Daily Steel News - 8 Dec 09

SE Asian billet importers stay on the sidelines
Billet offer prices are steady at $465-475/t cfr Southeast Asia, trading sources in Southeast Asia tell Steel Business Briefing. These prices are for CIS billet. Trading sources report that import buying in the region is not active. Transactions in the region recently concluded at around $457-462/t cfr. A cargo of Brazilian-origin billet, diverted from its original destination of Vietnam, is being offered at $470/t cfr Indonesia. "We heard that the Vietnamese buyer cancelled because of financing problems," a trader tells SBB. Offers of Turkish billet are prevailing at $480-490/t cfr. Taiwanese-origin Grade 40 billet was open to bids last week at $465/t cfr Philippines. The Dubai debt crisis has caused Asian importers to be cautious. "It is a bit quiet. Buyers do not know what to do," a trader says. Uncertainty in future market direction is causing buyers to hesitate. A trader says that, while he is receiving buying enquiries, importers are concerned that offered shipments of CIS billet will arrive only in February or March. Vietnamese trading sources also say that their market is currently quiet. Some traders, however, note that buying interest in Indonesia has picked up and bookings will start soon.

China's domestic iron ore market remains stable
Chinese domestic iron ore prices have stabilised as steel mills' demand and the imported iron ore market are still rather weak, Steel Business Briefing learns from market sources. The price of 66% Fe iron ore concentrate in Tangshan, Hebei province, is around RMB 749-760/wet metric tone ($110-111/wmt), up about RMB 11-12/t from last week. In Hebei's Hanxin region, 66% Fe concentrate is priced at RMB 959/dry metric tonne ($140/dmt) including VAT, the same price it has held for the last three weeks. A trader from Rizhao, Shandong province, points out that the stable market price is due to lack of freight capacity at the end of the year. He also says that in December, both domestic iron ore producers and steel mills are planning maintenance work which will help to keep prices stable. Baosteel will begin the first round of iron ore price negotiations with overseas iron ore producers on behalf of Chinese steel mills in late December and local media said the contract price is expected rise at least 10-15%. Traders say this increase is expected to help drive demand for domestic iron ore.

Daily Steel News - 4 Dec 09

Weak sentiment, higher prices dampen E Asian scrap buying
The scrap import market in east Asia is quiet this week with traders reporting to Steel Business Briefing that there has not been any recent buying of bulk scrap shipments. Last week, two cargoes of HMS 1 from west coast, USA for December shipment were booked at $329/tonne cfr Korea. Trading sources say that Korean importers may have held off further buying after that booking because sentiment was negatively affected by Dubai's recent debt default problems. "The Dubai problem has caused sentiment to fall. The Koreans need more scrap," a regional trader says."I am very concerned myself about issues happening in Dubai because the world economy is very vulnerable now," a Southeast Asian scrap trader says. There are fewer offers of bulk scrap to the region because suppliers say that supply is tight. Limited bulk offers of 80:20 HMS 1/2 are heard at $340-350/t cfr but there are no takers. No recent import bookings have been heard in China, according to local trading sources. "Prices are too high," a local trader tells SBB. The last booking of US scrap concluded at $325/t cfr China for 80:20 HMS and $330/t cfr China for shredded. Meanwhile, containerised scrap is being offered this week at around $310-320/t cfr for 80:20 to Southeast Asia. Some material was booked at $310/t cfr Vietnam last week, local traders tell SBB. "Demand has slowed down because the regional mills are waiting out the current market. The year-end is approaching too," an importer says.

Scrap export role continues to drive US market
With all the speculation about whether US scrap prices will have one large price increase in December, or two smaller increases this month and next, market players are looking to whatever "real" indicators they can find. And US scrap export trends continue to be a critical factor. A market analyst added: "(Up) $30 a long ton (in December) is a good number.the strength is coming entirely from exports. Volumes are strong." He wondered if China and Turkey were getting ahead of the expected January price jump by buying in December "so that they don't have to in January. I don't think they have the same tax reasons for being out of the market as domestic producers do, so they probably don't mind sitting on inventory. and they love to fish for cheap prices." One mill source added, "We agree (there will be) upward bias on scrap prices for December, and maybe into January, although it will be interesting to watch whether the recent developments in Dubai will impact Turkey's consumption of scrap short-term." More than one market source said US shredded scrap is already selling for $280-290/l.t delivered to mills - even as much
as $300/l.t in the southern US market - about $35-40 above the last month's price. The south, where most of the country's minimills operate, seems to be the most active, one scrap procurer said. Meanwhile, in Asia, the market seems to be cooling, market sources tell SBB (see other story), at least in part because of the Dubai crisis.

China set to import 600m t of iron ore this year
China is on track to import almost 600m tonnes of iron ore this year, up 35% on the 444m t it imported in 2008, the country's Ministry of Industry & Information Technology (MIIT) said on Thursday. Between January and October this year China imported 514.8m t of iron ore, up 36.8% on the corresponding period in 2008. MIIT also forecast that China will produce 571m t of crude steel in 2009 compared with around 500m t last year. The huge increase in imported iron ore relative to the rise in steel production shows the extent to which imports have replaced domestic iron ore, Steel Business Briefing notes. For much of this year, when lower iron ore spot prices made it uneconomic to continue operating, a large number of domestic miners closed their doors. But rising spot prices and steel capacity being switched back on encouraged domestic miners to resume operating. In September, Macquarie Bank said 60% of previously mothballed domestic iron ore miners had reopened over the previous month. Prices of Indian 63.5% Fe hit $100/t at the end of July before dropping to around $85/t at the end of August. In 2008, China produced 824m t of iron ore concentrate, equivalent to 245m t at an average 30% Fe after processing. Total concentrate capacity by 2010 is likely to be 300-400m t/y.

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New Zealand extends AD duties on Thai, Malaysian imports
New Zealand's Ministry of Economic Development has decided to extend anti-dumping duties on imports of galvanized wire from Malaysia, and rebar and coil from Thailand for another five years. The duties have been in place since 2004 and will be extended until 2014, according to a sunset review concluded on 17 November. The ministry had imposed a 28% anti-dumping duty on rebar and coil imports (5-40mm in diameter) from Thailand, and a 15% ad valorem duty on galvanized wire imports from Malaysia. The review found a "risk of recurrence of dumping and material injury." In a statement sent to Steel Business Briefing, Pacific Steel general manager, Ian Jones, said the company had "no problem competing with fairly priced imports, but as our recent work has shown, we will vigorously defend our business against unfair trading behaviour." Auckland-based Pacific Steel is New Zealand's only producer of reinforcing bar and wire, and was the original complainant. It is a division of Fletcher Steel.
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China domestic iron ore prices stable
Despite weakening imported iron ore prices in China, the market for domestic iron ore is currently stable with transactions described as "healthy", Steel Business Briefing learns from market sources. The price of iron ore concentrates grading 66% Fe in Tangshan in Hebei province has remained at around RMB 737-749/wet metric tonne ($106-110/wmt). In the Hanxin region, also in Hebei, 66% Fe concentrate is priced at RMB959/dry metric tonne ($140/dmt) including VAT, also the same as the previous week. A major producer from Hanxin tells SBB that he hasn't seen any negative effects from the softening imported iron ore market yet, and says the current level of transactions is satisfactory. He predicts that the domestic iron ore market will remain firm in the short term as demand from mills is still good. Mills are also planning to lift their steel prices, which he believes will underpin higher prices. A trader from Qingdao in northern China says that mills' output has stayed at a high level, keeping demand for domestic iron ore relatively strong. But he says that demand is likely to reduce when mills begin their maintenance work in December.

Daily Steel News - 2 Dec 09

Shagang lifts early December rebar price by $7/t
Eastern China's Shagang has released its new rebar and wire rod prices for deliveries before 10 December. The price for 16-25mm HRB335 has increased by RMB 50/tonne ($7/t) to 3,730/t ($546/t), while its 6.5mm wire rod price remains unchanged at RMB 3,750/t, both with 17% VAT. Encouraged by Shagang's higher rebar prices, traders in Hangzhou markets have raised their offers slightly by RMB 30-50/t to RMB 3,680-3,700/t. "Before this adjustment, Shagang's ex-works prices were already higher than spot prices, but we will lose more money if we don't follow Shagang's lead," a Hangzhou trader says. But he admits that attempts to push up market prices have not been well received by potential buyers. In both Shanghai and Beijing, prices have generally remained flat despite Shagang's price change. Shanghai traders are offering RMB 3,530-3,550/t for 16-25mm HRB335, and about RMB 3,700/t for HRB400. Meanwhile, Beijing prices have stayed at about RMB 3,630-3,650/t since Monday. All market prices quoted include 17% VAT. "The markets are lukewarm, with few buying," a Shanghai trader says. Most market sources do not foresee any obvious improvement in December, which is typically a month of low temperatures and slim demand for steel. Steel Business Briefing understands that weakening futures prices are also contributing to market pessimism. Rebar contracts for next February delivery on the Shanghai Futures Exchange closed at RMB 3,938/t on 1 December, down from Monday's RMB 3,958/t.

Korean H-beam prices continue to soften
Domestic Korean demand for H-beams remains in the sluggish condition that it entered in September, with the price reduction announced by market leader Hyundai Steel last month doing nothing to boost demand. Local distributors are selling Hyundai's 300x300mm H-beams at KRW 800,000/tonne ($685/t) while Hyundai's list price for the same sized beams remains at KRW 860,000/t, Steel Business Briefing learns from market sources. So while the longs producer cut its list prices by KRW 50,000/t from 1 November, for distributors to sell its beams much lower indicates Hyundai is still offering special discounts, SBB notes. Korea's construction sector still remains depressed so the country's two major H-beam producers of Hyundai and Dongkuk Steel Mill have plans to adjust their output this month in parallel with the output cut they also plan for rebars. Most domestic rebar makers have already decided to close their works for around seven days this month due to rising rebar stock levels, as SBB reported. Meanwhile, the country's H-beam exports in November increased by 4,600 t or by 5% to 95,500 t from October. This also represented a 50% surge year-on-year from the same month last year of 63,500 t, according to data from the Korea Iron & Steel Association.

Output cuts weaken Korean scrap prices
The recent strength in domestic scrap prices in Korea will likely ease within the next few weeks as demand from mills is expected to decrease. Production cutbacks by longs producers to reduce high inventory levels, especially rebars, is bringing an end to the firmer scrap prices. Korean domestic scrap prices, as quoted by Korean mills, had begun recovering since late November after prices had slumped during the previous two months. Hyundai Steel, Korea's leading scrap consumer, raised its buying prices by KRW 25,000/t ($21/t) a week ago. But the mill is considering lowering prices by the same margin from next week citing production cutbacks, Steel Business Briefing learns from a local mill source. Scrap inventories held by steelmakers have declined slightly due to the continuing decline in domestic scrap prices. The source said his company has enough scrap for about 15 days' consumption. "This is not so high but is sufficient as the production cutback looms." But he declined to reveal actual stock levels.Meanwhile, Hyundai's bid prices for Japanese scrap have already started softening. Earlier this week it offered ¥25,500/t fob ($292/t) and ¥28,500/t ($326/t) for Japanese H2 and Shindachi grades respectively. This represents a ¥1,000/t decline from its previous bid price for H2 grade of ¥26,500/t a week ago. Hyundai's three rebar works in Incheon, Dangjin and Pohang will each stop for four-seven days this month. Other mills will close for similar periods. Rebar inventories held by Korea's seven major producers reached 300,000 tonnes by end-November, compared with normal stock levels of 200,000t.

Indian iron ore market weakens, export bookings thin
Indian iron ore exporters are lowering offer prices to China but actual transactions are few. During the 16 November week, offer prices for 63.5%/63% Fe fines to China touched $110/dry metric tonne cfr, but transactions remained sparse as traders became wary of the weakening sentiment. In the past week, transaction volumes thinned further while offer prices also declined in tandem to levels of $106/dmt cfr for the same grade of ore. Steel Business Briefing hears of one transaction early last week at $106/dmt cfr for 40,000 tonnes of 63.5%/63% fines from the port of Krishnapatnam in the south eastern state of Tamil Nadu. The ore was shipped on a single-port loading basis in a Handymax carrier. The freight cost for this deal was $22/t. The freight for double-port loaded ore remained at last week's level of $27-28/dmt. However, shipping of the ore on a two-port basis from Haldia in West Bengal and Paradip in Orissa inevitably takes longer due to a 25-day waiting period, driving up the actual freight to nearly $38/dmt, SBB hears. Meanwhile, transactions for lower-grade ores (50-60% Fe) are more active than those for their higher-grade counterparts. A deal for 55%/54% Fe ore from Goa was heard at $50/dmt fob. This amounts to $76/dmt cfr, SBB understands. "The Chinese are comfortable with their stocks for the moment, so the situation is expected to remain the same this month given the holiday season in India," a Karnataka-based exporter tells SBB. "We hope to see some improvement (in volumes) in January."