Malaysian mills raise bar and wire rod prices
Malaysian mills have increased domestic prices of rebar and wire rod by RM 100/tonne ($29/t). This follows a similar magnitude price rise last month. List prices effective 1 June are RM 2,100-2,200/t for rebar. Wire rod is priced at around RM 2,200/t. "Prices are rising because of tight supply of bar and wire rod," a Malaysian trader tells Steel Business Briefing. He attributes this to a shortage of scrap and possible over-commitment by domestic mills in their export sales of billet. "Prices have risen by RM 200-250/t since lows seen in early May," he adds. "Prices are likely to rise further," he notes. "The price for >16mm bar is currently around RM 2,000/t net and it may move another RM 50/t soon," another trader tells SBB. The Malaysian market has recently picked up, in part due to the replenishment of stocks after destocking in the market. "Buyers wanted to lock in their purchases when they saw prices rise," a mill manager says. The bar market is seeing a slight recovery in domestic and export sales, according to the Malaysian Iron & Steel Industry Federation. Production levels and sales volumes of bar plunged by an average 60% due to the financial crisis. Production during third quarter 2008 was 535,000 t but this fell to 200,000 t during fourth quarter. The average bar price fell to RM 1,900/t in December 2008 and remained at this level earlier this year, compared to highs of some RM 3,500/t recorded during third quarter 2008.
Malaysian mills have increased domestic prices of rebar and wire rod by RM 100/tonne ($29/t). This follows a similar magnitude price rise last month. List prices effective 1 June are RM 2,100-2,200/t for rebar. Wire rod is priced at around RM 2,200/t. "Prices are rising because of tight supply of bar and wire rod," a Malaysian trader tells Steel Business Briefing. He attributes this to a shortage of scrap and possible over-commitment by domestic mills in their export sales of billet. "Prices have risen by RM 200-250/t since lows seen in early May," he adds. "Prices are likely to rise further," he notes. "The price for >16mm bar is currently around RM 2,000/t net and it may move another RM 50/t soon," another trader tells SBB. The Malaysian market has recently picked up, in part due to the replenishment of stocks after destocking in the market. "Buyers wanted to lock in their purchases when they saw prices rise," a mill manager says. The bar market is seeing a slight recovery in domestic and export sales, according to the Malaysian Iron & Steel Industry Federation. Production levels and sales volumes of bar plunged by an average 60% due to the financial crisis. Production during third quarter 2008 was 535,000 t but this fell to 200,000 t during fourth quarter. The average bar price fell to RM 1,900/t in December 2008 and remained at this level earlier this year, compared to highs of some RM 3,500/t recorded during third quarter 2008.
Malaysian output of long products
Source: MISIF (million tonnes)
2005 2006 2007 2008
Billet 3.796 3.834 4.695 4.623
Bar 1.648 1.942 1.944 1.903
Wire rod 1.175 1.158 1.331 1.110
Section 0.295 0.254 0.22 0.214
China stunned by BHPB-Rio iron ore merger plan
Rio Tinto and BHP Billiton have stunned their customers in China by announcing plans to bring their iron ore businesses in Western Australia into one massive 50:50 joint venture company. A combined Rio-BHPB will rival Vale as the world's largest iron ore producer. Rio said that the JV will yield more than US$10bn in production and development savings. The two companies will merge their Pilbara mines, railways and port infrastructure, and work together to expand iron ore production. However, sales and marketing of iron ore will remain largely separate. BHPB will pay Rio US$5.8bn to even up the JV equity. Most analysts believe the Australian government and shareholders will approve the deal. However, the merger must also be approved by the European Union which blocked BHPB's previous attempt to acquire Rio. Chinese steel mills, which were fervently opposed to a Rio-BHPB corporate merger, have been shocked by the news and confronted with a sense of déjà vu. "It's like our nightmare has returned," a state-owned mill official in northern China tells Steel Business Briefing. "This is very bad news for China and means there will be only two large iron ore suppliers rather than three, which was already too few," he says. Another mill official in Shandong province believes that it is effectively a "merger through the back door." "We're now faced with a monopoly with frightening pricing power," the official says. Chinese mills are resisting miners' efforts to enforce a 33% cut in contract prices. In 2008 China imported 183m tonnes of iron ore from Australia, mostly from BHPB and Rio, versus 100m t from Brazil. Annualised, Vale's crisis-hit Q1 2009 iron ore production figure would be around 188m t, SBB calculates. Rio plans to produce 200m t this year, while BHPB is targeting 130m t for 2009 fiscal year (1 July-30 June).
Source: MISIF (million tonnes)
2005 2006 2007 2008
Billet 3.796 3.834 4.695 4.623
Bar 1.648 1.942 1.944 1.903
Wire rod 1.175 1.158 1.331 1.110
Section 0.295 0.254 0.22 0.214
China stunned by BHPB-Rio iron ore merger plan
Rio Tinto and BHP Billiton have stunned their customers in China by announcing plans to bring their iron ore businesses in Western Australia into one massive 50:50 joint venture company. A combined Rio-BHPB will rival Vale as the world's largest iron ore producer. Rio said that the JV will yield more than US$10bn in production and development savings. The two companies will merge their Pilbara mines, railways and port infrastructure, and work together to expand iron ore production. However, sales and marketing of iron ore will remain largely separate. BHPB will pay Rio US$5.8bn to even up the JV equity. Most analysts believe the Australian government and shareholders will approve the deal. However, the merger must also be approved by the European Union which blocked BHPB's previous attempt to acquire Rio. Chinese steel mills, which were fervently opposed to a Rio-BHPB corporate merger, have been shocked by the news and confronted with a sense of déjà vu. "It's like our nightmare has returned," a state-owned mill official in northern China tells Steel Business Briefing. "This is very bad news for China and means there will be only two large iron ore suppliers rather than three, which was already too few," he says. Another mill official in Shandong province believes that it is effectively a "merger through the back door." "We're now faced with a monopoly with frightening pricing power," the official says. Chinese mills are resisting miners' efforts to enforce a 33% cut in contract prices. In 2008 China imported 183m tonnes of iron ore from Australia, mostly from BHPB and Rio, versus 100m t from Brazil. Annualised, Vale's crisis-hit Q1 2009 iron ore production figure would be around 188m t, SBB calculates. Rio plans to produce 200m t this year, while BHPB is targeting 130m t for 2009 fiscal year (1 July-30 June).
Malaysian Ringgit Exchange Rate