Ternium bidding for major stake in Usiminas

Thursday, 17 November 2011

Brazilian magazine Exame reported Wednesday that Latin American steelmaker Ternium has offered to pay 40 reais (US$22.6) per share to current stakeholders Camargo Correa and Grupo Votorantim to acquire their combined 26 percent stake in Brazilian flat rolled steelmaker Usiminas.

Ternium's reported offer price is an approximately 70 percent premium of the current value of Usiminas' shares as of Wednesday evening. Exame's reports also indicate that Camargo and Grupo Votorantim have already voiced their willingness to sell their stakes at Ternium's offer price.

Tags: coated , hrc , crc , galvanized , Luxembourg , Brazil , flats , European Union , Europe , South America , steelmaking , M&A

Sourced:SteelOrbis

Standard Bank expanding physical iron ore and swaps trade

Wednesday, 24 Aug 2011

Reuters reported that Standard Bank started to trade iron ore swaps this year, chiefly as an add on to its expanding physical iron ore business and this derivatives activity is attracting ever more customer interest.

Mr Jim Coupland global head of base metals and bulk commodities, told Reuters in an interview that “We see the key being the physical flow and the derivatives being an add on to manage price risk. We started to trade iron ore swaps this year mainly to manage our prices risk, but from a customers' point of view it has also become more interesting.”

He added “We have already concluded some long term iron ore off takes in Sweden, Latin America and Australia and we are actively trading material in China as well.”

Iron ore swaps allow producers, consumers and financial market participants to hedge or bet on prices in the future. A number of investment banks have started to trade iron ore swaps in the last few months. Some, including Citi and Goldman Sachs are also looking at physical iron ore trading, attracted by large market volumes that mean potentially high returns.

Standard Bank also started trading physical steel products such as billet and scrap last year and is active in steel derivatives such as rebar on the Shanghai Futures Exchange and billet in the London Metal Exchange.

Standard Bank physical steel and iron ore traders are based in Shanghai, Hong Kong, Singapore and London while the bulk of the risk management team is based in Singapore.

(Sourced Thomson Reuters)

HRC prices surging in Latin America and Middle East

Thursday, 27 Jan 2011
TEX reported that market prices of HR coils are surging for sales into the world's destinations such as Latin America and the Middle East, a situation where the going prices are believed to have already topped USD 800 per tonne CNF. But there are no signs of negotiated deals so far amid an intense upward mobility in prices.In the case of Latin America, a surge in HR coil prices relates to a surging domestic market for HR coils in the USA. The nation's current HR coil market is reported as a level of USD 780 per tonne, with a high of USD 800 per tonne, caused by a soaring ferrous scrap market there besides a certain level of HR coil demand.

There is information that electric steelmakers such as Nucor Corp and some integrated steelmakers will further increase what they charge for HR coils to a level of USD 870 per tonne for March shipments. The USA's domestic HR coil market stood at a level of USD 620 per tonne in late November last year, but it went up to USD 700 per tonne in early December and to USD 750 per tonne in late December. Also, it has further advanced to a little less than USD 800 per tonne since the beginning of January 2011.US steelmakers are main suppliers of HR coils to Mexico and elsewhere in Latin America. As a matter of course, the USA's soaring HR coil market has repercussions on deals of HR coil supplies to Latin America, where HR coil prices are subject to violent fluctuation because local supply sources are limited in number. A similar situation exists in the Middle East when it comes to HR coil supplies.

Transaction prices of HR coils for the Middle East have yet to hit USD 800 per tonne CNF. But a certain Asian steelmaker is reported to have offered HR coil sales to the Middle East at USD 750 per tonne FOB for March 2011 shipments.Negotiations on new deals of HR coil supplies are under way in Asia as well in what amounts to front loaded ones for shipments in the April-June quarter, given an upswing in quarterly price renewals of raw materials. In this connection, there are signs of the world's spot prices on track to top USD 320 per tonne FOB for coking coal and USD 180 per tonne for iron ore in the April to June quarter, a surge in the raw materials prices that is reminiscent of what happened in the April to June and July to September quarters of 2008, during which time HR coil prices exceeded USD 1,000 per tonne FOB.

The world's various steelmakers are contemplating seeking increased prices of HR coils in what they sell. As a result, it is uncertain how far their offer prices of HR coils will move up, a situation where it is considered difficult both for the steelmakers and their customers to work out a compromise.As far as Japan's integrated steelmakers are concerned, they have shortened the contract period of their HR coil exports to a monthly or quarterly settlement until now, a break with their half-year supply contracts in the past. A half year supply contract would permit a price increase twice a year. But a monthly or quarterly contract would necessitate any pass along to apply all at once for a monthly or quarterly provision.

It is certain that the Japanese steelmakers will seek a three-digit price increase in the renewal of each monthly or quarterly contract. But it remains to be seen whether they will offer a price increase of USD 150 per tonne, USD 200 per tonne, or more.In Asia, meanwhile, market sentiment has yet to follow a surge in HR coil prices. Taiwan's China Steel Corporation is contemplating executing a domestic price increase of HR coils by only TWD 973 per tonne so far for March 2011 shipments. By comparison, moves of South Korea's POSCO are unclear in relation to the company's HR coil prices for domestic sales. Still, it is considered possible for POSCO to win a virtual price increase of HR coils with a reduced discount.

In Vietnam, a price level of USD 700 per tonne C&F is still seen as the norm of what local users require on price for HR coil imports. Under the existing circumstances, however, there is no doubt that transaction price of HR coils will fast advance across Asia over time.
(Sourced from TEX Report Limited)