| Steel prices may fall as China acts to cool economy | ||
| Chinese steel prices could fall just after this week's New Year holidays on the back of further moves by the government to keep the economy from overheating. The People's Bank of China announced on its website on 12 February that it will be raising the country's deposit-reserve ratio by 0.5% for the second time this year, due to surging loans and property prices in January. Chinese banks issued RMB 1.39 trillion ($203bn) in loans in January. The move will take effect on 25 February, according to Bloomberg. Steel Business Briefing notes that Beijing already raised the minimum deposit-reserve ratio by 0.5% on 18 January. The central government was also considering raising interest rates by as much as 2%. This caused prices for cold rolled coil to fall by up to RMB 150/tonne ($15/t) in the week of 18 January, after rising earlier in the month, as SBB reported. Chinese domestic steel prices are currently stable as many traders are out of the market for the Chinese New Year holidays, which last from 13-19 February. Business is expected to resume on 20 February. On 12 February, the last day of business before the holidays, hot and cold rolled coil spot market prices remained stable with few transactions recorded. In Shanghai, Q235 5.5mm HRC was offered at around RMB 3,750/t ($549/t) with VAT, and 1.0mm CRC was offered at around RMB 5,050-5,350/t ($739-783/t) with VAT, as SBB reported.
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| CIS pig iron exports quiet, domestic demand strong | ||||||||||||||||||||||||
Having firmed at the end of last month, prices of Russian and Ukrainian basic pig iron offered for export still hold at the same levels of $390-410/tonne (€287-302/t) fob Black/Baltic Sea, producers tell Steel Business Briefing. They are now offering late March/April production, they say. The absence of Chinese buyers in the market, coupled with a generally negative business climate, affects the buyers’ mood, a major Russian producer says. Although not described as softening, the market is sensitive and mostly quiet, he says. However, demand on the Russian domestic market is said to be very active, with prices having increased since the beginning of the month to the levels of 11,500 roubles/tonne ($383/t), including 18% VAT and excluding transport. The available volumes, however, are said to be lower than usual, in the already tight 80,000 tonnes/month market, sources in Russia say. When demand returns in March, which is when the export market will pick up again by general opinion, demand will be coming from the traditional CIS destinations, such as Europe and USA. China, however, is described as "still unlikely to be able to pay the price," when it is back to the market in March.
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| Egypt rebar market strong, talk grows of AD against Turkey | ||
| Egypt’s steel market is seeing some significant rebar buying activity from domestic suppliers, but traders are cautious about booking imports from Turkey because of possible anti-dumping action against the imports, Steel Business Briefing was told. Egyptian rebar imports from Turkey had been strengthening due to increasing domestic prices. Turkish producers were looking forward to Egypt coming back to the market, as Egyptian rebar prices were very competitive against Turkish prices in the last months of 2009. With the latest increase in Egyptian rebar prices, importing from Turkey was more attractive for Egyptian buyers. But the Egyptian market is reported as being disturbed by the recent imports from Turkey, and that is why talk has resumed of an anti-dumping case against Turkey. The Turkish authorities are emphasising the importance of the bilateral free trade agreement between two countries, and say that AD action would violate the trade agreement. Egyptian domestic rebar suppliers are monitoring international market trends and want to see if the prices for raw material, semi-finished and finished products would support an increase in the Egyptian market. Any drop in billet and scrap prices might be an obstacle for rebar producers to raise prices, market sources state. Billet offers to Egyptian market are currently quoted at $470/t cfr from CIS.
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| Tokyo Steel lifts HRC and H-beam prices, seeks more exports | ||
| Tokyo Steel Manufacturing plans to lift its hot rolled coil and H-beam export prices by $50-60/tonne, for offers made after the Chinese New Year holidays, Steel Business Briefing hears from the company. For April and May deliveries, the leading Japanese mini-mill will lift HRC prices by $60/t to $650/t fob, and H-beams by $50/t to $700/t fob. “Demand in Asia is increasing so we have decided to lift our prices,” a Tokyo Steel spokesman says. The company already raised its domestic sales prices by ¥3,000/t ($33/t) for February contracts, citing the need to compensate for higher raw materials costs, and also to align prices with the international market. This will take the price of HRC (1.7-12mm) to ¥58,000/t ($643/t), while senior sized H-beam prices will become ¥66,000/t ($732/t). Tokyo Steel will announce its domestic prices for March contracts around 22 February, SBB understands. The company also plans to boost its export volume to cover the drop-off in domestic sales. The spokesman said request prices from overseas customers had previously been too low, resulting in fewer export contracts being signed. But as prices were strengthening overseas, Tokyo Steel would look to lift exports in the current quarter. Tokyo Steel’s total sales volume in April-December 2009 was 1.24m t, but exports comprised just 16,000 t, or 1.3%, of this. The company would not provide a target export volume, but said that 70% of the exports would be HRC with H-beams the balance. See also: "Japanese steel profits from past traumas" SBB Insight, 12 February
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| Gerdau importing scrap as domestic supply weakens | ||
| Brazilian longs maker Gerdau confirms to Steel Business Briefing the purchase of 30,000 tonnes of imported scrap from the US, that arrived at Rio de Janeiro’s port in January. The material was negotiated at US$230/tonne (R$425/t) fob US, according to customs. The move was unusual as most of Brazil's imported scrap comes from neighboring countries. Late last year, the Brazilian market saw scrap prices soar quickly, from R$350/t delivered to R$500/t delivered in a month and a half. However, with some mills reducing output and even suspending scrap purchases, prices dropped back in January, and currently are R$350-360/t del. In total, about 60,000 t of scrap were imported - part of it docking in January and the balance in February. Gerdau said it was necessary as local shortages made it more difficult to assure enough inputs. Scrapyards maintain there is enough material domestically, though.
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| Most coil prices rising gently, says The Steel Index | ||
| The latest reference prices from The Steel Index show that most coil prices in Europe and the US have firmed since last week. In northern Europe, the HR coil reference price is just €2/tonne higher at €433/tonne ($593/t). CRC fell back to around the level of two weeks ago while hot-dip galvanised coil rose by around 4% since last week. Average HRC and HDG delivery lead-times are shorter than last week, while CRC deliveries are just longer at 7.9 weeks. The CRC reference price in southern Europe is higher than last week at €502/tonne ($687/t). HRC and CRC are both at 12-month highs. HDG increased by 3% since a week earlier. Average CRC deliveries are unchanged at 7.7 weeks, while HRC and HDG lead-times are longer than last week. The US HDG reference price FOB Midwest mill increased and is now at $768/short ton ($847/tonne). CRC rose by a similar amount since a week ago. The average delivery lead-times for CRC and HDG are both 7.8 weeks, with HRC deliveries slightly shorter at 5.7 weeks. The domestic Turkish CRC reference price, ex-works, is $6/tonne higher than last week at $726/tonne, while HRC and HDG prices also rose by $6-7/tonne. CRC and HDG average delivery times are both slightly longer than last week at around 3 weeks. The Steel Index is owned by Steel Business Briefing . Companies wishing to submit data or receive the full set of reference prices every week can apply on the website www.thesteelindex.com .
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| V&M Star green lights Ohio seamless pipe mill expansion | ||
| Pipe manufacturer V&M Star has given final approval for a major expansion in Youngstown, Ohio to produce small diameter OCTG aimed at supplying natural gas drillers in the booming Marcellus shale region. The $650m project includes a new rolling mill and melt shop. It will increase the plant’s capacity from about 800,000 short tons/year to more than 1.3m s.t/year. Earlier cost estimates for the project were close to $1bn, Steel Business Briefing notes. The new mill will initially produce 385,000 s.t/y of seamless pipe but has the capacity to produce 550,000 s.t/y. It will make seamless tubes of 2.375 inches to 7.0 inches in outside diameter. The project includes heat-treatment and threading facilities. “This decision is supported by the long-term development of unconventional gas production in the US, which is driving increased demand for small diameter OCTG tubes,” the company stated French parent Vallourec said shale gas production typically requires an increased number of wells, horizontal drilling and sand fracturing at high pressures requiring higher volumes of small diameter alloy pipes with an increasing proportion of premium connections. V&M Star currently can produce seamless tube in ODs of 5.0-10.75 inches. The mill is located next to the Marcellus shale region, which covers much of Pennsylvania, West Virginia and western New York.
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| BlueScope makes a loss, markets now recovering | ||
| BlueScope Steel’s interim profit plunged by A$435.4m (US$386.4m) year-on-year on the back of weak slab and hot rolled coil prices and the strong Australian dollar. The Melbourne-based steelmaker made a loss of A$28m (US$24.8m) in July-December 2009, compared with a A$407m profit for the same period a year earlier, it said in a statement sent to Steel Business Briefing. During the half, BlueScope restarted its No.5 blast furnace at Port Kembla, south of Sydney, and reached slab capacity of 83%. Following a A$504m (US$447m) reline, the blast furnace was due to restart in June 2009 but this was delayed until August because of weak market conditions. The company said domestic steel demand was up 51% on the previous half, driven by the residential construction sector, and pipe and tube distribution. Commercial construction in Australia remained soft, however. Demand in Asia and North America improved between July and September, but softened in the December quarter before rebounding in calendar 2010, it said. BlueScope subsidiary New Zealand Steel’s domestic sales rose 28% on the previous half, winning market share against imports. BlueScope said export demand in Asia was “robust” as east Asian HRC prices had climbed in the March quarter, ranging from US$570-590/tonne CFR. But it expected Asian markets, including China, in the January-June half to be volatile. “It remains important that global steel supply will match demand and therefore supports steel prices to offset the expected increases in raw materials costs,” BlueScope said.
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| Yieh Phui keeps galvanising output high | ||
| Taiwanese hot-dip galvaniser Yieh Phui Enterprise is keeping its operating rate high at around 90% at its Kaohsiung works in southern Taiwan, as demand remains strong and steady, a company spokesman tells Steel Business Briefing. Yieh Phui has been gradually increasing its production since last year after it had cut production by as much as 50% in late 2008 due to weak demand caused by the global economic crisis. It has been producing at around 90% of capacity, which is considered a return to normal standards for the company, since the fourth quarter of last year. Yieh Phui can produce 125,000 tonnes/month of sheets and pipes, with flats accounting for 90% of this output. Production has also remained high, at around 90% capacity, at Sino Leading Technomaterial Co (SLTC), Yieh Phui’s Changshu subsidiary in China’s eastern Jiangsu province, where it has been since the fourth quarter of last year. SLTC has a capacity of 900,000 t/y of hot-dip galvanised, 900,000 t/y for pickling, 600,000 t/y for cold rolling and 360,000 t/y for colour coating.
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| Posco plans a new 800,000 t/y wire rod mill | ||
| Korea’s Posco is planning to build a new plant to produce wire rod at its Pohang steelworks north of Busan. The new plant will have a capacity of 800,000 tonnes/year and is slated to be commissioned by the first half 2012, Steel Business Briefing learns from an industry source. The new mill will be the Korean mill’s fourth wire rod unit, and it will take Posco’s total capacity of wire rod to about 2.8m t/y. Final approval for the project will be made at a meeting of Posco’s executives in April, the source says. As demand from the auto industry is steadily increasing, the new mill is likely to focus on producing cold-heading quality rod and similar products. Posco’s project comes in response to the increasing imports of wire rod over the past few years. Korean import volume of wire rod was hovering around 1-1.4m t/y during 2002-08, though the tonnage dipped to 762,000 t last year due to the large drop in demand, according to the Korea Iron & Steel Association. Market sources suggest Posco’s expansion of wire rod output will aim to substitute imported materials. Last year, Posco produced just over 2m t of wire rod, the majority of the country’s total output of 2.6m t. The mill sold 1.66m t wire rod to domestic consumers and exported 350,000 t, SBB learns.
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| BHPB boss says some mills don't honour iron ore contracts | ||
| BHP Billiton chief executive Marius Kloppers has said another reason for abandoning the iron ore benchmark system is that some mills do not honour the contracts when spot prices fall below the benchmark. Without referring specifically to Chinese mills, he said “poor credit grade customers” had a “huge incentive to default” when prices changed during the year-long contract period. “All of the players in the iron ore business, coking coal business and so on, lost money last year because their customers didn't pay them,” Kloppers told Australian television’s Inside Business program on 14 February. He said Vale’s threat to move to short-term reference pricing if mills did not accept an increase for 2010 contracts commensurate with current spot levels “basically illustrated that they also feel it was an unacceptable situation.” Vale’s director of ferrous minerals, Jose Carlos Martins, told analysts last week that if its “customers want to stick to benchmark prices, they will have to accept something close to the level of spot prices.” Kloppers pointed out that the 2009 benchmark price was settled “at the depth of the economic crisis” and believed “there's probably a good chance that they will go up from where they are today.” D.J. Carmichael analyst James Wilson said it was "no surprise" that Vale was also considering moving away from the benchmark system. "The negotiation process creates exhaustion in a market where index-based pricing would bring about an open and, more importantly, a transparent trading system, aimed at bringing the iron ore business out of the dark ages,” he told Steel Business Briefing.
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| Jiugang aims for 10% energy consumption cut in 2010 | ||
| This year Jiuquan Iron & Steel (Jiugang) Group, a major steel producer in north-western China’s Gansu province, is aiming to pare the energy it consumes during steel production by 10% year-on-year and to save 50,000 tonnes of standard coal, the company told local media. That means Jiugang’s comprehensive energy consumption per tonne of steel produced will reach 580 kgs and fresh water consumption will reach 5.2 t. The company says its energy consumption could rise when it lengthens its manufacturing chain with the commissioning of new processing mills, such as stainless and sheet mills. However, it has promised the central government to save 470,300 t of coal in 2005-2010. In addition to its current recycling plants that include coke dry quenching units and top gas recovery units, Jiugang also plans to build more facilities such as a combined cycle power plant (CCPP). Steel Business Briefing notes Jiugang is located in a city suffering from a serious shortage of water. The company says it saved 10m t of fresh water (down 16% y-o-y) last year as its water ration allocated by the local government cannot meet its production demand. Jiugang produced 75.9m t of crude steel in 2009. Data from the China Iron and Steel Association indicates that China’s steel industry accounts about 12% of the country’s total energy consumption, and about 16% of its total emissions. Thus with the industry considered a key to the success of China’s energy-saving and emission reduction targets, Beijing has asked it to focus on developing in an environmentally friendly manner.
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| HRC prices to see-saw in 2010; hedging grows in volume | ||
| Italian hot rolled coil prices are set to rise in Q1 and Q2 this year, and then slip back in the second half of this year before increasing again, according to a recent update from the global commodities unit of J.P. Morgan. HRC in Q2 2010 on average could rise to €440/t, compared with an average of €385/t in the current quarter, it suggests. In the USA, the Midwest price for HRC could rise to $650/s.ton in Q2 from $592/s.t at present. The US indicative price is then forecast to fall to an average of $580/s.t in Q4, before rising again in Q1 2011. At the same time, index-based agreements with some producers in Europe and North America have increased “significantly” over the last year or so, supplanting fixed price contracts, Steel Business Briefing understands from the unit. They are hedging over periods from 6-18 months. End users and distributors too are hedging, it comments. Inventories are at “historically” low levels, even adjusted for real demand in these two regions. There is, however, restocking by service centres, and the auto and energy sectors; elsewhere though real demand is “tepid.” But from the supply side, availability is limited, meaning there is little slack in the system. Imports are low, but may rise a little in the USA, and perhaps more in Europe, the outlook suggests.
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| New decoiler in Spain serves resurgent wind turbine sector | ||
| A new production line for plate has recently opened in Spain, geared specifically towards supplying the wind turbine sector, Steel Business Briefinglearns from informed sources in the region. The young company named Tecnoaranda has build the plant in the industrial site of Prado Marina de Aranda de Duero in Burgos, northern Spain, with an approximate investment of €70m. The plant will operate a decoiling line, producing plate from hot rolled coils. It is targeted to reach a capacity of 114,000 tonnes/year and produce 1,500 wind turbines per year by 2013. This appears to signal a good start to the year for the Spanish wind turbine sector, which suffered a setback in 2009. Its promised resurgence in 2010 could provide a more reliable market for Spanish steel producers, industry sources tell SBB. The new plant also includes a tubemaking line, providing a range of tubes applicable for the water, gas and oil sectors.
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| Croatian government searches for buyers for rebar mill | ||
| The Croatian ministry of economy has decided that a new buyer and strategic investor should be found for the country's rebar producer Zeljezara Split, a metal workers trade union representative tells Steel Business Briefing. The ministry reached the conclusion after talks with Zeljezara Split’s previous owner, Polish longs producer Zlomrex, that the mill should be purchased by a private investor rather than renationalised as was proposed last December. State ownership, it is argued, would not be in line with Croatia’s strategy for restructuring the metal industry. The ministry has been in talks with three potential buyers from abroad and also expects domestic partners to show interest. “The workers and trade union oppose the idea of another foreign partner and would prefer that the mill joins a consortium of Croatian construction companies that mostly work on state funded infrastructure projects,” the union representative says. The ministry hopes to find a buyer within the next month and a half, although union representatives find this time-frame somewhat optimistic, SBB is told. Zlomrex has laid claim to HRK 117m (€16m) in debts from the mill. A shareholders assembly, scheduled to convene on 22 March, is expected to decide on converting Zlomrex's debt into ownership, which would mean raising share capital from HRK 279m (€38.2m) to 396m (€54.2m). This would mean issuing Zlomrex with around 97 000 new shares.
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| Turkish rebar prices weaken, demand should increase | ||
| The Turkish domestic rebar market is facing a poor level of demand, and local sources tell Steel Business Briefing the future is quite uncertain. Although the general expectation is for demand to increase towards the second quarter, still it is not clear how a price-cost balance will be established. High stock levels are pushing rebar producers to decrease their prices, and in Marmara region rebar prices have come down to TL 910-930/tonne ($600-613/t), a decline of TL 20/t. In Izmir region the re-rollers are still out of production, and they do not see it will be possible resume production in 2010 because of low demand and high production costs. Rebar offers in Izmir are quoted at around TL 870-875/t ($573-577/t). All the above prices include 18% VAT. Scrap buying prices are also waning because of the low levels of steel demand Turkish producers are experiencing from both export and domestic markets (see separate article).
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| Danieli bloom caster starts up at Acciaierie Venete | ||
| A new conticaster for large-size blooms has been successfully commissioned and run for several months at Italy's Acciaierie Venete, according to a statement from Danieli. The 3 strand bloom caster is the fourth Danieli caster installed at the company's Camin works, near Padua in the north of the country. It replaces an existing caster. The new unit has a design capacity of 400,000 t/y and can cast up to 600mm round blooms in a range of steels. Venete produces SBQ for the automotive industry. The new bloom caster is part of a company development project that is due to be completed in 2011. “At the moment the new caster is not working at full capacity, but it is working well,” Acciaierie Venete’s owner Alessandro Barzato tells Steel Business Briefing.
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| General manager of Turkish tubemaker retires | ||
| Two top executives at Turkey's largest pipe producer Borusan Mannesmann, have stepped down. General manager Metin Tayfun Iseri and the deputy general manager, responsible for the purchasing and supply chain, Zafer Can Kibrisli, both took retirement yesterday, Steel Business Briefing learns from the company. In a filing with the Istanbul Stock Exchange the company says that its board is working to appoint replacements.
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| Poland’s CMC Zawiercie to complete SBQ mill in H2 | ||
| Polish steelmaker CMC Zawiercie (CMCZ) plans to complete its new SBQ (special bar quality) mill in the second half of 2010, Steel Business Briefing learns from the supplier of the equipment, Italy’s Danieli. The new 750,000 tonnes/year mill is being installed alongside the existing 500,000 t/y rolling mill, also supplied by Danieli. It is being commissioned in two stages. The first stage, consisting of a 160 tonnes/hour walking beam reheating furnace and 17-stand roughing and intermediate mill, was completed at the end of 2009. Initially, it is feeding the plant’s wire rod production unit. The second stage includes a 4-stand finishing mill and cut-to-length facilities and is due to start up in H2. The completed mill’s product range will include 16-80mm diameter plain bar, 14-40mm diameter rebar, 35-200mm flat bars, 50-180mm angles and corresponding channels. Steels will include low-, medium- and high-carbon and low-alloyed construction and engineering grades. Owned by Texas, US-based Commercial Metals Co since late 2003, CMCZ currently has a production capacity of 1.3m t/y of long products. It hopes to increase this to over 1.8m t/y once its ongoing investment projects are completed.
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| High prices keep Turkish buyers out of the scrap market | ||
| Turkish mills’ absence from the global scrap market is continuing because of prices, and only one deep sea cargo was booked last week, Steel Business Briefing learns from the market participants. A Turkish steel producer booked an HMS 1&2 80:20 cargo at $332/tonne cfr from an EU supplier. Traders state that this does not reflect the general level of offer prices in the market. The USA is still asking $345/t cfr for HMS 1&2 80:20 and over $350/t cfr for shredded scrap. The prices are expected to stay firm soon and no decrease is possible for now, says a market player. CIS region export prices are still unaffordable for Turkish mills, because of the improving demand in Russia and the continuing winter conditions which are hindering scrap collection and transport. The suppliers from this region are still asking $350/t cfr for A3 grade scrap, SBB learns.
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| Turkish local scrap prices weaken for first time this year | ||
| Domestic scrap prices in Turkey have softened after the sharp increase seen since the start of the year, Steel Business Briefing learns from Turkish steel producers. Currently, domestic scrap is being priced in the market at TL 390-480/tonne ($257-317/t), which is TL 15-20 ($10-13/t) less than last week. Steelmakers Çolakoglu and Asil Çelik decreased their purchasing prices by TL 20/t to TL 480/t effective from 13 February. Another steelmaker, Çemtas, reduced its buying price to TL 460/t, SBB learns from the companies. Turkish domestic scrap prices increased by TL 70/t ($46/t) since the beginning of the year before the most recent price fall, as reported.
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| Spanish scrap prices remain steady | ||
| Scrap prices in Spain are unchanged this month, with prices holding to February levels, merchants in Spain tell Steel Business Briefing. A small dip of €10/t had been expected during February. This could still occur during the final weeks of the month with a predicted weakness in prices following Chinese New Year. Price levels are currently pegged at the same levels with shredded at €235/t delivered. For March, not much is expected to change in terms of scrap, though there is a hint that prices may soften. But many believe that if this occurs, it will be short-lived as the repercussions of the rising costs of other raw materials, such as iron ore, impact the market. Meanwhile Spanish steel turnings prices are currently at €205-210/tonne CIF for Russian origin.
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| Galati shuts blast furnace for upgrade | ||
| Romanian steelmaker ArcelorMittal Galati has taken its blast furnace No 4 offline in order to undertake scheduled maintenance work, a company representative informs Steel Business Briefing. The repair work, at an estimated cost of €2.7m, will take 14 days to complete and is part of the company’s technical improvement programme, which it says is designed to “reduce variable costs in order to ensure the long-term competitiveness of the plant.” As previously reported, the Romanian plant is already investing €53m ($76m) into relining its blast furnace No 5, in order to extend the furnace’s operational life by 15 years and cut the cost gap between Galati and ArcelorMittal’s plants in western Europe. ArcelorMittal Galati cut its crude steel production rate to 1.5-1.6m tonnes/year, down from 4.5m t in 2008, in March last year. The plant has two plate mills with a combined capacity of 2.4m t/y, plus a hot strip mill and bloom/billet mills.
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| ArcelorMittal may restart more European furnace capacity | ||
| ArcelorMittal’s order book in Europe is increasing and inventories in the steel supply chain are low, executive director Michel Wurth said last week. “In Europe for the fourth quarter we were running at roughly 70% of capacity in our upstream facilities. In downstream even a little bit more, because we see today an increased demand which is mainly due to restocking,” he commented at the steelmaker’s annual results meeting. “We are evaluating the situation every month for the new production. We foresee also for the first quarter and Q2 maybe a slight increase in demand, which might help us to increase further our capacities and hence eventually think also [about] relaunching [one or more] furnaces,” he added. The company’s blast furnaces in operation in Europe are running at a high level of utilisation, so if it needed to increase production, it would mean restarting a furnace, Wurth told Steel Business Briefing. Where it would restart capacity depends on what makes sense in terms of markets: if the customers are in Poland, it would not make sense to restart a furnace in western Europe, he observed. The weak euro against the dollar is facilitating exports of ArcelorMittal’s steel products from Europe, Wurth noted. These exports are more in high-end, technological products. “In the last year, during the crisis, we were as low as operating ten blast furnaces out of 25 [in Europe]. Now we believe that we should be operating more than 20 blast furnaces during this quarter and going forward,” ArcelorMittal chief executive Lakshmi Mittal said.
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| Stockists see sales dim in Q1, especially for plate and pipe | ||
| Reversing mill plate and pipe are arguably the products still furthest away from a perceivable recovery in the next few months, according to the federation of Germany’s steel stockholders, BDS. But sales prospects for most other products are not too promising either. The majority of stockholders expect first quarter sales across all product groups to be similar to the corresponding quarter last year, according to a BDS poll. While this does not appear particularly optimistic, the expectation for some increases and fewer decreases is better than it was in the same poll prior to Q4 2009. For most products, such as wide flange beams, merchant bar, or sheet, expectations are rather balanced. The picture is more diverse for plate, where 35% of respondents predict sales still slumping, while 25% see sales going up. Scepticism is expressed also for welded and seamless pipes, and for hollow sections. As a result prices for these more sensitive products are expected to remain flat, as they are for cold rolled and coated strip. Increases are seen for wide flange beams, bar and rebar. By and large, the poll shows that at least an expectation of stability prevails, rather than the gloomy results of the federation’s polls throughout 2009, Steel Business Briefing notes.
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| Turkey's Erdemir makes $192m loss in 2009 | ||
| Turkey’s biggest steel producer Erdemir has reported a TRY 293m ($192.7m) net loss for 2009. Steel Business Briefing is informed by a filing with the Istanbul stock exchange that the company had net sales of TRY 4,084m ($2.69bn) in 2009. Erdemir had already reported a TRY 290m loss in the first nine months of 2009. The company's 2008 net profit was $175m. These figures have been announced for a provisional tax return. The company has not yet published its detailed annual results. Turkish market players were expecting Erdemir to return to profit in the last quarter of 2009, because of the high demand for steel. Currently demand for flat rolled products is not that high in Turkey, but Erdemir is reported to have filled its order book for March production because it offers competitive prices compared to import offers. Erdemir is selling HRC at $570/tonne for the local market, while Russian import offers are $620-650/t cfr. Most Turkish traders believe Erdemir will soon increase its prices; but they say the company should not add more than $30/tonne, in order to keep its market share.
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| EU industrial output slipped in December | ||
| Seasonally adjusted industrial production in the Euro-zone fell 1.7% in December last compared with the previous month, Steel Business Briefing learns from Eurostat, the European Union's statistics office. For the 27 EU member states as a whole, output was down 1.9% month-on-month. Industrial output in Germany, the EU’s largest steel producer and consumer, fell 2.6% in December. The UK and Spain meanwhile saw increases of 0.6% and 0.5% respectively. Production in France was stable compared with November 2009. However, on a year-on-year comparison, December's industrial production in the Euro-zone and EU27 dropped by 13.5% and 11.4%, respectively. The only member states in which output did not fall in the year to December were Romania (+6.9%), Poland (+4.8%), Slovenia (+10.7%) and the Netherlands (+1.1%). Eurostat’s figures for industrial production take into account all industry excluding construction. Separately, a recent Eurostat estimate for GDP growth suggests economic growth of 0.1% in the fourth quarter of 2009 in both the Euro-zone and EU27. GDP is estimated to have fallen by 2.1% in the Euro-zone and 2.3% in the EU27 compared with Q4 2008.
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| ‘No overcapacity in Europe in normal conditions’: Mittal | ||
| “We are more worried about the [steelmaking] overcapacity outside Europe than we are worried about overcapacity in Europe,” ArcelorMittal chief executive Lakshmi Mittal said at the company’s annual results meeting last week. “There have not been new capacities built in Europe in the last many years. So there is no overcapacity in Europe in the normal environment,” he commented in response to a question by Steel Business Briefing. “Clearly during the crisis we have seen the overcapacity, but that is a temporary period, and we believe that by 2012, 2013, when things will have recovered back to normal there will not be overcapacity in Europe,” he continued. “But today outside Europe and America there is overcapacity in China which is more worrisome and that issue has to be addressed,” he concluded.
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| West European trailer market slumps even more than trucks | ||
| Demand for road trailers in Western Europe plummeted even more last year than sales of the trucks that pull them, though the market is expected to improve in 2010. Compared to 2008, trailer sales dropped by 50% or 100,000 units, while recent data on commercial vehicle registrations in Western Europe show a 45% fall for heavy trucks and a 41% drop for smaller trucks in 2009. The trailer market peaked in 2007 at 208,000 units according to automotive consultancy CLEAR. Production of trailers in Western Europe collapsed even more spectacularly last year because sales opportunities in Eastern Europe evaporated as finance dried up. Output is expected to show about a 65% drop in 2009 to around 102,000 units. Large inventories of new trailers which have to be sold before production can be ramped up contributed to the slump, Steel Business Briefing understands. A strong trailer market prior to 2008 means that many transport operators have relatively new equipment so are in no hurry to upgrade. However, despite this CLEAR is projecting a 30% increase in trailer demand in 2010 and a 45% rise in production.
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| EU end-user recovery should lift steel demand, but slowly | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
A mild recovery in most steel using sectors in the European Union in 2010 should benefit demand for steel. However, construction-related sectors are still expected to drag down average growth in end-user activity, Steel Business Briefing learns from steel producers’ federation Eurofer. The federation forecasts that overall its steel weighted industrial production index will rise marginally by 0.6% in 2010, with larger growth of 3.7% to come in 2011. In 2009 the index fell by 20%. Some strengthening of the economic climate points to modest growth this year in the output of the metal goods (+4.6%), automotive (+2.8%), tube (+2.6%) and mechanical engineering (+1.8%) sectors in the EU. Restocking of depleted tube inventories due to increasing business activity is also expected to push up output. However, in the construction sector, which accounts for 27% of steel use in the EU, positive year-on-year growth is not expected until the fourth quarter of 2010. Construction activity is expected to decrease overall in 2010 by 1.3%, following contraction of 6.4% in 2009. Recovery should come for the EU construction sector in 2011, when its activity is forecast to increase by 3%.
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| Work on Zaporizhstal oxygen converter shop still stalled | ||
| The project for Ukraine's Zaporizhstal's new oxygen converter shop is still on hold. “We hope to start work on it in the very near future,” a senior executive at the mill tells Steel Business Briefing. It is not clear whether construction will begin this year. However, all the preparatory work has now been completed; production start-up was previously scheduled for late 2010. Construction of the 4.7-5m tonnes/year converter that will be supplied by Siemens VAI will take place in two phases. The first will comprise the construction of a basic oxygen furnace and a continuous caster, whilst phase two will see construction of a second basic oxygen furnace. Once completed, the converter shop will allow Zaporizhstal to decommission its open hearth furnaces and ingot casting shop. The modernisation of other existing facilities in the company is unlikely in the near future given current liquidity problems in Ukraine, the executive says. “Financial issues are halting modernisation and development programmes,” he says, adding that the situation is set to improve this year, and bank loans in the metals sector should slowly increase.
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| ArcelorMittal Kazakh plant reducing February output | ||
| ArcelorMittal's Kazakh steel mill in Temirtau will reduce February crude steel output compared to previously planned levels, a company spokesperson confirms to Steel Business Briefing. The mill is being forced to nearly halve crude steel output, from a planned 370,000 tonnes to 200,000t, due to a combination of bad weather and a molten steel spillage. The latter occurred at the beginning of February, the production director Ivo Khmelic is quoted as saying in a company statement. Claiming that "due to the tough weather conditions the steel combine has switched to a special mode of operation," he added that Temirtau's January output was also cut.
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| EBRD appoints new board members to Ukrainian tubemaker | ||
| The European Bank for Reconstruction & Development (EBRD) has nominated two new directors to the board of the Ukrainian stainless steel pipe producer Centravis, Steel Business Briefing learns from the company. The appointment of Ilya Shirokobrod and Sergey Shibaev reflects EBRD's increased involvement in the company, following its equity investment of €10m and a loan of €48m last October, as previously reported. In January 2010 Centravis became an approved supplier to Saudi oil company Aramco. This is expected to lead to supply contracts for seamless stainless steel tubes up to 114mm diameter and U-tubes with an outside diameter of up to 38mm, Centravis says.
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| AK sets $50 US sheet price hike, as bad weather continues | ||
| US sheet prices tracked by The Steel Index showed increases last week. However, market sources say spot prices for hotrolled coil and hot-dipped galvanized were relatively flat, while coldrolled prices have risen significantly. Prices could rise rapidly in the next few weeks due to continuing bad US weather. Also, in an apparent leading move, AK Steel said yesterday it would raise spot prices by $50/short ton, effective immediately for new orders. According to TSI, a unit of Steel Business Briefing, the weekly HRC reference price was up $3/s.t to $597/s.t, fob mill. HDG was up $15 to $768/s.t, while CRC was up $14 to $721/s.t. Sources say HRC prices are stagnant, contrary to a recent published report, as major mills hadn't announced increases anticipated by some. "(Rumors of US Steel and Nucor increases) spread like wildfire late Thursday and Friday," said one stockist. But few expected AK to make the first move. The stockist said CRC has risen to $750-760/s.t, up from $710-730/s.t. Sources said HDG and HRC prices have stayed around $710-730/s.t and $580-610/s.t, respectively, but all three prices could rise in the next few weeks due to weather. More than two feet of snow has fallen on some US cities and more than three feet on others. "The scrap you can't get at it is covered with snow," the source said, adding that railcars are filled with ice and snow, too. "When it thaws out, there's going to be a lot of scrap."
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| Nucor: plate price hike to stick despite surcharge drop | ||
| Although the raw materials surcharge it uses to set US prices for plate and other products went down $5/short ton for next month's deliveries, Nucor says the minimum $50/s.t price increase originally announced on January 26 will not change. A company source told Steel Business Briefing yesterday that the steelmaker's transactional pricing for plate "basically . . . will go sideways (for March), even though the surcharge went down $5 per ton." Plate prices have been increasing incrementally in the North American market due to rising scrap costs, but demand remains weak. The latest reference price from The Steel Index - a unit of SBB - was $690/s.t, fob mill, for A36 plate, while sources say domestic spot prices have been lingering around $640-660/s.t fob.
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| US semis, plate exports picked up in 2009 | |||||||||||||||||||||||||||||||||||
While overall US exports declined slightly for the third month in a row in December, the latter part of the year was the strongest for US mill exports. 2009 exports peaked at 898,000 tonnes in September and the fourth quarter was the year's strongest with exports at more than 840,000 t each month. Furthermore, November and December were the only two months in 2009 when exports were higher than the year-earlier monthly total, Steel Business Briefing observes in data from the US government. Semis exports rose dramatically through the second half - from less than 6,200 t in July to more than 80,000 t in both November and December. Semis shipments to Taiwan rose dramatically from previous months to 29,950 t in November and 25,200 t in December. Semis shipments to Peru jumped to 32,650 t after totaling only 100 t in the first 11 months of the year. Cut plate exports averaged over 73,000 t/m in the first quarter, but declined to about 63,000 t/m in Q4. Coiled plate exports, meanwhile, averaged over 88,000 t/m in Q4, compared to just over 23,000 t/m in Q1, with Canada and Mexico receiving the bulk of it. Canadian imports of American coiled plate picked up from about 12,000 t/m in Q1 to over 62,000 t/m in Q4. In Q1, the US shipped less than 8,000 t/m to Mexico, but in Q4 that rose to about 18,000 t/m.
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| US market uncertain about March rebar, MBQ prices | ||
| Rebar and merchant bar pricing for March remains unclear, Steel Business Briefing learns. US longs market leader Nucor hasn’t made any pricing moves yet on either product. Following two months of price increases due to rising scrap costs, rebar stands at about $560-590 a short ton, fob mill. Merchant bar is around $755-775/s.t, SBB notes. One Mid-Atlantic service center manager said recent MBQ price increases have been sticking. “I think the three leading players- Nucor, Gerdau Ameristeel and SDI- they control the market and scrap is up. I think all our customers recognize that scrap is up,” he said. One domestic mill source agreed. “They (recent price increases) seem to have taken hold,” he said, noting that pricing is still unclear for March. “The only rumor I haven’t heard is that prices are going down.” Despite scrap prices being essentially stable this month, the mill executive said rebar and merchant bar prices could still increase. Imports aren’t a threat at the moment, he said, adding, “If they (customers) have got to have the material right now, they’ve got to have the material . . . you might as well get your dollars for it. Lowering prices is not going to garner any more business.”
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| US recycler files $4.2m lawsuit | ||
| A unit of US scrap giant OmniSource Corp has filed a $4.2m breach of contract suit against a Hong Kong-based recycler, Steel Business Briefing learns. Carolinas Recycling Group, LLC, filed suit last week against Lee Cheung Steel and Metals Ltd in US federal court in South Carolina. The suit alleges Lee Cheung “ordered large volumes of steel scrap from Carolinas Recycling Group and agreed to pay for same,” court documents show. The company supplied the steel and expected payment, but has not been paid in full, the suit claims, with nearly $4.2m still outstanding. The lawsuit is demanding the outstanding payment. OmniSource is a subsidiary of US steelmaker Steel Dynamics Inc.
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| 2010 market is still difficult but US rebound looms | ||
| 2010 will be another challenging year for steel, but the stars are aligning for a recovery, according to industruy leaders. Weak demand will continue, said John Ferriola, COO of Nucor, but should begin to improve slowly over the course of the year. Don McNeely, president of Chicago Tube & Iron, agreed, saying companies should expect that 60% of their business this year will be seen in the second half. He said the market should expect to see more of a modest "hockey-stick" shaped recovery, as opposed to a dramatic V-, U-, or W-shaped recovery. Ferriola pointed out that although the worst of the recession has likely passed, the market will probably still see more bankruptcies, mergers and supply chain reconfiguration as the steel sector struggles to recover. McNeely and Ferriola, who spoke at last week's Port of Tampa Steel Conference attended by Steel Business Briefing, agreed that the upward momentum in the market is due to inventories and imports being at historically low levels. Ferriola added, however, that long-term prospects remain strong as populations continue to grow, emerging economies continue to develop, and steel intensity is maintained. "The steel industry will maintain and regain its strength," he stated. Both speakers pointed out that a weak US dollar will continue to provide opportunities for the US market to export more steel. McNeely anticipates that America's exports in 2010 will be in excess of 10m short tons.
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| 'Buy America' could be extended to Mexican firms | ||
| The US and Mexico may sign a government procurement agreement similar to the one signed last week between the US and Canada, which would extend the "Buy America" clause to Mexican companies, Steel Business Briefing has learned. While visiting Mexico, trade representative Ron Kirk announced that the US is willing to work out a procurement deal that would give Mexican companies access to US government procurement contracts on the federal and sub-federal level if US companies were granted mutual access, according to Inside US Trade. “We have committed to work with Mexico in a similar way [as Canada] if Mexico believes that is something that Mexican businesses are interested in pursuing,” said Kirk. Inside US Trade is reporting that Mexican access to programs under the American Recovery and Reinvestment Act of 2009 would be granted only if Mexico agreed to sign the WTO's Government Procurement Agreement.
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| US steelmakers see rise in weekly raw steel output | ||
| US steel production and capability utilization rose slightly week-on-week, Steel Business Briefing learns. According to American Iron and Steel Institute (AISI) data, domestic steelmakers operated with a capability utilization rate of 68% for the week ended February 13, producing nearly 1.65m short tons - up about 2.5% from the week before. During the same week last year, capability utilization was just 45.5% and production totaled a little more than 1.06m s.t. Weekly production was up in six of the eight US districts AISI tracks. The southern region saw the biggest w-o-w increase in terms of tons produced - up 16,000 s.t. The western region registered the biggest w-o-w decrease, dropping by 2,000 s.t, SBB notes. Year-to-date production totaled more than 9.9m s.t through February 13, while capacity utilization was 68%. In the same period last year, output was almost 6.5m s.t, with capability utilization coming in at 65.4%, according to the AISI.
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| AISI's market development group gets new president | ||
| The American Iron and Steel Institute (AISI) said yesterday Lawrence Kavanagh has been named president of the Steel Market Development Institute (SMDI), a business unit of AISI. Kavanagh, currently AISI's VP of environment and technology, will assume his new responsibilities on March 1, Steel Business Briefing understands. He succeeds David Jeanes, who has announced his retirement after 34 years with AISI. During his tenure, Jeanes was responsible for "developing and implementing an industry-wide strategic plan to advance the competitive use of North American steel," AISI said in a news release.
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| ArcelorMittal confirms April BF restart at Tubarão | ||
| Brazilian integrated flats mill ArcelorMittal Tubarão is operating two of its blast furnaces at full charge, while a third BF, currently idled, will be restarted in April, Steel Business Briefing learns from the company. BF No 2 is the smallest at the Tubarão works. Without it, the mill can still reach an 87% of capacity utilization rate with the other two furnaces. Surprisingly - even as the other two slabmakers in Brazil are virtually out of the slab exporting market - Tubarão's BF No 2 has been idle for almost a year. Now that it is about to be restarted, ArcelorMittal could become Brazil's lone slab exporter, until ThyssenKrupp CSA is commissioned.
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| Brazil's TenarisConfab cuts work shifts due to weak orders | ||
| Brazilian welded pipe and tube maker TenarisConfab has reached a deal with its labor union and decided against a mass layoff, Steel Business Briefing learns from the company. The tubemaker has decided to introduce a one-shift operation and to reduce workers' salaries. According to union sources, the company announced a likely mass layoff in January related to TenariConfabs’ extremely weak orderbook. Queried about a likely negative impact on its investment plans for 2010, the company declined to comment due to its “quiet period” for financial reporting. As SBB previously reported, Tenaris was supposed to invest R$44m (US$25.3m) this year, despite a low demand forecast for tubes during the first half this year.
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| Work on new Venezuelan seamless plant ongoing | ||
| Work on Venezuela's new state-owned seamless tube and pipe mill is apparently ongoing, according to local reports. Steel Business Briefing notes that some have been given access to the site, which was visited by domestic mining and base industries minister, Rodolfo Sanz. According to the construction and start-up schedule, the plant will be commissioned in December 2011. Danieli is supplying technology for the 465,000 tonnes/year seamless pipe mill, while SMS Innse will supply a 200,000 t/y casing/tubing mill.
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| Venezuela's auto sector down 36% in January | ||
| Venezuela's automotive output and sales dropped both month-on-month and year-on-year during January, Steel Business Briefing learns from the domestic auto group Cavenez. January vehicle output came to only 4,642 units, down 51.1% from January 2009, when production totaled 9,506 vehicles. Compared to December 2009, last month's output declined 35.9%. Meanwhile, Venezuelan vehicle sales in the local market, including domestic and imported units, reached 7,401 during January, 53.5% and 25.9% decreases from January 2009 and December 2009, respectively, SBB notes. Venezuela's automotive association has been reporting poor results due to negative market sentiment, as well as a domestic economic instability, SBB notes.
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| Citi forecasts 40-50% increase in iron ore prices | ||
| Citi Investment Research & Analysis is the latest observer to forecast a sharp increase in contract iron ore prices this year. It remains “bullish” on iron ore pricing, “with contract (prices) needing to rise by 80-90% to match the $130/tonne spot prices.” It forecasts a 40% increase in contract prices for fines and a 50% increase for lump ore in 2010, Steel Business Briefing learns from Citi's latest report. But it adds: “we remain concerned about the sustainability of iron ore prices at highly elevated levels.” Citi added it expects a 13% decline in South African miner Kumba Iron Ore’s full year results, which are to be released later this week. Lower iron ore prices and a firm rand impacted Kumba’s earnings, Citi said. However, it had higher sales volumes in 2009 by 32%, and spot market sales at a premium to benchmark prices should partially offset lower contract sales. Citi is a South African unit of US-based Citigroup.
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| Highveld appoints new deputy operations chief | ||
| South Africa’s Highveld Steel & Vanadium has appointed Johan Nel as its new deputy chief operating officer as from 12 February, the company said in a press release sent to Steel Business Briefing. Nel has worked for Highveld since 1988, most recently as works manager of the ironmaking division. Nel will report to newly appointed chief operating officer Franz Holy and will be responsible for the complete operations of Highveld.
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| AMSA may use cash to fund ZISCO buy | ||
| At the end of last year, ArcelorMittal South Africa (AMSA) had R4.3bn (€409m) in cash, which the company said could be used for a number of projects, including funding the purchase of Zimbabwe Iron & Steel Company (ZISCO), should it win the bid to buy the company. AMSA's spokesman Sven Lunsche tells Steel Business Briefing funding ZISCO with the cash could be an option, but the company could also “go to debt markets, bank funding, credit finance or a combination of all” to purchase the 60% stake in Zisco. “Future expansion or an upstream mining deal” is also under consideration for AMSA, and currently the company remains non-committal about its plans for the funds. “It’s not clear when a decision is expected,” regarding the winner of the ZISCO deal, said AMSA ceo Nonkululeko Nyembezi-Heita in a conference call last week. But should AMSA win the deal, “we would look at the best way of funding it”, says Lunsche. AMSA and Jindal Steel of India are the two short listed bidders to buy the stake in ZISCO, and a decision on the eventual winner is said to be nearing as discussions with president Mugabe are due to take place soon, as SBB previously reported.
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| Egypt’s Hadisolb reports half-year loss of $58m | ||
| Egyptian Iron & Steel (Hadisolb) reported a EGP 320m ($58m) loss for the second half of 2009. Steel Business Briefing is informed by a company filing to the Egyptian stock exchange that profit in the same period of 2008 was EGP 2m ($381,000). The company reported EGP 177m ($32m) net profit for the July 2008-June 2009 period. Hadisolb has 1.2m tonnes/year of crude steel capacity and produces semi-finished products, hot and cold rolled coils, angles, channels, rebars and sections. A company executive tells SBB that it plans to produce 850,000 tonnes of crude steel in 2010. Hadisolb will also build a new oxygen plant, which will start operation in the first half of 2012. The company will also complete the overhaul of its blast furnace No 2. The Hadisolb executive says the loss is due to the impact of global financial crises as well as the decline in local steel demand. Hadisolb sold 87.5% of its products to the Egyptian market in 2009, as reported.
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| Rio Tinto sees OECD steel demand recovering in 2010 |
| Global steel production will improve significantly this year, especially as OECD demand recovers following a period of substantial destocking, Steel Business Briefing learns from Rio Tinto’s chief economist Vivek Tulpule. The OECD recorded its first increase in output for 13 months in November, and “we expect this momentum to persist through 2010” he said. Chinese banks also increased new loans towards the end of last year, and “this money is likely to materialise as new infrastructure projects in the first half of 2010.” Tulpule said a key source of new demand will be residential development in rural China with steel consumption forecast to more than double from the current level of 25m tonnes/year by 2015, making it a larger consumer of steel than the automotive sector (which will consume 40mt/y by then). “Chinese farmers have significantly increased the consumption of steel while constructing new homes and replacing old ‘mud and straw’ type residences,” he said. “Improving demand gives scope for price rises but substantially higher steel prices will encounter strong head-winds from significant surplus capacity,” according to Tulpule. Conditions affecting spot iron ore markets are also expected to remain firm in 2010 with the market now returned to “the operating environment of pre 2008 when growth outstripped new supply” due to very effective stimulus measures in China. Steel production is expected to grow in all major seaborne iron ore consuming countries this year, Tulpule said. |
