Iran’s cutting steel imports, depressing global steel market

Monday, 13 February 2012

Steel exports to Iran, one of the world's top importers of billet used in construction, are grinding to a halt, traders said. "Iran is the only market in the world that can move billet prices and now trading has basically come to a halt," a steel trader based in Britain said.

"Now you can really feel the effects of the sanctions imposed by the U.S. and Europe...It is very difficult to do any business with Iran at the moment," a steel trader at a Swiss metals trading house said. Thanks to large-scale building programs in the last few years, Iran has become one of the top importers of steel billet, a semi-finished long steel product mainly used for construction.

The country imported over 3 million tons of semi-finished steel products in 2010 and almost 2 million of hot-rolled coil, a steel product used in transport, construction, shipbuilding and energy pipelines, according to data from the International Steel Statistics Bureau. Boris Krasnojenov, an analyst with Moscow-based Renaissance Capital, said monthly Iran imports from Russia were over 300,000 tons for most of last year.

"As far as I know, the situation is much worse. Some say CIS mills cut sales 10 times," he said.
The collapse in Iranian imports is depressing international steel billet prices, which fell by about $50 a ton in a month to $560 a ton fob Russia and Ukraine this week. "All volumes from the Caspian Sea will be redirected to the Black Sea," Krasnojenov said. "That is a major problem for Russian steel plants." Russia sends about 15 percent of its total exports to Iran, making it the largest source of foreign steel, but the sanctions are pushing it out of the market.

"Steel demand is pretty strong, the problem is the banking system," said Dmitry Smolin, metals and mining analyst at URALSIB Capital. "Russian banks do not have trading lines with Iranian banks to facilitate rouble transactions." Iran's envoy to Moscow said late last month that Iran and Russia had started using their domestic rial and rouble currencies in bilateral trade instead of the U.S. dollar. However, market players say the dollar shortage is crippling the steel trade.

(sourced Reuters)

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)

Baosteel raises some main steel product prices for Jan

Mon Dec 12, 2011

SHANGHAI Dec 12 (Reuters) - China's Baoshan Iron & Steel will raise prices for some main steel products for January bookings, the company said on Monday, signalling that steel demand may improve at the beginning of the new year.

The company plans to keep hot-rolled coil prices flat but will raise cold-rolled coil by 100 yuan per tonne ($16) and some electro galvanized steel prices by 100-200 yuan per tonne, after it cut main steel product prices by 200-300 yuan in December from November.

The firm, also known as Baosteel, is the country's biggest listed steelmaker and its pricing is often seen as a barometer of China's steel market. ($1 = 6.3647 Chinese yuan)

(sourced Reuters)

Indian iron ore prices firm vs falling international prices - JSPL

Sunday, 06 Nov 2011

In an interview with ET Now, Mr Sushil K Maroo group CFO of JSPL, gives his views on steel demand and iron ore prices.

ET Now - First a word on steel demand, one is getting a sense that global steel demand has got stagnated and that will hit Indian companies?

Mr Sushil Maroo - In fact, global steel demand has come off in the last two months time. Demand has gone down in China also and everywhere else because the world economy is really not doing very well. So, certainly the prices of raw material are also falling because of that, but unfortunately in India the prices of raw material are not falling and availability of iron ore is also in question. So steel prices are still very firm. But the demand in India for steel is not growing because of various reasons as the interest rate is very high and other industries are also getting affected adversely because of low demand of their products and higher interest rate, low liquidity. So, the steel prices in India are firm, still not fallen, but the demand is really not rising.

ET Now - Iron ore prices in India as well have risen recently but globally there has been considerable weakness give us your outlook on the same?

Mr Sushil Maroo - See the global iron ore prices have fallen something about 35% to 45% in last one month. But in India iron ore prices have not fallen commensurately in fact because many mines are closed, availability of iron ore has become very difficult now and many steel companies are having a lot of problems. The export of iron ore also has slowed down from India because they are not able to get the kind of prices they were getting in the past.

(sourced ET Now)

ArcelorMittal to shut down BF No1 at Eisenhuttenstadt

Tuesday, 06 Sep 2011

Reuters reported that ArcelorMittal will shut down a blast furnace at its plant in Eisenhüttenstadt in Germany in the next few weeks due to weaker steel demand.

It said that "Due to the current seasonal slowdown and some regional demand fluctuations in Europe, ArcelorMittal is optimizing production flows and aligning production capacities to seasonal demand. Consequently, the small BF No1 at ArcelorMittal Eisenhüttenstadt will be temporarily shut down until the demand situation supports a re start."

European steel makers produced high volumes of steel in the first half this year as a restocking cycle boosted demand, but as restocking came to an end the excess supply made steel prices fall. In order to support prices steel producers are now cutting their output.

Mr Jim Lennon head of commodities research at Macquarie said that "All leading indicators have definitely been suggesting slower growth in Europe and demand had to be cut in order to stabilize prices. We have seen pockets of weakness in Europe and steel makers have to respond by pulling supply out of the market to support prices."

According to data from the World Steel Association, steel production in Europe was at 14.579 million tonnes in July, down from 15.700 million in June.

Chinese and global steel production fell slightly from the previous month but remained near record levels in July, in what is usually a seasonally slower quarter and despite concerns that oversupply and the economic slowdown may weigh on prices.

(sourced from Reuters)

Indian steelmakers eying exports as domestic demand dips

Thursday, 04 Aug 2011 | sourced BS

Steelmakers are exploring the world market following a dip in domestic demand. According to the Joint Plant Committee data, steel exports in the Q1 ended June 30, jumped by 71.8%, at 1.074 million tonnes against a mere 0.62 million tonnes during the same period last year.

It said that that rising output, however, managed to curtail imports, which fell by 52% in the period under consideration. However, India still remains the net importer at 1.32 million tonnes at the end of the first quarter.

During the 17th Annual General Meeting on July 25, Mr Sajjan Jindal vice chairman and MD of JSW Steel had said the company is planning to increase its exports by 15% to 20% this fiscal.

TATA Steel, despite the surge in domestic demand, is looking at increasing exports. The company said that “In view of the robust domestic demand during the year, the opportunity for exports has been limited for flat and long products. However, there is a growth of 76% in wires and 43% in FAM business over the last year.”

Japanese Steel Takeover Driven by `Radical' Shift as Costs Rise

Feb 4, 2011 2:12 PM GMT+0530
By Masumi Suga and Rebecca Keenan

Nippon Steel Corp. and Sumitomo Metal Industries Ltd.’s plan to create the world’s second-largest steelmaker is aimed at gaining leverage over raw-material purchases and metal pricing as costs soar. Shares in both companies surged the most in more than two years today.

Based on Sumitomo’s market value and net debt, the deal would be worth more than 2 trillion yen ($24.5 billion), according to data compiled by Bloomberg. Yesterday’s announcement of the accord, which may be Japan’s biggest non- bank takeover, said it would be completed by October 2012.

Steelmakers in Japan, the world’s second-biggest producer of the alloy, are seeing profits squeezed while market-leader China encourages consolidation to create globally competitive companies. Rising costs for iron ore and coking coal used to make steel forced Nippon Steel to cut its full-year earnings forecast last week. Sumitomo Metal did the same today.

“The purpose of this merger is to fend off competition from rivals in China, South Korea and India,” said Takashi Murata, an analyst at Daiwa Securities Capital Markets Co. in Tokyo. A bigger company has more clout to negotiate raw-material costs and set steel prices for buyers including automakers, he said.

Share Reaction

Sumitomo Metal Industries rose 16 percent to 224 yen at the close of trading in Tokyo for the biggest advance since Oct. 30, 2008. Nippon Steel ended at 313 yen, up 9.1 percent, after rising as much as 14.3 percent, the most since Oct. 28, 2008.

Before today, Nippon Steel shares had fallen 16 percent in the past year, compared with a 3.2 percent decline for Luxembourg-based ArcelorMittal and a 17 percent drop for South Korea’s Posco, the world’s third-biggest producer. Sumitomo Metal had fallen 26 percent in the year before today.

The proposed merger between Sumitomo Metal Industries and Nippon Steel will create synergies for both companies as well as benefit “the wider steel industry by helping to increase pricing and margins,” Goldman Sachs Group Inc. analysts Rajeev Das and Nana Hasegawa said in a report today.

The merger is positive for Nippon Steel because of benefits arising from the combined size of the two companies, Standard & Poor’s said today in a statement.

‘Radical Change’

A combination of the two producers, which haven’t outlined terms of the transaction, would form the world’s second-largest steelmaker, based on output of 47.8 million metric tons in 2010, Sumitomo Metal Industries President Hiroshi Tomono said at a press briefing yesterday. ArcelorMittal is the biggest producer.

“We see a radical change in the business environment surrounding the Japanese steel industry,” Muneoka told reporters at the briefing.

Nippon Steel, formerly the world’s second-largest steelmaker by production, lost that rank in 2009 after being overtaken by five Chinese mills, according to the American Institute for International Steel.

Meantime, rivals are expanding, with South Korea’s Posco on Jan. 31 winning approval for a $12 billion steel plant in India, the biggest single foreign investment in the country.

“It’s very important Japanese steelmakers be globally competitive,” said Japanese Economy Minister Kaoru Yosano today. The planned merger of Nippon Steel and Sumitomo Metal Industries is “welcomed” he said.

Steel Demand

Steel consumption may rise 5.3 percent this year to a record, according to World Steel Association forecasts. Iron ore prices rose last year after Rio Tinto Group, BHP Billiton Ltd. and Vale SA, the biggest suppliers, shifted away from annual pricing to quarterly agreements.

The price of iron ore will be 21 percent higher on average this year, Credit Suisse Group AG said in a Jan. 7 report. The spot price of ore delivered to China including freight will average $178 a ton, the report forecast. That compares with $147 in 2010, according to The Steel Index.

Floods in Australia’s Queensland state closed mines and further pushed up coking-coal prices. Free-on-board prices may surge to $400 a ton for the three-month contract starting April 1, from $225 this quarter, Bank of America Merrill Lynch said last month.

“It’s all about lowering costs and enhancing margins,” Gavin Wendt, a senior resources analyst at Mine Life Pty in Sydney, said by phone. “While demand for steel is quite strong, one of the problems for steelmakers around the world is rising costs. It may give them more leverage when it comes to dealing with the miners.”
(sourced: bloomberg.com)

Chinese steel mills diversifying sources for iron ore supply

Friday, 04 Feb 2011
Indian iron ore spot prices in recent days kept surging due to iron ore supply shortage in the market, triggered by the news about Indian government hiking iron ore exports duty, flooding situation in Australia, Iran also contemplating 50% duty tax on iron ore fines and 35% on pellet exports.

With the expectation of housing project, railway project and underground projects undertaking in 2011 and many experts believe the Chinese steel demand will continue to see rapid growth in the next few years. The supply of the main source for steelmaking, iron ore has long been controlled by the three major supplying countries, Brazil, Australia and India. It has become a serious concern that China needs to diversify the sources of iron ore supply in the future in order to secure the necessary resources for the steel industry.

In fact, the recent data from China Custom have revealed the efforts. China imported 617 million tonnes of iron ore in 2010, down 1.4% than the previous year.

However, imports from smaller miners have showed significant growth in the past year. Between January to November in 2010, China imported 6.68 million tonnes of iron ore from Peru up by 22%, 4.41 million tonnes from Venezuela up by 77%, 12.88 million tonnes from Iran, up by 128%, 6.9 million tonnes from Indonesia up by 19%, 1.84 million tonnes from North Korea up by 167%, 1.72 million tonnes from Vietnam up by 10% and 6.10 million tonnes from Chile up by 17%.

Apparently, the surging iron ore spot prices and profitability of iron ore encourage smaller suppliers to jump into the iron ore market, thus pushing the imports from these countries to go up. Meanwhile, the overall decreasing in total imports and increasing amount from non-traditional iron ore suppliers indicated the Brazil, Australia and India market share have dropped in 2010.

Analysts pointed out that their market shares drops might be result from the economic recovery in Europe market and Vale have distributed quite a great deal of stock to the region. Traders revealed that importing iron ore from the major suppliers meant accepting the high cost at the market, and importing from smaller miners could mean the prices could be more flexible and thus more attractive.

The high iron ore spot prices have been pushing the index base quarterly contract prices to go up in the quarter one of 2011 as well. Sensing the huge demand from Chinese steel industry, major supplier like Rio, BHP and Vale have planned to expand production in 2011 and the onwards years.(sourced:mysteel.net, for real time access to China steel news)

Mr Mordashov foresees 8pct rise in Russian steel demand in 2011

Wednesday, 02 Feb 2011

According to Mr Alexey Mordashov chief executive of the leading Russian steelmaker Severstal at the World Economic Forum in Davos, demand in the Russian steel market could increase by eight percent in 2011, adding that in general the world steel market will be characterized by a rising tendency this year.

Mr Mordashov said "The prospects are good; we see an increasing conjuncture, a growing market both in terms of volume and prices. This is undoubtedly based on growing demand in view of national economic growth in Russia and in the world economy as a whole. Plus, we definitely see rising prices for raw materials, which in turn is also caused by the growth of the world economy, particularly in emerging markets."

Mr Mordashov said that in 2011 steel demand in the European market is unlikely to see much increase while in the US market it will grow insignificantly by just 1.5% to 3%. However, the biggest increase in steel demand is perhaps to be expected in the emerging markets.(sourced:steelorbis)