Daily Steel News - 27 Mar 09

SHFE tables opening bar, rod prices for futures launch today
The Shanghai Futures Exchange (SHFE) has published benchmark prices for rebar and wire rod futures with which trading will be formally launched on 27 March. The opening rebar contract price will be RMB 3,399/tone ($498/t) while wire rods will open at RMB 3,199/t ($468/t). Steel Business Briefing notes that physical spot market prices in Shanghai for 16-25mm HRB400 rebar are prevailing at about RMB 3,250/t with 17% VAT, up by about RMB 80/t since 23 March. Q235 (HPB235) wire rod prices have also increased by some RMB 50/t compared with early this week to RMB 3,220/t, also with VAT.

China's State Council approves tax rebate rises for exports
China's State Council has formally approved a proposal to increase the tax rebates for exports of a range of products including some finished steel items, textiles, non-ferrous metals, petrochemicals and light industrial goods. The new export rebates will take effect on 1 April. Although the State Council did not disclose the extent to which the export rebates on steel will be increased, a source close to the China Iron & Steel Association (CISA) says the new rebates might be lower than those the industry has lobbied for. In early March CISA, which represents 71 mills, petitioned the finance ministry to increase the rebates on cold rolled products to 17% from 5% presently, and those on hot rolled flat products to 13% from zero. However, most traders and mills contacted by Steel Business Briefing remain largely indifferent to the
increased export rebates, saying that without a recovery in global demand, the rebates are unlikely to result in an effective boost to the steel export market.

Scrap suppliers bump up offer prices to east Asia
Scrap suppliers are aiming to hike their offer prices by $20-30/tonne from last week's offers of $230-240/t cfr east Asia for bulk heavy melting scrap (HMS) 1&2 80:20, regional trading sources tell Steel Business Briefing. Importers report receiving new bulk 80:20 offers at $255-265/t cfr this week. These higher-priced offers are buoyed by recent buying by Turkey and improved sentiment for billet. Freight rates have also risen. Importers are generally not keen to book scrap now. "Chinese buyers want to wait," a Chinese trader tells SBB. A week ago Korea's Hyundai Steel booked three bulk cargoes . two from Sims and one from Schnitzer Steel Industries . at $232/t cfr for HMS No.1 basis. It also secured containerised scrap recently at $220/t cfr HMS No.1 basis. Offer prices of containerised 80:20 scrap have been raised to $230-240/t cfr. While traders report that this was recently booked at $230/t cfr Taiwan, buyers in Taiwan are generally bidding at $210-220/t cfr. Japanese H2 grade scrap prices are also rising, with export offers at $230-240/t cfr east Asia including Taiwan, China and Singapore. The last booking heard for H2 grade scrap was at $210-215/t cfr China. Hyundai's latest booking price for H2 grade scrap from Japan was ¥19,800/t ($202/t) fob, up from ¥19,300-19,500/t fob previously. Daehan Steel bid H2 on 26 March at ¥20,000/t fob. Korean trading sources are uncertain if Japanese suppliers would want to supply at this price. "It is hard to get offers. Japanese scrap prices are rising and suppliers want to see if the market moves up some more," a Seoul-based trader says.

ACCC approves Chinalco’s acquisition deal with Rio Tinto
According the report on Wednesday, the Australian Competition and Consumer Competition (ACCC) agreed the US$19.5 billion deal by Chinese state-owned Chinalco’s strategic takeover plan in Rio Tinto.In this deal, Chinalco will acquire stakes in some assets of Rio Tinto which includes iron ore mine and raise its interest in the dual-listed miner from 9 percent to 18 percent.This deal also has raised concerns of iron ore price that may benefit the Chinese steel mills by below competitive price levels. The ACCC concluded that the acquisition should not lower competition substantially under section 50 of the Trade Practices Act 1974. However, ACCC has different point of view from FIRB’s review. FIRB extended its review by 90 days.

Iron ore freight rates down marginally on lack of activity
Capesize freight rates have fallen slightly week-on-week because of inactivity, brokers tell Steel Business Briefing. Tubarão-Rotterdam iron ore movements fell from $8.30/tonne on 20 March to around $8.20/t on 25 March. Tubarão-China rates have also receded slightly from just below $17/t to $16.50/t. West Australia-China shipments are now pegged at $6.90/t, up slightly from last week as a result of ore shipments from BHP Billiton and Rio Tinto, according to one Norwegian broker. The Baltic Dry Index slipped 18% day-on-day on 25 March, partially a result of downward trending Capesize rates. Rates in the Atlantic basin have fallen on slacker demand exacerbated by a number of ballasters from the Far East.