Daily Steel News - 27 Oct 09

Rebar import prices fall below $500/t cfr in east Asia
The offered price of imported rebar in east Asia has fallen to below $500/tonne cfr from $510/t cfr in mid-October. The decline is in tandem with weaker scrap prices and bearish sentiment for finished steel. Weak demand due to the approaching wintry conditions in the northern hemisphere has also contributed to the slowdown. "There are few buyers for rebar regardless of the price offered," a trader in Singapore notes. "Buyers are scared off when they see prices falling." Turkish rebar is being offered at $480-490/t cfr Singapore. Last heard offers from China were above $500/t cfr. "Buying has slowed down because there is more than enough rebar in the market to last through January," another Singapore trader says. "Buyers believe that they can get lower prices next month so they would rather wait for prices to settle," an importer adds. Offer prices of rebar in Hong Kong have dipped to around $480/t cfr for Turkish-, Korean- and Taiwanese-origin bars, trading sources say. "Demand is slow everywhere," a trader tells Steel Business Briefing. But he believes that this will change in the second quarter of next year due to the start of new construction projects in Hong Kong and Macau. Around 20,000 tonnes of Korean rebar was booked at $490/t cfr Hong Kong early last week, another trader tells SBB.

Billet import prices slide in bearish SE Asian market
Billet import offer prices have slipped by $15-20/t to $450-460/t cfr Southeast Asia in the past two weeks for December and January shipments from Russian Far East and Black Sea ports, and Turkey. Buying is sluggish because importers anticipate further softening in prices. "There is some buying in the region but buyers are holding back," a regional trader tells Steel Business Briefing. Quantities being booked are smaller than usual and are restricted to keeping rolling operations going. He tells SBB that $450/t is the current market price because higher-priced offers at $460/t cfr will not attract any buying interest. The Taiwanese have indicated that they can accept an export price of $450/t cfr Philippines but buyers are bidding at $440/t cfr, a trader in Manila tells SBB. Currently, buyers rather wait for prices to settle down than book billet. But they will start buying next month because they have to prepare for next year. "It will be a better first-quarter," he tells SBB. Traders report that a few small deals were concluded in the previous week at $460/t cfr Vietnam and at $465/t cfr Indonesia. Thai trading sources say that there was a prompt November shipment of CIS billet recently booked at $450/t cfr. "Buying is slow because it is just the end of the rainy season and worldwide sentiment is poor," a Thai trader says. He believes that Thai buyers will return to the market in mid-November in order to book January/February shipments.

Iron ore prices trend higher last week, says The Steel Index
The latest daily iron ore reference prices released by The Steel Index last Friday show that the price for 62% Fe content iron ore has been trending higher during the week and ended more than 2% above the previous Friday's level. The reference price for 62% Fe content iron ore fines finished the week at $88.10/dry metric tonne CFR Tianjin port, China. This was a $1.80/dry metric tonne increase from a week earlier. The reference price for 58% Fe fines also moved generally higher during last week, and ended $2.10/dmt above the previous week's level. Within the delivered prices, rates for shipments from both the West and East coasts of India were stable. Freight rates from Australia to China began firming in the middle of the week, pushing the weekly average higher, while daily rates from Brazil to China increased nearly 20% during the week.

Daily Steel News - 9 Oct 09

Weak Chinese export prices create uncertainty - WSR
Falling Chinese export prices are influencing market sentiment, but they have yet to fall sufficiently to make a significant direct impact on global prices. Indirectly though, they are causing uncertainty, as potential buyers are delaying purchases, as they wait to see if export prices will decline further. However, as China is on holiday for a week or so, it will be some days before this situation clarifies. At the same time, with much restocking having been completed, some observers are fearing another price downturn, as global demand is still questionable. In such a "W" scenario though, this second decline is unlikely to be as deep as the first. Prime boron-added wire rod was being offered in recent weeks at $525-535/t cfr Southeast Asia, down from $540/t cfr previously. This contrasts with buyers bidding $505-510/t cfr. Billet from the CIS and elsewhere was also being offered last week at $495-510/t cfr East Asia. Trading sources tell SBB that with the narrowing of the rod-billet price differential, re-rollers prefer to import wire rod rather than roll their own billet. On the HRC front, Chinese offers into both northern and southern Europe were down to about €380/t ($552/t) cfr or less in some cases . equivalent to around $500/t fob China, or less. Offers to Korea were at a similar fob level. Rumours of much lower fob prices have been heard, but not confirmed. Meanwhile, scrap prices are typically weaker reflecting softer rebar and rod prices. As there are currently few signs of an immediate Middle East revival in demand, Turkish producers have been slow to re-enter the scrap market. Moreover, there are calls for excess capacity in the country to be closed.

Imports threaten stability of Russian domestic rebar prices
The Russian domestic market for long products is facing new challenges after a fairly stable summer, a major producer tells Steel Business Briefing. Weak international markets are threatening stable prices, which, should they remain unchanged, will attract more imports from neighbours, a source says. A thoughtful approach to stocking policies and thorough understanding of the diminished needs of customers led to a supply-demand balance during the summer. However, with post-Ramadan buying activity failing to show up so far and the traditional seasonal lull ahead of them, Russian producers are not optimistic. "Byelorussia, Moldova and Ukraine are closer to the regions where there is most of the demand," a major producer says. If prices don't fall this month, there are guaranteed to be more imports, he says. "Ukrainian imports have doubled in the last month," he notes. "We even attracted imports from Spain," another source adds. Sources close to Moldova Steel Works (MMZ) tell SBB that probably half of its wire rod allocations for this month will be going to Russia. The mill is said to be working at "good capacity utilisation rate, of at least 70%." Ukrainian producers' Makeyevka and Kriviy Rih decisions to cut production have been received well, another source says. From the June levels of around 13,800 roubles/tonne (€319/t) ex-warehouse (excluding 18% VAT) for rebar, prices today are 18,500-18,700 (€423 - €428/t) for regular grade, and up to €453/t for higher grades. But the volume of demand is expected to contract again, with both domestic and export markets' dynamics demonstrating that new waves of production cuts may be on the way.

Over-production threatens price weakness, executives say
Recovery for the European and global steel industry will be slow but steady over the end of this year and in 2010, industry executives comment to Steel Business Briefing. Stocks in both flat and long products all over the world are now lower and the industry is not going back to the worst levels of the recession, they believe. "There is a very delicate balance between demand and supply at the moment, but as soon as demand improves a little mills tend to increase production which causes again over-capacity and price weakening," one executive comments. Chinese prices are weakening and demand at the moment is low, but it has been like that for the past months and yet the general situation of prices, of demand and supply has improved from the worst levels of the past, they say. The European steel industry has proved to be resilient and strong in absorbing the crisis. When the price of hot rolled coils collapsed to €300/tonne mills were able to withstand this enormous price decreases and resulting production cuts. Despite the losses, companies still have a good financial position, one source says. For the next months there will be a gradual recovery characterized by oscillating prices . losing and gaining €20-30/tone. while demand will be unstable but not absent, executives agree.

Daily Steel News - 2 Oct 09

Holidays dull Asian sentiment for imported scrap
The import price for bulk shipment of deep-sea scrap into east Asia has fallen by around $5/tonne since last week to $340-345/t, trading sources tell Steel Business Briefing. "Turkish importers are still hesitating (to book scrap). Sentiment is weaker," a Korean trader tells SBB. Last week, Dongkuk Steel Mill's booking price for US-origin No.1 heavy melting scrap (HMS 1) was $346/t cfr, as SBB reported. Chinese trading sources say that the current import price of 80:20 HMS 1/2 is $340/t cfr this week whereas those in Southeast Asia say that offer prices are prevailing at $345-348/t cfr. A regional trader in SE Asia attributes the weaker sentiment to the market closure in China and Korea due to the holidays. "I do not foresee prices dropping further because there are few offers from suppliers," a trader in Vietnam says. He adds that since hardly any deals are being concluded, buyers are the ones talking the market down. Meanwhile, prices of containerised scrap are stable. Bookings by Taiwanese importers are unchanged at $320/t cfr for US-origin HMS 80:20. There are recent small-volume bookings by mills in SE Asia at $315-320/t cfr for containerized scrap from West Africa and Central America. Vietnamese trading sources tell SBB that containerised shredded from USA and Europe is currently offered at $335-340/t cfr.

SE Asian market hit by lower prices for Chinese longs
Prime boron-added wire rod from Chinese mills was offered last week at $525-535/t cfr Southeast Asia, down from $540/t cfr a week ago. This contrasts with buyers bidding $505-510/t cfr last week. And traders are heard inviting bids for Chinese wire rod at around $510/t cfr Philippines. Billet from the CIS and elsewhere is currently offered at $495-510/t cfr. Trading sources tell Steel Business Briefing that with the narrowing of the rod-billet price differential, re-rollers will prefer to import wire rod rather than keep their own rolling operations going. SBB is told also that some Chinese wire rod is imported to be cold-finished into smaller diameter rebar for lower-end usage in the region. Meanwhile, the export of Chinese billet declared as square bar is still taking place in SE Asia. The practice has emerged because boron-added square bar earns a 9% export rebate whereas billet exports are slapped a 25% export duty. "It is illegal," a Thai trader fumes. Prior to the arrival of the consignments at SE Asian ports in the Philippines, Indonesia and Thailand, the bills of lading are switched to declare these cargoes as billet. "The import duty of bar into the Philippines is 7% compared with the 3% import tax for billet," a Manila trader says. The current price for square bar into the region is $475-480/t cfr. However, traders say that the practice is not widespread. "There are offers but it is not a big volume. There cannot be too much billet being shipped this way or else it will draw the attention of the Chinese Customs," a trader in Hong Kong remarks.

Korean rebar demand sluggish, high prices blamed
September-October is traditionally the high season for Korean rebar sales yet domestic demand has remained depressed since earlier this month, market insiders tell Steel Business Briefing. Suggestions of speculative demand ahead of the country's 3 October Chuseok (harvest moon festival) holiday emerged around mid-September but actual rebar demand remains sluggish with no significant signs of improvement, they say. Chuseok is Korea's second largest festival. Industry insiders canvassed by SBB were unanimous in blaming high domestic prices for the sector's plight. From 1 September, rebar makers such as Hyundai Steel . citing the need to offset higher scrap costs . lifted their rebar list prices. Hyundai increased its list price for 10mm bar for supply to contractors by KRW 20,000/t ($17/t) to KRW 781,000/t ($621/t), as SBB reported. Speculation in the market that rebar makers would cut their prices soon has led some local distributors to begin offering rebar at KRW 750-760,000/t for immediate delivery, equal to KRW 20-30,000/t under mills' ex-works prices. But the mills insist no change. "We have already said we are firmly determined to maintain our current prices at home," a source at a major rebar maker insists. The rebar price cutback prompted by distributors is premature and likely to cause them losses, he adds.Meanwhile, in the two weeks from mid-September the country's rebar stocks have soared by 54,000 t to reach 220,000 t currently, SBB learns.

Russian scrap prices keep rising on fears of shortage
Russian scrap prices have risen again to 7,800-8,299 roubles/tonne ($258-272/t) delivered to domestic clients for grade A3 (HMS 1&2 80:20 equivalent). The increase comes as steelmakers continue to wind their offers up in a bid to secure tonnages, sources in the country tell Steel Business Briefing. Exports are $10/t cheaper, but the effective price is quite a bit higher after adding VAT and 15% export tax. With winter stocks not in place, it looks like the mills will be working on an "off the truck" basis, thus creating more danger of pushing up prices, they say. Admitting that any further scrap price rise needs to be supported by strengthening semis and finished product prices, one major steel producer says prices can only go up as high as 9,000 roubles/tonne ($298/t). "Prices are already close to the levels of last August/September . the highest ever . and it is unlikely to keep rising unless the finished product market goes through the roof," the steelmaker says. "Scrap is on the edge," another source confirms. There is only about 40% left of all the companies that used to operate in Russian scrap a year ago. Even with limits placed on the border points that can process scrap exports, there is simply not enough to go around, sources say. With winter upon us, there will be even less scrap available in the next several months, so prices are unlikely to fall. "Scrap is not yielding, longs market is not growing . confusing indeed," one seasoned observer concludes.