CISA: China's Iron Ore Prices to Stay Low

Monday, 06 February 2012

China Iron and Steel Association predicts in its report this week that Chinese steel production will move slowly but steadily alone with rebounding demand; iron ore price is expected to run low due to hiking domestic iron ore output and sizable port inventories, although demand will rise in accordance with steel production.

In 2011, China 's iron ore import price averaged $ 163.84, up 28.13% year on year, based China Customs; In the meantime, Chinese-mined concentrates rose 15.06%, versus the rise of 10.13% in CISA's China Steel Price Index (CSPI); Large and medium sized steel markers in China posted falling profit to 87.53 billion yuan and declining margin to 2.42% in the year, based on CISA. Apparently iron ore price is still high compared to the persistent weakness in steel market.
In January 2012, Chinese steel market was confined by demand and credit, leading to downtrend in construction, cold rolled coil and strip and stagnancy in hot rolled coil, plate, section and special steels, said CISA.

The market saw no loosening in government policies and credit pressure for real economies remained in place. Before Chinese new year festival, steel mills and trading companies faced heavy pressure from loans; previous active winter restocking and other supportive forces didn't come up this year; liquidating intention was strong on bearish prospect due to falling economic growth in the first quarter and concern about property market regulation.

Although expectation of loosening monetary policy is getting strong, rehearsal of prudent monetary policy in 2012 from China ' s central bank seems a denial to a reverse later on. Key steel consuming industries, including property, railway, machinery, auto, are slowing down; post-festival demand is expected to be low for a relatively long time; drops in raw material prices would be limited; mills will face heavy cost pressure; Steel inventories, particularly of construction steel are rising noticeably.

For a long time, post festival, Chinese steel market will be facing slow demand recovery, rising inventories and low steel prices.
Source: Steel Home

China 2011 steel output likely 683 million tons

Thu, Jan. 5, 2012

-- China's crude steel production likely reached 683 million tons in 2011
-- Country's 2012 crude steel demand may rise 4% to reach 700 million tons
-- Severe challenges ahead for China's steel exports, association says

BEIJING (MarketWatch) -- China's total crude steel output likely rose 9.2% in 2011 to 683 million metric tons, the China Iron and Steel Association said in a statement Thursday.

Steel exports likely rose 16% to 49 million tons. China's 2012 crude steel demand may rise around 4% to 700 million tons, it said.

However, many steelmakers in China are facing serious financing and capital difficulties, and some will have to halt or delay projects due to capital stress, CISA said.

The National Bureau of Statistics is expected to release steel output data later this month.

China faces "severe challenges" this year on the export front, and international trade frictions may arise, CISA said.

The association projected downside for iron ore prices due to sluggish global demand. "Chinese steelmakers are facing meager profit margins or losses this year," it said.

Import prices for iron ore averaged $166.2/ton in the first 11 months, up 31.5%.

In the first 11 months, CISA's member-mills gained a combined profit of CNY85.3 billion, up 8.1% but their profit margin was only 2.55% during the period, the association said.

(sourced MarketWatch)

China’s large and medium-size steelmakers see reduced profit margins

Tuesday, 1 November 2011

According to the China Iron and Steel Association (CISA), in September the average profit margin of domestic large and medium-size steel enterprises in China was 2.53 percent. For the first nine months of the current year, the aggregate profit margin in question was 2.99 percent.

In addition, the seventy-seven large and medium-size Chinese steel enterprises surveyed by the CISA achieved a total net profit of RMB 7.9 billion ($1.25 billion) in September this year, down 6.59 percent year on year. During the first three quarters, the aggregate net profit of these steel enterprises totaled RMB 82.34 billion ($13 billion), rising by 27.74 percent year on year.

Tags: China , East Asia and Pacific , Far East , Southeast Asia , steelmaking , fin. Reports

sourced steelorbis

CISA: China’s average daily crude steel output declines in mid-October

Monday, 31 October 2011

According to the data released by the China Iron and Steel Association (CISA), in mid-October (Oct. 11-20) the aggregate crude steel output of CISA member steel enterprises amounted to 15.58 million mt, while the overall crude steel output in China for the period was 17.997 million mt.

In mid-October, the average daily crude steel output of all CISA member steel producers amounted to 1.585 million mt, decreasing by 3.3 percent, while the average daily crude steel output in China overall was 1.7998 million mt, down 2.9 percent, both as compared to early October (Oct. 1-10).

Tags: crude steel , China , raw mat , East Asia and Pacific , Far East , steelmaking , production

sourced steel orbis

China's average daily crude steel output at 1.93 million mt in late September

Thursday, 13 October 2011

According to the data released by the China Iron and Steel Association (CISA), in late September (Sept 21-30) average daily crude steel production of CISA member companies reached 1.6397 million mt, increasing by 0.61 percent as compared to late August (Aug. 21-31) this year.

Meanwhile, in late September, China's overall average daily production of crude steel reached 1.9304 million mt. Average daily production of crude steel in China for the whole of September amounted to 1.9377 million mt, increasing by 2.24 percent as compared to 1.8952 million mt in August.

Tags: raw mat , China , Far East , production , crude steel , East Asia and Pacific

(sourced steelorbis)

China unveils iron ore price index

Tuesday, 11 Oct 2011

China's steel and mining associations on Monday officially published their first iron ore price index, which is expected to better reflect the domestic market and give the country a greater say in global pricing.

The China Iron Ore Price Index was compiled by the China Iron and Steel Association, the China Chamber of Commerce of Metals, Minerals and Chemicals Importers and Exporters and the Metallurgical Mines' Association of China.

The index, released on a weekly basis starting in October, is made up of two sub indices: the domestically produced iron ore price index and the iron ore import price index.

Both sub indices use iron ore prices from April 1994 as their base.

The domestic iron ore price index is based on the prices of iron ore in 14 provinces, autonomous regions and municipalities as well as in 32 mining areas. The import price index is based on data from eight ports.

In the first week of October, the iron ore import price index stood at 652.41, down 0.13 points from previous week.

The average cost, insurance and freight) price of imported iron ore was USD 176.22 per tonne in the first week of October, down three cents from a week ago.

The domestic iron ore price index remained unchanged at 455.81 from the last week of September, as no bulk trading occurred during the weeklong National Holiday, which began on October 1.

Currently, the world's major mining companies use foreign companies' iron ore indices as a reference when pricing their own exports, including the Steel Index, the Metal Bulletin Iron Ore Index and the Platts Iron Ore Index.

(sourced from Xinhua)

CISA to publish iron ore Index from October 1

Friday, 02 Sep 2011

Bloomberg reported that the China Iron and Steel Association will start publishing a weekly iron ore index on October 1 as commodity pricing services compete to have a bigger say over pricing of the raw material used in steelmaking.

Mr Luo Bingsheng the deputy party secretary of the association said “We are able to collect data from all domestic mines and 35 ports nationwide. The group, known as CISA represents China 77 biggest mills.”

He said that “It isn’t mandatory for steelmakers to replace other price indicators. But an index launched by the steel association will be well received by its members.”

Mr Zhang Changfu Vice Chairman said the association index which will consist of domestic and import prices and will more truthfully reflect China market reality and guide orderly imports.

Quarterly iron ore prices are typically based on figures derived by deducting freight costs from the three month average of daily iron ore indexes compiled by Platts, the Steel Index Ltd and Metal Bulletin with a one month lag period.

(Sourced from Bloomberg)

CISA blasts ArcelorMittal for not backing Chinese partner

Wed Aug 3, 2011

* Valin failed to get iron ore from ArcelorMittal
* ArcelorMittal failed to support Valin in auto sheet JV
* CISA says ArcelorMittal suspends investment on timing concerns

BEIJING, Aug 3 (Reuters) - The China Iron & Steel Association (CISA) has criticised ArcelorMittal , the world's top steelmaker, for not fulfilling its commitment to support its Chinese partner, the Hunan Valin Group .

ArcelorMittal failed to provide Valin with the technical support needed for their joint venture auto sheet plant in China, and did not fulfil promises to help the Chinese firm secure supplies of iron ore, Chi Jingdong, CISA's deputy secretary general, told reporters on Tuesday.

"ArcelorMittal has not fully met its commitment to Valin in some aspects until now, including iron ore purchases," he said.

ArcelorMittal promised to assist Valin Group to buy 3 million tonnes of ore in 2005 and increase volumes in line with Valin's growing demand.

A unit of the China Securities Regulatory Commission (CSRC) in Valin's home province of Hunan, upon checking with the Chinese firm, discovered ArcelorMittal had not helped it source iron ore. As a result, Valin incurred total additional costs of 780 million yuan ($121 million) over 2006-2009, the regulator said.

"ArcelorMittal promised to buy iron ore at lower prices for Valin, but it didn't meet (the promise) after 2005," Chi said.

When contacted by Reuters, a spokeswoman for ArcelorMittal said: "We are reviewing the report by CSRC and will respond to the regulator within the statutory period."

ArcelorMittal agreed to set up the steel auto sheet joint venture with Valin and its listed arm Hunan Valin Steel Co more than three years ago.

The plant, 33 percent owned by ArcelorMittal, was approved by regulators last year.

Under the agreement, ArcelorMittal agreed to provide technical support for the Chinese steel mill and its unit Lianyuan Steel, which will be responsible for producing hot-rolled coil for the new sheet plant.

However, regulators in Hunan said no technical support was made available, and a hot-rolling mill built especially for the joint venture ended up making losses of 857 million yuan last year.

"Valin encountered some difficulties in production and made losses, so ArcelorMittal's policymakers didn't think this was the right time to build new production lines and temporarily suspended big investment in Valin," Chi said.

China, the world's second-largest economy, has been encouraging steelmakers to improve technology in a bid to improve quality and efficiency.

Valin's shares have fallen about 8 percent since early July while shares of ArcelorMittal have slumped 14.7 percent over the same period. ($1 = 6.434 yuan)

China to step up investments in overseas iron ore mines

Monday, 25 July 2011

Li Chuangxin, deputy secretary-general of the China Iron and Steel Association (CISA), has stated that, as the largest steel producer and iron ore consumer in the world, China plans to invest significant funds in developing overseas iron ore resources in order to reduce its dependence on the big three iron ore mining giants (Vale, BHP Billiton and Rio Tinto), according to Chinese media sources.

China's iron ore imports from Brazil, Australia and India in 2010 met 62.3 percent of its total demand. The figure indicates the heavy dependence of China's steel producers on imported iron ore.

Mr. Li stated that the main purpose of the investment plan is to break the monopoly of the three iron ore mining giants. He said that China's goal is to reduce its dependence on iron ore imports from 62.3 percent to below 50 percent.

China daily steel output hits record 1.945 mln T in mid-March

Tue Mar 29, 2011 5:52am GMT

BEIJING, March 29 (Reuters) - Daily output of crude steel in March 11-20 reached a record 1.945 million tonnes, figures from the China Iron and Steel Association showed on Tuesday.

Despite uncertain demand, daily output stood at an average of 1.92 million tonnes in the first 20 days of the month, up from 1.823 million tonnes in February.

The figure would total more than 700 million tonnes when calculated on an annual basis.

CISA lobbies with Chinese premier to help tackle high ore prices

Friday, 18 Mar 2011

Bloomberg reported that the China Iron and Steel Association has asked Premier Mr Wen Jiabao to take measures to help steelmakers tackle iron ore prices as many of them will likely incur losses this month due to high costs.

Mr Luo Bingsheng special adviser and former executive vice chairman to the association, without specifying what measures the government would take, said that “Mr Wen and Vice Premier Mr Zhang Dejiang ordered the Ministry of Commerce to find solutions.”

Mr Luo said “The ultimate reason for the low profits is high iron ore prices. China should streamline its qualified importers to curb speculative purchases and control the inventory of imports at reasonable levels.”

He said that the government is actively studying the establishment of standards for imported iron ore.

Mr Luo said China iron ore production will rise 8.8% to 660 million tonnes this year, pacing estimates by the Ministry of Industry and Information Technology.

China iron ore imports fell 1.4% to 618.6 million tonnes last year, the first drop since 1998, after the government took measures to curb electricity use, rein in property speculations and as domestic mines increased output. (sourced:bloomberg)

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CISA: China to need 577 million mt of iron ore imports in 2011

Wed,Feb23,2011

At a recent meeting, the China Iron and Steel Association (CISA) has stated that price manipulation has worsened in the iron ore market.

CISA said that China is the world's largest iron ore importer, taking 75 percent of the world's total iron ore seaborne trade. It added that, with the three mining giants - Rio Tinto, BHP Billiton and Vale - dominating the market, they have been pushing iron ore prices up for years. The CISA said that Chinese steel enterprises have suffered from the iron ore price hikes as their profit margins have kept decreasing, though it added that import iron ore prices are expect to decline after March or April this year.

Wu Xinchun, deputy secretary general of the CISA, said that price manipulation is a given in the industry. China's iron ore imports have continued to increase since last September, whereas its domestic output of pig iron remained low, he said.

The CISA said it expects that in 2011 China is expected to produce 660 million mt of crude steel, while demand for iron ore is expected to reach 982 million mt, of which 405 million mt will be supplied domestically, with 577 million mt expected to be imported.

Tags: iron ore , raw mat , Australia , Brazil , China , Oceania , Far East , South America , BHP , Vale , Rio Tinto , consumption , steelmaking , East Asia and Pacific

China Plans Overseas Iron Ore Asset Spree

Wed,Feb23, 2011
BY CHUIN-WEI YAP

BEIJING—China plans an aggressive expansion of its iron-ore holdings overseas to increase the share of its imports from China-invested mines, an influential industry official said Wednesday.

China Iron & Steel Association Vice Chairman Luo Bingsheng told an industry conference Wednesday that China would seek to derive 40% of ore imports from Chinese-invested sources by 2015.

It is unclear what percentage of China's iron-ore imports currently come from mines part-owned by Chinese companies. Mr. Luo didn't give a figure. But the comments from Mr. Luo, who is to retire from the association this week, underscore the desire of China.

For more info asia.WSJ.COM

China Iron and Steel Association, CISA

China Iron and Steel Association China Iron & Steel Association is a national, non-profitable organization founded on 21st 1999 on the basis of China Metallurgical Enterprise Management Association. CISA members consist of China's steel enterprises, institutions, societies and individuals in the iron and steel industry, which participate the organization voluntarily according to certain regulations. CISA's responsibility is to link Chinese iron & steel industry with the government, to provide two-way services to Chinese steelmakers, institutions as well as to explore cooperation opportunities with overseas companies and organizations. China Iron and Steel Association

Change of guard at China Iron and Steel Association

Wednesday, 23 Feb 2011

It is reported that Mr Zhu Jimin chairman of Shougang Group will replace Mr Deng Qilin GM of Wuhan Iron and Steel Group as the new chairman of China Iron and Steel Association for 2011 to 2013 and chairman of Baosteel Mr Xu Lejiang will be the chairman of CISA for 2013-2015.
CISA has appointed the vice chairman Zhang Changfu, 65, as secretary general replacing 64 year old Mr Shan Shanghua, who was appointed CISA secretary general in 2007.
Meanwhile, Mr Luo Bingsheng, the vice chairman of the association, will also retire and be replaced by Mr Wang Xiaoqi, a former official at China's State owned Assets Supervision and Administration Commission.
The former cores of CISA Mr Bingshen and Mr Shanghua have recently announced their retirements. It is reported that both of them said due to their ages, they felt no long fit for their job.
Analyst points out that the retirements of Mr. Luo and Mr. Deng indicate the era of old iron ore negotiation has ended and the new leader will bring new staff to the table.
CISA has total member of 232 corporations, covering most of the national Steel industry. CISA plays an very important role in negotiating iron ore prices in the previous annual iron ore talks and provides advices for government regarding domestic steel industry policies.

(Sourced from Xinhua)

Baosteel aims to complete integration of Guangdong Steel in 2011

Tuesday, 22 February 2011

At a recent meeting of the China Iron and Steel Association (CISA), Xu Lejiang, the president of Chinese steel giant Baosteel Group, announced that the group aims to push through its program for the integration of Guangdong Steel Group in 2011.

In 2008, Baosteel decided to restructure two steel producers in the southeastern Chinese province of Guangdong, i.e., Shanguan Steel Group and Guangzhou Steel Group, and thus to set up a new company named Guangdong Steel Group, in which Baosteel would hold 80 percent of shares. Under the framework of its integration program, Baosteel also decided to eliminate 15 million mt of outdated steelmaking capacity in the province and to build a steelmaking base in Zhanjiang, Guangdong with an annual output capacity of over 10 million mt.

Mr. Xu stated that, while the restructuring work had been slow, Baosteel aimed to complete the integration of Guangdong Steel within the current year.

Tags: China , Far East , Baosteel , production , investments , steelmaking , East Asia and Pacific

CISA sees Chinese steel prices seen rising in near term

Saturday, 19 Feb 2011

Reuters quoted the China Iron & Steel Association as saying that steel prices in the Chinese domestic market will continue rising in the near term due to recovering demand and rising raw materials costs.

CISA said that it expects a gradual pick up in demand at home and abroad with costs of raw materials such as iron ore, coke and scrap likely to keep surging, pushing steel prices upwards.

It said "This year is the opener of the 12th five year plan, so steel demand will remain strong as economic growth is expected to remain healthy."

It added that major steel consuming sectors such as construction, machinery, transportation, home appliances and shipbuilding would continue to grow, lifting steel demand, noting that infrastructure projects would also contribute to rising demand.

The Ministry of Industry and Information Technology forecast earlier this week that China crude steel output would hit a record 660 million tonnes this year with downstream demand providing a boost.

However, CISA also warned that non steel mill steel product inventories had risen sharply and domestic steel production is also on the rise.

CISA data showed that China produced 1.7033 million tonnes of crude steel on a daily basis in January up by 2.5% from December.

Non steel mill inventories of five major steel products in 26 big cities rose 11.2% to 14.72 million tonnes in January from the previous month especially for rebar and wire rod used in the construction sector.

(Sourced from Reuters)

China 2010 steel output underreported - Macquarie

Thursday, 03 Feb 2011
According to Macquarie Research, Chinese crude steel output may have been under reported by 13 million tonnes in 2010 by failing to include small steel mills especially in the country's steel heartland of Hebei province.
Macquarie said annual production capacity of 24 million tonnes in the third quarter of last year and 27 million tonnes in the fourth quarter was excluded from full year steel production figures which should have reached 640 million tonnes.
Data from the National Bureau of Statistics showed China produced a record 627 million tonnes of steel last year.

Mr Luo Bingsheng, deputy chairman of the China Iron & Steel Association warned in late October that regional governments and enterprises could be misreporting their output figures.
Macquarie said CISA representing 77 medium and large sized Chinese steel mills said its Hebei based members produced 10.4 million tonnes of crude steel in December but the NBS put the figure at 9.2 million tonnes for the whole province.
Macquarie said "China demand for iron ore is almost 20 million tonnes higher in 2010 than what was implied using the NBS data, adding that this partly contributed to strong iron ore prices over the final quarter of last year.”

Based on its revised figures, Macquarie forecast a modest eight per cent growth in steel production this year, supported by demand from the manufacturing sector, bringing output to 690 million tonnes.(sourced:businessspectator.com.au)

Chinese top steel mill to contribute 60pct of total steel output

Tuesday, 01 Feb 2011
According to an official who was involved in working out the blueprint for the nation steel industry, which is set to be finalized soon said China top 10 steel mills will be able to contribute 60% of the country total steel output and 40% of the nation steel production will come from coastal areas in the 12th Five-Year Plan (2011-2015) period.

An official from China steel lobby, China Iron &Steel Association who wished to remain anonymous said a draft of that plan highlighted the priorities of increasing the concentration of the scattered steel industry, upgrading the industry technology, eliminating outdated capacity and encouraging steel companies to move to coastal bases.
For several years, the nation has been encouraging big mills to merge with rivals to create more cohesive steel groups in an effort to address overcapacity, pollution and a disadvantageous position in price negotiations for iron ore.

Mr Hu Kai an analyst from Umetals.com said Chinese steel companies have to pay an extra USD 200 million this January for iron ore imported from BHP since it made that shift.
The central government aims to create several steel giants with an annual production capacity of over 50 million tons through mergers and acquisitions to reverse the situation.
Hebei Iron and Steel Group Co Ltd said in January that it agreed to take 10% stakes in seven private steel mills to expand its production capacity and increase consolidation in Hebei province. Hebei province where 60% of the capacity comes from small private steel mills is drafting a plan to reduce the number of its steel mills from 88 to 10 during the next five years.

The official from CISA said that because of increasing environmental pressure and the need to control logistical costs, the central government plans to gradually move its steel production to coastal areas. The official said the government will accelerate the restructuring of the steel industry that is focused on China coast with Anshan Steel in Liaoning province, Shougang in Caofeidian, Hebei province; Baosteel in Zhanjiang, Guangdong province and Wuhan Iron and Steel Group in Fangchenggang in the Guangxi Zhuang autonomous region.
The official also said the 12th Five-Year Plan will highlight the preparation of new coastal bases in Fujian and Jiangsu provinces. Another target of the plan is to increase the proportion of Chinese steelmakers self-supplying of iron ore by expanding domestic ore production and acquiring more overseas resources.

Mr Deng Qilin chairman of China third largest steelmaker, Wuhan Steel said his company will become self-sufficient in iron ore supplies in the next five years.
China domestic iron ore supplies have been rising for the last two years. During the first nine months of 2010, domestic iron ore output jumped 26%YoY to 780 million tonnes. (sourced:China Daily)

Chinese steel production falls in mid Jan - CISA

Tuesday, 01 Feb 2011

Reuters quoted data from the China Iron & Steel Association showed that China daily crude steel output fell 5.4% to 1.695 million tonnes in the second 10 days of January from the previous 10 days the first fall since mid-October.
Average daily steel production on a 10 day basis has climbed since the middle 10 days of October, despite government led measures to cut production in order to meet energy efficiency targets.

Analysts suggested that slower production was mainly the result of routine annual overhauls by several steel mills.
Mr Feng Gangyong an analyst with Guangfa Securities said "Several steel mills carried overhauls which usually last 7 to 10 days before the Chinese Lunar New Year and this had some impact on production."
He said that "I expect this fall would be temporary and steel production will recover growth after the Spring Festival and likely peak in the second quarter."

Mr Feng forecast that China steel production will likely hit 675 million tonnes this year as demand from downstream users including housing and machinery sectors remain strong.
China steel output hit a record of 627 million tonnes last year while analysts are expecting the world top steel producer will continue lifting production this year.(sourced:Reuters)