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Bản tin thế giới ngày 14/02/2013

CIS coil export prices rise, more gains seen for March
The upward trend in Black Sea export prices for hot and cold rolled coils is continuing this month as the CIS steelmakers are reporting bookings concluded at higher levels than in January, market participants told Platts this week.

The latest quotations from the mills in Russia and Ukraine to their export buyers were seen as realistic on the back of the offers from other major exporters in China and Turkey. Shortly before the national holidays, Chinese 3mm-and-up SS400B material was available $650/metric ton FOB for March delivery but did not attract bids.

Ukrainian producer Metinvest has nearly closed its March campaign, selling at $575-580/mt FOB Black Sea ($595-600/mt DAP), which was a $15-20/mt hike on the last month’s deals. Orders of HRC to Europe from Russian producer MMK were placed at the targeted level of $590-600/mt FOB Black Sea, a source in the company told Platts. Traditionally, two other major market players Severstal and NLMK have achieved the highest settlements selling their HRC at $620/mt.

Cold rolled coils have showed mixed dynamics this month. Russian producers have taken orders at $690-700/mt FOB, with NLMK reported at an even higher level. Metinvest, however, kept its CRC prices unchanged at $630/mt FOB Black Sea.

The CIS producers expressed their confidence in further price increases for HRC next month. One source said the situation will depend on China but it is likely that Chinese suppliers will be bullish after the holiday, paving the way for other exporters. He told Platts the Black Sea HRC is likely to go up another $10-15/mt.

Platts daily price assessments FOB Black Sea rose to $567.5/mt for HRC and $645/mt for CRC on Wednesday.
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CIS/Turkey billet strengthens, mart awaits clearer direction
The daily Platts assessment for billet exports from the Black Sea strengthened on Wednesday as traders awaited more clarity from new offer levels for March from producers, some of whom are already giving above $530/metric ton FOB Sea of Azov on prepayment.

At the end of last week the tender for the March output of the Belarusian producer BMZ was closed at $520/mt FOB with full pre-payment, a level which was described by a trader “above the one previously envisaged”.

A new tender is expected to be concluded this week for Russian material, with trading sources reporting the likely price to be just above the $525/mt FOB, indicating that the price is now firming slightly despite the demand in the market being relatively quiet. Regionally, stronger rebar prices on export and locally in Turkey are a big factor for stronger billet sentiment.

A trader noted that in Ukraine one supplier is currently not selling its output to traders yet, as it targets sales to its direct clients first, but noted that the current offer level is believed to be $520/mt FOB Mariupol (equivalent to some $524-525/mt FOB Black Sea). He added that another Ukrainian supplier is currently keeping its offer level above $530/mt FOB Mariupol on 30% pre-payment, but this is failing to attract interest from the market.

Meanwhile the Turkish suppliers have also noted a slight pick-up in their transaction levels, with sales to South America concluded by an exporter this week at some $559/mt FOB Turkey (for material carrying a premium) and new offers from another supplier seen at $550/mt FOB. Re-rollers in Turkey are expected to be currently bidding at around $10/mt below the domestic offers (some $522-523/mt FOB Black Sea port).

As a result the daily billet assessment was up $5/mt on Wednesday, to $525/mt FOB Black Sea.
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Special Report: Weak rupee leaves Indian HRC imports quiet
The market for hot rolled coil imports into India could remain quiet for several more weeks as a weak rupee leaves most import offers higher-priced than domestic equivalents by about $60-70/metric ton, according to Indian market sources surveyed by Platts Wednesday. “Even if international prices started to correct, it would take a while for imports to become viable again,” a Mumbai-based trader said.

Domestic transaction prices for IS 2062 grade A/B structural HRC, 3mm thick and above, currently average Rupees 33,500-34,000/mt ($622-632/mt) ex-works though some sources reckoned mills have been able to achieve slightly higher prices in some transactions this month. This is equivalent to an import parity level of $579-588/mt CFR Mumbai at a 7.5% import tariff. In comparison, although import offers are presently sparse, few cargoes from different origins were available at prices lower than $650/mt CFR Mumbai, sources said.

“This is a pretty huge gap to bridge,” another Mumbai-based trader said. “The exchange rate is playing a very crucial role. And even if there are changes to the rupee or import offers, these won’t happen overnight,” he noted.

Import bookings for HRC into India have been sparse since end-October when the rupee averaged around 52-53 to the dollar. The currency topped 55 against the dollar earlier this month, and has since fluctuated mostly in the 53-54.5 range.

Although the scenario gives Indian mills room to lift domestic base prices, sluggish demand is thwarting these efforts, as reported. Indian sources were also mostly uncertain of a continued uptrend in international prices in coming weeks.

Prior to closing for the Chinese New Year holidays, some Chinese mills had announced increases to their March HRC export prices. “No-one is buying into the Chinese optimism,” another Mumbai-based trader said. “Chinese mills are like Hollywood movie producers – they create all the hype before releasing a movie and you finally realize you have spent money on a movie that was not even worthwhile,” he said.
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America's 2012 steel imports rise 17% to top 30 million mt
US imports (C&A)  
Based on DOC and AISI data; in mt
  2012 2011 % change
Semis 6,752,106 5,919,583 +42%
OCTG 3,257,885 2,602,408 +25%
Line Pipe 2,504,936 1,767,717 +42%
HRC 2,470,016 2,382,980 +4%
HDG sheet & strip 1,816,412 1,326,445 +37%
Hot-rolled bar 1,368,339 1,169,724 +17%
Coiled plate 1,310,279 1,152,126 +14%
Cold-rolled sheet 1,183,290 985,093 +20%
Cut plate 1,167,253 997,433 +17%
Wire rod 970,418 898,793 +8%
US steel imports increased by more than 17% to 30.4 million mt in 2012, as the top 10 imported steel products in 2011 made gains in 2012.

In 2011, total steel imports (carbon, alloy and stainless) were 25.9 million mt.

Carbon and alloy semifinished steel topped the import list again in 2012, with a 14% year-on-year increase to 6.8 million mt, up from 5.9 million mt.

OCTG imports increased 25% to 3.3 million mt in 2012, up from 2.6 million mt in 2011. Line pipe imports jumped by 42% to 2.5 million mt, up from 1.8 million mt in the same comparison.

US imports from Canada decreased by nearly 5% to 5.2 million mt in 2012, down from 5.5 million mt in 2011. Brazilian steel shipments to the US increased by 27% to 3.6 million mt, and Korean steel exports to the US increased by 29.6% to 3.3 million mt.
US imports  
Based on DOC data in mt
  2012 2011 % change
Canada 5,223,763 5,471,712 -5%
Brazil 3,591,948 2,820,402 +27%
Korea 3,336,545 2,574,186 +30%
Mexico 2,453,290 2,622,173 -6%
Japan 2,363,173 1,824,282 +30%
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EU improves exports; NAFTA growth needed to absorb excess
The EU-27 improved exports to deal partially with the overcapacity in the common economic area in 2012 by selling 38 million metric tons of steel, up 6% on the previous year; however, NAFTA will need to post decent growth in 2013 to help absorb excess capacity, chief executive of the International Steel Statistics Bureau (ISSB), Richard White, said at the Adam Smith Summit in Moscow.

NAFTA imports reached 33 million mt in 2012, up 43% year-on-year. Exports slipped to 5 million mt, down 17%. ISSB forecasts strong year-on-year consumption growth in the North American continent for 2013 at around 3.6%, or 135.1 million mt.

The Middle East and North Africa region is also contributing significantly to aid a better balance between supply and demand globally, as it imported 44 million mt in 2012, 10% more than 2011. Middle East demand growth is likely to be strong in 2013, too, at 5.9%, reaching 52.8 million mt.

EU-27 as a bloc still saw the highest internal trade at 100 million mt in 2012, narrowly edging out South and East Asia at 96 million mt, while South America ranked lowest as a continent in terms of local intra trade, putting together only 3 million mt of cross-continental deals.

Nevertheless, despite positives in terms of trade routes, capacity continues to grow faster than demand. ISSB predicts that output will increase by 36% by 2017 compared to 2012, hitting 1.83 billion mt worldwide.

China’s production rates are due to increase every year until then. In the same period, EU-27 production could increase by 7% to 180.5 million mt, but even after this increase would still lag behind 2007 levels of output by 14%.

Production in India could push up 37% to 104.7 million mt by 2017 compared to 2012 levels. Next year, though, world steel production could reach 1.59 billion mt; but demand only push up to 1.45 billion mt. Demand in China could be 659.2 million mt in 2013; output is likely to reach slightly higher than the 717 million mt posted in 2012.

Therefore, despite upward pressure on prices from a desire among steelmakers to alter their poor profitability, White stated that “the whole supply chain is underperforming” in terms of profitability, China’s hard landing and the slower recovery in the mature economies of the western hemisphere than expected are likely to weigh on prices this year
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Sidor’s Bolivar port closed due to worker strike
Venezuela’s largest integrated steelmaker Sidor has had operations stopped at its own port in Bolivar state since February 8 due to a port workers strike, causing delays in some domestic shipments, according to a company source.

The strike was started by 41 employees of Verificador Carga Muelle (IVG), which was incorporated by Sidor in 2009. The workers' complaint is that they are being compensated at levels below the company's typical pay scale, the source said.

The strike is preventing Sidor from loading its steel products onto ships and from unloading ships with raw materials. Sidor did not respond to a Platts query as to whether this situation has hampered production or by how much it has already affected shipments.

The flats, longs and tubes producer has a liquid steel production capacity of 5.1 million mt/year. Sidor aims to more than double its 2012 crude steel output of 1.72 million mt to 4.4 million mt/year in 2013.
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Korean mills mull lowering autosheet prices to carmakers
Korea’s autosheet producers – Posco and Hyundai Hysco – have been pondering over lowering prices to domestic carmakers for the January-March quarter compared with the previous quarter, informed sources said this week. Market pundits have been warning that the Korean currency’s appreciation against both the US dollar and the Japanese yen will erode competitiveness among Korean exporters such as carmakers.

“Considering the recent issue of foreign exchange rates and other matters, we are trying to help domestic automotive companies build their price competitiveness in exports markets,” a Posco spokesman told Platts.

“We are now in talks with end-users by industry and by company, so it is difficult to say if we’re in discussions with individual end-users or if we have already completed the negotiations with them,” he said when asked about the progress of negotiations between the steelmaker and carmakers led by Hyundai Motor over autosheet prices' reduction for Q1.

However, local media reported last week that Posco has decided to cut autosheet prices to major carmakers for the current quarter and Hysco has also lowered prices to its parent company Hyundai Kia Automotive Group. The reports did not mention the size of the price cut, but trading sources estimated that the discount margin this time might be about Won 50,000/metric ton ($46/mt).

Last month, Korean automotive output jumped by 23% year-on-year to 410, 602 units thanks to more working days in January and an increase in export sales, the Korean Automotive Manufacturers’ Association said on Tuesday. In spite of the continued global slowdown, the country’s vehicle exports surged by 17% y-o-y to 288,344 units.
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SSI sees Thailand domestic steel demand up 7.2% in 2013
Thailand based flat steel producer Sahaviriya Steel Industries last week reached a cumulative hot rolled coil production of 28 million metric tons, the highest record among Thai steel companies, the company said in a press release. It added that it continues expecting an increase in production at its Thai re-rolling plant due to the increasing domestic demand and the results of the synergies from its vertical integration (with the slab supply from SSI UK).

"We will see from now consistent growth in volume and sales revenue, and reducing production cost due to larger economy of scale. Furthermore, we will soon begin to see better margin as our products gain market share under our innovate premium value products strategy," the company said.

SSI added that in 2013 Thai domestic steel demand is expected to increase 7.2% y-o-y, to 17.5 million mt, according to the local steel institute. "This is mainly because of several major infrastructure investment projects of the government and the expansion of downstream industries such as automobile and energy," SSI added.
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Korean construction orders value slump 8% in 2012
The total value of new orders received in the Korean construction market during the last calendar year plunged to the lowest in seven years since 2005, according to statistics released earlier this week by the Construction Association of Korea (CAK).

The value of new orders for 2012, including those from both private and public sectors were tentatively estimated to total just Won 101.5 trillion won ($93 billion), down 8.3% compared with those seen in 2011, CAK noted. This value was below the target of Won 111 trillion set for 2012.

The country’s highest value of total new orders had hit a record high of Won 129.9 trillion in 2007 and this figure has steadily declined year after year since that peak.

“This was widely expected as the Korean construction market already reached its peak many years ago,” a manager from construction company told Platts.

Hyundai Steel, the country’s leading steelmaker of construction steel, had forecast that domestic construction activities will remain stagnant given the acute lack of new orders from the private sector, it said late last month. While the public construction sector is expected to slightly improve this year compared with last year, it cannot offset for the sluggish construction acivity in the private sector.

The steelmaker sold just 7.36 million metric tons of construction long products such as rebar, beams and other sections during the last calendar year, down 3% year-on-year, according to the company.
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Jindal Stainless loss widens in Oct-Dec
India’s Jindal Stainless Limited (JSL) posted a net loss of INR 2.57 billion ($48m) in the October-December quarter, the country’s largest stainless steel producer announced last week. The loss is larger than losses it posted in the previous quarter and the same quarter last year.

JSL said its results were adversely impacted during the quarter by subdued global economic conditions, depreciation of the Indian rupee and ongoing ramp-up at its Odisha stainless steel works.

JSL registered net loss of in INR 1.52 billion in July-September 2012 and INR 1.1 billion in October-December 2011.

The steelmaker booked revenue of INR 25.84 billion in October-December 2012, an increase of 4.9% quarter-on-quarter, but it was not enough to offset its expenses which rose 4.6% q-o-q to INR 26.34 billion in the quarter.

JSL’s net loss totaled INR 6.41 billion in nine months ended December 2012. JSL’s spokesman was unable to comment further by press time.
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Japanese scrap prices rise in Kanto export auction
The highest bid in Wednesday’s export auction for H2 grade scrap, held by the Kanto Tetsugen group of scrap dealers based around Tokyo, was ¥33,600/metric ton ($361/mt) FAS. This represents an increase of ¥750/mt ($8/mt) from the highest bid in the group’s previous auction held on January 12. The bid was for 5,000 mt of scrap at the equivalent of about ¥35,000/mt FOB. While Kanto Tetsugen does not disclose the names of bidders, trading sources said that this bid was placed by Okaya & Co, a mid-sized trader headquartered in Nagoya.

JFE Shoji Trade, the trading arm of JFE Steel, was awarded 5,500 mt at ¥33,590/mt and another 5,000 mt at ¥33,550/mt. Sumikin Bussan, a trader under Nippon Steel & Sumitomo Metal Corp, clinched 5,000mt at ¥33,570/mt. All bids were on FAS basis and all cargoes have a mid-April shipment time. The bidding prices were higher than expected, said a Kanto Tetsugen official, adding that he was satisfied with the results.

A scrap purchasing manager of a major Kanto-based steelworks said that the highest-priced bid was about ¥1,000/mt higher than the export price level being targeted by Japanese traders. He pointed out that the bid prices rose to reflect the falling yen. The yen weakened to ¥93-94 against the dollar as of February 13, from ¥91-92 in end-January.

Japanese traders were last heard aiming to contract export sales for H2 grade scrap at ¥34,000/mt FOB and a trader said they may even be eyeing to export at ¥35,000/mt FOB based on the strong Kanto Tetsugen results. But he and others including Japanese domestic mills would be watching to see whether Korean importers would accept price hikes for Japanese scrap.

Meanwhile, Tokyo Steel Manufacturing lifted its scrap buying prices by ¥500/mt for all grades at all works effective for February 14 arrivals. The mini-mill’s H2 buying price at Utsunomiya in the northern Kanto was raised to ¥32,000/mt ($344/mt).
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Indian auto sales decline, steel market sentiments dip
India’s auto sector is slated to miss its growth targets for sales in all segments this fiscal year ending March 31, with some segments having shown up to a 40% year-on-year decline in sales in January, the Society of Indian Automobile Manufacturers (SIAM) said this week.

Auto production during April 2012-January 2013 grew 2.76% year-on-year to 17.2 million vehicles. Domestic sales rose 4.66% y-o-y but export sales fell 3.01% y-o-y over the same period, SIAM said. The largest decline of 21.4% y-o-y in domestic sales during this period was seen in the medium and heavy commercial vehicles segment.

The declining trend in the auto sector, coupled with India’s projection of a lower GDP growth rate this fiscal compared to the previous year, have dampened domestic steel market sentiments, sources said. “There is a lot of fear in the (steel) market now,” a Mumbai-based trader said. “Overall sentiment in the market is really poor.”

Earlier this month, the Indian government forecast a 5% GDP growth rate for the year ending March 31, down from 6.2% seen during the April 2011-March 2012 fiscal year. “Everyone is just fighting a survival game now,” the trader said.

Another Mumbai-based trader said that sluggish end-user demand is continuing to pressure Indian steelmakers. “Customers can wait (to buy), but mills have to sell,” he said.

The auto sector consumed about 7 million metric tons of steel in FY 2011-12, accounting for about 10% of India’s total finished steel consumption of about 71 million mt that fiscal, according to data from the India Steel Vision 2020 report.
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Indian iron ore miner reports drop in Oct-Dec sales, profits
State-owned Indian iron ore miner NMDC saw sales and net profits during October-December 2012 tumble more than 20% from the previous quarter and by more than 30% year-on-year, it announced to the Bombay stock exchange Wednesday.

NMDC’s net sales last quarter totalled Rupees 20.47 billion ($380 million), down 22% from the previous quarter and also a decline of nearly 43% from Rupees 28.22 billion the same period in 2011. Similarly, the miner’s net profits during October-December 2012 totalled Rupees 12.93 billion, down 23% from the previous quarter and also lower by 31% from the previous year.

Although NMDC officials were unavailable for comment Wednesday, the firm had previously said that its domestic customers were reluctant to procure ore at the prices offered. This has resulted in lower offtake of material from its mines. As reported, NMDC had also started to pare domestic iron ore contract prices from October, which would have reflected in the lower q-o-q sales numbers.

In a related development, NMDC has offered to supply iron ore from its Chhattisgarh mines to end-users – subject to surplus availability – after the firm has fulfilled supplies promised under long-term domestic contracts for January-March. The surplus ore would be supplied at long-term prices prevalent at the time of despatch, NMDC said on its website.

Products on offer from its Bailadila mines in Chhattisgarh include 65.5% Fe lumps 67% Fe calibrated lump and 64% Fe fines. Only end-users can apply and the deadline is February 14, the circular said.

For February, NMDC has priced its contracts at about Rupees 5,060/metric ton ($94/mt) for of 6-30mm blast furnace-grade lumps of 65.5% Fe, and about Rupees 2,610/mt ($49/mt) for 64% Fe fines. All prices are on a free-on-rail basis.
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Turkish HDG and PPGI demand stable after price hikes
Turkish hot-dip galvanized and colour-coated galvanized (PPGI) coil demand remains stable after recent price hikes, market participants told Platts on Wednesday.

“0.5mm thick galv, base material for PPGI, is sold at $830-850/metric ton ex-works, while 0.5mm thick 9002 code PPGI is quoted at $960-980/mt ex-works; both are up by $20/mt on last week. However, buying is slow and only few transactions were reported this week. Producers raised their prices but they are still giving discounts. Demand from end-use sectors will determine price direction in the coming days,” a trader said.

A producer executive was convinced higher prices would soon be accepted by the market. “Because raw material costs are rising, we increased our offer prices. Our new price for 0.5mm thick HDG is $850/mt ex-works. We expect demand will improve more in the coming weeks and prices will exceed this level soon,” she said.

The consensus between market participants is that any price increases will be gradual in the short-term, as the market is not ready for sharp hikes while demand is weak.

Meanwhile, after CIS suppliers' recent offer hikes, the Turkish hot rolled coil market is relatively silent with few transactions taking place. Local producers are asking for $640-650/mt ex-works for HRC and $730-740/mt ex-works for cold rolled coil.
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Ilva seized products could be released, need judge's OK
Part or all the court-impounded finished and semi-finished products of Ilva could be finally released for sale this week, a source with knowledge of the matter told Platts Wednesday.

The Taranto based prosecutors formalized the request to the preliminary investigating judge Patrizia Todisco to give the green light to sell the products that were impounded by her at the end of November. Todisco seized all the products – some 1.7 million metric tons – produced in the four months since the end of July when she issued the first order to close some of Taranto’s installations on pollution grounds. “Because the preliminary judge and the prosecutors were always in line in their orders, we expect a final yes also from Todisco, but of course we are not sure 100%”, the source explained.

The government signed an amendment of the decree law to leave Ilva free to produce and to market also the impounded materials, but both the prosecutors and the preliminary judge opposite to the decree law and the amendment, calling them unconstitutional; as a consequence Ilva continued to produce but the products continued to be seized.

The prosecutors changed their mind due to a report in which the legal guardians of the mill certified that the impounded coils might deteriorate and become unsaleable, and also because the revenue from selling the steel will be held by the environmental ministry and used to pay salaries and finance environmental upgrades at the plant. The company valued the seized products at €1 billion, but according to the prosecutors they are worth €800 million.

In the meantime on Wednesday Italy's Constitutional Court started considering whether to accept the request to review whether the government decree was unconstitutional.

Meanwhile, Todisco refused the request of the Riva legal team to free Nicola Riva, who has been under house arrest since July. A tribunal in London at the beginning of March will decide whether to extradite Fabio Riva, who at the moment is under probationary freedom in London.
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North European rebar down by €7-10/mt on poor demand
In Germany and Benelux, severe weather and carnival holidays put pressure on the mills, with rebar and mesh quality rod prices decreasing by around €7-10/mt since last week.

According to local sources the offers from local mills for 12mm rebar declined to €260-270/metric ton base price and €510-520/mt effective delivered, while for mesh quality rod prices went down to €510/mt delivered and for large buyers €500/mt delivered.
“The snow has gone now but there are still low temperatures, and the building sites are still on hold with buyers delaying their purchasing. We have to keep our nerves until after the end of the winter period”, a German producer said. “As soon as the weather will improve we are still confident that the demand will improve as well, because the fundamentals here are not so bad”, an international trader said.

“People are mainly on holidays, but nevertheless we bought a truck of rebar: the tonnage was small, so that we paid €270/mt base price delivered”, a Belgian stockholder said.

Mills are also suffering from cheap import competition from Poland, Italy, Belarus and due to the strength of the euro also from Turkey. Imports are reported to be around €500/mt effective CPT German customers, with a trader confirming also €490/mt delivered from import.

Stockholders are holding around 30-40 days of inventory at the moment, and the mills around 30 days. “Mills have very low stocks because they did not receive too many orders and they did not want to build up their stocks because higher scrap costs (might cause) losses”, the trader explained.
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BE Group expects increasing prices in Q1
Scandinavian steel stockholder BE Group expects sales prices to rise during the first quarter of 2013 with demand somewhat improved for the start of this year compared to the end of 2012.

In order to improve its cost competitiveness, the company is in the process of selling its operations in the Czech Republic and cutting 140 full-time jobs across its Swedish and Finnish operations at a saving of SEK 65 million.

The president of BE Group, Kimmo Väkiparta, said that the company was implementing measures at its Polish operations which have so far been unprofitable. “Regardless of the economic trend, the ongoing program of measures will also affect BE Group's competitiveness and results positively," he said.

For 2012 the company made an underlying operating loss of SEK 33million ($5.25m), down from a profit of SEK 29m in 2012 on a 22% year-on-year decrease in sales to SEK 998m.

"The trend over the most recent quarters, with generally weakening demand, persisted during the fourth quarter. We have also had a stronger seasonal dip than normal. Tonnage decreased by 14% and, combined with lower prices, this explains the drop in results," Väkiparta said.
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EU industrial output shows turnaround
Industrial output in the 17-nation euro zone showed a sharp turnaround in December, gaining 0.7% compared with activity in November when it fell a revised 0.7%, official data showed on Wednesday. This was the first month-on-month growth registered since August when output rose 0.8%, but analysts cautioned against reading too much into the data.

The increase "needs to be kept into perspective," said Howard Archer of IHS Global Insight. "The 0.7% month-on-month expansion only reversed November's fall in production while output had also fallen sharply in October (by 1.0%) and September (by 2.3%)," Archer told the AFP news agency.

For the full 27-member EU, industrial output in December was up 0.5% from November when it dropped 0.6%, the European statistics agency said. For 2012 as a whole, euro zone industrial output was off 2.4% with the EU-27 down 2.1%. Among the major economies, Germany rose 0.8% in December compared with November, France and Spain were flat, and the UK put on 1.1%.

Archer said the figures overall suggested that the euro zone economy contracted 0.4% in the three months to December compared with the third quarter last year. "While it looks likely that euro zone manufacturing activity turned the corner late in 2012, a return to growth in the first quarter of 2013 is far from guaranteed," he said.

ING Bank was more positive, saying the data "at least shows that the European manufacturing sector is benefiting from the gradually unfolding worldwide recovery."
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Istanbul's new airport to require 350,000 mt of steel
The construction of Istanbul’s third – and Turkey’s largest – airport will require 350,000 metric tons of flat and long steel products, according to local steel market participants. The deadline for bids to build the $9.3 billion airport on a 25-year lease is May 3.

Steel market players have expressed positive opinions about government projects which are expected to boost steel consumption in Turkey. “I hope that this airport project and the government’s other urban transformation projects, which target the demolition and rebuilding of 300,000-400,000 houses in Istanbul alone, will support Turkey’s steel sector this year. 350,000 mt of steel, including both long and flat steel products will be used in this airport. This is the kind of project that will revive the Turkish steel market,” a steel service center executive told Platts on Wednesday.
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OMK to commission OCTG mill in Texas by end of February
Russia’s United Metallurgical Co (OMK) plans to commission its newly built welded pipe mill, called OMK Tube, in Houston, Texas, by the end of February, the company’s representative told Platts.

OMK Tube is adjacent to TTS, the 200,000 metric tonnes/year pipe finishing plant, and its nameplate capacity matches that of the finishing line. OMK acquired TTS, its first foreign production asset, a year ago and committed to add a welded pipe mill there in a year’s time.

“Texas holds the US’s largest oil and gas fields and almost half of the country’s oil refineries are concentrated around its major city of Houston which makes this state such an important pipe consumer”, the company’s representative commented on the advantages of OMK Tube’s location.

OMK Tube will produce welded OCTG in the 60-177.8mm diameter range with 3-12.7mm wall thicknesses. OMK plans to ramp it up to the full capacity of 200,000 mt/year this year. The major equipment for the mill – supplied by Nakata of Japan, Thermatool of the US and EFD of Norway – together with the construction cost represents an investment of $100 million.

To feed the mill, OMK plans to source skelp locally, although its 1.5 million mt/year thin slab casting-rolling complex in Vyksa, central Russia’s Nizhny Novgorod region, can also provide the feed. Despite that it now has a mill within the US major pipe market, OMK will continue supplying pipe to the US from its Russian mills, including the 2 million mt/year Vyksa works, as it has been doing since 2004.
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Steel overcapacity helps Russian miner Petropavlovsk
The overcapacity in the global steel market is helping Russia’s Far East iron ore miner Petropavlovsk to compete better with other ore shippers who are closer to ports, chief executive officer Yury Makarov said at the Adam Smith Summit in Moscow on Wednesday.

“Overcapacity helps… transportation costs are low because of the crisis and the reorganization of the railroad companies in Russia,” Makarov began. “If the market comes back, then transportation will become more expensive.”

Makarov said that, given the 1,500 km distance of the company’s mines from Far East sea ports, cheap rail and shipping freight are extremely important for Petropavlovsk to sell ore to its largest markets: China, South Korea and Japan.

Petropavlovsk has set up a three-step plan to increase its iron ore output to 6.5 million metric tons by 2018 from its Far-East Russian operations. At the moment, the company is mining 1 million mt, with this set to increase to 3 million mt by mid-2014.
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Kazakh mining company plans to enter steel production
Kazakhstan mineral mining company Tau Ken Samruk is holding talks with potential partners to construct a new electric arc furnace-based meltshop in the country's south, company managing director Kylyshbek Izbashanov told Platts at the Adam Smith Summit in Moscow this week.

“We want an EAF to develop higher grades of steel,” Izbashanov commented. "Kazakhstan has much better potential.” The company is mulling a melting capacity of over 1 million metric tons/year.

Samruk is looking to carry out the project together with a strategic partner in a joint venture. The partner would contribute funds, equipment, technology, experience and other assets, while Samruk would “ensure obtaining the right of subsoil use”, Izbashanov said. The company is currently in talks with the Export-Import Bank of the United States and an unspecified German bank.

If everything goes according to plan, the project should receive financing in the second half of the year, while commissioning is scheduled for the end of 2015.

The construction of the EAF will likely lead to additional investments into rolling capacity, according to Izbashanov. The new facility will be located in the densely populated southern Kazakh city of Shymkent, near the borders with Uzbekistan and Kyrgystan. Kazakhstan and the Central Asian states will be key markets for Samruk’s new steel products.

Tau Ken Samruk is a wholly-owned subsidiary of Sovereign Wealth Fund Samruk-Kazyna.
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Steelmakers look to optimize costs in oversupplied market
Steelmakers talking at the roundtable during the Adam Smith Summit in Moscow on Wednesday agreed that optimizing costs was the most important priority in an oversupplied market. Representatives from pig iron and coking coal producer Koks Group and integrated steelmaker Severstal were both confident of overcoming challenges that overcapacity may present.

“[Overcapacity] is not a big problem for the market: it doesn’t need to be resolved on a global level, because the market will self-regulate,” Sergey Frolov, Investor Relations Director at Koks Group said. Frolov pointed to the numerous pig iron producers who stopped their mills temporarily or for good in 2012.

“Controlling costs and lowering them [is key],” Vladimir Zaluzhsky, Head of Investor Relations at Severstal said, before pointing out the advantages integrated producers have. “If gas prices become attractive for hot-briquetted iron production, for instance, production could be switched on a mass scale to supply HBI,” Zaluzhsky said, discussing a scenario where demand is stronger for the metallic than for iron ore.
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INGAA applauds President's natural gas remarks
The Interstate Natural Gas Association of America (INGAA) applauded President Barack Obama’s support for the natural gas industry in his state of the union address, but cautioned the US government to “avoid actions that might stifle domestic energy investment.”

In a statement released Wednesday, INGAA CEO Don Santa said the US would be wise to keep investing in its natural gas infrastructure.

“Natural gas is driving resurgent US manufacturing, creating good-paying American jobs, generating revenues, reducing emissions and lowering consumer energy prices,” he said. “The US is now the world’s largest natural gas producer. We must continue expanding America’s energy infrastructure to ensure that this success story continues. As part of this, we should examine ways to streamline pipeline permitting, while continuing to protect landowners and the environment.”

During the state of the union, President Obama said the natural gas boom “has led to cleaner power and greater energy independence. We need to encourage that. That's why my administration will keep cutting red tape and speeding up new oil and gas permits.”
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Obama address falls short on steel issues: AISI
President Obama’s State of the Union address noted some policies that could be good news for steel, though at least one steel industry representative said the speech fell short of providing substance for the steel industry.

Obama discussed a “Fix-it-First” program to expedite work on the most urgent infrastructure jobs in the country, including nearly 70,000 structurally deficient bridges. “And to make sure taxpayers don’t shoulder the whole burden, I’m also proposing a Partnership to Rebuild America that attracts private capital to upgrade what our businesses need most: modern ports to move our goods; modern pipelines to withstand a storm,” he said.

Thomas Gibson, president of the American Iron and Steel Institute, told Platts Obama didn't say whether this would be paid for via general funds or some other program, noting the insufficiently funded highway fund.

“From a trade perspective it’s more what wasn’t said than what was said,” Gibson added, citing pending issues like the Keystone XL pipeline, the ENFORCE Act, and allegations of rampant unfair trade practices by China.

Obama also announced a new Transatlantic Trade Partnership initiative with the European Union that could potentially benefit steel, but Gibson said there would be a lot of work to do. “We would like to make sure that any discussion on trade … addresses state-owned enterprises,” he said.

The White House and European Commission jointly released a statement on Wednesday that said: “A high-standard Transatlantic Trade and Investment Partnership would advance trade and investment liberalization and address regulatory and other non-tariff barriers.”
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Warren Steel adds railway capabilities to Ohio mill
US semi-finished steel producer Warren Steel Holdings has added railway capabilities and new analytical equipment to its Warren, Ohio mill.

“Shipping by train is important for both our customers and our overall growth strategy, and we are excited to have a revitalized rail system that can accelerate growth in our local economy,” said commercial VP Steve Clancy in a statement. “These capital investments will ensure that we can continue to produce and deliver the highest quality goods for our clients with greater cost inefficiencies.”

A representative for Warren said the rail rehabilitation cost about $1 million.

Warren’s analytical equipment additions include a scanning electron microscope. The company produces rounds and squares for the forging, bar rolling and seamless tube industries.
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El Salvador's HRC imports fall 15% in 2012
El Salvador's hot-rolled coil imports fell 15% in 2012 to 108,552 mt from 127,760 mt the year before, while wire rod imports rose 13.5% and rebar imports edged up 2.4% in the same comparison, according to data from the country's Central Bank.

In December, the Central American country imported 10,068 mt of HRC - almost double November's 5,418 mt. Japan is El Salvador's main supplier of HRC and it increased its exports from 2,818 mt in November to 6,133 mt in December. The Asian nation also reduced the average export price of its coils thinner than 3mm-thick from $669/mt CIF to $614/mt CIF in that period.

Regarding long products, El Salvador imported 43,873 mt in 2012 compared with 38,671 mt in 2011. Trinidad & Tobago is its main supplier of wire rod, which is not purchased every month. In December, Trinidad & Tobago supplied 3,623 mt of the 4,777 mt imported by El Salvador at an average price of $691/mt CIF for wire rod with a carbon content less than 0.6% of weight.

El Salvador's rebar imports increased from 36,552 mt in 2011 to 37,426 mt in 2012. The market share is divided among many countries, led by Guatemala. Honduras and Costa Rica are also important suppliers. In December, when 2,037 mt were imported, the average price was $900/mt CIF.

El Salvador imported 187,868 mt of flats and 115,654 mt of longs in 2012.
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AMSA may restart EAFs to keep Vanderbijlpark mills rolling
Following the fire last weekend at ArcelorMittal South Africa’s Vanderbijlpark works, AMSA has confirmed that the blaze affected only the steel making shop at the plant. “Other sections of the works remain in operation,” it said. As previously reported, force majeure has been declared, and “assessment on the extent of the fire damage is continuing”.

A source closely acquainted with the matter told Platts one option the company is considering is restarting the plant’s three electric arc furnaces that were closed in October last year. These were shut after being served a notice by the Gauteng Department of Agriculture & Rural Development to close for environmental reasons.

The source said that one option now is to re-open discussions with this regulator about environmental issues and how these may be addressed in order to reopen the furnaces. The three EAFs have a combined capacity of 1.44 million metric tons/year.

Concerning the replacement of production lost as a result of the fire, the source said that AMSA was looking at all its plants in South Africa as possible sources and also at its overseas units. It is keen to try and source slab or coil internally if possible.

Vanderbijlpark’s damaged oxygen steelmaking shop has a production capacity of some 3 million metric tons/year. The works has a 3,650mm plate mill (480,000 mt/y capacity), a seven-stand 2,050mm wide hot strip mill (3.6 million mt/y), two five-stand cold strip mills (1.7 million mt/y), and coating lines for galvanizing, pre-painting and tinning.
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Iranian long steelmaker appoints new managing director
The Iranian government has appointed Ardeshir Saad Mohammadi as the new managing director of the country’s largest long steelmaker, state-owned Esfahan Steel Company (Esco), Platts learned from the Iranian mines and metal holding Imidro.

Mohammadi had hitherto been working at Imidro in mining-related positions. He replaces Safarali Barati who was company MD for four years.

As reported by Platts, Iran’s parliament is launching an investigation into delays in Esco’s capacity expansion project and the company’s financial difficulties.

Esco is Iran's only firm producing steel through the blast furnace route. It is currently struggling to secure sufficient supply of coke feedstock, a proportion of which has to be imported from abroad.
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Iron ore exchange gets clearing exemption from US regulator
US customers of the Singapore Exchange can continue current clearing activities through SGX Derivatives this year, a spokeswoman for the exchange confirmed Wednesday.

Under US Commodity Futures Trading Commission's Dodd-Frank Act, US banks need to clear transactions through a designated clearing organization (DCO). SGX is still in the process of applying for DCO status, but has been made exempt this year, meaning "our clearing house continues to clear trades for all global customers throughout," Joan Lew, vice president of communications, said in an emailed statement.

SGX is responsible for around 90% of the world's trade in iron ore derivatives. It cleared 108.9 million metric tons of iron ore swaps in 2012, out of total cleared OTC swaps trade of 114.8 million mt. It also cleared 0.76 million mt of options in 2012, out of a total 13.16 million mt, with its contract going live in September.

Options clearing over SGX appears to be gaining pace, market sources said: in January this year it cleared 1.26 million mt of options, more than the 0.95 million mt by the CME exchange, which has dominated options trade.

Before it had received exemption status from the US CFTC, SGX said it would launch an iron ore futures contract on February 25 – US customers would still be able to trade futures through SGX, without it having DCO status.

A Singapore-based trader said he had seen little impact from the Dodd-Frank regulation so far this year, terming it a "non-issue." Sources said should the regulation have an impact, US entities only represent a small portion of the swaps market, and would just relocate their business elsewhere.
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Tata Steel increases losses as Europe unit struggles
Tata Steel saw its net losses increasing during the October-December quarter of 2012, as total steel deliveries slowed down and the group’s European unit continued suffering from the difficult situation in the continent.

During the quarter the group recorded a net loss of $139 million, more than doubling the loss recorded in the previous quarter. During the first nine month of Tata’s financial year (starting in April) the net losses stood at $96m, compared with profits of $901m registered in the same period of the previous year.

Despite the general weak steel demand in India, the Indian operations performed steadily, remaining profitable during the first nine months of the financial year (net profit of $683m) and continuing increasing its steel deliveries to 1.89 million metric tons in the October-December quarter. Crude steel production surpassed 2 million mt during the quarter, standing at 2.07 million mt, up 200,000 mt q-o-q.

However, the European unit, accounting for over 50% of the group’s total turnover, reported falling profit and turnover during the quarter. “Sliding demand was a key problem for European steelmakers in 2012 and this was reflected in our December quarter deliveries,” the unit’s CEO, Karl-Ulrich Köhler said.

Steel deliveries from the European unit stood at 3.02 million mt during the quarter, down some 400,000mt quarter-on quarter. During the first nine months of the 2012-13 financial year, the unit also saw its turnover decreasing by over 5% y-o-y, to $10.7 million.