| Export and domestic HRC prices weaken further in China | ||
| As market sentiment was dampened by falling futures and screen trading prices on April 18, Chinese domestic hot rolled coil prices dropped further. Affected by the falling domestic market and lack of overseas orders, Chinese HRC export prices also weakened further. On April 18, Q235 5.5mm HRC prices were around Yuan 3,720-3,750/metric ton ($602-607/mt) with 17% VAT in Shanghai and Yuan 3,800-3,820/mtwith VAT in Lecong, down Yuan 45/mt and Yuan 60/mt respectively from the previous day. Traders contacted by Platts said buying had shrunk in tandem with falling prices, and market sentiment was so weak that they had no interest in booking mills’ May material. Traders predicted that in a bid to encourage bookings, steel mills would have to compensate traders for losses made on March-delivered HRC. Shougang promised Yuan 300-320/mt compensation for March HRC, as Platts reported, and some traders expected Anshan Iron & Steel and Benxi Iron & Steel to follow suit. The weak domestic market also weighed on exports as foreign buyers were in wait-and-see mode, expecting Chinese domestic prices to drop further. On Wednesday prevailing offers for Chinese SS400B 3mm-and-above HRC were almost unchanged from last week at around $560-565/mt FOB. However, traders admitted these prices were not attractive and workable prices should be under $550/mt FOB. However, some steel mills were resisting cutting prices to this level. One Chinese mill refused a Korean bid for 30,000 mt of SS400B 3-12mm thick HRC at $550/mt FOB. However, one market source said mills might have to readjust their expectations given the weak domestic market. Platts assessed SS400B 3mm-and-above HRC at $540-555/mt FOB on April 18, down $10/mt from last week.
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| Turkish rebar mills' hiked export offers confuse traders | ||
| Turkish rebar traders this week were left perplexed by mills' decisions to bring offers back up for end-May output, despite other input costs such as billet and scrap ticking down over the course of the week, market participants told Platts on Thursday. A range of $600-610/metric ton FOB Turkish ports for remaining May output was given to traders, with the lowest end of the range for Izmir ports and the higher end for Iskenderun producers, who are expecting another bout of purchases from Iraq next week, having made some sales at $605-610/mt ex-works last week. Platts daily assessment increased $5/mt on Thursday to $595/mt FOB Turkish ports to reflect the about-turn in offer prices from Turkish producers. Sales had been registered between $590-595/mt FOB Turkish ports at the end of last week and into this week to major export destinations; and, while some traders believe mills are still selling in this range on export, the offers they are receiving are higher. "Producers are cautious, and this is why they have increased offers again," one export manager at an electric arc furnace-based mill said. "There hasn't been much scrap booking done yet, and a lot more needs to happen." Scrap cargoes have largely gone to the Izmir area this week for bulk shipments, while billet has been booked in Iskenderun – because of a local shortage – and Marmara by producers.
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| CIS rebar and wire rod mills trim export prices for May | ||
| CIS wire rod and rebar exporters have had to slightly cut their prices for May output offered to customers in the Middle East and Africa, Platts heard from five market and industry sources. Ukrainian producer Metinvest has lowered its offers of 5.5-12.5mm mesh quality wire rod to $592/mt FOB Odessa, from $595/mt for April exports; two sources said they hadn’t yet placed their next month orders and the steelmaker had still had some tonnages to sell out. One also added that the same product shipped from Ukrainian port of Mariupol, which is closer to Metinvest’s longs plant Makeyevka, will naturally decline to $575/mt due to $15/mt lower transport costs. A steel distributor receiving material from ArcelorMittal Kryviy Rih said the mill had sold the bulk of its May output of wire rod and rebar at $600/mt and $580/mt both on FOB Odessa basis, respectively and is expected to keep the same prices for its June rollings. He described demand for wire rod from buyers in Africa and the Mediterranean region as satisfactory. Another trader said that even $590/mt offers can hardly lead to any sales in the current market, indicating that the real selling price for both CIS-origin rebar and wire rod is around $580/mt FOB Black. “The market is tough at the moment. Everyone is desperate to sell at least some volumes but these attempts are not fruitful. It seems that nobody wants anything. However, mills are not in a hurry to cut output. If that would be the case, the market would probably breathe again”, he commented. One of the major CIS rebar mills, which exported April 14mm rebar at $563-565/mt FOB Black Sea, has proposed a $565/mt starting price for May but hasn’t sold anything to destinations served from the Black Sea ports and opted to focus its sales efforts on Eastern and Northern Europe and Russia. This mill sells only on full up-front payment terms. The same 14mm diameter material the mill shipped to Moscow for the present month sales has fetched 22,200-22,300 roubles/mt ($700-703/mt) including by-rail delivery and 18% value added tax, according to a Moscow trader.
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| China's weak domestic rebar prices restrain overseas buying | ||||||||||||||
| China’s domestic rebar prices have remained on a downwards track this week amid concern about the country’s economic growth. In the export market, buyers continued to shun Chinese materials and bearish sentiment dominated the market. Barely any rebar export deals were heard concluded this week. A trader in eastern China suggested that the workable price for theoretical weight China-origin 16mm diameter and up BS460B grade rebar should be around $530/metric ton FOB. He emphasized that there was limited room for negotiation at this price level as mills’ production costs remained high. A mill source in eastern China said that she could not even find any real inquiries for rebar demand recently since most foreign buyers did not think Chinese steel prices had bottomed out. She sensed that real demand from overseas seemed less than the same period last year. As she believed lowering offers to $530/mt would not mean a significant increase in buying, she preferred to keep offers higher and wait for a buyer to accept, she added. A trader in southern China concurred that it was difficult to persuade buyers to take material at $530/mt FOB as domestic prices continued to fall. On Beijing’s dealer market on April 18, spot prices for 18-25mm diameter HRB400 rebar dropped by Yuan 10-20/mt ($2-3/mt) to Yuan 3,560-3,580/mt ($576-579/mt) with 17% VAT. The widely-traded October rebar contract on the Shanghai Futures Exchange closed down 1.30% at RMB 3,651/mt. In light of weaker market sentiment and domestic prices, Platts dropped the top end of its assessment for 16mm diameter and up HRB400/BS460B rebar to $545/mt FOB from last week’s $550/mt, leaving the low end unchanged at $540/mt FOB.
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| Severstal NA sets minimum base pricing for sheet | ||
| Severstal North America has boosted its minimum base prices for sheet products, according to a customer letter sent late Wednesday, a de facto price increase. Beginning April 22, Severstal’s ex-works base price for hot-rolled coil will be $640/st. Cold-rolled coil and hot-dipped galvanized substrate will have a minimum base price of $740/st. Assuming Severstal is selling at current market prices, the announcement represents a price increase of roughly $20-40/st. Platts has assessed current market prices at $590-610/st for HRC and $700-720/st for CRC, ex-works normalized to a Midwest mill basis. A service center source said he expects the increase will stop pricing from sliding further, but he said he is unsure whether it will produce any real forward momentum. “Again, it’s basic supply and demand,” he said. “The market will support it if the demand is there. It’s tough for a mill to just dictate a price.” A mill source agreed that the increase – if supported – will likely halt price erosion. “If someone else will follow them, then we can just get it back up a little bit. It can’t keep dropping,” the source said.
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| LatAm group: low per capita steel use a challenge | ||
| Latin American steel association Alacero, in a report from its board meeting this week, said it considers global overcapacity and low regional steel use to be the major challenges for the region's steel industry in 2013. Citing a report by the steel committee of the Organization for Economic Cooperation and Development, Alacero said that global overcapacity is at 542 million mt, and China, along with Russia and India, is a major contributor. China is also a main exporter to Latin America and its unfair trade practices are hurting the region, Alacero said. The group said the region received 5.4 million mt of steel products from China in 2012. Meanwhile, an earlier Alacero report pegged total imports by Latin America and the Caribbean at 11.6 million mt in 2012. As for consumption, Alacero said it will continue to promote the industrialization of the region and increased steel use this year, noting that the current annual per capita steel consumption in the region is 130 kg, while in developed countries it is about 300 kg. Alacero said it expects a growth of 5.3% in apparent steel use in 2013 in Latin America, which makes it an attractive destination for China's exports. “Latin America is facing a historical moment of growth," said Alacero President Benjamin Baptista. "The regional steel value chain should be a fundamental pillar to build this growth on. But a context that promotes fair trade conditions in the region is essential to achieve the goal of an industrialized Latin America.”
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| Posco inaugurates CGL plant for auto sector in China | ||
| Posco officially commissioned a new continuous galvanizing line at its Shunde works in Guangdong province, southern China, on April 15, according to the company. Posco Guangdong Automotive Steel has a design capacity of 450,000 metric tons/year and is coating substrates sourced mostly from Posco’s Gwangyang works in Korea. The new CGL plant will operate alongside Posco’s other autosheet processing centers in China such as Posco-CFPC in Guangdong, Posco-CSPC in Jiangsu and Posco-CCPC in Chongqing which supply to global carmakers which have plants in China, Posco said in a statement. The Korean steelmaker’s aggressive expansion in China is in line with its expectation that the automotive industry there will grow rapidly. It estimated that China’s annual vehicle output will exceed 38 million units in 2020, it added. “We have secured a strong stance in major countries specialized for large-scale automotive sectors worldwide such as China, India and Mexico, whereas other overseas competitors have expanded into Southeast Asia and other certain countries,” it noted. The new plant began producing commercial grade hot-dip galvanized coils for automotive applications in November last year, as Platts reported. Posco holds a 93.6% stake in the autosheet plant while the Guangdong provincial government takes the remaining 6.4%.
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| China’s Rigang stalled in effort to take over Yingkou Plate | ||
| China’s Rizhao Iron & Steel Group (Rigang), a major privately-owned steel mill in eastern China’s Shandong province, has made little progress in taking over Yingkou Plate in northeastern China’s Liaoning province in the past two years, mainly because the latter is a state-owned entity under China Minmetals Group, a Rigang official admitted to Platts. “Minmetals is happy with the divestment but Yingkou Plate employees are strongly opposed to our acquisition, as they believe that privatization will undermine their benefits and retirement package compared with state-owned companies’,” he explained. Rigang itself is a target for acquisition by the state-owned Shandong Iron & Steel. Little progress has been made on this merger either, Platts notes. Rigang, boasting 14 million metric tons/year of crude steel capacity, took over day-to-day operational management of the 6.5 million mt/y Yingkou Plate in February 2011. Rigang holds a 49.6% stake in Yingkou Plate and Minmetals the balance. A Minmetals official confirmed Thursday that her company is agreeable to the acquisition, as Minmetals plans to refocus on trading steelmaking raw materials and finished steel and away from investments in steel plants. As part of this shift, Minmetals handed over raw materials procurement for Yingkou to Rigang this year, a Rigang official disclosed. Minmetals, headquartered in Beijing, traded approximately 64 million mt of finished steel and steelmaking raw materials in 2012. Mergers among Chinese steel mills face many obstacles, with differences in ownership structure and steel capacities being part of the problem, a Beijing-based steel analyst concluded. Therefore, Beijing should be prepared for a slow and painful path in consolidating the industry. It may not meet its deadline of 2015 for the top ten steelmakers to produce 60% of China's steel, he added.
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| TPCO commissions pipe processing plant; phase two underway | ||
| China’s largest seamless pipe maker Tianjin Pipe Group Company (TPCO) in the northern municipality of Tianjin has brought on-stream a pipe processing plant for large-diameter and premium pipes used in energy and other industries, Platts learned from company sources on April 18. Construction of the greenfield project was started in June 2011, and the operation was inaugurated and trial production begun on April 10 this year, according a release from project contractor MCC Tiangong Group. The Yuan 683 million ($111 million) project consists of a 100,000 metric tons/year heat treatment plant, a 120,000 mt/y threading line and 150,000 mt/y finishing mill, a company source said. The plant is meant to produce high-specification products including high-pressure boiler pipes, linepipes, casing and nuclear pipes and cylinder pipes, although exact specifications have yet to be published, the source said. Meanwhile, TPCO began building the second phase of the project last year, with commissioning due in mid-2013, Platts learned from a second company source. The Yuan 483 million ($78 million) second phase will consist of an oil tubing heat treatment plant, a heat treatment unit for high-pressure boiler pipe, mechanical pipe and other special pipes, along with a tubing threading unit, each with capacity of approximately 70,000 mt/y. TPCO can produce 3.5m mt/year of seamless pipes. The company aims to retain its domestic market share amid fierce competition and excess capacity by increasing sales of high-spec products, Platts is told. Last year, the company’s high-specification product sales advanced notably, driven by increasing exploration of wells with complex conditions, as Platts reported.
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| NSSMC to export pipe piles to Australia from Vietnam | ||
| Nippon Steel & Sumitomo Metal Corporation (NSSMC) said Thursday the company had won a contract to supply the Ichthys liquefied natural gas project in Australia with steel pipe pilings from its venture in Vietnam, NPV. The order was for the supply of 18,000 metric tons of steel pipe pile with inner ribs to be used in the project, which is currently under construction near Darwin, in Australia’s Northern Territory. Pipe piles will be shipped from April 21 with the entire order to be completed by autumn this year. The order is the second largest for NPV, following its 28,000/mt steel pipe pile order from Formosa Ha Tinh Steel project in Vietnam, supplied in March-December 2012. “This is not the first export order to Australia for the venture, but we expect to increase exports to Australia because there are a number of such major projects planned or underway,” an NSSMC spokesman said. Called Nippon Steel & Sumikin Pipe Vietnam (NPV), the venture is held 51% by NSSMC, 20% by trader MetalOne, 10% by Vietnam Steel Corp and 4.75% each by traders Sumitomo Corp, Marubeni Itochu Steel, Hanwa Co and Nippon Steel Trading. Located at Phu My II industrial zone in Ba Ria-Vung Tau province in southern Vietnam, the operation started up in May 2011 producing 5,000 mt/month. NPV currently operates at mostly full capacity and NSSMC is supplying all hot rolled coil feeds from its Kimitsu and Yawata works in Japan.
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| Nisshin to lift domestic stainless CRC, tube prices | ||
| Japan’s Nisshin Steel is lifting domestic prices of austenitic (SUS304 base) cold rolled coil and tube by Yen 20,000/metric ton ($204/mt) and is also adding Yen 10,000/mt to the price of ferritic (SUS430 base) CRC and tube for ‘miseuri’ or spot sales from June deliveries, the company confirmed Thursday. “Higher input costs caused by the extremely strong yen need to be shifted to our product prices; we hope our customers understand and accept this situation,” a Nisshin spokesman said. Nisshin increased prices by Yen 20,000/mt from April deliveries for austenitic CRC and tube, and by Yen 10,000/mt for ferritic CRC and tube. “The hike from April has already been absorbed, but the yen has weakened further so an additional increase is needed,” the spokesman added. He noted that Nippon Metal Industry (NTK) is also owned by Nisshin Steel Holdings, and the two companies’ sales departments have been merged and therefore have the same price policy. “Stainless sheet demand from kitchen manufacturing use is firm but is less strong from other areas. Demand is not strong enough to absorb all hikes by producers, but we have to lift our prices,” a stainless distributor in Tokyo said. Nippon Steel & Sumikin Stainless (NSSC) increased prices for austenitic CRC and plate by a total of Yen 50,000/mt, while ferritic CRC increased by Yen 20,000/mt from January-March. Prices were rolled over for April. Nisshin and NSSC do not reveal their list prices, but market prices for SUS304 grade CRC cut sheet (2mm thick, 1,219 x 2,438mm) are currently around Yen 290,000/mt ($2,959/mt), up Yen 20,000/mt from the beginning of this year. Those for SUS430 grade CR cut sheet of the same size are around Yen 240,000/mt ($2,449/mt), unchanged for the past three months.
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| China’s daily crude output hit record high in early April | ||
| China’s production of crude steel was estimated by China Iron & Steel Association (CISA) at 2.124 million metric tons/day over the first ten days of April, an all-time high and up 2.5% from the daily figure in the last eleven days of March. This is equivalent to an annualized 775 million mt. The early April average daily crude output of CISA member mills was 1.697 million mt/d, up 1.3% from late March. Given the sluggish steel market, rising output led to soaring mill inventories. According to CISA, its member mills’ combined finished steel stocks totaled 13.73 million mt by April 10, up 0.2% from end-March and up 45% from end-December last year. The stock level was also 22% higher than in the same period last year. Rising steel output further dented market participants’ confidence about the market in April. Some traders said output was significantly outpacing the recovery in demand, which was why spot market prices have been unable to sustain any rebound since March. They also told Platts that very few mills had so far either conducted or planned blast furnace maintenance downtime, indicating that high output would continue into at least mid-April. Jiyuan Iron & Steel has carried out a planned blast furnace maintenance stoppage since late March, but this would only cause a loss of 50,000 mt of hot metal output. Meanwhile, Jiuquan Iron & Steel, Shagang and Tiantie have also conducted maintenance on blast furnaces as reported, but with only around 190,000 mt combined of lost iron output in April.
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| Indian court permits more ore mines to restart in Karnataka | ||
| The Indian Supreme Court on Thursday permitted the restart of more iron ore mines in the southern state of Karnataka, while also cancelling the leases of some mines found to be engaged in illegal practices, local industry sources confirmed to Platts. Output from the mines permitted to restart would be ramped up only gradually as the leases for many of these mines are up for renewal, a Bangalore-based official with the Federation of Indian Mineral Industries (FIMI) said. He estimated that iron ore output from these mines would total about 10-15 million metric tons during the April 2013-March 2014 fiscal year, and ramp up to 15-20 million mt the following year, and further to 20-30 million mt in 2015-16. Iron ore mining was banned in Karnataka in August 2011, pending investigation into illegal mining operations and environmental damage. Only state-owned NMDC was permitted to mine up to 1 million mt/month of iron ore, for supply to steelmakers and sponge iron producers in the region. In September 2012, the court granted permission for the restart of operations at 18 iron ore mines classified ‘Category A’; these mines were deemed legal by the court’s Central Empowered Committee (CEC) following its investigations into the state’s mining operations in 2011. But delays in securing the requisite clearances have delayed the actual restart of production. The mines permitted by the court to restart on Thursday were classified ‘Category B’ where the CEC had determined some infringements and recommended that leaseholders of such mines be made to pay penalties before being allowed to resume mining. The CEC had also earlier recommended that iron ore output in Karnataka be capped at 30 million mt/year. The FIMI official expected this cap to be revised upwards as proposed new steelmaking capacity in the state fuels demand for iron ore in coming years.
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| Steelmaker welcomes restart of ore mines in southern India | ||
| India's JSW Steel welcomed the Supreme Court's verdict Thursday to permit the restart of operations of more iron ore mines in the southern state of Karnataka [see related article]. In an e-mailed statement, JSW Steel joint managing director Seshagiri Rao noted the verdict came “at a time when the steel industry was at the brink of closure due to non-availability of iron ore.” JSW Steel operates a 10 million metric tons/year integrated steelworks at Vijayanagar in Karnataka and a 1 million mt/y integrated works at Salem in neighboring Tamil Nadu state. With no captive iron ore mines, the steelmaker saw capacity utilization at its works averaging 70-80% or lower on raw material supply constraints. In March, JSW Steel said it was slowing down expansion at Vijayanagar owing to lack of guaranteed iron ore supplies. Crude steel production capacity at Vijayanagar was earlier planned to be lifted to 12 million metric tons/year from 10 million mt/year, with the expansion set for completion this year. Whether the steelmaker would change its decision following the court’s verdict Thursday could not be immediately ascertained. But Rao stated: “As Indian economy is expected to get back to growth mode, the opening up of mining will enable raw material linkages for further investments in steel sector in Karnataka.”
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| Korea's Hyundai eyes lower-priced Japanese scrap | ||
| Hyundai Steel, Korea’s largest scrap consumer, has cut its buying price for Japanese H2 material by Yen 1,000/metric ton ($10/mt) from last week, company sources said Thursday. The Korean mill last contracted Japanese scrap this week at Yen 32,000/mt FOB ($325/mt) for H2, and Yen 35,500/mt for shindachi grade, a source close to the company said. He said the steelmaker would look to book more Japanese material this week. “As weak demand for finished steel products is expected to prevail for the time being, we will continue to keep pressing down scrap imports prices (from Japan),” a Hyundai official told Platts. Japanese suppliers have resisted lower prices into Korea, but they will have to lower offers as they have no other real export markets, a Seoul-based trader said. “I personally predict there is room for further price declines in Japanese scrap export prices in the short term. Hyundai is pushing hard to cut its scrap input costs due to the stagnant steel market situation,” he noted. Previously, most Korean mini-mills believed they must regularly secure deepsea US tonnages. But now they prefer to benefit from the advantages of lower prices and shorter lead-times presented by Japanese scrap amid continued gloom and uncertainty in steel markets, the trader said. Meanwhile, Hyundai plans to cut its domestic scrap buying prices by Won 10,000/mt ($8.9/mt) at its Incheon steelworks from April 22 and similar price reductions will be announced for Pohang and Dangjin works by the end of this week, another Hyundai source said.
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| Japan’s crude steel output rises in March | |||||||||||||||||||||||||||||||||||||||||
| Japan’s crude steel production in March increased by 13.5% month-on-month and by 1.3% year-on-year to 9.45 million metric tons, the Japan Iron & Steel Federation (JISF) said Thursday. Increasing export and rising construction demand had lifted steel production in March, it said. Output from oxygen converters in March increased by 13.8% m-o-m and by 3% y-o-y to 7.25 million mt, while that from electric furnaces increased by 12.8% m-o-m but dropped by 4% y-o-y to 2.2 million mt. Integrated mills raised exports sales because of increased competitiveness as a result of the weaker yen, a JISF spokesman said. Electric furnaces raised steel production in March because of demand arising from reconstruction work in the aftermath of March 2011's earthquake. “We expect demand for construction steel to grow further due to more reconstruction work and public infrastructure projects due to the government's expansionary economic measures,” the JISF spokesman said. Crude steel output in 2012 fiscal year (April 2012-March 2013) was 107.3 million mt, up by 0.8% y-o-y. Of this total, output from converters rose by 2% to 82.85 million mt whereas those from electric furnaces dropped by 3.1% to 24.45 million mt. The JISF spokesman explained that output by integrated mills and special steel producers in the first half of FY2012 was high in tandem with the buoyant automotive sector, but it decreased after September with the ending of government subsidies for ‘eco-friendly’ vehicles. Also, Japanese steel export sales declined during the autumn when Chinese customers boycotted Japanese goods over a diplomatic row. “But the downward correction of the strong Yen in the last quarter helped to lift steel production in Japan. Steel production during the current fiscal year could reach the same level as the previous fiscal,” he noted.
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| Indian steelmaker secures first captive iron ore mines | ||
| The state government of Andhra Pradesh in southern India has for the first time allocated prospecting licenses for iron ore to central government-owned steelmaker Rashtriya Ispat Nigam Ltd (RINL), the company announced Thursday. The iron ore mines are located in the Khammam, Warangal and Karimnagar districts, about 500-700km west of its integrated steelworks at Visakhapatnam. The mines are being allocated to RINL on the condition it establishes an iron ore beneficiation plant and an integrated steelworks at Bayyaram in Khammam district, according to an April 17 statement published by the Andhra Pradesh chief minister’s office Thursday. Although RINL officials were unavailable for comment to Platts yesterday, Indian media reports quoted company finance director P. Madhusudan as saying that the mines hold an estimated 60 million metric tons of iron ore reserves. The steelmaker presently relies on ore supplies from state-owned miner NMDC. Crude steelmaking capacity at RINL’s works is being ramped to 6.3 million mt/year from 3.3 million mt/y previously, and the completion of this expansion is expected to be announced in coming months. Subsequent modernizing and upgrading of existing units would lift steelmaking capacity to 7.3m t/y. RINL has already contracted NMDC for the supply of necessary ore to feed 7.3 million mt/y of steelmaking capacity, as previously reported. RINL also has access to iron ore produced by state-owned Orissa Minerals Development Company (OMDC). RINL holds 51% of an investment firm under the Indian steel ministry, Eastern Investments Ltd, which in turn holds a controlling stake in OMDC.
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| China's Baotou Steel targets 8% output boost in 2013 | ||
| Baotou Iron & Steel Group’s listed arm Baotou Steel Union Co. aims to lift its crude steel output by 8% year-on-year in 2013 to 10.85 million metric tons, according to company’s annual financial report filed to the Shanghai Stock Exchange. The steelmaker, in Inner Mongolia, northern China, reported its crude steel output at 10.07 million mt in 2012. The company produced 1.31 million mt of pipes, 4.29 million mt of flat products, 0.94 million mt of sections and 2.53 million mt of bar and wire rod. The company expects to bring on-stream a 5 million mt/year integrated hot rolled strip mill in the second half of this year, as Platts reported, which would help the company to boost its finished steel output. According to the China Iron & Steel Association (CISA), Baotou Iron & Steel Group produced 10.19 million mt of crude steel last year. A company source suggested that the additional 120,000 mt of output were contributed by the unlisted construction steel producer Baogang Wanteng Iron & Steel, which is 51% owned by the parent group. Baogang Wanteng, also in Inner Mongolia but some 400 km away from Baotou, has an official crude steel capacity of 1 million mt/y which was commissioned in late 2011 but production had been ramped up only slowly. Meanwhile, the listed company also said that its net profits earned in 2012 dropped by 48% year-on-year to Yuan 256 million ($41 million). The company hoped it could increase its gross profit from Yuan 339 million in 2012 to Yuan 997 million for 2013.
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| Heard in the EMEA flats market: week 16 | ||
| The following is a sample of trade and market information gathered by Platts editors as they assessed the daily prices for flat products this week. Monday April 15 HRC: -Tata Steel offering in the UK domestic market at £465/mt DDP, Mechel at £440/mt DDP: trader -UK sources receiving import offers at £430-435/mt DDP for June delivery: stockholder -Traders selling available stock at UK port at £415-420/mt DDP -Chinese mill offering HRC to a trader in Europe at $555-560/mt FOB China: trader -Ukrainian mill quoting $550/mt CIF for South Europe and Turkey and $565/t DAP for Eastern Europe: mill -Ukrainian mill quoting $525-535/mt FOB Black Sea for its HRC, May rolling, June shipment: mill Tuesday 16 HRC: -Indian material offered at some €465-470/mt CFR Europe from trader to stockholder -Ukrainian material transacted at €440/mt CFR Italy: stockholder -Russian mill quoting $555/mt FOB Black Sea for its HRC, May rolling, June shipment: mill CRC: -Russian mill quoting $630-640/mt FOB Black Sea for its CRC, May rolling, June shipment: mill --Base CRC prices from Turkish producers are now at $720-730/mt ex-works; however, transacted prices are as low as $710-720/mt, $20/mt lower than in late March Wednesday 17 HRC: -Italian mill offers to German stockholder at €470/mt DDP: source -Russian mills ready to sell to EU service centres at €460/mt CFR Europe -Russian mill closed HRC sales at $555-$575/mt FOB Black Sea, for May production, June shipment: mill -Russian mills HRC offers are at $575-585/mt CFR Turkey, while Ukrainian offers are pegged at $555-570/mt CFR. -Ukrainian mill offers HRC to United Arab Emirates at $610/mt CFR: traders -Taiwanese mill offers 1.2mm HRC to UAE at $680-690/mt CFR: traders CRC: -North European mills offering at €560/mt DDP base Germany: service centre -Russian mill closed CRC sales at $635-$685/mt FOB Black Sea, for May production, June shipment: mill -Ukrainian supplier Metinvest is offering CRC at $645-655/mt CFR Turkey, while Russian offers are pegged at $655-670/mt CFR. Slab: -Italian re-roller bought slabs at $460/FOB Black Sea May-June delivery, offers at $480/mt FOB: trader Plate: -Italian re-roller sold plate S235 at €470-480/mt ex-works, prompt delivery: trader Thursday 18 Plate: -Northwest European mill selling commodity plate, grade S235, at €510-520/mt ex-works: mill -Polish mill offering commodity plate for export at €500/mt ex-works: mill -Italian plate available from re-rollers at €480/mt for S235 grade and €500/mt for S355, ex-works: trader
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| Alfonso Gallardo starts negotiations to shut rebar plant | ||
| The Spanish Alfonso Gallardo group officially started this week the process to shut the rebar plant it controls in the north of the country, Corrugados Azpeitia, having filed the documents to request the permanent layoff of the entire workforce, union sources confirmed to Platts. In addition to the closure of this plant, which was anticipated by the group earlier this year, Gallardo is proposing to cut by half the workforce of two wire rod plants, Corrugados Lasao in the north of Spain and Ferromallas in Extremadura, a union source added. The company confirmed late Thursday that it will present to the employment ministry on April 23 a proposal to terminate all workers at Azpeitia, cut 38 jobs at Lasao, 24 at Ferromallas and 10 at group level in Extremadura, citing a 22% drop in Spanish long product sales in 2012. The Azpeitia unit suffered losses of more than Eur100 million ($130.5 million), jeopardizing its continued viability while demand for wire rod is also weak, a company statement said. The formal negotiations for these layoffs will start on April 26, but according to market sources there are few hopes for the group to change its current plan. Alfonso Gallardo group re-opened during Q1 2013 its rebar mill near Madrid, Corrugados Getafe, following an agreement with the workforce regarding salaries and labor issues.
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| Heard in the EMEA long products markets: week 16 | ||
| The following is a sample of trade and market information gathered by Platts editors as they assessed the daily prices for flat products this week. Monday 15 April Billet: -CIS traders offered at $510/mt FOB Black Sea ports to Turkey for May shipments: trader Rebar: -Turkish mills looking for $595/mt FOB Aliaga/Marmara for end-May: traders -Italian mill sold rebar at €465/mt FOB to Algeria, 30 days delivery: trader -Italian mill sold rebar at €465/mt FOB to Algeria 30 days delivery: mill -Italian mill sold rebar art €210/mt base for domestic market with prompt delivery: mill -Italian mill sold wire rod mesh quality at €465-470/mt ex-works, while drawing quality at €485-490/mt ex-works: mill Wire rod: -Italian mill sold mesh quality rod at €475/mt FOB: mill Tuesday 16 Rebar: -Polish mill planning to increase rebar offer to PLN2,100/mt delivered: mill -Purchases of Polish rebar closing at PLN1,900-2,000/mt delivered: traders -Spanish mills sold to Algeria at €465-470/mt FOB, 30 days delivery: mill -Trader sold at €465/mt FOB to Algeria 30 days delivery: trader -Spanish mill sold €490/mt CFR to Algeria, 30 days delivery: trader -Turkish mill sold last of May 10 shipment at $600/mt CFR Dubai on theoretical weight basis: stockists Billet: -Turkish mill received offer at $530/mt CFR Nemrut Bay for May shipment from CIS steelmaker -Turkish re-rollers/mills bidding at $523-528/mt N-S Turkish ports for May shipments: trader Wednesday 17 Billet: -Russia Amurmetall sells 10,000 mt at $527/mt FOB to trader in tender -Bangladesh, bulk modified 4sp cargo still given at $570/mt CFR Chittagong-flat on-week: trader -Turkey offers for May shipments given at $525/mt CFR Marmara ports to EAFs/ re-rollers: trade Rebar: -Turkish mills asking $600/mt FOB + Turkish ports for end-May; latest sales at $590-595/mt FOB: trader -German producer sold at €490-500/mt effective delivered, prompt delivery -Italian producer offered at €460/mt ex-works effective Thursday 18 Wire rod: -Ukrainian mill offered May production for $592/mt FOB Odessa: trader Rebar: -CIS mill offered May-made rebar on full prepayment for $565/mt FOB Black Sea: trader CIS mill shipped April-made rebar to Russia for $593-595/mt CPT Moscow: trader Sections: -German stockholder bought category 1 from local mill at €550/mt delivered, prompt delivery -Italian producer offered category 1 at €200/mt base delivered, prompt delivery Billet: -Belarus 20,000 mt sale made at $504/mt FOB Odessa from mill to trader Turkish re-roller bid at $520/mt CFR Bartin; fails to receive interest from sellers Rebar: -Turkey sold to Iraq at $605-610/mt EXW Iskenderun from producers in South Turkey: trader
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| Turkish ship scrap prices down on softening imported scrap | ||
| Turkish ship scrap prices fell this week owing to weakening scrap import prices, Platts learned from industry sources on Thursday. Melting scrap from shipbreaking is currently being offered to mills in western Turkey at $375-385/metric ton delivered to mill, up to $10/mt lower than last week. However, demand for scrap from mills in Turkey remains firm, and shipbreakers are continuing to increase their production, according to the Ship Recyclers' Association of Turkey (Gemisander). The country’s only shipbreaking yard, in the western town of Aliaga in Izmir, supplies scrap to steel producers in the region. It operated at more than 100% of its 900,000 mt/year capacity in 2012, breaking 282 ships, which produced 927,000 mt of scrap. Meanwhile, Turkish domestic scrap prices remained stable throughout the week. In the domestic market, auto bundle (DKP grade) scrap is still priced at TRY $630-730/mt ($351-407) delivered to mill. Turkish steelmaker Colakoglu is buying auto bundle scrap at TRY 630/mt ($351), while alloy steelmaker Asil Celik is purchasing at TRY 680/mt ($379/mt) delivered to mill, Platts learned from the steelmakers. Erdemir has been buying auto bundle (DKP grade) scrap at TRY 720/mt ($402) since April 10, while Kardemir has been buying the same material at TRY 730/mt ($407) delivered to mill.
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| Mittal calls for more protection against cheap imports in EU | ||
| French and other European governments should do more to support the competitiveness of the steel industry, ArcelorMittal chief executive Lakshmi Mittal said on Wednesday. He cited trade, energy and access to raw materials as issues where governments could intervene. Mittal was speaking to a committee of the French parliament meeting in closed session. One of the parliamentarians present told the AFP news agency that Mittal complained about steel production costs in Europe being too high, citing a labour cost of $3 per hour in China. This illustrates the need for Europe to protect its steel market from an “invasion of cheap products,” the parliamentarian quoted Mittal as saying. Asked about his company’s strategy for France and the rest of Europe, Mittal said there has been a structural change in the European steel market, with demand now 30% below 2007 levels. In order to adjust to this structural change, it was necessary to reconfigure ArcelorMittal's footprint in France and in Europe, in order to meet market demand in the most competitive way, he said. He outlined that ArcelorMittal's vision for the future is to concentrate primary production of steel at its most competitive coastal plants and continue to develop its inland plants into centres of excellence that are strategically close to its customers. Mittal said there are no plans to install electric steelmaking at the Florange works in eastern France where blast furnaces have been closed, because power costs are too high. But he affirmed that the company would stick to its commitment to invest €180m in finishing operations at the plant.
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| Turkish exporters slam Colombian blocking of imports | ||
| Turkish steel exporters claim their products are being deliberately delayed entry to Colombia by customs, calling the move a “defamation campaign”, the Turkish Steel Exporters’ Association (CIB) said in a statement sent to Platts on Thursday. According to the statement, Colombian customs started taking samples of imported Turkish steel for analysis from January 1, claiming Turkish products are sub-standard, with the aim of hindering steel imports from the Mediterranean country. “Our products were delayed at customs for a long period on the basis of groundless claims. This action represents a non-tariff-based barrier aimed to hinder imports. In past years, other sources who were uncomfortable with steel imports from Turkey attempted the same practices but, as a result of CIB’s efforts and dialogue with the Colombian steel industry federation – Fedemetal, the analysis was accepted as groundless and the institution responsible for the claims published a disclaimer,” said CIB chairman Namik Ekinci. Ekinci recounted that Turkish steel exporters previously faced similar obstacles in other countries; however, the high quality of Turkish steel was always proven. The CIB chairman said these attempts to hinder steel imports from Turkey are against the spirit of the planned free trade agreement between Turkey and Colombia. “We would like to invite our Colombian partners and media to visit steelmaking facilities in Turkey, to observe production processes for high quality steel products. CIB welcomes any collaboration with the Colombian steel industry and is ready to share know-how and experiences,” Ekinci noted.
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| Evraz Europe cut its output in Q1 from figures year ago | ||
| Evraz Europe, the European division of Russian steelmaker, represented by Vitkovice mill in the Czech Republic and and Palini e Bertoli in Italy, saw its output dwindle across all the production lines in Q1 2013 compared with Q1 2012, Evraz group stated in its January-March production report. Vitkovice’s meltshop produced 140,000 metric tons of crude steel in Q1, a fall of 20.5% year-on-year. “The agreed purchased volumes of pig iron were sufficient to cover the needs of the steel shop from January to March 2013,” the company said. The output for in the Q2 will be heavily weighed by the downtime started in April. The gross output of steel products registered by Evraz Europe in the period under review dwindled 17.3% y-o-y to 254,000 metric tons. The figure, however, showed a 10% improvement on Q4 2012. A similar situation was observed for flat rolled products, which were 15% down on y-o-y basis but 14% up on q-o-q basis, at 228,000mt. At the same time, production of construction products fell to 14,000 mt from 26,000 mt in Q4 2012 due to overhaul of the Vitkovice heavy section mill in mid-March 2013. The Q1 output of plates made by Palini e Bertoli remained flat compared with the preceding quarter at 100,000mt. Prices of flat-rolled products in Q1 were averaging at $683/mt ex-works, and were marginally changed on Q4 2012 but rolled down $108/mt from Q1 2012 level. The average selling prices achieved by Evraz Europe in Q1 for construction products stood at $890/mt, largely unchanged on Q4 and $25/mt higher than in Q1 2012.
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| Tata Steel buys seven iron ore cargoes from Sydvaranger | ||
| Northern Iron, which operates the Sydvaranger iron ore project in Norway, sold 482,000 metric tons of concentrate in January-March, up 2% on the preceding three months, it said in an operations update Thursday. It despatched seven vessels to Tata Steel at an average price of $114/dry mt FOB Kirkenes, a 28% rise on the $89/dmt obtained in Q4. Northern has hedging arrangements in place for the remainder of this year, with a Q2 swap for 261,000 mt sold at $136/dmt basis 62% Fe material. It has 171,000 mt of Q3 production hedged at $134/dmt and 60,000 mt of Q4 output at $128/dmt, again basis 62% reference prices published by The Steel Index, a specialist unit of Platts operating under its own methodology. Northern's cash costs rose $5/dmt in January-March, to $90/dmt, because of reduced concentrator operating rates and more tons mined. In March, however, when concentrate output hit a record of 187,000 mt, cash costs reduced to $76/dmt. The company produced concentrate with 67.9% Fe and 4.7% silica in January-March, compared to 2013 estimates of 68.5% Fe and 4.5% Si. It produced 497,000 mt of concentrate, down 6% on quarter because of a planned shutdown and slower than expected operating rates on restart due to cold weather. Mine production reached a new record of 4.96 million mt, up 12% on quarter, while unaudited EBITDA was $10 million, an $8 million increase on the previous three months. The revenue rise was helped by stronger market pricing, Northern said.
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| Villa and Riganti to lead Stemcor Italy; Barzaghi leaves | ||
| The commercial director Roberto Villa and the financial director Massimo Riganti will lead Stemcor Italia after the departure of the former chief executive, Angelo Barzaghi. It is understood that Barzaghi has left the company on good terms. “This year we have built a strong presence in Italy in trading and distribution in all the steel products: from the raw materials to the finished products in all grades from carbon to alloy both in import and export”, Barzaghi said. “Due to the market situation the further expansion planned with downstream investments has been put temporary on standby; therefore we took together this decision also in order to restructure the company to fit it to today’s Italian market condition.” Nevertheless Stemcor will continue its activity in Italy, although the domestic market is still overall suffering a lack of demand. Stemcor in Italy has its headquarters in Sesto San Giovanni near Milan and employs around 25 people.
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| Zaporizhstal returns to profitability in Q1 | ||
| Ukrainian flat rolled steelmaker Zaporizhstal, a unit of Metinvest, returned to profitability reporting UAH 170,2 million ($21 million) net profit for the first quarter of 2012 from UAH 455 million loss in Q1 2012, the company stated in a press release. The positive result was achieved thanks to the implementation of the steelmaker’s strategy to return to break-even point, started in August last year. In line with the strategy the mill sought to improve its production efficiency, power resources management and product quality. It also managed to cut down its production cost by 18%, representing UAH 700/metric ton, the company explained. "One of the basic indicators that the works operates steadily is profitability, Rostislav Shurma, the general director of Zaporizhstal commented.
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| Nucor: Challenging times ahead for US sheet | ||
| The US sheet market is in for a rough second quarter, according to Nucor executives. On an earnings conference call with analysts, CEO John Ferriola said a combination of turbulent market fundamentals, overcapacity and imports will hamper pricing momentum in the coming months. “We do see 2013 to be better in terms of volume and pricing,” he said. “We think sheet will continue to be very challenged, particularly in the second quarter.” He added that getting imports under control will be key to tapping into demand in end markets like automotive and energy. “These import levels make no sense whatsoever when you consider that American producers are among the lowest cost producers of steel in the world,” Ferriola said.
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| SDI ramps up rail shipments in first quarter | ||
| Steel Dynamics Inc. boosted its first quarter rail shipments by about 56% year on year, while its structurals shipments held nearly flat in the same period. SDI shipped 52,808 st of rail in Q1, up from 33,947 st in Q1 2012. “We plan to eventually produce up to 300 or some thousand tons of standard strength and premium rail for North America's railroad industry,” Mark Millett, CEO of SDI, said in the company’s Q1 earnings call. SDI’s sections shipments totaled 228,089 st in Q1, up slightly from 227,059 st in Q1 2012. SDI's Roanoke Bar division’s shipments fell by 7% in Q1 year on year to 139,950 st, down from 151,296 st.
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| Insteel expects rod pricing stability, higher shipments | ||
| US wire drawer and fabricator Insteel Industries saw widening spreads in its selling prices and raw material costs in its fiscal second quarter ended March 30 and CEO H.O. Woltz III is confident the company’s raw materials costs “are not going to run away on us.” Woltz said Inteel’s customers are more optimistic about business prospects this year than at any time since the downturn in construction. “Despite the ongoing volatility in steel scrap and rod prices, we do not presently perceive rising raw material costs to represent a significant risk to our margins during the balance of fiscal 2013,” he said. Insteel’s average selling prices in its fiscal Q2 increased by 0.2% from fiscal Q1 but are down 3.4% year on year. Shipments quarter on quarter decreased by 3.7%, while shipments from the prior year quarter slid by 1.5%. The company attributed lower shipments to adverse weather. Quarterly sales of $82.9 million represent a 4.8% decrease from $87 million in the year-ago quarter. The company’s net earnings totaled $3.7 million, up from $0.3 million in the same quarter last year. Insteel’s capacity utilization was 46% last quarter, which did not change from its fiscal Q1 and the year-ago quarter. “…(W)e’re seeing preliminary signs of a more pronounced seasonal upturn in demand that should have a stabilizing influence on pricing and drive increased operating levels for Q3 and Q4,” Woltz said. “Our performance for the first half of fiscal 2013 and our outlook for the balance of the year affirm our belief that we will experience a modest increase in shipments expected for 2013…”
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| Insteel sees 'encouraging signs' of US recovery | ||
| Major US wire drawer Insteel Industries reported the first real signs of economic recovery in recent months, and the company believes that increased infrastructure spending in the second half of 2013 will further support its business. “We’re seeing cases – and it’s spotty and it’s regional – but we’re seeing cases where we’re actually having customers gear up and hiring people and operating more hours. It is very spotty, but it’s the first real encouraging sign of recovery that we’ve seen,” CEO H. O. Woltz III said in the company’s fiscal second quarter earnings call. CFO Michael Gazmarian discussed macroeconomic indicators, including the positive trending Architecture Billings Index, as well as the increased surface transportation funding provided by the Transportation Infrastructure Finance and Innovation Act and the Moving Ahead for Progress in the 21st Century Act. MAP-21 provides $105 billion in funding for fiscal 2013 and 2014. “We are also encouraged by the growing number of states that have enacted or are considering tax and fee adjustments, including increases in sales and fuel taxes and vehicle registration fees, to fund their transportation requirements, which should benefit our infrastructure-related business,” Gazmarian said. Furthermore, Woltz said expansion at two of Insteel’s engineered structural mesh production facilities in Texas and North Carolina will generate $15-20 million of incremental revenues annually when fully operational. The Texas production line will add a third shift this month, and a specialty ESM production line in North Carolina will be commissioned late this quarter, he said.
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| US scrap prices fall in mid-month buys, USEC dock deals | ||
| A second US East Coast exporter dropped its dockside pricing $10/long ton on Thursday, matching a competitor's move from Monday, and mid-month domestic scrap deals were being done at lower prices compared to early April. As a result, Platts Thursday lowered its USEC dockside pricing by $5 to $310-320/lt and $320-330/lt for heavy melting scrap No. 1 and shredded scrap, respectively. Remote dealers were receiving higher prices, sources said. The moves followed a Turkish EAF mill's booking late Wednesday of a mixed HMS I/II (80/20 blend) and shredded cargo at $382.50/mt CFR Aliaga. That equated to roughly $358/lt FOB East Coast port for shredded scrap. Mid-month scrap deals continued Thursday, with one mill booking shredded and busheling material for May deliveries at prices representing a $15/lt drop from pricing for April requirements. Bulk activity has been at a near standstill on the US East Coast, while container activity has been described as steady. "On the box market the demand is okay," one source said. "I wouldn't call it thin because there are mills buying." Shredded was being transacted Thursday in a range of $410-414/mt CFR Nhava Sheva. Freight rates to Nhava Sheva ranged from $900-970 per container out of New York and $1,015-1,125 per container out of Florida - equating to $36-39/mt out of New York and $41-45/mt out of Florida based on 25 mt containers. On an FAS basis, containerized shredded scrap was being transacted at $355-360/mt in Florida and $365-370/mt in the northeast.
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| Nucor's Louisiana DRI facility to give company flexibility | ||
| Nucor’s direct reduced iron (DRI) plant in Louisiana will give the company flexibility on steelmaking input costs when the facility begins production in June 2013. “It will displace pig iron and it will displace prime scrap,” Nucor CEO John Ferriola said on an earnings conference call on Thursday. “How the mix works out will be a function of the cost of the material at the time we are making the decisions. We can use prime scrap, we can use pig iron that we will continue to purchase or we can use the DRI out of our two facilities.” Nucor currently operates a 2 million mt/year DRI facility in Trinidad. The facility had its most profitable year in 2012. The 2.5 million mt/year Louisiana plant will reach full capacity in two to four months after startup. “One of the great advantages this will give us (is) the flexibility to make good economic decisions,” Ferriola said. Nucor is permitted for construction and operation of a second DRI facility in Louisiana. “It is too early to comment on that,” Ferriola said. “We have built the infrastructure and support structure at the Louisiana facility so the timeline (for a second facility) will be a little shorter, the investment a little lower and we can move forward a little quicker.”
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| Nucor's Q1 earnings slump on lower prices | ||
| Despite a slight quarter-on-quarter increase in sales, Nucor’s earnings dipped in the first quarter due to stagnant margins and lower average realized prices, Platts learned Thursday from the company’s earnings report. Nucor posted a Q1 profit of $84.8 million on sales of $4.55 billion. In Q4, the steel, scrap and fabrication firm recorded a profit of $136.9 million on $4.45 billion in sales. “Metal margins at our steel mills for the first quarter remained flat compared with the fourth quarter of 2012,” the earnings report states. “Overall, our steel mills have not experience the seasonal improvement in volume and pricing that is typical in the first quarter of the year.” Nucor’s average sales price declined about 2% quarter on quarter, while tons shipped increased 4% to about 5.71 million. Concurrently, scrap and scrap substitute costs increased 2% to $379/lt. In the second quarter, Nucor expects general improvement in its profits “partially offset by weaker performance in sheet steel.” “Import levels and general economic and political uncertainty continue to negatively affect our business,” the report states. “We continue to be cautiously optimistic about non-residential construction markets in 2012 as they continue to improve slowly from historically low levels. The strongest end markets continue to be in manufactured goods including energy and automotive.”
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| SDI reports increased profits on higher value shift | ||
| Steel Dynamics Inc.’s shift toward more value-added product sales in the first quarter helped offset narrowing metal margins, which helped the company achieve slightly higher year-on-year profits. Q1 steel operations posted net sales of $1.14 billion, compared to $1.25 billion in Q1 2012. SDI noted its average selling price in Q1 increased by $5/st to $789, while the average cost of ferrous scrap rose by $8/st to $351. The Indiana-based steel and scrap firm’s net income was $48.2 million in Q1, up from Q1 2012 profits of $45.7 million. The company’s metals recycling and ferrous resources operations incurred an operating loss of $9.8 million, compared to a $4.2 million operating profit in the year-ago quarter. Total metals recycling sales fell to $835 million in Q1, from $1.1 billion in Q1 of 2012 as ferrous shipments fell to 1.34 million lt from 1.58 million lt. SDI noted a $14 million negative impact on net income from its Minnesota operations, and added that it will install additional oxygen burners and equipment at its iron nugget facility this month. SDI plans to rely solely on its iron concentrate for nugget production next month. Regarding opportunities for growth, CEO Mark Millett said, "The team is on track to complete the organic growth projects scheduled to start at the end of this year, including the engineered special-bar-quality capacity expansion and the premium rail product addition." SDI’s Q1 steel shipments totaled 1.47 million st, up from 1.45 million st in the year-ago quarter. The company noted strength in its rail division sales as well as its fabrication division. “An oversupplied northeastern US galvanized sheet market pressured first quarter shipments from The Techs," Millet said. "However, increased shipments of wide flange beams, rail and engineered bar products more than offset the decrease. Despite the slow growth of the commercial construction market, we have seen increased wide flange beam shipments for several consecutive quarters…” SDI reported its steel mill utilization rate in Q1 was 89%, up from 80% in Q4 of 2012.
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| Nucor subsidiaries' backlogs indicate strengthening market | ||
| Nucor pointed to anecdotal evidence from customers and expanding backlogs from its downstream operations as evidence that the US construction market is improving, but CEO John Ferriola remains “cautiously optimistic.” “We haven’t seen anything to get very excited about at this point,” he said in the company's first quarter earnings call, though he remarked that some of Nucor's customers seemed more positive than they have been in a while. The company expects to see improvements across all its products in sales volumes and pricing with the exception of sheet (see other story). Ferriola noted that long products markets are poised to improve along with some flats. Ferriola added that moving up the value chain and increasing the scope of Nucor’s offerings has helped its business and that Nucor downstream subsidiaries Harris Rebar, Verco Decking and Vulcraft have all gained new orders and grown their backlogs recently. Margins have improved notably for the company’s steel joist and decking business as these sales to outside customers increased by 11% and 6%, respectively, year on year in Q1. Ferriola recalled the "credit on steroids" construction market of 2007-2008 and said even a portion of that would be a great improvement over current conditions. “I don’t expect to see again, but if it approached 70-75-80% of the peak levels of 2007, we’d be pretty pleased with where we are. We think that that would support a strong market for both our long products and our building products,” he said.
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| Brazil's flats imports drop 53% m-o-m in March, 81% y-o-y | |||||||||||||||||||||||||
| Imports of flat products in Brazil plunged 53.4% month on month in March, according to latest data from the national foreign trade ministry, Mdic. In March, Latin America's largest country imported 25,489 mt of flats - 29,248 mt less than in the previous month. Compared with the same month in 2012, March flats imports fell by 81%. Cold-rolled coil experienced the largest month-on-month decline, shrinking 67.4% to 14,868 mt. Meanwhile, imports of hot-rolled coil rose 11.2% to 9,825 mt, while cut plate imports fell 29.1% to 795 mt in the same comparison. Considering the numbers from the first quarter of 2013 versus the same period in 2012, the total amount of flat steel arriving in Brazil fell by 50.9% to 181,801 mt. CRC declined by 44.3%, HRC by 63.2% and cut plate by 31.6%.
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| Brazil’s crude steel production falls 8% y-o-y in March | ||
| Brazil's crude steel production in March totaled 2.9 million mt – 7.6% less than that in the same month in 2012, according to the latest data released by Brazilian steel institute IABr. Meanwhile, flat-rolled steel production last month reached 2.2 million mt, down 1.7% year on year. Domestic shipments in March were a scant 0.5% higher in the same comparison at 1.9 million mt. Imports reached 271,000 mt, down 15.4% year on year. Exports in March totaled 719,000 mt, representing a decline of 4.6% compared with the same period last year. The apparent domestic consumption of steel products in March was 2.2 million mt, totaling 6.2 million mt year-to-date in 2013. These figures represent a decrease of 2.2% and 1.7%, respectively, compared with the same periods last year.
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| Paraguay’s Acepar prepares for restart, buys ore from Brazil | ||
| The new majority owners of Paraguay's Acepar hope to restart production by next week at the longs mill, which has been idle since February 4 due to a lack of iron ore and billets. A consortium of three companies and four investors from Paraguay's construction sector purchased a 66.6% stake in the country's sole steelmaker on April 10. The workers' cooperative, Cootrapar, retains its 33.3% stake. On Tuesday, Acepar received its first cargo of iron ore, Platts was told by Sergio Ferreira and Genaro Zárate - one the company's new owners and labor union president, respectively. The mill received a bulk of about 5,000 mt from Brazilian iron ore and pig iron producer Vetorial, said the sources. In recent contacts with Platts, Vetorial confirmed that it would supply iron ore to Acepar. Another delivery of the same volume is expected to arrive by next week. The negotiated price was not revealed. According to Zárate, Acepar also received on Tuesday a new refractory lining for the pig iron channel to its basic oxygen furnace. The blast furnace also requires repairs to its lining, he said. Completion of this maintenance work should enable the plant to resume operations by next week, "God willing," said Ferreira. Acepar's goal is to restart the plant on April 24 or 25, Zárate said. Acepar is capable of producing 50,000 mt/year of wire rod and rebar. Ferreira, head of the consortium, is expected to become Acepar president; however, a vote must first be taken by company owners.
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| Costa Rica postpones new rebar requirements | ||
| Costa Rica's ministry of economy, industry and commerce postponed the implementation of the country's new, stricter technical requirements for rebar due to its inability to verify the material meets the required standards. Initially scheduled to be implemented April 11, the government has not yet set a new date to enforce the regulations. The postponement was supported by the Costa Rican Construction Chamber (CCC). "We identified that the local rebar distributors had difficulties in complying with the requirements, since there is no accredited entity able to verify the quality standards," stated CCC's president, Gonzalo Delgado. The new rebar regulations were designed to follow ASTM A 615 and A 706 standards, as well as INTE-06-09-01 to 05, and were conceived considering the seismic activity in the country. Platts notes that it is not known whether Costa Rica intends to establish a rebar certification organization. CCC said consumers are not at risk during the postponement, since the country's existing rebar requirements are strict. Costa Rica's sole steelmaker ArcelorMittal previously stated to Platts via its press office that its rebar already meets the new technical requirements.
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| Peru rebar shipments fall in February, despite strong demand | ||
| Peru's domestic rebar shipments decreased 10.9% in February compared with January, despite the strong demand that has persisted since last year due to the boom in the construction sector. According to data from the National Institute of Statistics, Inei, Peru shipped 101,895 mt of rebar in February, down from 114,332 mt in January. A domestic distributor and importer said this drop could be a result of the increasing presence of Turkish rebar in the domestic market. "Our company, for example, imports all the rebar that we distribute from Turkey (around 5,000 mt every two months). The price is very competitive, at around $650/mt CFR, while (local mills) Siderperú and Aceros Arequipa sell the product for more than $800/mt. Both also purchase from Turkey, changing only the label of the product," said the source. Peru's rebar production also decreased, totaling 79,537 mt in February. This represents a reduction of 8.1% compared with 86,556 mt in the first month of the year, according to Inei data. The institute's figures for rebar shipments and production come from data supplied by Siderperú and Aceros Arequipa.
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| Argentina's domestic rebar prices stable in 2013 | |||||||||||||||||||||||||||||||||||
| Argentina's rebar prices remain unchanged since the beginning of the year, Platts learned from domestic distributors. “Demand since March has been very weak; we’re reaching almost 40 days without any deal. What we bought from Acindar is still in our inventories. We have had no orders in the past few weeks. The market is very slow,” said one Rosario-based distributor. Even though the capital city of Buenos Aires is working on several larger construction projects, rebar demand has not increased in the past few months, agreed domestic sources. “As it is an election year, demand should increase, but if it hasn't until now, it probably won’t,” said one source. “Prices have been unchanged for a very long time, but this isn’t the fair price that should be occurring currently in the country,” said another market source, adding that prices should be 20% higher. Meanwhile, although rebar transactions are rarely completed in Argentina using US currency, when they do occur they can significantly affect mill prices to distributors. The government-approved purchase price for the US dollar is close to the current exchange rate at 5.15 Peso/US dollar. Meanwhile, the unofficial market-priced “blue dollar,” as it is called in the country, is at 8.5 Peso/US dollar.
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| Vale's Jan-Mar iron ore output falls 3.5% over last year | ||
| Brazilian mining giant Vale produced 67.5 million metric tons of iron ore in January-March, down 21% on the December quarter and 3.5% lower than the same period a year ago, the Rio de Janeiro-based company reported late Wednesday. Vale attributed the output fall to seasonal rains which impact operations at the start of each year and also to some issues with the crusher at its Itabira mine. A weaker March quarter compared with the December quarter is normal, but the 3.5% fall over last year indicates the difficulty Vale has had in lifting its iron ore production capacity. The Brazilian company noted production at its Mariana mine had been impacted by “issues related to permits to exploit new mine sections.” In 2012 the company deferred a major iron ore expansion program by twelve months because of difficulties in obtaining approvals. However, Vale is set to add 40 million mt/year of new capacity at Carajás by the end of this year. Vale said it was maintaining production guidance of 306 million mt of iron ore for the full 2013 year. Vale produced 21.6 million mt of iron ore from Carajás in January-March, a similar level to the previous year, but output of 24.8 million mt at its Southeastern System of mines and 17 million mt at its Southern System of mines were down 7.4% and 3.5% respectively. Its production of pellets also fell 3.5% over the year to 11.6 million mt in January-March. Vale’s operations were hit be severe rains in late December which impacted shipments, resulting in fewer spot cargoes in the first quarter of this year as the miner caught up with its contract obligations. The company said its shiploading terminals were particularly affected by the rainfall as it was concentrated over coastal regions. For coal, Vale had its best quarter, at 1.7 million mt, up 16.6% year-on-year. Following the floods and subsequent rail damage in Mozambique in February, Vale experienced an estimated loss of 500,000 mt, causing Moatize's production to fall 16.8% y-o-y.
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| Steelworkers to join June strike in Colombia's Boyacá dept | ||
| Workers from steel companies, as well as from all other industries in Colombia's Boyacá department (or state), are planning to strike in June to protest a lack of government response to increasing imports. Platts learned of the strike, still in the planning stages, from representatives of the country's steelworkers' union Sintrametal last week on the sidelines of the union's steel trade forum. "This is a protest against the increasing volumes of imports Colombia has been facing in the last few years," said Laureano Torres, president of the central union (CUT), which represents all industry workers in Boyacá. "We want to stop all the activities in the region to get the national government's attention. There is no estimate on how much time it may take - maybe one day or one week; if necessary, one month. We are only going back to work when the government decides to do something to protect the domestic industry." Colombia's steelmakers have been calling for government protection from unfairly traded imports since last year. According to the steel division of the national business association Andi, Colombia's total longs imports rose 43% year on year from January through November 2012 to 644,000 mt. Statistics were not available for flats. "Boyacá is responsible for 49% of all the steel produced within Colombia," said Mauricio Castro, Sintrametal president. The department is home to steelmakers Gerdau, Acerías Paz del Río and Sidenal and also to Minas Paz del Río, which produces iron ore and metallurgical coal. As reported, Colombia's vice president and several government ministries have pledged to support efforts to protect the nation's steel industry from imports.
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| Nigeria becomes a steel exporter | ||
| Nigeria is set to export its first long rolled steel this month. According to the local Daily Times, African Foundries is set to make its first export to Ghana during April. The company, according to the report, has a production capacity of 500,000 metric tons of steel billet and a continuous rolling mill. Managing director Sanjay Kumar was quoted as saying “We are showcasing our feat to announce the breakthrough, because we have started to produce for export”. Platts understands that the initial export consignment is just 5 mt but will pick up subsequently. Kumar was also quoted as saying that the firm now has “multiple furnaces of bigger capacity, along with a rebar mill and a structural rolling mill”. He added “With this plant and the two others in Ikorodu, Lagos and Suleja, in Niger state, we are targeting 1 million mt/year to be able to position ourselves for the 1.5 million mt Nigerian demand for steel”.
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| Iranian private company invests into coke production | ||
| Iran’s Tabas Coke Company will commission a new coke plant in summer 2013, Platts learnt from Iranian metal and mine state holding Imidro. The plant’s capacity in the first phase will be 450,000 metric tons/year; this will later be increased to 1.2 million mt/y, according to Tabas managing director Mashaalah Shakinbi. The facility is designed to consume domestically produced coking coal instead of imported material. Iranian coal quality makes it unsuitable as feedstock for most coke plants, a steel specialist told Platts. Iranian steelmakers are struggling with limited coke availability due to economic sanctions on Iran that restrict imports, the specialist observed. Esfahan Steel Company, Iran’s main coke consumer and long steelmaker, recently started trial production at its 900,000 mt/y coke plant in order to reduce reliance on imports, he added. However, the firm will still need to import a proportion of its coking coal feedstock.
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| Reshuffle at BHPB as Mackenzie stays close to operations | ||
| Incoming BHP Billiton chief executive Andrew Mackenzie has reshuffled his leadership team with key iron ore and metallurgical coal executives set to step down from their current positions. He has also removed a tier of management that previously existed to have business heads reporting directly to him. The moves, which take effect on May 10, are designed to help Mackenzie stay close to the business in order to carry out his strategy of driving down costs and lifting productivity, the Melbourne-headquartered company said Thursday. Mackenzie has done away with his old role of chief executive non-ferrous, and Marcus Randolph’s position as chief executive ferrous & coal is also ending. Randolph has been away on extended sick leave and will step down from the group management committee (GMC). He is due to come back to BHPB in mid-year but as yet no new role has been assigned to him, Platts understands. President of metallurgical coal, Hubie van Dalsen, will retire with his responsibilities passing to Dean Dalla Valle, who will oversee the miner’s entire coal business. Jimmy Wilson will remain as president of the miner’s iron ore business. Singapore-based Mike Henry will remain in the GMC and take on wider responsibilities. Alberto Calderon, who was previously chief executive, aluminum, nickel & corporate development will leave the GMC but stay on as advisor to Mackenzie. Mike Yeager will retire from both the GMC and BHPB on July 1. Yeager, Randolph and Calderon were believed to be Mackenzie’s main competitors for the job of replacing outgoing chief executive Marius Kloppers.
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| World Steel foresees a 2.9% rise in steel use in 2013 | ||
| In the last few weeks, China has maintained a fairly strong rate of economic growth, though the country’s soaring real estate markets are worrying. Europe has shown a few tentative signs of recovery, as has Japan. The US has kept up a modest expansion pace and, whilst many emerging markets are growing moderately, some face possible credit bubbles. World automotive sales in the first quarter were 1-2% ahead of 2012, with Chinese and US sales well up. This mixed picture was highlighted in the World Steel Association’s outlook for apparent consumption. After a meagre 1.2% increase in 2012, it is forecasting a 2.9% rise this year, and 3.2% in 2014. Nearly all the 2013 growth to 1.45 billion metric tons will come from China and other emerging economies: their higher steel consumption will more than offset the weakness in Japan and Europe (other than Turkey). Consumption will grow also in the USA and Russia, the Association says. Given the uncertain economic rebound, the 2.9% forecast increase may be slightly optimistic, comments Roger Manser of Kestrelman, a steel-economics consultancy. However other analysts are forecasting a pick-up in energy and construction demand later this year. Steel prices are likely to remain soft due to excess production. China is continuing to produce in excess of local demand, hiking iron ore prices to around $140/dmt CFR North China for 62% Fe. March’s industrial production was lower than expected contributing to the rise of almost a fifth year-on-year in Q1 finished exports. Mills and traders are likely to maintain their aggressive stance until losses become unmanageable. Export HRC from Tier 2 mills is being offered at $550/mt FOB, $10/mt down on several weeks ago. In contrast to iron ore, the scrap market softened last week. The widespread cold weather may have contributed to increased long product availability and weaker prices. Southeast Asian CFR and Black Sea FOB billet prices fell by $5-10/mt. However, Turkish rebar offers to the Middle East and North Africa fell only slightly as its mills sought to keep a healthy margin between input costs and finished output. Turkish and CIS-origin HRC export prices fell more steeply - in a few cases by $20/mt or more from March - due to fierce competition and low demand. South European HRC prices were stable but under pressure, mostly because of low consumption but also as Italy’s Constitutional Court said that Ilva can market the 1.7m mt of products that was sequestered. North European spot HRC was weaker at €480-485/mt base ex-mill. US sheet prices slipped last week, with HRC down by $10/short ton to $590-610/s.t ($650-672/mt) on a fob Midwest basis, due to overproduction. For light long products, the mills have lowered prices by $15/s.t to reflect the lower scrap surcharge and competitive Turkish rebar imports. This market report is taken from the April 17 edition of Platts World Steel Review.
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