Daily Steel News - 22 May 09

China's Shagang lifts rebar and rod prices again
In line with market expectations, Shagang has increased rebar and wire rod ex-works prices for late May deliveries (21-31 May). Prices of 16-25mm HRB335 rebar and 6.5mm carbon wire rod have been respectively lifted by RMB 70/tonne ($10/t) and RMB 80/t to RMB 3,520/t ($516/t) and RMB 3,550/t, including 17% VAT. In total, Shagang has lifted rebar prices by RMB 170/t and wire rod prices by RMB 210/t during May, Steel Business Briefing notes. "Shangang raised prices to catch up with the market but I don't think its new prices will push up spot prices . they will just squeeze traders' profits," a Hangzhou trader says. As the trader predicted, Shagang's announcement did not see prices rise in either Hangzhou or Suzhou on 21 May. Hangzhou prices for Shagang sourced 16-25mm HRB335 remain unchanged at around RMB 3,530-3,550/t. Shanghai traders, however, tell SBB that local prices have increased slightly but transactions have yet to really improve. 16-25mm HRB335 rebar is offered at about RMB3,420-3,440/t, up by over RMB 20/t, and similar sized HRB400 rebar is priced at about RMB 3,520-3,530/t. A Suzhou trader thinks the price is likely to remain stable for a while, since new deliveries from mills are at normal levels. But given that billet prices in northern China's Tangshan area have dipped by about RMB 100/t to RMB3,100/t compared with the previous week, some traders worry rebar prices could also drop. All market prices include 17% VAT.

Daily Steel News - 20 May 09

Malaysian steel demand bottoming out
Malaysia's apparent steel demand in 2008 fell by 10.7% year-on-year and is forecast to contract by an additional 25% this year. There was a sharp drop in steel demand of more than 60% in fourth quarter 2008, and this low steel demand continued into the first quarter of this year. The market appears to be bottoming out, with de-stocking likely to continue taking place this year until Q3, says Chow Chong Long, president of the Malaysian Iron & Steel Industry Federation (Misif). Misif projects that demand for finished steel will pick up by 10-15% each quarter this year after prices reached lows in December that continued into first quarter 2009. "We are starting to see a pick-up in demand, and orders (for both domestic and export) are coming in slowly," Chow tells Steel Business Briefing. Since demand will take 2-3 years to reach levels seen in 2007, mills must exercise restraint, SBB is told. They cannot operate at full capacity yet unless there is demand from markets outside Malaysia. Steel demand has been helped by small government construction projects. The large government projects will take a little longer to be implemented, however. The government is also committed to a second stimulus package. Misif estimates that 25% or over $15bn will be spent on construction projects over the next two years. The average price of billet dipped to M$1,900/tonne ($538/t) in December 2008 and remained at that level for January and February 2009. Production levels and sales volumes dropped by an average of 60%, and the industry has only begun seeing a slight a recovery in sales or exports in recent weeks

SE Asian billet prices continue to surge
Billet import prices have risen in Southeast Asia to around $420-430/t cfr levels. Import buying was most active in Vietnam last week, regional trading sources tell Steel Business Briefing. The country has witnessed buoyant growth in its construction and building sectors in recent months. Bookings in Vietnam for Russian material took place at $420-425/t cfr. Higher-priced bookings were also heard for prompt shipments, especially for Asean-origin billet which enjoy a preferential import duty of 5% as compared to 8% for imports from elsewhere. Traders believe that Malaysian-origin billet was recently booked at around $435/t cfr. Some traders in Vietnam tell SBB that there are fewer offers of billet in the market because some mills are holding back offers in anticipation of higher prices. "Just when you think prices cannot go up further, mills ask for higher prices. Demand is there but price is an issue," a trader in Ho Chi Minh says. Offers of Taiwanese-origin billet were prevailing at $425-430/t cfr. Taiwanese trading sources say that the Taiwan mills will be seeking higher export prices of around $425/t fob because scrap prices have risen recently. This is the same export asking price of certain Malaysian mills. Bidding in the Philippines is at $415-420/t cfr and a booking was done there for Russian-origin billet at $420/t cfr. A small volume was concluded in Thailand last week at around the same price level, SBB is told.

Daily Steel News - 18 May 09

Scrap import prices ascend in east Asia
The scrap import market in east Asia continues to firm. A tender in Taiwan for a bulk shipment of P&S (plate and structural) scrap attracted offers at around $320/tonne cfr. Offers of bulk shipment to Southeast Asia are prevailing at around $295/t cfr for 80:20, importing sources tell Steel Business Briefing. Containerised 80:20 scrap was recently booked at around $270/t cfr Taiwan and new offer prices are prevailing at $280-285/t cfr. A trader claims a booking was closed at $275/t cfr after the importer negotiated down from the initially offered $280/t cfr. In Southeast Asia, offers of containerised 80:20 are prevailing at $280-285/t cfr. Importers in Vietnam are generally bidding at up to $290/t cfr for shredded in containers and $285/t cfr for 80:20. Traders say they cannot source at these bidding prices because limited offers are priced $5-10/t above bidding prices. The Japanese scrap market is also firm. Dongkuk Steel last week secured H2 grade at ¥24,500/t ($258/t) fob and HS (P&S) grade scrap at ¥26,500/t fob respectively. The Korean mill's booking was for June shipment totalling around 30,000t. Trading sources tell SBB that China and Taiwan are now actively making enquiries to book Japanese scrap because of rising offer prices from other sources. A lot of 5,000 t of HS grade was recently sold to China at $297/t cfr.

CIS billet export market is under pressure
Last week was not particularly active for the CIS billet export market, as producers were not budging in response to buyers' low bids, market sources tell Steel Business Briefing. As price expectations diverged, with buyers prepared to pay $340/tonne fob Black Sea, according to trading sources, and some traders offering $365/t fob Black Sea, there was very little business done. Consistent demand from China for the past three weeks has pushed up prices from $390/t to $425/t cfr, and now Chinese buyers are starting to get nervous, one major trader says. Although there is still a shortage of billet in the Far East, the knowledge that theirs is the only demand in the market right now gives them considerable bargaining power, he says. Indeed, after buying an estimated 400,000 plus tonnes of long products last month, Egypt is now quiet, with enough stock to last until the end of June, according to some sources. Turkey continues to be out of the equation, still unable to sell rebar, sources say. There was still demand for small quantities in Vietnam and the Philippines, at $415/t cfr, one major producer notes. Some traders say there were offers as low as $360-370/t fob Black Sea which were not accepted by the market. The sentiment is that there is a "negative wind", and with stocks being in moderately good shape, buyers might not start buying at all, unless demand livens up in Turkey and the Middle East. "Buyers and producers are in a stand-off," one source underlines.

Daily Steel News - 15 May 09

Chinese rebar export prices increase
Chinese rebar producers have raised export prices in tandem with domestic prices, mill and market sources tell Steel Business Briefing. Eastern China's Shagang is offering $480-485/tonne
($498-501/t) fob for vanadium-added rebar, while Chengde Iron & Steel in northern China is quoted at about $495/t fob for similar materials. April prices from both of these mills were recorded at $460/t fob, as SBB has reported. The offers are generally believed to be too high for new conclusions, compared with cheaper prices from Taiwan and CIS countries. A mill source tells SBB that it is better to sell in the domestic market as it can achieve higher prices, rather than compete with others in the lower priced export markets. Korea, however, remains a consistent buyer of Chinese rebar, though currently at smaller tonnages. One of the workable offers this week is from a northern Chinese mill at $490 cfr Korea. In domestic markets, rebar prices have strengthened since late April and continued to increase this week. After 16-25mm HRB33 rebar prices peaked at about RMB3,400-3,420/t, they dropped by some RMB 20/t on 14 May.

Australians selling ore 'wholesale' on spot market

Australian iron ore producers have begun "wholesale" selling of iron ore on a spot pricing basis, according to analysts at Macquarie Research. Compared with the benchmark price of about $90/tonne fob, recent sales appear to have been at a discount of around 40%. Chinese imports are increasingly being conducted on a spot pricing basis, Macquarie still expects a benchmark price to be concluded for 2009, especially for buyers who appear unwilling to move to spot pricing. I forecasts the benchmark price for Australian fines will be cut by 35%, and that for Brazilian ore by 30%. Price cuts for lump ore and pellets are likely to be larger, due to a major fall in demand for these products.

Daily Steel News - 14 May 09

China billet prices soar on de-stocking and better sentiment
Supported by rebounding steel prices, Chinese billet prices have continued to increase since late April, Steel Business Briefing learns from market sources. In northern China's Tangshan area, mills' ex-works prices for 150mm Q235 billet have soared to RMB 3,200/ton ($469/t), on a cash payment basis with 17% VAT. This compares with prices of RMB 3,020/t at the end of April. Chinese steel prices have strengthened since late April and continued climbing in May on the back of de-stocking and improved market sentiment. An industry source believes billet producers can generate healthy profits of RMB 200-300/t from current sales, but warns that rapid increases seen over the past few weeks could be followed by slight falls if sales start to slow again.

Fewer companies expect higher prices:
Price expectations
% of respondents
Higher prices Unchanged Lower prices
W/C 4 May 17% 43% 40%
W/C 27 Apr 25% 41% 34%
Change w/w -8% +2% +6%
The latest market survey results from The Steel Index show that fewer US, European and Asian companies expect higher prices than in the previous week, while the number of respondents foreseeing lower prices rose. However, more US companies are expecting higher demand in the next three months, but more companies elsewhere predict lower demand. There was a significant increase in European companies with lower inventories.

Daily Steel News - 13 May 09

Malaysian domestic prices increase for rebar and rod
Malaysian mills have raised domestic prices of wire rod and rebar on improved market sentiment and rising scrap prices, mill and trading sources tell Steel Business Briefing. Mill list prices for rebars have risen by RM 100/tonne ($28/t) since the last week of April to RM 2,000-2,100/t ($569-598/t) ex-works domestic prices of mesh-grade rod were raised across-the-board early this week by RM 50/t to RM 2,100/t. Mill sources say that wire rod prices were already raised by RM100/t last month. "Demand for long products is picking up. The outlook is better than two months ago," a manager with a local mill tells SBB. He adds that de-stocking has taken place and export orders for wire rod to the Middle East and neighbouring countries including Vietnam have increased during the period. Another mill manager says the recent launch of government construction projects, as part of the stimulus package, has played a part in boosting market confidence. While the mills have raised their list prices, traders tell SBB that actual selling prices are discounted by RM 50-100/t because demand has yet to fully return to normal levels. "Demand in Malaysia remains weak," a local trader notes. Malaysian mills are still offering billet exports at $420-430/t fob, which are not price-competitive within Southeast Asia."Why export billet if the mills can sell their finished product at much higher prices?" he rationalises. The conversion cost of billet into bar is normally around $40-50/t. Malaysian mills were actively exporting billet to countries such as Vietnam earlier this year.

China speeds up de-stocking of long products
De-stocking of steel in major Chinese cities has gathered speed, according to the country's ministry of industry & information technology (MIIT). By 20 April, market inventories had fallen 880,000 tonnes or 8.1% from end-March to 9.96m t. This follows the 4.2% drop by late-March from end-February. Rebar and wire rod stocks fell the most, the MIIT notes in a report seen by Steel Business Briefing. From late-March till mid-April, rebar and wire rod inventories dropped to 3.59m t and 1.25m t respectively, down by 12% and 21%.By contrast hot rolled coil, cold rolled coil and plate stocks dipped only slightly (by 1.5%, 0.8% and 1.6%) to 2.68m t, 1.18m t and 1.26m t respectively. MIIT also quotes data collected from 67 major mills (that produce 77% of China's steel) to show that crude steel production declined during the period 10-20 April. Over the ten days, the mills produced 10.93m t of crude steel, equivalent to a daily output of 1.09m t, down by 31,000t or 2.8% from the first ten days of April. Thus a preliminary estimate of China's raw steel output in April's first 20 days becomes 1.41m tonnes/day (a 3.1% decrease on March). But the ministry warns this is higher than the 2008 average of 1.37m t.

Some say pricing rebar basis LME, others say it's only talk
Some companies have begun pricing rebar contracts off the London Metal Exchange billet price, one exchange member company tells Steel Business Briefing. Turkish and, to a lesser extent, Middle East Gulf companies are pricing their rebar off the LME Mediterranean billet contract with a slight premium, the member says. However, LME-basis pricing isn't widespread and there is no formula for calculating the premium, he adds. Turkish export rebar is currently priced at $460-70/tonne, according to SBB data. With the latest cash mid-point for the LME Mediterranean billet at $335/t, this equates to a premium of $125-135/t. Other trading sources say companies have been talking about pricing off the LME, but are not yet doing so.

Daily Steel News - 7 May 09

Vietnam Steel raises domestic prices of long products
The state-owned steelmaker has raised prices in a series of price hikes starting 10 April, with the most recent being a VND 100,000/tonne ($6/t) hike for wire rod, and VND 150,000/t ($8/t) for rebar a week ago. The ex-mill price of its wire rod products is prevailing at around VND 10.2m/t ($574) and that for rebar around VND 10.6m/t ($596), excluding value-added tax. This is an increase of VND 300,000-600,000/t since early April. "At the moment, construction projects for private housing and buildings in Ho Chi Minh city and southern Vietnam are doing well," a VNSteel official tells Steel Business Briefing. He adds that there is also a shortage for billet in the country, especially billet for making wire rod, and imported billet prices have risen to the prevailing $410-420/t cfr.

Chinese rebar price showing signs of weakening
Increases in ex-works prices of rebars announced by steelmakers have given impetus to further rises in spot prices in eastern China. But some traders have begun loosening their offers, giving rise to fears of approaching weakness, market sources tell Steel Business Briefing. In the Hangzhou market, prices of Shagang-produced 16-25mm rebar strengthened by about RMB 30/tonne ($4/t) since 4 May to a prevailing RMB 3,400/t ($499/t). Shanghai market, rebar prices have also risen by about RMB 20-50/t since 4 May. Offer prices of 16-25mm HRB335 rebar are currently around RMB3,280-3,330/t, while those of same sized HRB400 rebar have climbed to RMB 3,370-3,400/t. But a Hangzhou source says that from late on 5 May, transactions have slowed and some traders have begun clipping prices to spur sales. The same phenomenon is seen in Beijing, with a trader there telling SBB that while HRB335 prices are being kept at about RMB 3,500/t, some traders have lowered their prices to RMB 3,480/t. All market prices include 17% VAT. "It's very hard to propel the prices up without support of strong demand," a Shanghai trader says. "But on the other hand, price collapses are unlikely to happen." The Hangzhou source predicts that markets could continue to fluctuate along the bottom until September. On 5 May, the closing price for September rebar contracts on the Shanghai Futures Exchange dropped to RMB 3,577/t, from RMB 3,636/t on 4 May.

Manila hears demand for safeguard duty on angle imports
A hearing is taking place this week at the office of the Philippines' Tariff Commission to examine a safeguard petition filed by major sections producers Cathay Metal Corp, Dragon Asia Rolling Mills and Lunar Steel Corp. The mills allege that imports of angle bars of less than 80mm have injured local producers and are seeking the imposition of a duty of a minimum P 14,000/tonne ($292/t) on imports. A 5% import duty already exists, though imports from the Asean countries enjoy a preferential duty of 3%. The commission has affirmed claims by local producers that the volume of imports surged during 2004-2007 and that local production fell in the same period. It also determined that local products were identical to the imports, despite importers arguing that a difference exists between local and imported products. The commission's determination enables the domestic industry to apply for protection through the application of safeguard measures. In the report, the commission notes that imports increased from 338 t in 2004 to 31,847 t in 2008, and at the same time domestic producers' market share fell from 99.8% to 49%. Though mostly from China, some imports were from Taiwan, a spokesperson of the Steel Angles Shapes & Sections Manufacturers Association of the Philippines tells Steel Business Briefing. Several domestic producers have either halted operations, turned to producing round and deformed bars, or are opting to produce angles intermittently, SBB understands.The Tariff Commission is due to submit its recommendations to the Department of Trade & Industry by mid-June.

Rebar prices firmer, plate unchanged, says The Steel Index
The latest reference prices released by The Steel Index this week show that European rebar prices have risen since last week. US plate prices are essentially unchanged, while southern European plate prices have consolidated at similar levels to two weeks previously. Rebar ex-mill reference prices in northern Europe are €11/tonne higher than last week at €323/tonne ($427/t), and the average lead-time is longer at 2.4 weeks. The southern European rebar price is also higher than last week at €365/tonne ($483/t), and the average delivery time is also longer at 3.2 weeks. The US plate FOB Midwest mill reference price is just $2/short ton lower than last week at $604/short ton ($666/t), and the average US plate delivery time is shorter at 3.7 weeks. In southern Europe the plate reference price is now at €450/tonne ($595/tonne), which is almost the same as two weeks ago.

Daily Steel News - 4 May 09

Chinese rebar prices firm again

Chinese rebar prices have rebounded since 27 April following the declines in the latter half of the previous week. But some traders predict that prices may copy the earlier trend and drop in the beginning of May. "Demand will probably strengthen a little next month (May), but I don't expect it will be enough to hold the prices; market inventories are decreasing but production remains high," a Shanghai trader says. He adds that rebar prices could dip again, but by no more than RMB 100/t ($15/t). Another Shanghai trader says transactions have slipped from 29 April following an improvement in the first two days of the week. Prices will be under pressure if May sees large increases in new deliveries, he adds. Steel Business Briefing learns that prices in both Shanghai and Beijing increased by about RMB 100/t in the last week. Shanghai traders are offering RMB 3,280-3,300/t ($481-484/t) for 16-25mm for HRB335 and RMB 3,350-3,380/t for same sized HRB400. Meanwhile, Beijing prices for 16-25mm HRB335 have moved up to about RMB 3,500/t. All prices include 17% VAT. In line with the physical market, prices on the Shanghai steel futures market have also increased. The September rebar contracts closed at RMB 3,553/t on 30 April, compared with RMB 3,499/t on 27 April.

Little change in billet import prices to East Asia

Billet import transaction prices are holding at $410-420/tonnes cfr Southeast Asia, trading sources in the region tell Steel Business Briefing. There are not many offers in the market, traders say, and at the same time regional buyers are reluctant to pay the higher asking prices sought by suppliers. "Buyers don't want to pay the price because nobody knows where the price is," a trader in Vietnam says. While billet of Malaysian and Taiwanese origin is offered at $415-420/t cfr to the region, some traders report that mills from these countries are also pushing for higher export prices of $425-430/t cfr to the region including Vietnam. Taiwanese importers booked 30,000-40,000 t of various grades of blast furnace billet .wire rod-making, carbon and vanadium-added billet . from Japan at $390-396/t cfr around two weeks ago. A cargo of 5,000 t of Japanese origin SD390 billet was booked more than a week ago at $410/t cfr Haiphong, a Vietnamese trader reports. The import market in the Philippines is quiet, local traders tell Steel Business Briefing. "The users here are fully covered until July," says a trader in Manila who describes demand as having "slowed down". The last deal was a booking for Taiwanese billet at $405/t cfr made earlier this month.

Offer prices to East Asia for containerized scrap jump

Offer prices for containerised scrap imports have risen in east Asia. At around $260/tonne cfr, containerised scrap offers are higher-priced than bulk scrap which last concluded at $255/t cfr Korea for HMS 1. "I've had no bookings for the last three weeks because scrap prices are moving up fast," a Vietnamese scrap trader tells Steel Business Briefing. He says that offers of containerised mixed ferrous scrap cargo of 80:20 heavy melting scrap (HMS) 1/2 and shredded are at $285-290/t cfr whereas bids are at $270/t cfr for 80:20 and $275/t cfr for shredded. Another says he has heard that containerised scrap was booked at $270/t cfr Vietnam whereas offers are now at $280-285/t cfr for 80:20. Offers of containerised shredded are prevailing at $280/t cfr Malaysia. However, importing sources claim that they booked a small lot at $255-260/t cfr last week. In Taiwan, those that needed material recently booked containerised 80:20 material at $260-265/t cfr. "Buyers are generally resisting these higher scrap prices, at least for the short term," a Taiwanese trader says. He notes that certain mills, such as Feng Hsin Iron & Steel, preferred to book Russian pig iron at $275/t cfr instead. The Taiwanese are expected yield to higher scrap prices if the rising price trend continues. In Korea, no offers of bulk scrap are heard because of recent bookings which will see a large volume of bulk scrap arriving in May and June. This week Hyundai Steel booked Japanese H2 grade scrap at ¥23,200/t ($237) fob. "Japanese scrap suppliers are asking for more than ¥24,000/t but the Korean mills are in no hurry to book because of the inflow of scrap after Golden Week," a trader in Seoul says.