Daily Steel News - 26 Feb 2009

China’s 2009 steel consumption to increase by 40 million tons

According to a study analysis by the China Iron and Steel Association (CISA), the governmental “4 trillion stimulus package” and “top ten industries revitalization scheme” will push steel consumption of 2009 up to 430 million tons, increased by 40 million tons.It will focus on 4 industries – equipment manufacturing industry, shipbuilding industry, auto industry and petro-chemical industry. And the steel consumption of year 2010 and 2011 will also increase further benefited from the favorable policies.

European demand for steel drops by 40%
UK steel industry is now suffering the severe recession, which has not been seen in 30 years and steel output has plummeted to an unprecedented level since 1980.With the global economic crisis, steel demand from automobile and construction industries has plunged, forcing the worldwide mills to cut the output and jobs.According to the statistics, UK crude steel output fell to less 700,000 tons, down by 45 percent. And European steel demand has fallen by 40 percent, all the way down since 2008. Corus, the second largest steel corporation in Europe and ArcelorMittal NL-MT, the world’s largest steel company, both have cut the jobs and output in response to the recession.

Daily Steel News - 25 Feb 2009

Tokyo Steel cuts scrap buying prices twice in two days
Tokyo Steel Manufacturing is cutting its scrap buying prices again, this time by ¥1,000/tonne ($10/t) for all grades at all works effective from 26 February arrivals. The reduction is the mini mill's second this week after it clipped prices by ¥1,000-2,000/t from 24 February. After Tokyo Steel's earlier reduction, other mini mills followed and pared their prices by the same margin. "But scrap export prices also fell by ¥1,000/t to around ¥20,000/t fob for H2, so Tokyo Steel again decided to cut its prices," a scrap trader tells Steel Business Briefing, pointing out that with its reduced output Tokyo Steel doesn't need much scrap. After the reduction, Tokyo Steel's H2 prices at its Okayama and Kyushu works become ¥19,000/t $196.3/t) and those at Takamatsu and Utsunomiya become ¥18,000/t and ¥20,000/t respectively. Average scrap buying prices by Japanese mini mills peaked at ¥19,177/t ($198/t) in the first week of February after 26/02/09 9/18 bottoming at ¥9,588/t last November, SBB learns from the Japan ferrous raw materials association.

Japanese scrap price falling
Japanese scrap price keeps on falling and may decrease further because China and Taiwan have refrained from buying scrap. It is reported that Korean Hyundai purchased H2 scrap from Japan last week, at ￥22,000/ton. Besides, Hyundai won’t purchase more for the time being, but they will consecutively request to reduce the purchasing price. Japanese high level scrap price won’t slide in line with dropping H2 scrap price. Hyundai’s latest purchasing price for new scrap was ￥25,000/ton, and that of P&S scrap was ￥24,000/ton.

Tokyo Steel cuts H2 scrap purchase price
Japan’s Tokyo Steel is cutting their H2 scrap purchase price by ￥1,000～2,000/ton to the level of ￥19,000～21,000/ton, first adjustment over the past three weeks.Consequently, if calculated on base price of ￥20,000/ton and plus sea freight, Japan’s offer on H2 scrap to Taiwan stays at US$240/ton.

China to adjust import, export tax policy in March
China will launch new policies on steel industry in March, which involves more flexible export duty to ensure 15 percent of total steel output for export market. This plan indicates that Chinese steel export may decline by 50 percent in 2009 and steel makers are facing the hardest time in recent years. China will take further actions to expand domestic steel consumption especially in construction steels, which is occupying 50 percent of total steel consumption locally. China will keep current tax level for steels with low grade and profit margin while will impose more attractive tax on highly profitable steels. However, import tax on some steels may be increased by the government in order to protect internal steelmakers.

China's overcapacity may be 200m t/y this year - Eurofer
China has no global cost advantage in steel making, yet could have a crude overcapacity of 100-200m tonnes/year this year, according to a new study on the country's industry prepared by Eurofer, the European steel makers' association. The study is primarily designed to alert the European Commission and EU governments to China's insidious influence in the global steel market, Ian Rodgers of UK Steel told Steel Business Briefing at its launch in Brussels.
The growth of China's industry over the last 5-10 years was not market-driven, said Markus Taube of Germany's Think!Desk Consulting, and author of the Eurofer study. Rather it was steered by a "cartel" involving top steel managers and governmental and industry bodies (such as the National Development & Reform Commission and China Iron & Steel Association).
The result has primarily benefited the top 20 or so mills. Many of the smaller enterprises, described as "renegades" by Taube, are outside this "China Steel Inc" state-business relationship. They often align themselves with local stakeholders, and defy central government policies, he added. These various alliances, often backed up by subsidies and other financial benefits detailed by the company in the report, have supported the industry's expansion. Pre-crisis, Taube estimates overcapacity at more than 100m t/y; this year, including an estimated 10% decline in output, it could reach 200m t/y. Consequently China's exports to Europe have increased significantly in the last few years. Taube says this reflects the domestic market distortions, which have depressed costs and unfairly strengthened the mills' international competitiveness.

Perwaja & Southern Steel record losses

24-02-2009:
Perwaja slips into the red in 4Q, RM90m net profit for FY08
Fong Min Hun http://www.theedgedaily.com/cms/content.jsp?id=com.tms.cms.article.Article_a641f14d-cb73c03a-1a8402c0-a6a45244#
KUALA LUMPUR: Perwaja Holdings Bhd slipped into the red with a net loss of RM212.82 million in its fourth quarter ended Dec 31, 2008 after registering a strong set of results in the previous three quarters.
It attributed the loss to lower selling prices and sales volume and a writedown to net realisable value in inventories amounting to RM225.8 million.
Revenue plunged 77.4%, or RM756.7 million, from RM978 million in the previous quarter due to the international steel market slump and weakening global economy.
Due to the strong previous quarters, Perwaja, which was listed last August, stayed in the black for the full year with a net profit of RM90.15 million, while revenue surged 38% to a record RM2.33 billion in FY08 from RM1.69 billion in FY07.
The group made provisions totalling RM346.1 million for the impairment of inventory value in the second half of 2008. Excluding the provisions made, the group would have posted a 168% rise in full-year net profit to RM436.2 million for FY08 from RM162.6 million in FY07.
“2008 was a roller-coaster year not just for Perwaja, but for the industry as a whole,” Perwaja managing director Tan Sri Pheng Yin Huah said in a statement.
“We achieved a strong set of results in the first half of 2008, driven by a sharp spike in steel price and robust demand both from the domestic and regional markets. Unfortunately, the downswing in the second half of the year was just as sharp, and this had reduced our overall performance.”
Perwaja expressed “cautious optimism” for FY09 owing to the government’s stimulus spending and signs of improvement in the market.

Friday February 20, 2009
Southern Steel records loss
Southern Steel Bhd posted a RM300mil loss in the last quarter ended Dec 31, as the steep drop in steel prices eroded the value of its inventories.
Its revenue was RM489mil versus RM689mil registered in the same quarter a year earlier.
The huge losses in the last quarter dragged down the group’s full year (FY08) earnings to RM105mil from RM192mil previously.
“The lower profit was due to poor market conditions in the second half of the year and the dimunition in value of inventories,” Southern Steel said in a filing with Bursa Malaysia.
“The board does not expect a quick recovery and expects this new financial year to be challenging,” it added.
The company said the steel sector was probably the worst affected in terms of the drop in demand and prices, as the financial crisis dragged the world into a recession.

Daily Steel News - 24 Feb 2009

Feng Hsin drops rebar, section prices
Taiwan’s Feng Hsin Iron and Steel has announced to adjust down its price this week. The company is dropping its domestic rebar prices by NT$1,000/ton and section by NT$500/ton. The company’s rebar price is now about NT$19,800/ton. Price of section is in a range of NT$19,000~19,200/ton. The company unchanged its scrap purchasing price at the range of NT$7,100~7,600/ton.

China aiming to export 70 million tons of steels in 2009
China is launching series of plans and new policies in order to cope with sliding steel export and aiming to export 70 million tons of steels this year. Statistics shows that In January, China sold only 1.91 million tons of steels to foreign market, which is down by 54 percent in comparison with last January’s level. China will adopt more flexible tax rate and adjust targeting markets to reach its goals. It will focus more on Asian market and African market in coping with pressures from American and European market. China will also expand domestic steel consumptions especially in construction and automotive industries.

Steel News - 23 Feb 2009

Low-priced offers of rebar depress markets in SE Asia
The optimism held by regional mills in Taiwan and Korea earlier this month that the regional markets for long products were picking up has now evaporated. The sellers were eying higher export prices of $510-520/tonne cfr Southeast Asia.A cargo of 20,000-30,000 tonnes of Turkish-origin rebar was booked by importers in Singapore and the region at $450/t cfr. Offers from regional suppliers in Taiwan and Korea are at $470/t cfr Singapore levels. There are also new suppliers to the region. Brazilian rebar was offered at $470/t cfr. An offer of Polish rebar offered at around $450/t cfr is not attracting much buying interest because the shipment time is relatively long. The last reported booking in Singapore was Korean-origin rebar at $490/t cfr around three weeks ago.

Bearish sentiments in SE Asia hold back billet deals
Offers of imported billet from the CIS are generally prevailing at $385-400/tonne cfr Southeast Asia. "There is no movement because prices are on the downtrend. Offer of Russian billet at $380/t cfr but is uncertain if bookings have been made. The last concluded deal involving Ukrainian billet was done at $385/t cfr Philippines. Offer prices to Vietnam are prevailing at $390-400/t cfr for Russian billet. The prevailing domestic price for local billet is around VND8.0m/t ($450/t).

CIS, Turkey’s billet price to slide further
European rebar, section and wire rod markets remain sluggish, leading CIS and Turkey’s billet price to fall again. It’s forecast that there’s still some room for the price to keep falling.Turkey’s long product price is sliding gradually and meanwhile the exchange rate of lira and US dollar has depreciated, making the US dollar price also drop. At present, the rebar price has fallen to US$400/ton, wire rod to US$425-435 and section price to US$450-480/ton. Because of the falling price of long products and the weak demand for scrap price, last week’s Turkish billet export quotation fell to US$370-390/ton. In addition, CIS billet export also fell last week, to US$345-360/ton.

Lack of confidence depresses rebar demand in MidEast
Rebar trading in Lebanon is reported to be very slow. The market is getting offers from Ukraine, Turkey and China, but China is uncompetitive as its offers are higher than those of Ukraine and Turkey.
Ukrainian rebar offers are reported to be at $400-410/tone cfr in Lebanon. Turkish offers still reported to be higher in the country at around $440-450/t cfr. China's last offers were around $500/t fob, with a freight rate to Lebanon of around $50/t.
The retail price for rebar is reported to be $540/t in the Lebanon market. The rest of the Middle East was out of market last week, with the expectation of prices to fall. Various offers from Turkey are being heard from $450/t fob and lower, but lack of confidence in the market pushes the demand down.

Taiwanese rebar market remains uncertain
Taiwan’s rebar prices are still prevailing at NT$15,500/ton this week; however, some mills have tried to promptly sell off the rebar, they have reduced the price to NT$14,500/ton even down to NT$14,300/ton in order to attract the buyers.Taiwan’s government tries to expand the projects of domestic demands to rescue the economy, but it still needs time to plan and prepare. Therefore, the mills have to wait and suffer the difficult situation until April.

H-beam, channel beam prices hold stable in China
China's market price of H-beam and channel beam prices remained stable on Monday. The price of H-beam of 346*174 (Q235) from Laisteel is currently at RMB3,850/ton, and that of 496*199 (Q235) from Masteel is at RMB3,700/ton. Regarding the channel beam, the price of 14#a(Q235) from Mateel is at RMB3,830/ton. And that of 36#a (Q235) from Laisteel is at RMB 4,050/ton.

Turkey's scrap imports up by 1.6% in 2008
Turkey imported 17.41 million tons of scrap in 2008, increased by 1.6 percent compared to the same period of last year. America was the biggest exporter of scrap to Turkey at 5.045 million tons, up by year-on-year 27.7 percent. Russia's scrap shipments to Turkey totaled 2.206 million tons, down by 36 percent from last year. Besides, U.K. occupied 1.823 million tons, Romania 1.431 million tons, and Netherland 1.117 million tons.

Korea's scrap imports soar by 6.3%
Korea imported 7.314 million tons of scrap in 2008, an increase of 433,000 tons or 6.3 percent compared to the same time last year. America was the biggest exporter of scrap to Korea at 2.865 million tons, up by year-on-year 40 percent.Japanese scrap product shipments to Korea totaled 2.33 million tons, down by 31.2 percent from last year. Besides, Russia occupied 1.184 million tons.

America's scrap export soar by 30.5% in 2008
America exported 21.712 million tons of scrap in 2008, increased by 4.9 percent compared to the same period of last year. Among them, Turkey ranked the first largest export destination at 4.482 million tons, up by year-on-year 37.4 percent; China ranked the second at 2.827 million tons, increased by 14.5 percent compared to the same period of last year; Korea ranked the third at 2.635 million tons, up by 93.1 percent from last year. Moreover, Taiwan occupied 2.58 million tons, Canada 1.676 million tons, Malaysia 1.273 million tons Thailand 1.063 million tons and India 883,000 tons.

Russia to place limits on scrap exports
Russia has decreed that the scrap export in its east gulf will basically be limited; this will have a serious impact on the Korean electric steel mills which depend on Russian scrap. The Russian government said in December that no area is allowed to export scrap except for the port of Petropavlovsk-Kamchatsky in Kamchatka peninsula. This means that Russian scrap can only be exported via Petropavlovsk-Kamchatsky. In 2002, the Russian custom committee also decreed limits to the exporting of scrap at its 8 ports because of shortages in the domestic market

China disagrees Vale's 10% reduction on iron ore
It is said that Vale still insisted on 10 percent reduction of the 2009-2010 iron ore contract price, and this proposal is firstly been raised by the end of January. But China's iron and steel manufacturers have asked for a greater rate of decline. The China Metallurgical Mining Enterprise Association (CMMEA) said that if China is willing to accept lower prices for iron ore 10 percent of the proposal, Vale will immediately sign the contract price, but no manufacturer is willing to accept it. China Iron and Steel Industry Association (CISIA) and Baosteel Group are working with Vale, Rio Tinto and BHP Billiton on the three iron ore giants 2009-2010 iron ore contract price negotiations.

BHP agrees price cut for coking coal with SAIL
It is reported that Australia’s BHP Billiton has entered into a re-negotiation agreement in response to a 50 percent price drop on the long term coking coal contract with the Steel Authority of India Ltd. (SAIL).The price of coking coal will drop to US$150/ton from US$300/ton.The long term contract will last till this June. The new prices in the next round will be based on the negotiation between BHB and Japan’s steelmakers. It is expected that the new price will be lower than the current level.

Iron ore reference prices fall back, reports The Steel Index
The latest iron ore spot prices released by The Steel Index last Friday show that both grades of iron ore covered have dropped in price since the previous week. The reference price for 62% Fe content iron ore fines fell by $4.70/dry metric tonne to $74.30/dry metric tonne cfr Tianjin port,China. This price had risen during the previous three weeks, but is now only just higher than it was a month ago. The reference price for 58% Fe content fines also fell, by 1.1%, to $64.70/dry metric tonne cfr Tianjin port. Prices for this grade are still $4.70/dry metric tonne higher than four weeks ago. The Steel Index is owned by Steel Business Briefing and specialises in compiling steel and iron ore reference prices based on actual transaction data.

Global crude steel output falls in January
According to statistics released by the World Steel Association (worldsteel), in January 2009 global crude steel output hit 85.768 million tons, down by 24 percent compared with 112.9 million tons in the same month of 2008.Japan's crude steel output fell by 37.8 percent to 6.37 million tons, while Korea dropped by 25.6 percent to 3.47 million tons.EU crude steel production in January reached 9.549 million tons, decreased by 45.9 percent. Among them, the German’s production was 2.651 million tons, down by 35.6 percent, Italian production was 1.592 million tons, down by 40.4 percent and France output hit 858,000 tons, down by 46.7 percent.CIS crude steel production in January dropped to 5.755 million tons, down by 46.9 percent. U.S. output was 4.09 million tons, down by 52.9 percent, Brazil produced crude steel about 1.617 million tons, down by 45.6 percent decline while in Turkey the output hit 1.951 million tons.

China to cut steel production by 8% in 2009
It is reported that China has decided to bring its steel production down by 8 percent as compared to last year and limit it at 490 million tons in 2009. This is against an output of 500 in 2008, of which more than 10 percent was exported while the export will only be 8 percent in 2009. Meanwhile, the government will support consolidation and maintain the current 10-25 percent export taxes on low-value products, but the VAT rebates on high-value products are likely to increase.Russia predicted to resume 70~80% of total steel capacity in MarchAccording to Russian official statistics, the steel capacity will rebound to 4.3~ 4.5 million tons in March, equivalent to 70~80 percent of total monthly capacity.Russian steel finished product output in January has surged to 3.5 million tons, up by about 30 percent compared to that of last November.Although its Steel finished product output recovered, the steel pipe market remained quite.

Indonesia's steel imports to fall in 2009
Executive director of Indonesia Iron and Steel Industry Association (IISIA), Mr. Hidayat Triseputro said that it was estimated that steel imports in Indonesia will decrease to 1.5 million tons this year due to weak international market and overstock in domestic market. The steel import amount was 6 million tons and 10 million tons in 2007 and 2008 respectively.

Malaysia - Scrap iron and steel products expected to cost more - 12 Feb 2009

Scrap iron and steel products expected to cost more
By ELAINE ANG
PETALING JAYA: The recent rebound in iron ore spot prices, slowing de-stocking of steel inventories and the economic stimulus activities around the world have raised expectations that prices of scrap iron and steel products may start rising, industry players and analysts said.
Malaysian Iron and Steel Industry Federation (MISIF) president Chow Chong Long said scrap iron prices could firm up in tandem with iron ore prices and steel mills would have to adjust their product prices accordingly.
Steel bar price at about RM1,900 per tonne currently is very competitive internationally, says MISIF president Chow Chong Long.
“Steel bar price at about RM1,900 per tonne currently is very competitive internationally,” he told StarBiz. “I think the chances are higher for steel product prices to be on the uptrend than downtrend as raw material prices increase and demand improves as de-stocking activities wind down and economic stimulus packages in various countries start to take off.”
Chow expects the de-stocking of steel inventories to be completed latest by the second quarter on average globally.
Spot iron ore prices have been improving in the past few months with prices narrowing to a 15% discount to the benchmark contract price of US$82 to US$83 per tonne before Chinese New Year (CNY) and a 9% discount after CNY, compared to a more than 30% discount at the end of last year, according to OSK Research’s analyst Ng Sem Guan.
However, negotiations are under way between mining companies and major steel players on new iron ore contract prices to take effect April 1.
Ng said the consensus was for a 20%-40% cut in benchmark contract prices due to deteriorating steel demand worldwide.
Despite the potential cut in iron ore prices, Ng sees steel prices consolidating at current levels of US$520 (RM1,860) to US$580 (RM2,080) per tonne based on the historical correlation between steel and iron ore prices.
“Demand for steel products especially long steel may drop by some 10% this year versus 2008. We expect the same quantum for steel production and sales this year,” Ng said. “The outlook may be weak but it is not as bad as many think – steel consumption should be boosted by government pump priming.”
AmResearch analyst Mak Hoy Ken said demand for steel in the country would very much depend on how fast big-impact projects such as the double tracking project was implemented and the effectiveness of stimulus packages elsewhere around the world.
“The impact of the stimulus packages will filter down to economies globally thus boosting demand of steel with prices following suit,” he said.
On the performance of local steel players, OSK’s Ng expects them to have normalised margins from the second quarter of the year as hefty inventory losses would have been written off in the fourth quarter of 2008.
“Investors can look forward to better profitability and books as the players’ cost structure readjust to normal and this could lead to a re-rating of steel stocks,” he said.

Steel Bar Prices in Malaysia - updated on 23 Feb 2009

Month/Year/Week/Price(MT)
Feb-09
Week 1 - RM1,950.00
Week 2 - RM1,900.00
Week 3 - RM1,840.00
Week 4 - RM1,800.00

Jan-09
Week 1 - RM1,980.00
Week 2 - RM1,860.00
Week 3 - RM2,000.00
Week 4 - RM1,950.00

Dec-08
Week 1 - RM2,000.00
Week 2 - RM2,000.00
Week 3 - RM2,100.00
Week 4 - RM2,020.00

Nov-08
Week 1 - RM3,000.00
Week 2 - RM2,750.00
Week 3 - RM2,750.00
Week 4 - RM2,000.00

Oct-08
Week 1 - RM3,200.00
Week 2 - RM3,200.00
Week 3 - RM3,200.00
Week 4 - RM3,000.00

Sep-08
Week 1 - RM3,500.00
Week 2 - RM3,300.00
Week 3 - RM3,200.00
Week 4 - RM3,200.00

Aug-08
Week 1 - RM3,900.00
Week 2 - RM3,800.00
Week 3 - RM3,800.00
Week 4 - RM3,800.00

Jul-08
Week 1 - RM3,880.00
Week 2 - RM3,880.00
Week 3 - RM3,930.00
Week 4 - RM3,930.00

Jun-08
Week 1 - RM3,780.00
Week 2 - RM3,780.00
Week 3 - RM3,780.00
Week 4 - RM3,880.00

May-08
Week 1 - RM3,534.00
Week 2 - RM3,534.00
Week 3 - RM3,634.00
Week 4 - RM3,780.00

Apr-08
Week 1 - RM3,154.00
Week 2 - RM3,254.00
Week 3 - RM3,304.00
Week 4 - RM3,434.00

Mar-08
Week 1 - RM2,754.00
Week 2 - RM2,854.00
Week 3 - RM2,954.00
Week 4 - RM3,054.00

Feb-08
Week 1 - RM2,504.00
Week 2 - RM2,554.00
Week 3 - RM2,604.00
Week 4 - RM2,654.00

Jan-08
Week 1 - RM2,354.00
Week 2 - RM2,454.00
Week 3 - RM2,454.00
Week 4 - RM2,454.00

Dec-07
Week 1 - RM2,302.00
Week 2 - RM2,352.00
Week 3 - RM2,352.00
Week 4 - RM2,352.00

Nov-07
Week 1 - RM2,152.00
Week 2 - RM2,202.00
Week 3 - RM2,252.00
Week 4 - RM2,252.00

Oct-07
Week 1 - RM2,052.00
Week 2 - RM2,052.00
Week 3 - RM2,102.00
Week 4 - RM2,102.00

Sep-07
Week 1 - RM1,952.00
Week 2 - RM1,952.00
Week 3 - RM2,047.00
Week 4 - RM2,052.00

Aug-07
Week 1 - RM1,942.00
Week 2 - RM1,942.00
Week 3 - RM1,942.00
Week 4 - RM1,942.00

Jul-07
Week 1 - RM1,917.00
Week 2 - RM1,912.00
Week 3 - RM1,902.00
Week 4 - RM1,942.00

Jun-07
Week 1 - RM2,067.00
Week 2 - RM2,057.00
Week 3 - RM1,932.00
Week 4 - RM1,922.00

May-07
Week 1 - RM2,067.00
Week 2 - RM2,062.00
Week 3 - RM2,052.00
Week 4 - RM2,067.00

Apr-07
Week 1 - RM2,067.00
Week 2 - RM2,067.00
Week 3 - RM2,077.00
Week 4 - RM2,067.00

Mar-07
Week 1 - RM2,067.00
Week 2 - RM2,067.00
Week 3 - RM2,067.00
Week 4 - RM2,067.00

Feb-07
Week 1 - RM1,877.00
Week 2 - RM1,897.00
Week 3 - RM1,917.00
Week 4 - RM1,967.00

Jan-07
Week 1 - RM1,817.00
Week 2 - RM1,627.00
Week 3 - RM1,627.00
Week 4 - RM1,627.00