious consequences for the steel firms concerned”, as Steel Business Briefing reported. | ||
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| Mexico cuts anti-dumping duty on Chinese FeMn | ||
| Mexico has lowered its anti-dumping duty on China-origin high carbon ferro-manganese imports from 54.34% to 21%, according to a 10 February statement from the Chinese Ministry of Commerce. This follows the completion of a sunset review by Mexico’s Ministry of Economy, which has decided to continue applying dumping penalties to the product at a lower duty rate, the statement says. The new duty is effective for five years, retroactive to 26 September 2008. The anti-dumping duty had been in place since September 2003 and a sunset review was initiated by Mexico in 2008, Steel Business Briefing understands. China’s exports of FeMn have dropped in recent years following an increase in its export tax. Its current export tax stands at 20%. China’s exports of FeMn fell 90% to 17,951 tonnes last year, according to Chinese Customs data. | ||
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| Korea's Daehan ponders new rebar plant | ||
| Korean rebar producer Daehan Steel is considering building a new plant in the Busan Jinhae Free Economic Zone in south-east Korea, about 30kms from its present location. For the first stage of the expansion, the steelmaker has signed a memorandum of understanding with the Busan local government to secure land. The Busan-headquartered mini mill told the Korea stock exchange on 10 February that it plans to invest KRW 400bn ($345.6m) by December 2015 to build a new works and will require a 50 hectare site. For some time Daehan has been considering what to do with its Shinpyung plant in Busan as the works was inaugurated 30 years ago and space is now insufficient, a company source tells Steel Business Briefing. “The existing 80-tonne EAF in Shinpyung is old so there is a possibility of installing a new EAF at the new place,” he says. “But no specific decision has been made yet whether to keep the old facilities or build new ones.” The feasibility study is slated to start from March and, assuming the results are positive, the formal contract will be signed within this year, he adds. Daehan has two rebar works in Busan – at Noksan and Shinpyung – with rolling capacity of 400,000 t/y and 600,000 t/y respectively, as SBB reported. The mini mill started a new an 80-t EAF at the Noksan plant in June 2008. | ||
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| Chinese steelmakers win margins of just 2% in 2009 | ||
| Chinese steel producers achieved a sales margin on their products last year of only around 2%, said Wu Xichun, honorary chairman of the China Iron & Steel Association (CISA) speaking at a press conference on 9 February. The margin compared with an average of over 5% for China’s manufacturing sector as a whole. According to local media, Wu suggested that the profit margins are no higher than what mills can get from bank interest. Considering the mean profit margin, Wu strongly defended the rationality of Baosteel’s price hikes in previous months and said he believed the increases are “not enough”. As Steel Business Briefing reported, Baosteel raised its January prices for hot rolled coil by RMB 300/tonne ($44/t), but kept its February prices flat. This was probably due to the publicly held belief that a price increase may put China at disadvantage in the iron ore negotiations with international miners. Wu explained that the Chinese steel industry’s low concentration and production efficiency are among the reasons for the small profit margin. Another major reason is profits have been squeezed by continuous increases of iron ore benchmark prices. Further hikes in benchmark prices of iron ore and in prices of coal, coke and other raw materials, will put pressure on mill production costs this year and may result in steel price hikes. But CISA also pointed out that China's steel overcapacity might not support substantial price increases and will continue to challenge steel makers’ profits this year. | ||
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| Baotou Steel predicts 200% drop of '09 net profits | ||
| Baotou Steel Union Co. in northern China’s Inner Mongolia autonomous region has become more pessimistic about its likely business results for 2009 and is now predicting a loss of RMB 1.3-1.7bn ($190-249m), down by over 200% year-on-year, according to a company release. In the third quarter of 2009, Baotou Steel had forecast a y-o-y drop of 80-120% in 2009 profits. During 2009 Q1-Q3, its total losses amounted to RMB 329m ($48m), which indicates the steel company apparently still suffered a loss last quarter. The company realized a net profit of RMB 920m ($135m) in 2008. Baotou Steel explained that it misjudged the market situation in the last quarter of 2009, and this resulted in a larger decline in profits than earlier forecast. Baotou Steel, the largest steel company in Inner Mongolia, says the prices of its main products – plate and seamless pipe – have dropped substantially because of serious overcapacity and fall in demand. But at the same time the cost of raw materials including coal and alloys have increased. According to data from the China Iron & Steel Association (CISA), its 68 member mills made a combined profit of RMB 55.39bn ($8.11bn) in 2009, down by more than 30% from 2008. Baotou's parent group, Baotou Iron & Steel Group, is also a CISA member mill, Steel Business Briefing notes. | ||
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| Bhushan eyes joining Posco, ArcelorMittal in Karnataka | ||
| Indian cold rolled and coated strip producer Bhushan Steel Ltd (BSL) is writing to the government of Karnataka state expressing its interest in accepting the government’s invitation to build a steelworks in the south Indian state. BSL hopes to sign a memorandum of understanding soon, Steel Business Briefing understands. Late last year the state government invited Posco and ArcelorMittal to build integrated steelworks in Karnataka. This resulted in both firms tabling proposals to each build 6m tonnes/year steelworks there. Karnataka’s state high level clearance committee, headed by state chief minister B.S. Yeddyurappa, okayed the proposals on 5 January, as SBB reported. Now BSL says that it too has received an invitation and that it too was eyeing building a steelworks in the state if other conditions such as the provision of land and access to raw materials are guaranteed. “But no details have been decided,” a BSL official stresses. The company is denying Indian media reports suggesting the Karnataka project would supersede one advanced with Japanese steelmaker Sumitomo Metal Industries. “The Sumitomo project is totally separate and is still proceeding in West Bengal,” the BSL official says. BSL and SMI are planning a 6m t/y greenfield integrated steelworks in Asansol in West Bengal to produce auto grade sheet but a formal venture agreement is still pending, as SBB has reported. | ||
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| ArcelorMittal still keen on India, despite delays | ||
| India and other emerging markets such as Brazil, Middle East and Africa continue to perform well and are demonstrating strong demand for steel, ArcelorMittal chief executive Lakshmi Mittal said at the steelmaker’s annual results meeting attended by Steel Business Briefing. “We will continue to work on our Indian greenfield projects, which remain a very important part of group strategy, but capex spending is expected to remain marginal at this stage of the development,” he commented. “In India there are many plans: we have Jharkhand, we have plans in Orissa, now we have initiated new plans in Karnataka. We really do not know which will come first. It will depend on the progress in various states,” he said. “All these plans [...] are in the initial stages, and there is a lot of progress still to be made,” he added. “Clearly India is very important for us and every year we will see growth of [steel] demand between 10-15%,” Mittal continued. There are “hundreds of billions of dollars of infrastructure projects in the pipeline in India. So all of them will need steel and this growth should continue on a medium- to long-term basis, and ArcelorMittal is anxious to establish and start generating revenue from India as soon as possible, but it is difficult to give you any timeline,” he elaborated. The company has already taken a 34.42% stake in Indian cold roller and galvanizer Uttam Galva Steels Ltd, and “we will continue to explore the opportunities with our joint venture with Uttam Galva,” Mittal noted. | ||
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| ArcelorMittal to restart galvanizing line in Spain | ||
| The Spanish branch of ArcelorMittal is to restart the galvanizing line at its Etxebarri plant this month, the company’s vice president Gonzalo Urquijo stated at the company's results presentation, attended by Steel Business Briefing, on 10 February. The resumption will take place on 22 February following a stoppage which lasted over 18 months. The plant was idled in mid-2008. The reopening is due to a recovery in demand in the fourth quarter of last year, says the company. This has in turn has permitted the company to reactivate other facilities in Spain, such as the second continuous casting line at Sestao, the second blast furnace at Gijón and other units in Sagunto and Aviles. As for the company’s plant in Bergara, Guipuzcoa which remains idle, Urquijo stated that its production was still being transferred to the neighboring unit at Zumarraga. He noted it would only reopen if the company saw a tremendous surge in demand, but that this is not yet apparent. | ||
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| ArcelorMittal seeks €40/t more for EU sections | ||
| ArcelorMittal has announced a €40/tonne price increase on European shipments of sections from 1 March, Steel Business Briefing learns from a company statement. The increase is based on improving demand, which the company says is reflected in higher mill loadings. An overall “firming” of raw materials costs is also given as justification for the move. The increase will be applied to current February price transaction levels, SBB understands, and will cover the small, medium and heavy size range. The company was unavailable for comment at SBB's deadline. However, one northern European trader suggests the company is now offering category one sections at around €500-505/tonne ($682-688/t) effective delivered. Whilst some buyers describe this level as "reasonable," others note that stock levels in the region are now at adequate levels and demand is still poor. "I don't think they will achieve this kind of increase,” said one distributor in the Benelux region; "maybe €15-20/t max". C1 sections were transacted at around €450-460/tonne around one month ago, as SBB has reported. In December last year ArcelorMittal said it would temporarily discontinue its scrap surcharge mechanism and increase sections prices by €50/t. It also announced a €30/t increase in size extras from the beginning of this year. | ||
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| Istil UK on verge of production after nine months out | ||
| Istil UK, the Kent-based re-roller, will restart bar production in the next two or three weeks, a source at the company tells Steel Business Briefing. Istil intends to start production on 25 February, but “it might be a week later,” the source says. The company has received raw materials, shipped from Russian group Mechel, which will last for a month. It also has another two contracts in place, which will see more billet arriving. Rather than ramp-up gradually, Istil will now begin producing at full capacity, around 6,000 tonnes/month, with a total of 74 employees. The merchant bar mill, which was previously owned by Vladimir Varshavsky’s Mirinvest, has not produced in around nine months, SBB understands. Mir Steel UK, which was also owned by Mirinvest, may also begin production in the first half of this year, although it is not a certainty, a source suggests. | ||
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| Turkish pipe export prices stable, demand is low | ||
| Turkish pipe exports prices are stable on low demand from foreign markets, and it is not expected to improve soon, Steel Business Briefing is told by Turkish pipemakers. After the hot rolled coil price increase from the both domestic and foreign suppliers, Turkish pipe producers increased their prices at the beginning of the month. Turkish producers say that the effects of the global crisis are continuing and the market is not expected to recover before the first half of 2010. The imbalance between production costs and sales prices is squeezing pipemakers’ profit margins. “In the crisis time many people took a variety of actions in the market. Too many transactions were done at unexpected prices. Now we expect the market get into balance and prices to be stable. But for this, raw material (coil) costs should come down a bit and demand should improve. We still hear pipe prices in the EU at almost the same level as imported HRC from the CIS,” a producer adds. The new coil producers in Turkey like Isdemir and Toscelik are also expected to help the pipe market improve in Turkey, SBB learns. Currently the base prices of 2mm wall thickness, 48mm diameter hot rolled S275 ERW industrial pipes are at $750/tonne fob. The same size of S355 prices are at $780/t fob and the S235 ERW pipe prices are at $680/t fob, as reported. | ||
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| Spain’s Sidenor restarts Reinosa rolling mill | ||
| Sidenor, the Spanish special steels producer is restarting its rolling mill at its Reinosa plant, the company tells Steel Business Briefing. It has been idled for approximately a year. The mill will be restarted on 1 March as the company says it is seeing a recovery in orders, “It looks like Sidenor has reached rock bottom now and is slowly starting to recover,” a company source tells SBB. The company generally has an optimistic view for the coming year with most of its operations receiving a healthy level of orders and returning to good levels of production. Azkoitia’s blooms' mill has seen improved orders for February and March, reaching 11,500 tonnes and 12,500 t respectively. Meanwhile the plant's quenching unit is also increasing production from 800-900 t/month in 2009 to 2,000 t/m. “The number of shifts here will increase again, once the market picks up a little more,” Sidenor tells SBB. Basauri’s melt shop is now producing at around 45,000-50,000 t/m, with its rolling mill and bright finishing lines all currently running at 100%. Meanwhile the continuous mill at Vitoria is also seeing higher output and is now running at approximately 10,000 t/m. | ||
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| Polish coking coal market waits on global price settlement | ||
| Poland’s coking coal and coke markets are waiting on the outcome of negotiations for hard coking coal prices from Australia before settling any long-term contracts, market participants tell Steel Business Briefing. Global spot coking coal prices are increasing but it is not yet clear how this will be reflected in the annual benchmark. “At the moment buyers are still careful with accepting higher prices,” a Polish analyst says. However, 2010 is expected to be a better year for Polish suppliers. Poland will produce at least 7m tonnes of coke and 10.1mt of coking coal in 2010, up from below 7mt and 6.7mt last year, estimates suggest. Poland’s only coking coal miner JSW is expected to sell its entire output this year. "Global prices are expected to go up, so it’s only logical to say that this will also happen in Poland next month,” a Polish coking coal analyst says. “But it’ll depend on negotiations with buyers,” he adds. Some of the coal is sold on quarterly contracts and some annually. “Poland will see a slight strengthening in coke prices but not a steep hike,” a local coke producer predicts. “We do, however, have the chance to fill the gap vacated by the lack of coke exports from China,” he continues. “Polish coke producers have now started selling significant volumes to India, when usually we only export to Germany, Austria, the Czech Republic and Slovakia.” | ||
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| Turkey's iron ore imports increased by 49% in 2009 | ||
| Turkish iron imports almost doubled in 2009 compared to previous year, partly because of the carry-over into 2009 of shipments delayed from 2008, SBB learns from the market players and data provided by the Turkish Statistical Institute (TUIK). Turkish imports totalled 7.77m tonnes in 2009, which is 48.5% higher than the 5.23mt imported in 2008. In 2009, five countries supplied all of Turkey’s iron ore needs: Brazil was the largest supplier with 3.36m tonnes, followed by Sweden (1.93mt), Ukraine (1.19mt), Russia (951,000t) and Canada (337,000t), Steel Business Briefing understands. | ||
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| Greece's anti-crisis plan 'may reduce steel demand' | ||
| There is anxiety in the air in the southern European steel markets, in particular Greece, over the impact on steel demand of measures currently under discussion to tackle its national debt crisis. EU leaders at a summit meeting yesterday pledged to help Greece, but the details were not known at SBB’s deadline. However, the EU was expected to insist that Greece cut public expenditure, which may cause steel-using projects to be delayed or cancelled. Greece normally consumes more than 4m tonnes/year of flat and long steel products. Some Greek producers are concerned that cutbacks will curtail steel demand at an already difficult time for the industry. “The Greek market is already small and we were beginning to feel that we could be on the road to recovery. This now throws a spanner in the works and could potentially slow down our progress,” one market source comments to Steel Business Briefing. Conversely, other Greeks were hoping the summit would result in a “rescue package” being offered by the EU that could stimulate steel demand. “It is hard to tell what the outcome of the summit will be. We were generally quite optimistic about demand for long products this year and most of us still are,” a tube producer tells SBB. “Also, don’t forget the Greek market does also rely on the thriving Balkans market, where there are a lot of up and coming pipe projects pending.” The Spanish national debt is also causing unease among EU leaders. “We’re not too concerned – well not as concerned as they should be in Greece. Demand is slowly coming back. Certainly, projects have been postponed and put on hold over the last year. But we’re confident that demand for all steel products will slowly but surely return this year,” a Spanish market analyst tells SBB. | ||
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| German stockists' leader warns of second half relapse | ||
| The return to normal business for stockists will be slow in 2010, and could even suffer a relapse in the second half of the year, the president of the German steel distributors’ federation BDS, Oliver Ellermann, has warned. According to BDS’ latest estimates, German stockists sold 9m tonnes of rolled steel products in 2009, which is the lowest tonnage since the reunification of the country in 1990. The first half of 2009 saw a drop of 34% year-on-year, an unprecedentedly harsh fall. Currently, industrial activity is still being supported by national incentive schemes, which quite possibly won’t have sufficient impact to stimulate the real economy, Ellermann suggests. Given that private consumption will suffer from an expected additional 600,000 job losses, the country’s economy could see another reversal by the summer. “We are facing a year of two halves, and I fear that the first half will be the better one,” Ellermann warns. Therefore, steel distributors should keep a wary eye on their business environment, so as not to repeat the mistakes of late-2009 by restocking too much at too high prices. Towards the end of summer 2009, a temporary restocking at stockists and customers brought an “artificial high” to the level of trade, Ellermann recalls. “This purely technical order position expired in the autumn, and then we were worse off than before,” he cautions. | ||
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| Polish steel production could reach 11m t in 2012 | ||
| Steel production in Poland is expected to recover “slowly but systematically” over the next three years to return to the record levels set in 2007, the Polish steel association (HIPH) tells Steel Business Briefing. In 2009, the country’s steel production fell by 27% to a low of 7.1m tonnes. Steel consumption, meanwhile, decreased by 30% on 2008 to 8.1m t, and 58% of steel consumed came from imports. HIPH estimates that in 2012 steel production should return to 10.5-11m t, while consumption should reach 12m t. Almost half of the steel consumed in Poland goes into the construction industry and building of steel structures. The forecast for the coming years is that these sectors will require more steel, mainly to realise infrastructural investments for the Euro 2012 football tournament. “Certain projects, such as regional road construction and railway infrastructure modernisation, are being prepared and will soon start sourcing steel,” HIPH says. “The Polish energy market is also making significant investments that will require the use of steel,” it continues. “Poland is also becoming ever more competitive in the white goods industry, and the upcoming digitalisation of the country’s radio and television systems will require the use of steel-related products,” it adds. Although 2009 was a tough year for the Polish steel industry, production of some products, such as reinforcing and structural steel, actually rose. HIPH is also pleased with last year’s output of cold-formed sections and coated sheet. | ||
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| Turkish automotive production almost doubled in January | ||||||||||||||||||||||||||
Turkey produced 76,565 motor vehicles in January 2010, 97.5% more than January 2009’s 38,775. Steel Business Briefing is informed by the Turkish Automotive Manufacturers’ Association (OSD)’s general secretary Ercan Tezer that domestic sales increased by 2% to 21,047. The modest increase in domestic sales is because of the discount campaigns of car producers at the end of 2009, which made the buyers bring forward their purchasing, Tezer said. Turkey exported 59,999 vehicles in January 2010, 86.2% more than January 2009’s 32,215. OSD says this increase is because late 2008 and the beginning of 2009 were when the global crisis was at its peak. So “the increase in production and export figures should be considered as base effect,” it says. Turkish automotive production is expected to increase in 2010, as most producers are planning to raise output by around 10-15%, as SBB has reported. | ||||||||||||||||||||||||||
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| German spot customers won’t lift steel purchases in Q1 | ||
| German steel distributors expect end-user demand to remain flat in the first quarter of 2010, with little hope for increases but also no major fear of a further slump. Between 70% and 85% of managers believe demand will be flat across most customer industries, according to a poll by the national steel distributors’ federation BDS. Two related sectors with somewhat bleak prospects are the general construction and structural steel construction markets. The concerns have been confirmed and enforced by a hard winter, according to the country’s main construction industry federation, as more construction companies cite the weather as a main obstacle for business than in January last year. Steel consumption is also falling in the automotive industry, according to BDS, a view which is at odds with mills’ suggestions of higher utilisation on increased automotive activity. “The distributors’ customers are not the OEMs, but the suppliers, and we have a larger share in utility vehicle construction where the situation is still extremely tense,” a BDS spokesman explains to Steel Business Briefing. Positive signals are reported from the mechanical engineering and chemicals industries. While a third of respondents saw these sectors decline further in the previous poll, only 10% and 5% respectively retain that concern. The same is true for the many small-sized steel and metals fabricators, whose main problem these days is getting bank loans to finance their business. | ||
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| Polish steel distributor eyes further consolidation | ||
| Polish steel processor and distributor Konsorcjum Stali (KS) is preparing to acquire another company in the sector, a KS representative tells Steel Business Briefing. “We are carrying out pretty advanced talks: we are still before the stage of due diligence but we would like to write up a letter of intent by the end of the first half of the year,” KS president Robert Wojdyna said. “The steel market is [poised] before the expected recovery and this is the last moment for closing such transactions,” he continued. “I do not want to go into details,” he added. It was thought KS was in talks with Krakow-based distributor Sambud-2, which it expressed an interest in acquiring in September 2008. Sambud-2, however, has said this is not the case. “I am sure a lot of managers are thinking intensively about consolidation in the branch, but at the moment we are not interested in this subject,” Sambud-2’s president Krzysztof Stepak told PUDS (Polish Union of Steel Stockholders). KS acquired steel structures producer Polcynk last year and steel distributor Bodeko in 2008. Wojdyna told local media last year that KS was in talks with various firms interested in “capital mergers” with a view to consolidating the company. KS sells rebar, wire rod, sections, angles, tubes, as well as hot and cold rolled coil. It sold 495,000 tonnes of steel in 2008. | ||
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| NLMK consolidation boosts long product development | ||
| Novolipetsk Steel (NLMK) has now officially announced the formation of a long product division to be known as NLMK-Sort (NLMK-Long Products). Olga Naumova was appointed as general director, as previously reported in Steel Business Briefing. NLMK-Sort comprises the Nizhne-Serginsky Metallurgical & Metalware Plant (NSMMZ), Berezovsky Electrometallurgical Plant (BEMZ), Uralsky Plant of Precision Alloys, Kaluzhsky Electrometallurgical Plant and Vtorchermet scrap division. The units produce a wide range of long and semi-finished products. NLMK-Sort companies have a combined capacity of 2.2m tonnes/year of crude steel and 2m t/y of rolled long products. An EAF in the Kaluga region is under construction and will add an extra 1.55m t/y of crude steel capacity upon completion; its start-up was previously reported as 2011, but this date may have slipped. | ||
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| Severstal raises 2010 capex plans to $1.4bn | ||
| Severstal's capital expenditure on steelmaking and mining in Russia this year is expected to be $1.4bn - surpassing the $1bn planned for 2010 in late 2009, Steel Business Briefing learns from the company. The steel segment will receive $685m - double that of 2009, and see a start to the construction of the Balakovo mini-mill, as well as the commissioning of the tube and longs mini-mill in Sheksna. Severstal will also continue construction of second colour coating line at Cherepovets, the company's principal steel-making site. In addition, Severstal intends to open a new service centre and stamping line in the Kaluga region. Other investments include the modernisation of a galvanising line, coke battery No.7 and a chemical by-products' filter at Cherepovets. Meanwhile, Severstal says it will invest $365m into its mining division, Severstal Resource. It plans to increase production volumes at Vorkutaugol, a coal mine. Iron ore pellet producers Karelsky Okatysh and Olkon will also have new equipment. For the future, Severstal envisages a dual track approach for its Russian operations - to include both mini-mills as well as the vertically integrated route, its CFO Alexey Kulichenko is quoted as saying. | ||
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| ArcelorMittal's NA carbon flats shipments up 22% in Q4 | ||
| ArcelorMittal’s North American carbon flats shipments were up more than 22% from the third quarter to the fourth quarter, raising the 2009 total to 10.8m tonnes. In its annual earnings statement, ArcelorMittal announced Q4 carbon flats shipments of 3.3m t, up from 2.7m t in Q3, Steel Business Briefing notes. The global steel giant also announced North American flats earnings before interest, taxes, depreciation and amortization (Ebitda) of $400m for 2009. From Q3 to Q4 Ebitda was down 14% to $127m. Operating or net profits for the region were not provided. ArcelorMittal’s capital expansion projects were limited in 2009, though an ongoing project at the company’s Dofasco sheet facility in Canada aims to increase total slab capacity by 630,000t/year. The project is scheduled to be completed by mid-year (see other story). | ||
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| Allegheny raises electrical steel surcharge | ||
| ATI Allegheny Ludlum has upped its grain-oriented electrical steel surcharge for April shipments to $391 a short ton. That's up from $385/s.t for March shipments, which was a 25% increase over February's surcharge. The monthly surcharge reflects raw materials and energy used to produce the electrical steel with a two-month lag, Steel Business Briefing notes. | ||
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| NA longs sales not profitable for ArcelorMittal in 2009 | ||
| ArcelorMittal's North American mills shipped 3.8m tonnes of long carbon steel products in 2009, including a little more than 1m t in the fourth quarter, Steel Business Briefing learns. Q4 sales generated $13m in earnings before interest, taxes, depreciation and amortization (Ebitda), but for the full year the steelmaker’s NA longs segment had an Ebitda loss of $145m. ArcelorMittal shipped 1.02m t of NA longs in Q4, up from 828,000 t in the third quarter. | ||
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| US pipe distributor to relocate Illinois warehouse | ||
| US tubes distributor Marmon/Keystone is closing its Bolingbrook, Illinois warehouse and relocating to a new facility about 80 miles away. The new facility in Spring Valley, Illinois, is expected to be operational early in the fourth quarter, Steel Business Briefing learns from a company press release. Headquartered in Butler, Pennsylvania, Marmon operates service centers throughout the US, Mexico and Canada for carbon, alloy, stainless and aluminum tubular products and bar. | ||
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| Grande Cache sees growth in 'robust' met coal market | ||
| Canadian firm Grande Cache Coal Corp, like other met coal companies, is counting on a continuing recovery from traditional steel producers as well as strong growth in China, Steel Business Briefing notes. For the current fiscal year 2010, which ends March 31, the Alberta-based company anticipates that metallurgical coal sales volumes will be 1.6-1.8m tonnes, at an average price of US$115-$125/t. The company anticipates sales volumes for fiscal 2011 will be in the range of 2.0-2.2m t. “Final pricing will be dependent on market conditions,” the company noted. “Price discussions have commenced with customers for fiscal 2011 but agreements have not yet been reached.” The firm recently announced its financial results for its fiscal third quarter, which ended December 31, 2009. Net income was C$4.3m (US $4.1m), less than the C$36.8m it made in the year-ago quarter. It attributed the reduction to lower coal prices, though those were somewhat offset by higher sales volumes, according to the firm’s earnings statement. Similar to other coal firms, the company believes the met coal market “continues to be robust.” Grande Cache plans to produce 3m t/year by 2013, SBB notes. The average sales price in fiscal Q3 for met coal was C$138/tonne (US$130/t). | ||
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| Usiminas rehearses resuming slabs exports | ||
| Usiminas is slowly resuming slab exports, starting from its Cubatão plant, in the Brazilian state of São Paulo. Steel Business Briefing learns from the company that it shipped 40,000 tonnes to Asia from Cubatão in January. However, the company's mill in Ipatinga is still out of the export market. By November and December 2009, Usiminas slab exports were almost null, as reported. The company says, though, that the shipment made in January came from a small inventory surplus, and that this does not necessarily reflect a return to the export market. Both blast furnaces at the Cubatão works are operating normally, it adds. | ||
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| Vale's 2009 iron ore & pellets exports to China up 55% | ||
| Brazilian mining company Vale's iron ore and pellet shipments to China hit a record in 2009, reaching 144m tonnes, up 54.5% over 2008, Steel Business Briefing learns from the miner. During the fourth quarter, iron ore and pellet sales to the Chinese market came to 31.2m t, against 14.2m during the same period in 2008. Meanwhile, overall iron ore and pellets shipments totaled 253.4m t in 2009, against 295.1m t in 2008. Vale says this drop is mainly related to a dramatic decline in demand during the first half last year. In Q4, these sales reached 69.8m t, against 55.2m t during Q4 2008. Compared to Q3 2009, however, October-December sales fell 7%. According to Vale this decrease is due to heavy rains that affected its output and maintenance at the Carajás mines, as well as maintenance work at its port terminal Ponta da Madeira, SBB notes. | ||
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| No resumption in sight for Chile's Manganesos Atacama | ||
| Chilean manganese producer Manganesos Atacama SA - part of the domestic steel and iron conglomerate CAP - stopped producing at the end of the first half 2009 and remains idled, Steel Business Briefing learns from company officials. Manganesos produces about 9,000-10,000 tonnes per year of manganese ore, as well as 2,000-3,000 t/y of refined manganese. No schedule has been established for resuming operations at the plant, and a restart is not expected any time soon, as the company says its inventories can satisfy existing contracts for at least two years, SBB notes. | ||
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| Major service center charting growth in NE Brazil | ||
| The owner of Brazil's newest steelmaking plant, Aço Cearense group, which first emerged as a major regional distributor and service center, is boosting processing activities and is already mulling expansions of its facilities and workforce in the near future, Steel Business Briefing learns from a company executive. Local unionists say the Aço Cearense service center operation is considering hiring more employees over the next few weeks, as its facilities are being expanded. The company confirms a new warehouse is being built, but states it is only for logistical purposes. Reports from several sources within Ceará and other northeastern states suggest that Aço Cearense's Sinobras longs mill is advancing towards a market previously dominated by Gerdau Cearense. | ||
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| Venezuela's Sidor starts construction of energy plant | ||
| Venezuela’s state-owned mill Sidor this week started building a captive energy plant to supply its iron and steel facilities, Steel Business Briefing learns from the country’s mining ministry. The diesel plant – with around 420 megawatts of combined capacity – is scheduled to be commissioned in around five months, and is aimed at maintaining Sidor’s production. According to the mininistry, investments might reach roughly US$400m. As SBB previously reported, the steelmaker was obligated to halt some of its furnaces and rolling mills due to the ongoing energy conservation plan in Venezuela. The flats and longs maker has been working at around 20-30% of its overall capacity. | ||
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| Simandou start-up date remains unconfirmed: Rio Tinto | ||
| Despite some progress in Guinea towards open elections, Rio Tinto does not expect to see its Simandou iron ore project starting production by 2013, Steel Business Briefing learns from the company. Rio Tinto had aimed to bring the 70m tonnes/year Simandou project into production by 2013, but that is unlikely to happen due to much infrastructure projects still needing to be built, including the construction of a port. The company has also been in dispute with the Guinean government over the extent of its mining concession, as SBB previously reported. However, ceo Tom Albanese said: “We’ve had some progress in Guinea and they’re moving towards open elections in the near future, which we welcome.” He added that planning of the mine is underway, although no start date for production can yet be confirmed. In 2008 Moussa Dadis Camara seized control of the West African country. Camara said on 14 January that Guinea would be returned to civilian rule within six months. | ||
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| Dubai rebar prices continue recovering | ||
| Dubai market players are reporting an AED 50/tonne increase in rebar prices in the domestic market to AED 2,000-2,050/t ($544-558/t). The increase is mainly based on raw material costs, and is expected to continue for the following weeks. Main concern of the Dubai market is that Turkish producers may lower their prices to secure sales to Dubai. One trader states: “the market in Dubai is now better, the demand is OK and the prices are increasing in line with the raw material prices. But we are worried that Turkish producers might lower their prices to be able to sell material to Dubai market, because their exports are falling.” Current rebar export offers to Dubai are not found to be economic for the local traders, and that is why the local producers can increase their prices. But if import offer prices fall, then the local producers are also likely to decrease their prices to fight against the Turkish imports, Steel Business Briefing was told. Turkish offers to Dubai are heard in the range of $525-545/t cfr. The absence of Turkish rebar is seen as positive for the supply and demand balance of the UAE steel market. | ||
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| Price rise may falter on excess restarts, says analyst | ||
| The consultancy Applied Value has warned that recent price rises in Europe and the US may not continue. Martin Ekstrom, head of Applied Value’s metallic practice, tells Steel Business Briefing there are already signs that prices may be softening: in the USA, he points to “recent capacity restarts as well as Toyota halting car production.” Prices are also likely to be capped by fears of attracting foreign imports. Ekstrom says price rises will slow in Q2 as inventories are rebuilt, and supply catches up with demand. US service centre inventories almost halved in Q1-3 2009 from 4.2m tonnes, but have now recovered to almost 3m t in Q4. In Europe, demand too may strengthen until restocking is complete, while higher global export prices and a strong US dollar mean that foreign imports are of less concern. However demand will be met by suppliers bringing idled capacity online and so prices may not rise significantly until 2011, when demand is predicted to recover. US capacity utilisation rose to 64% last month, up from 38% in January 2009, while in the European Union, it rose from 53% to 62% from Q1 to Q4 2009. Meanwhile, Applied Value forecasts that China’s voracious appetite for raw materials will drive up its cost. | ||
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| ArcelorMittal's 2009 stainless sales halved to $4.2bn | ||
| ArcelorMittal’s total stainless flats sales topped $4.2bn in 2009, down from $8.3bn in 2008. However, fourth quarter sales of $1.25m were up 18% from the third quarter. The company’s stainless segment reported an operating loss of $172m for the year, after earning $383m in 2008, Steel Business Briefing notes. The segment earned $10m in Q4, down from $51m in Q3. Quarter-on-quarter, stainless shipments rose about 17% from 354,000 tonnes in Q3 to 415,000 tonnes in Q4. ArcelorMittal does not break out the shipments geographically, though its total stainless shipments worldwide reached 1.45m t in 2009, down from 1.96m t in 2008. Though stainless is a comparatively low-volume product for the global steel giant, its average selling price was about $2,763/t in 2009, more than triple typical prices for carbon flats and longs. However, last year’s average price was off 30% from the 2008 average of $3,976/t. | ||
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| Iron ore sales underpin Rio Tinto profit jump | ||
| Rio Tinto reported a net profit of US$4.87bn for 2009 on the back of record iron ore sales of 204m tonnes. The result was a 33% improvement on the $3.67bn it recorded in 2008. However, iron ore earnings fell 31% to $4.1bn after last year’s benchmark price reductions. Describing 2009 as “a year of two halves”, Rio chief executive Tom Albanese said severe flooding in the Pilbara and slumped demand caused by the global financial crisis curtailed sales and production in the first half-year. But once the effects of the Chinese stimulus package kicked in during the second quarter, Rio’s iron ore mines consistently operated above “nameplate capacity” of 220m t/y between July and December to meet resurgent Chinese demand. Rio said 50% of iron ore sales in the first half of the year were sold on the spot market. In the second half, most shipments were sold to China on a “provisional” basis – in line with settlements in Japan and Korea. “We continue to be active across a range of sales mechanisms with our Asian customers,” Albanese said in a briefing monitored by Steel Business Briefing. He said the stronger demand seen over the latter part of 2009 was continuing into this year with Europe and North America also improving. Rio predicts the Chinese economy will grow 9% in 2010. However, Albanese warned that “excessively aggressive tightening of stimulus packages could have a big effect” on iron ore demand. He expects India to “be where China is today by 2025” and, coupled with China, “demand will double over the next 15 years." | ||
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| Iron ore price tipped to rise as steel demand strengthens | ||
| Steel demand has been strong this year, not only from China, but around the world, and when steel demand rises it means we’ll see the price of iron ore follow suit, Rio Tinto ceo Tom Albanese told a briefing in London attended by Steel Business Briefing yesterday. “The world’s steel mills are now ramping up, so we’re seeing more demand coming than just from China,” he said. But he would not comment on where spot and benchmark iron ore prices would be in 2010as benchmark negotiations are currently taking place. In the second half of 2009 Rio Tinto sold the bulk of its iron ore on long term contracts at the benchmark price or at provisional prices and China was its largest customer, representing 24% of its business. “Demand from China has never been stronger,” Albanese said, and he expects to continue to see China remain an important customer. “Long term China wants more metal; iron ore, copper and aluminium,” and Rio Tinto is a producer of these products and we want to work together to achieve this, Albanese concluded. | ||
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| Chinese steel prices to continue rising: ArcelorMittal | ||
| “After a short period of correction during quarter four [2009], Chinese and emerging markets’ [steel] prices have increased again due to rising raw material costs and production cuts,” ArcelorMittal chief executive Lakshmi Mittal said this week. “Chinese prices should remain volatile but continue to trend upwards as a result of raw material constraints and demand growth,” Mittal forecast at the global steelmaker’s annual results meeting in Luxembourg. “Similar to the decline in Chinese prices in Q4, [steel] prices also corrected in the US and Europe, but are again increasing since the beginning of the year,” Mittal told the meeting attended by Steel Business Briefing. | ||
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| Growth in global manufacturing gathers pace |
| The worldwide manufacturing industry started 2010 on a positive note, according to a widely-watched index of manufacturing activity monitored by Steel Business Briefing. The global manufacturing purchasing managers’ index (PMI), compiled by Markit Economics and J.P. Morgan, climbed from 54.6 in December to 56.1 in January. This was the eighth month of expansion, represented by any number above 50, and brought the PMI to its highest level in almost six years. The improvement was most marked in the US, where January output was up by 6.5 PMI points on December, Markit says. China, India, Taiwan and South Korea also posted strong rates of expansion for the month. Activity in Western Europe and Japan showed “signs of improvement,” though remained below the global average, it notes. An increase in the forward-looking orders-to-inventory ratio also suggested the upturn should be sustained, at least in the short-term. “The current phase of recovery looks to still have significant momentum,” comments David Hensley, director of global economics coordination at J.P. Morgan. “[This] suggests growth will continue in the months ahead”. Meanwhile, manufacturers’ input costs continued to increase, reflecting rising commodity prices and supply-chain factors, says Markit. The global manufacturing input prices index jumped by 10 points over the last two months to reach 63.4 in January. |
