| N. European coil market remains void of transactions | ||
| Transactions in the northern European coil market remain scarce as stockists and end-users wait before buying to try to delay impending price increases proposed by the mills, participants tell Steel Business Briefing. Mills continue to probe the market with offers starting at €450/tonne ($613/t) base for hot rolled coil and €510/t for cold rolled, but most buyers purchased more material than they required throughout January, meaning they will not need to purchase significant volumes until well into the second quarter. “Off-takers do not want to believe that prices are increasing so dramatically,” a Dutch trader says. “If EU mills manage to stay disciplined, however, then these new prices should be pushed through,” he believes. “In the past they were talking tough [in public] but then compromising on prices through ‘back-door’ deals. But now they do not appear to be giving an inch,” he observes. “Most mills are fully booked in April and some in May,” a German stockist says. “They booked too much for Q1 at the old prices and production of this material has spilled over into Q2,” he notes. “Mills may look to come to a compromise with the off-takers and increase the agreed price to reflect proposed Q2 pricing,” he suggests. Imports of Chinese coil into northern Europe remain scarce, as latest offers of €430/t CIF Antwerp are not attractive enough to persuade stockists to buy. However, if EU mills are successful in obtaining price increases and the euro does not weaken further, then imports may become viable.
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| Climbing imported strip prices keep S. Europe buyers at bay | ||||||||||||||||||||||||||||||||||||
Importers of coils are hiking their offer prices into Southern Europe, which is continuing to deter buyers in the region, Steel Business Briefing learns from market sources. Import prices are now said to be more expensive than domestic levels, which has made import bookings during 2010 scarce. “China isn’t offering much at the moment and what they are offering is too expensive. Russian prices are high as well. The Southern European market is dominated by domestic buying basically,” says an Italian service centre. However, material from Asia, Iran and Turkey is currently said to be arriving at southern European ports. This was purchased around November and bought for considerably lower prices than today’s. “Some service centres bought HRC for as low as €380/tonne, which was a good bargain,” says an Italian trader. A significant amount of galvanized coils is also said to be arriving at Spanish ports from China. “Material is arriving now and more is due in March. Traders are offering HRC for around €420-423/t when they bought it for much less back in November,” Spanish stockist says. Price levels for HRC imports have again risen moderately since January, with HRC now between €420-460/tonne cif, while CRC and HDG offers climb to €450-500/t and €500-550/t cif, respectively. For the time being, the market awaits the return of the Chinese following the Lunar New Year break, in hope that market sentiment will not be altered and that imported material will continue to be priced uncompetitively.
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| More companies have higher inventories - The Steel Index | ||||||||||||||||||||||||||
The latest market survey results from The Steel Index show that more companies in US, Europe and globally report higher stock levels than in the previous week as destocking appears to be coming to an end. Expectations on pricing in the next three months are lower than last week’s results. 29% of companies globally reported higher stocks than a week earlier, up from 20%, and 53% advised they had stable inventories (see table). 39% of US companies reported higher stock levels than last week, up from 33%, while 52% had steady inventories, up from 43%. 20% of European companies had higher inventories compared with the previous week, up from 14%, while 58% of companies reported unchanged stock levels. 55% of companies globally expect higher prices in the next three months, down from 60%, while 31% expect stable prices. 55% of European companies also foresee higher prices, down from 62%, while just 11% anticipate lower prices. 58% of US companies expect higher prices during the next three months while 21% of respondents expect lower prices. Expectations of higher demand rose slightly in Europe since last week, with 36% of companies expecting better off-take in the next three months, up from 27%. 55% of respondents foresee stable demand. Sentiment in US weakened as 42% of companies expect higher off-take, down from 52%, while half foresee steady demand. Overall, 39% of companies anticipate higher off-take and 54% of respondents expect stable demand. The Steel Index www.thesteelindex.com - is a weekly steel reference price service majority-owned by Steel Business Briefing .
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| Korean mills seek higher HRC export prices for March-April | ||
| Exports offer prices for hot rolled coil from Korean mills for March-April deliveries are expected to be $20-30/tonne higher than January-February contracts. This means the new export offer prices from Posco and Hyundai Steel will be around $600-610/t fob or even higher. Depending on the market situation, prices could rise by as much as $50/t, Steel Business Briefing learns from local traders. Significantly higher iron ore contract prices from 1 April and tighter HRC supply from major producer Posco are the main drivers behind the rise. Maintenance work carried out by Posco will affect its HRC output, with export volumes for April-June deliveries likely to be 20-30% down on the January-March quarter, as SBB has reported. Korean HRC producers are expected to table their new export offer prices by late February or early March. Meanwhile, Hyundai appears to be retaining its HRC export tonnage of about 40,000-50,000 t/month. But industry sources expect the producer to lift its HRC exports once it begins commercial production at its first blast furnace of 4m t/y in early April. Export offer prices from Korea’s other major HRC maker Dongbu Steel will be similar to those of Posco and Hyundai. Dongbu’s average exports volume of HRC is currently 20,000 t/m but the mill is aiming to increase this to 40,000 t/m from the second half of this year.
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| Domestic demand for steel in Japan falls to 40-yr low | ||||||||||||||||||||||||||||||||||||
| Domestic demand for ordinary steel in Japan slumped to a 40-year low in 2009, reaching just 60.87m tonnes. The 2009 figure was down 18.8% year-on-year, achieving the lowest total since the 59.91m t Japan recorded in 1971, Steel Business Briefing learns from the Japan Iron & Steel Federation (JISF). A JISF spokesman explained that domestic demand last year had been “stagnant” because of the economic crisis, though the manufacturing sector had begun to recover in the second half of 2009. Orders booked in December by the manufacturing sector reached 1.89m t, up 7.9% from November and up 16.8% y-o-y, according to JISF data. Demand for construction steel remained low, however, falling 26.1% y-o-y to 9.46m t. “There is little sign that demand in the construction sector is recovering so we expect it to remain flat for a while longer,” the JISF spokesman told SBB. He noted that orders booked by the Japanese construction sector were around half the volume of its 1990 peak of 18.46m t. But Japan’s exports recovered from a slow start to record their second highest total of 23.1m t, behind the previous high of 24.76m t in 1984. “It’s clear that Japan’s ordinary steel orders last year were helped by stronger exports,” the JISF spokesman said. He noted that current demand from the domestic manufacturing sector was increasing and would cover the drop-off in demand from the country's construction sector. See also: "Japanese steel profits from past traumas" SBB Insight, 12 February
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| American Micro Steel to build new rebar mill in Puerto Rico | ||
| American Micro Steel of Puerto Rico (AMS), based in the US state of Virginia, has plans to build a new straight, coiled and fabricated rebar micro mill in Guayanilla city, Puerto Rico, Steel Business Briefing learns from the company. The mill, which aims to meet domestic demand from the construction industry, will be the sole rebar producer in the country, with a nominal capacity of 250,000 short tons a year. The scrap-based plant will receive a US$275-300m investment. The complex will include a scrap shredder, melt shop, rolling mill and rebar fabricating shop, SBB notes. AMS says it will apply for environmental licenses soon, but the project's funding should be concluded in the third quarter. Meanwhile, start-up of the fabricating shop is planned for the first quarter of 2011, while the shredder and mill commissionings are scheduled for Q1 2012.
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| Weather and demand causing congestion at Australian ports | ||
| Flooding, infrastructure constraints and massive demand for Australia’s iron ore and coal have led to a build-up of vessel congestion at the country’s ports over recent days. By last Friday there were 181 vessels moored at the major ports, eight more than the week before, with 153 ships scheduled to arrive over the next fortnight, Bloomberg reported, citing data from Global Ports. Heavy rain in New South Wales last week added to existing supply-chain problems in the coal producing Hunter Valley region. Steel Business Briefing understands that there are currently 51 vessels in the queue at Newcastle port, double what is considered normal. Some 14 metallurgical and thermal coal miners ship their product from the port, which is getting a A$167m (US$150.5m) overhaul to boost capacity by 20m tonnes/year to 123m t/y by 2012. Further north at Queensland’s Dalrymple Bay coal terminal, which handles met coal from Macarthur Coal and BHP Billiton-Mitsubishi Development, the queue is currently 54 vessels. Dalrymple Bay general manager, operations, Greg Smith, says the number has come down from more than 70 a few months ago. “We haven’t suffered so much from the weather at this stage; there are some speed restraints on rail, but the supply chain is generally keeping up with demand,” he tells SBB. Demand from met coal customers in Japan, Korea, Europe and Brazil has returned to pre-financial crisis levels. This has led to China’s spot purchases being pegged back since July with the country currently taking around one-fifth of met coal output from the Bowen Basin region.
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| Indian iron ore miner ventures into steel making | ||
| Indian iron ore miner H.L. Nathurmal, headquartered in Goa, is planning to build an integrated steelworks in the southern state of Karnataka by 2012-13. It plans to make 1m t/y of bars and wire rods in equal quantities, for sale in the local construction market and export to Africa. “We have acquired 40 hectares of land in Bagalkot, Karnataka, near our existing iron ore mines and the acquisition of the remaining 81 hectares is under way,” a company official tells Steel Business Briefing. “We will mostly be making alloy steel via the DRI-EAF route, but we will take another four months to finalize the details.” A new company to undertake the venture, Doddanavar Iron & Steels Ltd, has already been formed. Nathurmal produces 50% Fe iron ore fines and lumps at its two mines in Arvalem and Vantem, Karnataka. This is beneficiated to 58-58.5% Fe to produce 2m tonnes/year of saleable ore. The mined ore with an Fe content of less than 50% is dumped, and Nathurmal has accumulated a large quantity of such material which it plans to beneficiate to 62% Fe for use at its prospective steelworks. The construction of the 1m t/y beneficiation plant is due to begin later this year and commissioned by April 2011.
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| JFE raises 13Cr tube export prices for April | ||
| Japan's JFE Steel is lifting the price of its 13Cr seamless tubes by $300/tonne for April contracts in a bid to recover revenues lost by lowering its prices over the past year, Steel Business Briefing learns from the company. JFE says demand for 13Cr seamless tubes fell significantly last year, especially in the US, which is a major market. This resulted in prices dropping around $1,000/t in line with lower prices for carbon grade seamless tubes. But demand is recovering after a period of customer de-stocking and a number of new energy projects in the process of being developed, giving JFE confidence to lift its seamless pipe prices again. “The price rise for 13Cr seamless pipes is an attempt to make the product profitable again and we could lift prices further to make up some of the deficit from the period of lower prices, but it depends on the market,” a JFE spokesman tells SBB. JFE would not disclose its 13Cr seamless output volume, but told SBB it believed it was the largest global provider of 13Cr seamless tubes. JFE produces seamless pipes and tubes at its Chita works, near Nagoya, and has capacity of 470,000 t/year for medium-sized diameter seamless pipes and 440,000 t/y for smaller diameters. Its 13Cr seamless tube capacity is around 150,000 t/y, SBB believes.
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| Bulk scrap import prices are strong in East Asia | ||
| A Korean mill’s recent booking of deep-sea US-origin scrap indicates that bulk scrap prices are still firm in east Asia. SeAH Besteel late last week booked around 40,000 tonnes of West Coast US scrap, for April arrival, at $375/t cfr for HMS 1, Korean trading sources tell Steel Business Briefing. Several more Korean mills have also expressed their interest to book US scrap and are likely to confirm their bookings within the week. There are rumours that a Korean mill has placed a bid at $383/t cfr for HMS 1 but its booking is not finalised. A local trader says that there is an uptrend in prices and offers of HMS 1 are at around $390/t cfr now. Limited tonnages of bulk composite scrap (HMS1&2 80:20 and shredded) from USA were offered last week at $380-385/t cfr Southeast Asia. Higher Japanese scrap prices are contributing to the firming scrap import market. Offers for Japanese H2 grade scrap are around ¥32,000/t ($354) fob or the equivalent of about $375/t cfr Korea. This is deemed high-priced because H2 scrap is normally $10-15/t below HMS 1. A regional trader in Southeast Asia says that rising Japanese scrap is a "signal" of a stronger market. “There are few offers (of scrap). Availability is still an issue,” he tells SBB.
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| Korea's domestic scrap prices tipped to rise in March | ||
| Lower domestic scrap prices quoted by Korea’s mini mills since last week are unlikely to continue for the long-term, market sources believe. Local dealers’ deliveries to steel makers have slowed in anticipation of high demand starting in March. Further, higher scrap prices from Japan are also expected to affect that country’s ability to export to Korea. Hyundai Steel, the leading scrap buyer in Korea, slashed its domestic scrap purchase prices by KRW 10,000/tonne ($8.6/t) from 8 February. Rapidly rising stock levels of finished products, in particular rebar, were influencing weak domestic scrap prices until the end of last week. But the announcement that Tokyo Steel Manufacturing will lift its scrap prices by ¥1,500-2,000/t ($16.7-22/t) dampened sentiment in Korea when trading resumed after the Lunar New Year holidays. “Higher scrap prices from Japan are disrupting buying activity among the Korean mini mills at the moment,” a local scrap trader tells Steel Business Briefing. He adds that most Korean mills have sufficient scrap stocks so are hesitating to book Japanese scrap at the moment. “We’ll get a better idea of the market’s appetite for scrap prices by the end of this week,” the trader says. Meanwhile, Posco booked Japanese scrap at ¥35,300/t ($390/t) cfr for 2,000 t Shindachi grade, equivalent to ¥33,100-33,200/t ($366-367/t) fob, on 12 February. The mill also contracted H2 grade scrap at ¥31,100-31,200/t fob - some ¥500/t higher than its previous purchase, SBB learns.
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| Indian pig iron export price is firm | ||
| Stemcor is believed to be negotiations with Vizag over its higher-priced bid at $386.06/tonne fob in the Indian company's 13 February tender for 25,000 tonnes of pig iron. Prime Carbon submitted the other bid at $373/t fob. Traders believe that Vizag is aiming for a higher price because the Indian domestic price for pig iron is above $400/t. One trader tells Steel Business Briefing that he has heard that Vizag wants a bidding price of around $410/t fob. Trading sources note that Stemcor's tender price is roughly similar to the last awarded pice of $390/t fob in MMTC's pig iron tender on 29 January. "Pig iron is still very firm because scrap prices are still strong," a trader tells SBB. MMTC is due to hold another export tender on 24 February for two 30,000 t lots of pig iron for shipment by 25 March. One lot is confirmed for sale whereas the other will be sold at the seller's option.
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| India may raise ferro-alloy import tax soon | ||
| India’s ferro-alloy producers are continuing to lobby the government in a bid to raise import taxes on all ferro-alloys, excluding ferro-nickel, from 5% to 10%. An announcement on the change could come as early as this month, Steel Business Briefing learns. “The government is considering our request,” T.S. Sundaresan, secretary of the Indian Ferro Alloy Producers’ Association (IFAPA), tells SBB. “They may announce the change on 26 February,” he notes – the day the Indian government is due to deliver its budget for the 2010-11 fiscal year. IFAPA’s request excludes FeNi, which is not produced in India. But Sundaresan adds that the import tax on FeNi, which is also currently at 5%, could be cancelled alongside an increase in import tax on other ferro-alloys. India’s stainless steel producers have pushed for a cancellation of the FeNi import tax on the grounds that there is no domestic FeNi industry to protect. They say an import tax, which is absent in competing stainless-producing countries, will lead to higher costs and a decrease in industry competitiveness, as SBB reported. India’s ferro-alloy industry operation rate is currently 60% of around 4m tonnes/year capacity. Ferro-chrome aside, where prices have improved, the Indian ferro-alloy market is generally still quiet, notes Sundaresan. India produced 2.19m t of bulk ferro-alloys, which includes ferro-manganese, silico-manganese, ferro-silicon and FeCr, in its fiscal year 2008-09, according to IFAPA.
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| Turkey receives higher strip offer prices from Ukraine | ||
| Despite low demand for flat rolled steel in Turkey, Turkish traders are receiving higher offers from importers, and they expect the local producer Erdemir to increase its prices soon. Steel Business Briefing is informed that Ukraine’s Zaporizhstal is asking $565-570/tonne fob for hot rolled coil. Freight to Turkish Black Sea ports costs $15-20/tonne. Previous prices from Ukraine were $550-570/t cfr. Local producer Erdemir’s HRC price for March production is $570/tonne. Most Turkish traders believe this price will be increased to a minimum of $600/t for April production. The price change is expected this week or early next week. Turkish market players say demand from the end-users is not high in Turkey because most bookings were made in January. They believe demand is unlikely to increase before March because end-use sectors like machinery production and construction are still slow.
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| Welded pipe demand low, prices stable in Turkey | ||
| Turkish domestic pipe prices are still weak because of low demand, but the higher coil costs keep the pipe prices stable, Steel Business Briefing learns from the market players. A pipemaker states that it is not expecting prices to decline; it is forecasting prices to improve slowly in the next six months period. For local buyers, pipe producer Tosyali is currently offering 33% discounts for cold rolled products and 35% for HR products on its list prices. Yucel Boru’s discounts are at the same levels for Iskenderun region, and 29% on CR pipes and 31% on HR pipes in Istanbul region; these discounts are for cash payments, SBB learns. The largest pipemaker of the country, Borusan, is offering 23% of its list prices for HR hollow sections and 21% for CR hollow sections, while it is offering 21% for HR and CR pipes for the cash payment including delivery. With the current discounts, 40mm diameter, 1mm wall thickness cold rolled industrial pipe prices are at around $721/tonne (list price: TL 1.96/metre) from Tosyali. For 3mm wall thickness, 60mm diameter hot rolled industrial pipes the price is $709/t with Borusan’s discount on its TL 5.70/metre list price, SBB understands.
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| Polish steel pipe distributor increases coating capacity | ||
| Polish steel pipe insulator and distributor Izostal, a subsidiary of flat and long steel producer Stalprofil, has commissioned a new service centre for the production of anti-corrosive insulated pipes in Kolonowskie, northwest of Katowice, Steel Business Briefing learns. The new centre, which has its own railway siding, will increase Izostal’s pipe processing capacity to 1m sq metres/year of externally insulated steel pipe and 400,000m sq m/y of internally insulated steel pipe. The company would not say how many tonnes of pipe this represents or what increase in capacity it represents. The total cost of the investment was PLN 80 million (€20.1m), over PLN 20m (€5m) of which was EU finance. The new centre is fitted with two production lines, which will produce internally insulated pipe 219.1mm-1,220mm in diameter and externally insulated pipe 21.3-1,220mm finished diameter. Coatings are polypropylene or polyethylene. Izostal supplies pipe to the oil and gas transmission industries, as well as for water projects and construction. The company’s other production centre in Zawadzkie, a few miles southeast of Kolonowskie, will continue to produce polyethylene coated anti-corrosive steel pipes. Izostal will be looking to increase the amount of steel pipe it sources from its suppliers in view of its capacity increase. The firm sources its steel from Poland, Ukraine, Czech Republic, Slovakia, Germany and Italy.
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| Euro stainless mills sense opportunity for more price rises | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
European stainless buyers are expecting mills to press for further increases totalling up to €100/tonne for type 304 sheet and coil base prices before mid-year, although with real demand still quite subdued, some question whether these levels can realistically be achieved. There seems to be general agreement that mills are successfully managing the supply side to keep the market quite tight, with lead-times lengthening slightly as a result. Some mills are now closing their April books for commodity grades, others are in mid-April, and Steel Business Briefing hears that Acerinox’s lead-time is a bit shorter at 45 days. These lead-times, despite being based on under-utilised capacity, put mills in a stronger bargaining position. They are assisted by a general expectation that demand overall must strengthen, if only slightly, in the months ahead. Also, competition from imports should reduce with the dollar strengthening against the euro. Although the market direction is currently far from clear, some sources report better than expected buying activity from manufacturing, suggesting some improvement in real demand. Others say small-to-medium size project activity has lifted a little. However, capital finance remains a problem. Construction activity continues to be quiet. Although there is some restocking by distributors, there are mixed views about whether this is in anticipation of higher transaction prices (nickel’s behaviour points to higher surcharges next month), or just stockists buying only what is absolutely necessary, as inventories generally are low. With the business climate very competitive, some distributors are said to be selling at historic, rather than current market prices, driving down margins.
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| Jacquet asks French court to block IMS's stainless sale | ||
| French stainless plate supplier Jacquet Metals is taking legal action in an attempt to block fellow special steels distributor International Métal Service (IMS) from selling its stainless steel business. Jacquet tells Steel Business Briefing that IMS should not make the sale without gaining shareholder approval. Jacquet owns 33% of IMS and earlier this month launched a full-scale takeover bid for the much larger company. IMS’s board rejected its advances, saying the bid undervalues the company. In a statement sent to SBB yesterday, Jacquet said it is asking the commercial court to intervene because the president of IMS’s supervisory board has indicated that it will proceed with the sale of Stappert Spezial-Stahl, the stainless steel distributor, without seeking shareholders’ authorisation. This goes against France’s “Code de Commerce,” it says. Jacquet opposes the sale, as it believes Stappert is potentially the group’s most profitable business. IMS had not responded to Jacquet’s legal action by SBB’s deadline. It is expected to issue comments late on Thursday when it reports its business results for 2009.
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| ThyssenKrupp‘s stainless unit still loss-making, but less so | ||
| The stainless steel activities of Germany’s ThyssenKrupp Group have started the company’s fiscal year (October-September) in the red, but they noticeably reduced their losses compared with the corresponding quarter a year earlier, the company points out. Unlike the group’s carbon steel activities, which returned to black ink in the Oct-Dec quarter, the division now called TK Global Stainless reported an operating loss of €59m, recovering from -€243m in the corresponding 2008 period. With the exception of nickel-based speciality alloys at VDM, all subsidiaries in Germany, Italy, Mexico and China reduced their losses and lifted production. However, the market upturn lost momentum towards the end of the reporting period for seasonal reasons and because of renewed restraint due to the nickel price trend, TK notes. In the first quarter, TK’s stainless sales climbed 3% to €1.2bn. Order intake was up 29% year-on-year, though in terms of value this remained virtually unchanged at €0.9bn, due mainly to lower alloy surcharges. Deliveries were up 25% to 510,000 tonnes, Steel Business Briefing notes. Looking ahead to the rest of its financial year, the company says it expects a stabilisation of volumes at improved base prices, as world demand for stainless flats is forecast to grow by around 10%, bringing global demand back to just above the level of 2008.
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| Turkey's stainless coil imports hit 255,086 tonnes in 2009 | ||||||||||||||||||||||
| Turkish stainless coil imports in 2009 almost matched the previous year’s tonnage because of the sharp decrease during the last quarter of 2008, Steel Business Briefing learns. According to data released by the Turkish Statistical Institute (TUIK), Turkey imported 255,086 tonnes of stainless steel sheets in 2009, which is only 2.7% less than in 2008. In the month of December 2009, Turkish imports totalled 27,276 tonnes of stainless coils, which is 93% higher than the same month of previous year while it is also 12% higher than the November imports (see table). In the whole year of 2009, Taiwan was the largest supplier to Turkey with 58,544 tonnes. Germany was second with 51,113t and South Korea third with 26,836t, SBB understands from TUIK’s data. Market players say that the main reason of high Far East exports to Turkey is because of the competitive prices offered by these suppliers. They also say no big improvement in the market is expected in the first half of this year, until prices stabilise in line with demand.
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| ThyssenKrupp keeps outlook stable after first quarter | ||
| Germany's ThyssenKrupp sees no change for the worse or the better since the outlook it gave in late November, when presenting its full-year results. In the report for the first quarter (October-December) of its new fiscal year sent to Steel Business Briefing, ThyssenKrupp states that global steel markets “remain subdued”. Demand should be higher than in 2009, mainly due to restocking. But the company underlines that Europe could be subject to a new risk of rising imports, caused by capacity expansions elsewhere. The automotive industry, arguably ThyssenKrupp’s most important customer sector, is seen recovering only slightly from the sharp decline in 2009. “In 2010 we anticipate a 6% increase in [international] production to just under 63 million cars and trucks,” the group writes. For the global shipbuilding industry, prospects remain dim, and German shipyards especially are hurting from order cancellations. The machinery sector is seen rebounding by 2-3% in the industrial areas of North America and Europe, and probably by a larger degree in China. In its current fiscal year, ThyssenKrupp expects improved sales volumes but at prices below the prior-year level for its carbon steel business, stable volumes at higher base prices for stainless, and stabilisation of both volumes and prices at its steel distribution services.
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| Italian production showed slight recovery in December | ||
| Italian crude steel production fell in 2009 by 35.5% to 19.7m tonnes, Steel Business Briefing learns from data released by the producers’ association Federacciai. In December Italian crude steel production was down by 10% to 1.47m t compared to the same month last year. Italy is Western Europe's second largest steel-producing country after Germany. In 2009 the country's flat steel production declined by 35 % to 9.09m t compared to 2008, while long steel product output fell by 33.6 % to 11.06m t. December 2009 figures showed a slight recovery in flat product output, but it remained below its 2007 level. In December Italy produced 881000 t of flat products, indicating a year-on-year increase of 40.3 % compared with the 628,000 t produced in December 2008. Italy’s long steel product output in the month fell by 22.2 % to 581,000 t compared with the 748,000 produced in December 2008.
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| ArcelorMittal flat & long carbon Europe shipments up in Q4 | ||
| ArcelorMittal’s flat carbon Europe division increased its steel shipments by 14% to 6.4m tonnes in quarter four 2009 compared to Q3. Q4 shipments also rose by 6% year-on-year. In full year 2009, though, shipments fell by 35% to 21.8m t. The division’s crude steel production fell similarly by 34% to 22.8m t in 2009. But in Q4 crude production of 7.4m t was up by 10% on Q3 and, notably, by 44% on Q4 2008. Following improvement in demand, the company has restarted certain idled production facilities, it notes. In Q4 2008 shipments of 6m t exceeded crude steel production of 5.1m t, but in Q4 2009 the situation was reversed with crude production exceeding shipments. The division’s revenue roughly halved to $19.98bn (€14.70bn) in 2009. Earnings before interest, taxation, depreciation and amortisation dwindled to $1.91bn and operating income turned into a loss of $540m overall. However, operating income became positive again in Q4 at $230m. This result included a net gain of $108m recorded on the sale of carbon dioxide credits. Shipments from ArcelorMittal’s long carbon steel plants in Europe rose by 2% quarter-on-quarter in Q4 to 2.8m t, and full-year 2009 shipments totalled 10.8m t. Long carbon Europe’s EBITDA was $249m in the full year and $43m in Q4. ArcelorMittal Group produced 73.2m t of crude steel in 2009, down 29% on 2008. Group revenue almost halved to $65.11bn, EBITDA dived by 76% to $5.82bn, and operating income turned into a loss of $1.68bn, Steel Business Briefing learns from the company.
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| Severstal Balakovo mini mill works to start in April | ||
| Russia's Severstal will embark on the construction of its Balakovo mini mill near Saratov in April, a spokesperson for the company tells Steel Business Briefing. Production start-up is scheduled for 2013, he adds. With a capacity of 1m tonnes/year, the $600m mini mill will produce long products for the construction sector. Originally scheduled to start up in 2010, Severstal postponed the construction due to the slump of the economy, even though the equipment for the mill from Siemens VAI and Danieli was ordered in 2008. Meanwhile, its Sheksna plant, located in the Vologda region of Russia, completed hot trials of its slitting line earlier thie month, Severstal says. The mill produces hollow sections with plans set to also produce square pipe of 90-320mm and rectangular pipe from 100x80mm to 350x250mm. In addition, a $100m pipe rolling facility called TPZ Sheksna is currently under construction. The project consists of pipe welding machines, with the capacity of up to 250,000 tonnes per year, Severstal says.
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| Nucor raises sheet prices $40/s.ton | ||
| Nucor is raising sheet prices by a minimum of $40 a short ton, effective immediately. The across-the-board move on hotrolled coils, coldrolled coils and galvanized sheet follows a $50/s.t price increase announcement by competitor AK Steel earlier this week. The moves take these mills' transaction prices for HRC well over $600/s.t, fob mill, Steel Business Briefing notes.
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| US electo-galv exports up while other sheet exports fall | ||||||||||||||||||||||||||||||||||||||||||
| While most sheet exports out of the US were down significantly year-on-year, exports of electrogalvanized sheet and narrow strip maintained their strength in 2009. An analysis of US government export data reveals electrogalv exports last year, at 289,700 tonnes, were up 4% over 2008. Shipments to Nafta trading partners Mexico and Canada were about even at around 132,000 t each for the year. All other sheet exports were down almost 20% or more y-o-y, Steel Business Briefing learns from the data. Hotrolled sheet exports fell 26% y-o-y to just over 691,000 t while coldrolled sheet exports declined 27% to 448,400 t. Hot-dipped galvanized sheet exports were down 19% to 725,700 t. Exports of electrical sheet and strip declined 26%, HR strip exports were down 23%, and CR strip exports fell 28% (see chart).
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| US minimill sacrifices profits to rising scrap costs | ||
| Rising US scrap prices throttled the profits of bar producer Kentucky Electric Steel in its fiscal first quarter 2010, which ended December 31, 2009. The company is optimistic that merchant and special quality bar is poised for a comeback akin to hotrolled coil. “Steel scrap, our primary raw material, was 22% higher in price in the last quarter of 2009 than in the same period of 2008!” stated John Scheel, CEO of Kentucky Electric’s parent company ALJ. “So scrap is up and our selling price is down. This is due to higher scrap demand in the flatrolled steel sector which has begun to recover. Only very recently have we begun to see signs of similar improvement.” ALJ posted a net loss of $153,000 in fiscal Q1 on net sales of $21m. In fiscal Q1 2009 the company posted a loss of $198,000 on sales of about $40m, Steel Business Briefing notes.
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| Distributors resisting HSS, mechanical tubing increases | ||
| Several recent US tube price increases are softening at the mill level, market sources report. Except for OCTG, which continues to experience strong demand in North American shale plays, tubing prices across the board are weakening due to slack demand from non-residential construction and heavy industry. Increases announced for mechanical tubing and hollow structural sections are faring the worst, one distributor reported. “I’ve already noticed small deals being cut at some of the mills. They’re just trying to generate demand, because there really isn’t any out there,” he said, noting that HSS price increases have been announced three times since early December for a total of about $170/short ton. Mechanical tubing increases also are finding resistance among distributors, sources report. There have been at least two announced price increases in the $60/s.t range for non-galvanized mechanical tubing this year. “They’ll say they’re shipping a lot, but if you ask them what their new orders are or what they’re booking today, the answer will be the complete opposite,” a distributor told Steel Business Briefing. “One major mill just yesterday booked less than one truckload. That’s scary.”
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| NAS raises stainless wire rod base price 5% | ||
| North American Stainless has announced a 5% hike in base prices for all wire rod products effective with April shipments. “The increase is necessary to support continued growth and investment in our business,” according to a customer letter. It was unclear from the letter as to what base price the increase will be applied. NAS stainless wire rod products range from 5.5mm to 42mm in diameter. Several wire drawers told Steel Business Briefing that they’ve been anticipating a base price increase, despite a concurrent rise in announced March surcharges. “They’re piling on increases,” said one wire producer. “And because they’re piling it on, everyone else will pile it on.” Demand isn’t stagnant, however, according to another major wire producer. The automobile industry is largely driving the market for stainless wire, which is ultimately woven into exhaust components and filters, he said. “They’re still building cars,” he said. “Not as many as they used to, but they’re still building them.”
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| US stainless exports fall despite big jump in semis trade | ||||||||||||||||||||||||||||||||||
| While overall US exports of stainless steel were down in 2009 compared to the prior year, exports of stainless semis increased dramatically year-on-year. Total shipments of stainless steel products out of the US totaled almost 477,200 tonnes last year – a 16% decline from 2008 when stainless exports totaled 570,700 t, according to data from the US government. Exports of stainless blooms, billets and slabs, meanwhile, more than tripled y-o-y, from less than 14,000 t in 2008 to more than 45,800 t in 2009. The increase in stainless semis exports was led by shipments to Honduras. The Central American country received more than 27,000 t in 2009, Steel Business Briefing observes in the data. There was also a large shipment of stainless semis to Turkey in November, SBB notices, as 15,700 t were shipped there that month. Exports of coldrolled sheet – the most exported stainless product – were down 24% y-o-y to about 133,500 t and coldrolled narrow strip exports were down 18% y-o-y to 55,200 t.
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| Cliffs doubles Q4 earnings; sees more strong results ahead | ||
| Cliffs Natural Resources, which more than doubled its fourth quarter 2009 profits to $108m (up from $46m in Q4 2008), expects continued strong results going forward based on rising raw material prices. The US-based miner, while noting that major contracts are not yet settled, is basing its outlook on the following assumptions for 2010. - Increases of 40% for world blast furnace iron ore pellet price settlements. - Increases of 35% and 30%, respectively, for Australian lump and fines benchmark price settlements. - North America hard coking coal prices of $125 per short ton, fob mine. Cliffs Q4 revenues were $821m, down from $916m in Q4 2008. For full-year 2009, Cliffs earned $204m on sales of $2.34bn. That was down from 2008 earnings of $537m on sales of $3.6bn, Steel Business Briefing notes.
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| Moody's upgrades outlook for US steel industry | ||
| Moody's Investors Service has upgraded its outlook for the US steel industry to "stable" from "negative," Steel Business Briefing learns. "Although challenging conditions continue to face the industry and end market demand remains relatively weak, the changed outlook reflects our view that the operating environment has stabilized and that the industry will not return to the low capacity utilization rates experienced for most of 2009," the company's report states. Moody's says the industry, which has operated with capacity utilization rates of roughly 60-65% for the past four months, needs to average at least 80% "for a return to sustainable, solid profitability." It says flatrolled producers should fare better as the auto industry recovers, but longs producers are likely to have more difficulty as nonresidential construction is expected to contract again in 2010, among other negative factors. "We still believe that 2010 will evidence only gradual improvement as the year progresses and that the industry faces a long road back to full recovery," Moody's says. "In our view, overcapacity remains a key risk for the industry globally. Although we do not expect steel imports to flood the US in 2010, such remains a risk as China continues to expand its steel production. "In addition, the premature restart of idled capacity in the US and other parts of the world could derail the improvement now taking shape."
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| Brazil lifts imports of Russian flats | ||
| Brazilian flats imports from Russia have been increasing. Steel Business Briefing learns from customs data that Russian steel producer Severstal shipped 11,044 tonnes of hotrolled coils to the Pecém port during January, probably for the region's major distributors Aço Cearense and Ferronorte. During the same month, Russia’s HRC exports to Brazil overall came to about 25,000 t, including nearly 14,000 t to the port of Sao Francisco do Sul. SBB believes that flats distributors in the country's southeastern region are increasing HRC purchases from Russia as well. According to local market players, Severstal has better prices than fellow Russian steelmaker MMK, and has recently sold a cargo of 40,000 t of HRC at around US$610-620/t cfr Brazil. This cargo is scheduled to arrive at Pecém port in April. Meanwhile, 13,672 t of Russian HRC arrived in Brazil during December, while coldrolled coil imports from Russia totaled 16,878 t, according to government figures.
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| Siderperú reports 2009 net losses | ||
| Gerdau's Peruvian steelmaker Siderperú reported a fourth quarter 2009 net profit of PEN 61.1m (US$21.3m), against net losses of PEN 98.1m during the same period in 2008, Steel Business Briefing learns from the mill. For 2009 overall, the company’s net losses came to around PEN 109m, against a net profit of PEN 18.3m in 2008. Meanwhile, Siderperú saw its Q4 2009 net sales fall 25% in a year-to-year comparison, to PEN 259m. Sales totaled PEN 1.15bn for the full year, a 32% decline from 2008. As SBB previously reported, the company plans to resume its idled blast furnace by mid-2010 in response to better market conditions.
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| Shougang Hierro Peru's 2009 iron ore sales down 8% | ||
| Peruvian iron ore mining company Shougang Hierro Peru (SHP) reported its iron ore sales totaled around 6.85m tonnes last year, an 8.5% decline from 2008, when the miner sold roughly 7.49m t, Steel Business Briefing learns. During the fourth quarter last year, SHP’s iron ore shipments reached around 1.85m t, up 17.8% over Q4 2008, when the company sold 1.57m t. Moreover, the company reported a net profit of PEN 151.5m (US$51.7m) during 2009, down from PEN 416.4m during 2008. Q4 2009 net profit came to PEN 51.6m, against a PEN 94.5m net profit in the same period of 2008. According the company, 2009 profit was negatively affected by reduced iron ore sales, as well as lower average sales prices. SBB also notes that SHP’s iron ore output was impacted by several labor strikes that occurred last year.
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| Brazil's Jan. FeSi exports up 25% from 2009; off from Dec. | ||
| Brazilian ferrosilicon (>55% Si) exports registered a 25.4% increase in January over the same month in 2009, up from 8,772 tonnes to 11,000 t, Steel Business Briefing learns from the country’s customs data. Meanwhile, FeSi export revenues came to US$17.4m fob during the first month of 2010, against US$19.8m fob in the same period last year. This drop is due to exchange rates movements, SBB notes. Despite the year-over-year export volume gain, producers shipped 19.2% fewer tonnes last month when compared to December 2009, when foreign sales reached 13,617 t. For full-year 2009, exports totaled 127,987 tonnes valued at US$206.5m fob. The main recipient countries were Belgium, South Korea and Germany.
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| European Union delists Zisco from sanctions | ||
| The European Union has extended targeted sanctions on Zimbabwe for a further twelve months, but delisted nine companies from the measures including Zimbabwe Iron & Steel Co, Steel Business Briefing learns from the EU. The sanctions were originally imposed on over 100 Zimbabwean companies that had ties to Zanu PF, the political party led by president Robert Mugabe, SBB understands. Zisco is owned by the government and it is trying to sell a 60% stake in the company to either ArcelorMittal South Africa or Jindal Steel of India, as SBB has previously reported. Analysts suggest the removal of EU sanctions may make Zisco a more attractive acquisition target.
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| Highveld Steel ceo resigns | ||
| Walter Ballandino has resigned from his position as ceo of South African flat and longs producer Highveld Steel & Vanadium, Steel Business Briefing learns from majority owner Evraz. No reason was given for his departure. Ballandino has served as ceo and also a director of Highveld since July 2007 and his resignation will take effect from 28 February. A replacement will be announced in due course, the company said.
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| UAE faces shortage of some thin-gauge flats | ||
| Demand for flat rolled steel is firm in the United Arab Emirates, and there is still some shortage for 0.3mm and 0.4mm thick hot-dip galvanized coils. Steel Business Briefing is informed by traders that, even if demand is not very high, material availability is also low. Some further price increase is also expected in the market. HDG is still offered at $825-900/t cfr to UAE. CRC is offered at $860/t cfr from Japan, and HRC offers are $600-640/t cfr. Iran is asking $600/t fob for HRC. UAE traders say these prices are expected to increase by around $100/tonne because of the raw material price increases around the world. However, the market situation also depends on China, sources say. When the Chinese come back from their holidays, all market trends may change, they think, so buyers are cautious of making big bookings.
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| Saudi rebar price increase is delayed, cost pressures mount | ||
| Increasing international raw material prices have been putting pressure on steel producers in Saudi Arabia. The government’s persistence to maintain a stable market for steel has prompted producers to delay increasing their rebar prices for the last month. Producers say that the price increase is not likely to come before the end of this month. The government regards stability of steel prices and availability of steel for the end-users as its main priorities. One producer says the policy of the government in the steel industry is now more based on taking a key role for stability of steel market, to prevent market volatility, especially after the recent global crisis. Sabic Hadeed has been determined to supply rebar at a fixed price for a year, to overcome concerns of the government, which makes it difficult for the private producers to adjust their prices in line with international raw material costs. But, on the other hand, the growing pressure of the scrap prices on the privately owned steel producers makes it inevitable for them to increase their prices, producers tell Steel Business Briefing. The end-users are reported to be booking high tonnages, while the talk of price increases grows. If the international market prices do not fall drastically, the prices are expected to increase for March sales, SBB was told.
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| Syrian rebar producer to start making billet by late 2010 | ||
| Syrian rebar re-roller Joudco Steel plans to start billet production by the end of 2010. Annual steelmaking capacity of its new billet plant will be 750,000 tonnes. The company has established a joint venture with foreign partners for the billet plant which will be based in Adraa Industrial Zone of Damascus, Steel Business Briefing was informed by Arab Steel. Joudco Steel produced 132,000 tonnes of rebar in 2009, around the same volume as 2008. Almost all of the rebar was sold in the local market, and only 557 tonnes of rebar exported. In 2008 the company exported 15,740 t. The company also continues with its investment for wire-drawing factory in Aleppo and has completed the wire-drawing mill in Seaport Free Zone in Lattakia. More wire-drawing capacity is expected to be established in Lattakia, in Al-Samandeel Area.
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| Low freight rates may allow higher fob prices for iron ore | ||
| A surge in deliveries of new ships may keep ocean freight rates depressed, allowing iron ore exporters more scope to raise fob prices, according to analysts at Macquarie Research. In a report sent to Steel Business Briefing they say a “massive” number of new dry bulk vessels are due for delivery in 2010 and 2011. If realised, this would add 30% to the global fleet of Capesize vessels (used for iron ore) and 18% to the fleet of Panamaxes (used for coal) in 2010 alone. Even assuming a 30% shortfall in ship deliveries – due to double-counting of orderbooks, errors, deferments and cancellations – the growth in the dry bulk fleet will still be “impossibly large” relative to the growth in trade, the report says. “There appear to be way too many ships.” Current freight rates are around $9/tonne for Australia-China and $26/t for Brazil-China. “On the assumption that delivered prices of iron ore to China (cfr) will match domestic spot prices, then lower freight rates may imply more potential to raise fob iron ore prices,” the report adds. Chinese domestic spot prices currently exceed $120/t (for 62% Fe ore) and probably have to stay above $100/t to act as an incentive for marginal high-cost domestic producers to remain in production.
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