Scrap importers in East Asia watching, out of market
The scrap import markets in East Asia are quiet as importers continue to stay on the sidelines and delay their buying. Prices of containerised scrap have fallen by around $10/tonne from last week. Some 1,000 t of HMS 1&2 80:20 from Latin America was booked this week at $405/t cfr Singapore, down from offers at
$415/ a week ago. “Prices keep falling,” a trader in Vietnam tells Steel Business Briefing. He says that Vietnamese importers are not booking containerised 80:20 being offered at $430/t cfr, compared to $440-450/t a week ago. “Vietnamese buyers want to book at $400/t cfr,” he adds. Containerised 80:20 was heard by some traders to have been recently booked at $410/t cfr Taiwan. This may have been from small suppliers because large US scrap suppliers are still offering at $420/t cfr. Taiwanese importers have also lowered their bidding price to around $400/t cfr. Containerised scrap was offered at $420-425/t cfr but Korean bids were at $415/t cfr. There are less bulk scrap offers than containerised offers in the market. An offer for US bulk 80:20/shredded scrap was heard last week at $460/t cfr Singapore and for European scrap $460-465/t cfr. The Chinese mills are absent from the imported scrap market. “They cannot buy because local scrap prices are lower,” a trader in Shanghai says. US-origin bulk shredded is offered now at $440/t cfr, he adds. Chinese domestic scrap prices are generally unchanged from last week but described by local traders as soft. HMS 1 is prevailing at RMB 3,100-3,200/t ($454-469), including 17% VAT.
Rebar prices fall further in China
China’s rebar prices are weakening further this week, as more market players become bearish on market prices and make efforts to speed up sales. Steel Business Briefing learns from market sources that Shanghai prices for 18-25mm HRB335, sourced from tier-two mills, have dipped to a prevailing RMB 4,200/t ($615/t), with 17% VAT, compared with last Wednesday’s RMB 4,230-4,250/t ($620-623/t). The approaching Shanghai World Expo is said to have affected local demand, with construction idling in downtown and end-users taking a wait-and-see attitude, but a trader says they should still be able to deliver steel to markets close to Shanghai. In northern China’s Beijing, prices for the same material sourced from Hebei Iron & Steel (Hegang) have declined from last Wednesday’s RMB 4,700/t ($689/t) to about RMB 4,600/t ($674/t). A Beijing trader complained that mills have passed higher raw materials costs onto them by continually raising their ex-works prices, but market prices have dropped far below mills’ ex-works prices; and he reported that Hegang is rumoured to be planning to further hike prices in May. Major mills are yet to re-adjust their export offers, with prevailing prices basically unchanged at about $650-670/t fob for vanadium-added rebar, according to traders. Market offers for wire rod are around $640- 650/t fob, compared with mid-April’s $650/t fob. “Domestic prices are falling. We dare not purchase from mills right now; it’s quite risky,” a Shanghai exporter says.
LME billet price continues down amid record level of trading
The London Metal Exchange’s Mediterranean billet futures contract price has continued to soften this week from last week, and saw record levels of trading activity on Tuesday. The three-month price was at $499-505/tonne (€378-382/t) and cash $471-475/t at the end of Tuesday, softening from $550-560/t and $530-530.50/t respectively at this time last week, Steel Business Briefing learns from LME data. “The month of May is usually a quiet one as Middle Eastern, Ukrainian and Russian buyers have bought the material they need in the physical market,” a trader says. Merchants have possibly taken the opportunity to sell off material as they expect a quieter May, he adds. “So it would not be a good time to hold onto long positions.” The volatility in the strength of the euro and a strengthening dollar are also affecting the price. “We wouldn’t expect it be above $550/t in the short term,” the trader says. The LME said that a new record in trading was achieved on Tuesday with 1,514 lots (98,410t) of the Med contract turned over. This was 17.5% higher than the previous record of 1,288 lots on 19 March.
China domestic iron ore prices become volatile
Rising production costs are forcing Chinese steel mills to decrease purchases of domestic iron ore. This,
combined with a drop in prices of imported Indian iron ore, is causing price swings in the market, Steel Business Briefing learns. In the Hanxin region of northern China’s Hebei province, the price for 66% Fe iron ore concentrate climbed by RMB 94/dry metric tonne ($14/dmt) to reach RMB 1,533/dmt ($225/dmt), including VAT, up from RMB 1,439/dmt ($211/dmt) on 14 April. But in Hebei’s Tangshan city 66% Fe concentrate sold at around RMB 1,158-1,170/wet metric tonne ($170-171/wmt) including VAT, some RMB 71-82/wmt lower than on 14 April. A Tianjin trader notes that weakening prices of imported Indian iron ore have put downward pressure on the Chinese market, while lower demand from mills has also pushed prices down. Steelmakers are using both higher and lower priced iron ore together, in order to control costs, he notes. However, many mills have almost exhausted their stocks of lower-priced ore now and can hardly afford the current high prices. Thus, they are delaying purchases until prices fall. A major iron ore producer in Hanxin notes that being fortunately surrounded by several mills, he has maintained his prices at RMB 1,533/dmt since last week and has sold out of stock. He predicts that purchasing will pick up if prices continue to fall, as mills will return to the market once their ore stocks a
Thursday, April 29, 2010
Monday, April 26, 2010
Daily Steel News - 26 Apr 10
Billet import offer prices weaken by around $10/t in SE Asia
Offer prices for billet have slipped by around $10/tonne to around $650-665/t cfr Southeast Asia but regional importers are generally staying away, trading sources tell Steel Business Briefing. “The region is quiet this past week,” a regional trader tells SBB. Traders say that the market is taking a wait-and-see stance because rebar demand in regional markets is not strong. Taiwanese-origin billet has been offered at $650-660/t cfr SE Asia and Malaysian billet at $660-665/t cfr. One lot of Russian billet was recently offered at $660/t cfr Indonesia and Japanese billet at $660/t cfr Indonesia, down from $670/t cfr previously. Trading sources report billet from the CIS is still offered at $660-665/t cfr Vietnam but there are also higher offer prices for Russian and Turkish billet at $670-680/t cfr. “The future is not bright for the Taiwanese longs market for the short term,” a Taiwanese trader says. Domestic scrap and rebar prices have been dropping and no rebound is expected yet. He last heard an import booking of containerised US-origin vanadium-added billet some two weeks ago at $657/t cfr. A buyer in Indonesia says that there has not been any concluded deal recently although he has heard of bidding at $650/t cfr for 20MnSi grade material. A small-volume lot of Japanese origin billet was booked early last week at $653/t cfr Vietnam. Japanese billet enjoys a preferential import duty of around 4.5% compared to normal duty of 7%for imports.
Indian longs prices falter on weak demand
Indian domestic prices of thermo mechanically treated (TMT) rebars and mild steel billets produced by mid-tier steelmakers have declined by Rs 1,500-2,000/tonne ($34-45/t) from early April levels on slackened demand. Fe 500 TMT rebars (12mm) are priced at Rs 34,000-35,500/t ($765-788/t) including taxes and freight, down from Rs 36,000-37,500/t in early April. Average country-wide prices of Fe 415 TMT rebars (12mm) are Rs 33,500-35,000/t all inclusive. At the same time, 8mm Fe500 TMT rebars in north India are priced at Rs 36,600/t, while 10mm rebars cost
Rs 36,000/t all inclusive. Prices of 16mm, 20mm and 25mm TMT rebars are Rs 35,200-36,000/t all inclusive. EAF-manufactured mild steel billets (100mm) in west India are priced at Rs 27,000/t ex-works without taxes, and Rs 30,900/t including of taxes and local freight. North Indian billet prices hover at Rs 30,000- 40,000/t all inclusive. Billet prices are Rs 1,500/t lower than early April levels of Rs 31,500-41,500/t. Meanwhile, induction furnace-manufactured pencil ingots at Mandi Gobindgarh in the northern state of Punjab have been hovering at Rs 29,000-30,300/t including taxes and freight, and Rs 28,000-28,500/t in Raipur in the central state of Chhattisgarh. “Domestic demand is weak, not only because of financial market constraints, but also through the low availability of other construction-related raw materials such as sand,” a rebar manufacturer tells Steel Business Briefing. However, with the monsoons approaching in mid-June, the industry expects a pick-up in domestic demand soon, as buyers can stock up on their inventories before the seasonal rains begin.
Hyundai raises longs prices for May
Korean integrated mill Hyundai Steel has decided to lift domestic long product prices by KRW 40,000/tone ($35/t) for May, blaming consistently rising scrap prices. From 1 May, Hyundai’s price for rebars will be KRW 831,000/t ($745/t) for 10mm diameter bars directly supplied to building contractors while its 300x300mm H-beams will be priced at KRW 950,000/t ($852/t). The company will also raise prices of sections such as angles and channels to KRW 940,000/t for base sizes from next month, Steel Business Briefing learns from the company. “The price hike for long products this time is inevitable because scrap prices have kept surging,” Hyundai says. In April, it added KRW 50,000/t to the prices of all its long products for the same reason. Market watchers had long expected that Hyundai would hike prices but the increase margin this time is slightly smaller than many had been forecasting. “This is because of Hyundai’s concern about resistance from contractors given that the recovery in construction activity is still very weak,” a source says. Meanwhile, Hyundai will also increase its domestic prices for hot rolled coil and heavy plate from 1 May [see other article]. As a result, the new price for Hyundai HRC will be KRW 850,000/t ($762/t) and that for plate will be KRW 900,000/t ($807/t). Hyundai commissioned its first blast furnace in January to boost flats production but it still operates EAFbased works at Incheon and Pohang producing longs, SBB notes.
62% iron ore price eases back from peak: The Steel Index
The latest daily iron ore reference prices released by The Steel Index last Friday show that the prices increased strongly from a week earlier, though the 62% price eased back from its midweek peak. Average weekly freight rates from Australia and Brazil firmed during the week, but weekly freights from India moved slightly lower. The reference price for 62% Fe content iron ore fines finished the week at $184.80/dry metric tonne CFR Tianjin port, China. This is a $6.70/dmt, or 3.8%, increase on the previous week’s price, but is slightly below the highest level of $186.50/dmt which was recorded on Wednesday. The reference price for 58% Fe fines finished the week $7.70/dmt, or 5.4%, above the level of a week earlier. Daily freight rates from Australia and Brazil to China rose slowly since the start of the week. Daily freight rates for shipments from both west and east coasts of India continued to slip downwards during the week. The Steel Index is majority-owned by Steel Business Briefing and specialises in compiling steel and iron ore reference prices based on actual transaction data. Further details of the methodology and specifications for the two grades of iron ore can be found on the website www.thesteelindex.com . Companies wishing to subscribe to the full set of reference prices or apply to submit iron ore or steel price data can do so on the website .
Offer prices for billet have slipped by around $10/tonne to around $650-665/t cfr Southeast Asia but regional importers are generally staying away, trading sources tell Steel Business Briefing. “The region is quiet this past week,” a regional trader tells SBB. Traders say that the market is taking a wait-and-see stance because rebar demand in regional markets is not strong. Taiwanese-origin billet has been offered at $650-660/t cfr SE Asia and Malaysian billet at $660-665/t cfr. One lot of Russian billet was recently offered at $660/t cfr Indonesia and Japanese billet at $660/t cfr Indonesia, down from $670/t cfr previously. Trading sources report billet from the CIS is still offered at $660-665/t cfr Vietnam but there are also higher offer prices for Russian and Turkish billet at $670-680/t cfr. “The future is not bright for the Taiwanese longs market for the short term,” a Taiwanese trader says. Domestic scrap and rebar prices have been dropping and no rebound is expected yet. He last heard an import booking of containerised US-origin vanadium-added billet some two weeks ago at $657/t cfr. A buyer in Indonesia says that there has not been any concluded deal recently although he has heard of bidding at $650/t cfr for 20MnSi grade material. A small-volume lot of Japanese origin billet was booked early last week at $653/t cfr Vietnam. Japanese billet enjoys a preferential import duty of around 4.5% compared to normal duty of 7%for imports.
Indian longs prices falter on weak demand
Indian domestic prices of thermo mechanically treated (TMT) rebars and mild steel billets produced by mid-tier steelmakers have declined by Rs 1,500-2,000/tonne ($34-45/t) from early April levels on slackened demand. Fe 500 TMT rebars (12mm) are priced at Rs 34,000-35,500/t ($765-788/t) including taxes and freight, down from Rs 36,000-37,500/t in early April. Average country-wide prices of Fe 415 TMT rebars (12mm) are Rs 33,500-35,000/t all inclusive. At the same time, 8mm Fe500 TMT rebars in north India are priced at Rs 36,600/t, while 10mm rebars cost
Rs 36,000/t all inclusive. Prices of 16mm, 20mm and 25mm TMT rebars are Rs 35,200-36,000/t all inclusive. EAF-manufactured mild steel billets (100mm) in west India are priced at Rs 27,000/t ex-works without taxes, and Rs 30,900/t including of taxes and local freight. North Indian billet prices hover at Rs 30,000- 40,000/t all inclusive. Billet prices are Rs 1,500/t lower than early April levels of Rs 31,500-41,500/t. Meanwhile, induction furnace-manufactured pencil ingots at Mandi Gobindgarh in the northern state of Punjab have been hovering at Rs 29,000-30,300/t including taxes and freight, and Rs 28,000-28,500/t in Raipur in the central state of Chhattisgarh. “Domestic demand is weak, not only because of financial market constraints, but also through the low availability of other construction-related raw materials such as sand,” a rebar manufacturer tells Steel Business Briefing. However, with the monsoons approaching in mid-June, the industry expects a pick-up in domestic demand soon, as buyers can stock up on their inventories before the seasonal rains begin.
Hyundai raises longs prices for May
Korean integrated mill Hyundai Steel has decided to lift domestic long product prices by KRW 40,000/tone ($35/t) for May, blaming consistently rising scrap prices. From 1 May, Hyundai’s price for rebars will be KRW 831,000/t ($745/t) for 10mm diameter bars directly supplied to building contractors while its 300x300mm H-beams will be priced at KRW 950,000/t ($852/t). The company will also raise prices of sections such as angles and channels to KRW 940,000/t for base sizes from next month, Steel Business Briefing learns from the company. “The price hike for long products this time is inevitable because scrap prices have kept surging,” Hyundai says. In April, it added KRW 50,000/t to the prices of all its long products for the same reason. Market watchers had long expected that Hyundai would hike prices but the increase margin this time is slightly smaller than many had been forecasting. “This is because of Hyundai’s concern about resistance from contractors given that the recovery in construction activity is still very weak,” a source says. Meanwhile, Hyundai will also increase its domestic prices for hot rolled coil and heavy plate from 1 May [see other article]. As a result, the new price for Hyundai HRC will be KRW 850,000/t ($762/t) and that for plate will be KRW 900,000/t ($807/t). Hyundai commissioned its first blast furnace in January to boost flats production but it still operates EAFbased works at Incheon and Pohang producing longs, SBB notes.
62% iron ore price eases back from peak: The Steel Index
The latest daily iron ore reference prices released by The Steel Index last Friday show that the prices increased strongly from a week earlier, though the 62% price eased back from its midweek peak. Average weekly freight rates from Australia and Brazil firmed during the week, but weekly freights from India moved slightly lower. The reference price for 62% Fe content iron ore fines finished the week at $184.80/dry metric tonne CFR Tianjin port, China. This is a $6.70/dmt, or 3.8%, increase on the previous week’s price, but is slightly below the highest level of $186.50/dmt which was recorded on Wednesday. The reference price for 58% Fe fines finished the week $7.70/dmt, or 5.4%, above the level of a week earlier. Daily freight rates from Australia and Brazil to China rose slowly since the start of the week. Daily freight rates for shipments from both west and east coasts of India continued to slip downwards during the week. The Steel Index is majority-owned by Steel Business Briefing and specialises in compiling steel and iron ore reference prices based on actual transaction data. Further details of the methodology and specifications for the two grades of iron ore can be found on the website www.thesteelindex.com . Companies wishing to subscribe to the full set of reference prices or apply to submit iron ore or steel price data can do so on the website .
Tuesday, April 20, 2010
Daily Steel News - 20 Apr 2010
Billet offer prices levelling off in SE Asia, buyers nervous
Offer prices for billet imports appear to be stabilising at $660-670/tonne cfr Southeast Asia after a series of price hikes. Buying is thin because regional importers regard current prices as too high and resistance
towards rising rebar prices is increasing in the region. "The market has not fallen but sentiment has changed. Buyers are nervous that prices have gone up too fast and by too much," a regional trader tells Steel Business Briefing. Malaysian mills are offering commercial grade billet to Vietnam at around $670/t cfr. Taiwanese and Korean material is being offered at $660-670/t cfr SE Asia and Japanese billet at around $670/t cfr. Limited offers from the CIS are prevailing at $660-665/t cfr. Containerised Indian-origin billet is offered at $660/t cfr Philippines. Vietnamese importers booked sufficient quantities for re-stocking last month and in early April. Re-rollers are also turning to domestic billet, priced at around VND13m/t ($686/t) excluding 10% VAT. “Billet prices are too high so there's not much recent buying. But scrap buying continues,” a Vietnamese importer says. Malaysian-origin billet, which enjoys preferential import duties, was booked at $665-670/t cfr. In the Philippines, some 25,000t of Russian billet for July arrival was booked at $655-660/t cfr more than a week ago. The peak price was achieved because the buyer would be averaging his costs with lower-priced imported material, SBB believes. A cargo of Russian billet for May shipment is being offered at $660/t cfr. Some 5,000t of Chinese-origin billet equivalent to 20MnSi grade was heard booked at $655/t cfr Indonesia, and 3,000t of odd-sized Chinese Q235 billet at $640/t cfr.
New iron ore pricing to bring 'instability,' Steinbruch says
Brazilian steel and iron ore producer CSN has increased its iron ore prices by up to 100% over 2009's contract prices, but is concerned about the new quarterly pricing system led by the world's three largest miners and adopted by minor ore producers as well. Steel Business Briefing learns from CSN CEO Benjamin Steinbruch that the new pricing model can impact the steel supply chain since mills will repass raw material cost hikes to consumers. "Personally, I think the new quarterly-based pricing system will bring instability to steel markets," explains the executive. Steinbruch confirms that CSN is talking to its steel buyers about new arrangements for steel pricing. However, he puzzles over the outcomes of the change: "How can you say to a carmaker that prices will change every three months?" Currently, CSN - the country's second largest iron ore miner - is producing about 27m tonnes a year at its Casa de Pedra and Namisa mines. However, this volume is under an expansion plan targeting 70m t/y by 2014, with 40m t to be produced at Casa de Pedra this year.
Iron ore price negotiations - Hebei Steel breaks ice with Vale - Report
Dow Jones quoted an official with the Chinese giant international trading arm said Hebei Iron and Steel Group has agreed to extend iron ore volume contracts with Brazilian miner Vale SA and Anglo Australian BHP Billiton Ltd from 2010. Mr Yan Liang deputy GM of the group's international trading department said at an industry conference that the deal makes Hebei Iron Vale's largest customer in China.
Monday Market Monitor - China - Correction starts
Chinese steel market, vanguard of global steel industry accounting for 50% of the global steel production, has started to reflect weak sentiments since Wednesday of last week after increasing on Monday and Tuesday. Whether it is the cost push or the demand pull China sets the trend. A concurrent analysis of the price movements bring out nearly 17% increase in Chinese domestic levels for both long and flat products since March beginning.
Monday Market Monitor - EU - Doubts emerging
Although, steel prices in Europe are continuing to go up amid tight availability, buyer’s sentiment is changing from positive to doubtful and they are reported to be adopting a very conservative stance in last few days. Because of consumption and demand remaining quite low, all distributors are puzzled about future trend as they cannot recharge the successive price increases to their customers.
Monday Market Monitor - CIS - Signs of stability
After 6 weeks of hectic activity, billet market seems to have stabilized this week as their prices rolled down a little bit but kept the levels in general. The sellers’ idea of price is closer to USD 625 per tonne to USD 640 per tonne with buyers looking at USD 600 per tonne to 620 per tonne. Generally we understood that the market is around USD 610 per tonne to USD 630 per tonne. It is reported that the buying was quite limited in terms of quantities and May volumes are not fully allocated yet.
Monday Market Monitor - Iron Ore - Party is on
The surge in spot prices of Indian iron ore fines is continuing and the CFR prices for 63.5%/63% are reported to have crossed USD 180 per tonne. As a result, FOB India levels have surged by about 15% in last 15 days especially for higher grades. Market players are totally puzzled and do not understand what is happening, why its is happening and how long it would last. They are highly concerned over the future and sustainability of such levels. It is clear that the surge in iron ore prices is propelled by speculators as the quantum of steel prices hike in Chinese domestic market does not justify so much increase in iron ore import prices.
Offer prices for billet imports appear to be stabilising at $660-670/tonne cfr Southeast Asia after a series of price hikes. Buying is thin because regional importers regard current prices as too high and resistance
towards rising rebar prices is increasing in the region. "The market has not fallen but sentiment has changed. Buyers are nervous that prices have gone up too fast and by too much," a regional trader tells Steel Business Briefing. Malaysian mills are offering commercial grade billet to Vietnam at around $670/t cfr. Taiwanese and Korean material is being offered at $660-670/t cfr SE Asia and Japanese billet at around $670/t cfr. Limited offers from the CIS are prevailing at $660-665/t cfr. Containerised Indian-origin billet is offered at $660/t cfr Philippines. Vietnamese importers booked sufficient quantities for re-stocking last month and in early April. Re-rollers are also turning to domestic billet, priced at around VND13m/t ($686/t) excluding 10% VAT. “Billet prices are too high so there's not much recent buying. But scrap buying continues,” a Vietnamese importer says. Malaysian-origin billet, which enjoys preferential import duties, was booked at $665-670/t cfr. In the Philippines, some 25,000t of Russian billet for July arrival was booked at $655-660/t cfr more than a week ago. The peak price was achieved because the buyer would be averaging his costs with lower-priced imported material, SBB believes. A cargo of Russian billet for May shipment is being offered at $660/t cfr. Some 5,000t of Chinese-origin billet equivalent to 20MnSi grade was heard booked at $655/t cfr Indonesia, and 3,000t of odd-sized Chinese Q235 billet at $640/t cfr.
New iron ore pricing to bring 'instability,' Steinbruch says
Brazilian steel and iron ore producer CSN has increased its iron ore prices by up to 100% over 2009's contract prices, but is concerned about the new quarterly pricing system led by the world's three largest miners and adopted by minor ore producers as well. Steel Business Briefing learns from CSN CEO Benjamin Steinbruch that the new pricing model can impact the steel supply chain since mills will repass raw material cost hikes to consumers. "Personally, I think the new quarterly-based pricing system will bring instability to steel markets," explains the executive. Steinbruch confirms that CSN is talking to its steel buyers about new arrangements for steel pricing. However, he puzzles over the outcomes of the change: "How can you say to a carmaker that prices will change every three months?" Currently, CSN - the country's second largest iron ore miner - is producing about 27m tonnes a year at its Casa de Pedra and Namisa mines. However, this volume is under an expansion plan targeting 70m t/y by 2014, with 40m t to be produced at Casa de Pedra this year.
Iron ore price negotiations - Hebei Steel breaks ice with Vale - Report
Dow Jones quoted an official with the Chinese giant international trading arm said Hebei Iron and Steel Group has agreed to extend iron ore volume contracts with Brazilian miner Vale SA and Anglo Australian BHP Billiton Ltd from 2010. Mr Yan Liang deputy GM of the group's international trading department said at an industry conference that the deal makes Hebei Iron Vale's largest customer in China.
Monday Market Monitor - China - Correction starts
Chinese steel market, vanguard of global steel industry accounting for 50% of the global steel production, has started to reflect weak sentiments since Wednesday of last week after increasing on Monday and Tuesday. Whether it is the cost push or the demand pull China sets the trend. A concurrent analysis of the price movements bring out nearly 17% increase in Chinese domestic levels for both long and flat products since March beginning.
Monday Market Monitor - EU - Doubts emerging
Although, steel prices in Europe are continuing to go up amid tight availability, buyer’s sentiment is changing from positive to doubtful and they are reported to be adopting a very conservative stance in last few days. Because of consumption and demand remaining quite low, all distributors are puzzled about future trend as they cannot recharge the successive price increases to their customers.
Monday Market Monitor - CIS - Signs of stability
After 6 weeks of hectic activity, billet market seems to have stabilized this week as their prices rolled down a little bit but kept the levels in general. The sellers’ idea of price is closer to USD 625 per tonne to USD 640 per tonne with buyers looking at USD 600 per tonne to 620 per tonne. Generally we understood that the market is around USD 610 per tonne to USD 630 per tonne. It is reported that the buying was quite limited in terms of quantities and May volumes are not fully allocated yet.
Monday Market Monitor - Iron Ore - Party is on
The surge in spot prices of Indian iron ore fines is continuing and the CFR prices for 63.5%/63% are reported to have crossed USD 180 per tonne. As a result, FOB India levels have surged by about 15% in last 15 days especially for higher grades. Market players are totally puzzled and do not understand what is happening, why its is happening and how long it would last. They are highly concerned over the future and sustainability of such levels. It is clear that the surge in iron ore prices is propelled by speculators as the quantum of steel prices hike in Chinese domestic market does not justify so much increase in iron ore import prices.
Wednesday, April 14, 2010
Daily Steel News - 14 Apr 10
Taiwan rebar prices continue upwards on rising scrap, demand
Major Taiwanese rebar producers have again raised their prices because of higher scrap prices and strong demand, taking ex-works list prices to TWD 21,600-21,700/tonne ($684-688/t) this week. Prices have risen by TWD 1,600-2,200/t ($51-70/t) since the beginning of April. Feng Hsin Iron & Steel in central Taichung increased prices of its standard SD280 medium-sized rebars by TWD 1,000/t ($32/t) to TWD 21,700/t this week. The recent surge in rebar prices has not dampened orders, a Feng Hsin spokesman tells Steel Business Briefing. “Customers understand that the raw materials price rise is the reason for the increase,” he says. Wei Chih Steel in southern Tainan raised its SD280 prices by TWD 1,200/t ($38/t) to TWD 21,700/t this week. Demand, particularly from Southeast Asia, remains strong, says a senior Wei Chih official. “Customers have no problems accepting the price increases as their inventory is low as well,” he adds. Hai Kwang Enterprise in southern Kaohsiung raised its SD280 prices to TWD 21,600/t this week. Hai Kwang, which did not table offer prices at the beginning of last week, later raised its prices firstly to TWD 21,000/t and then to TWD 21,300/t over the course of the week, from TWD 20,000/t in late March. The company is selling a limited quantity of rebars this week as raw materials prices are rising too rapidly, and it does not rule out another price hike in the near-term, says a Hai Kwang spokeswoman. “Customers are worried that if they don’t buy now, prices will rise even further later on,” she adds.
Billet prices approaching $615/t in northern China
Spurred by rising raw material and steel prices, billet prices in northern China’s Tangshan city have galloped to a level close to RMB 4,200/tonne ($615/t), Steel Business Briefing learns from industry sources. In Tangshan, ex-works prices for 150x150mm Q235 billet are prevailingly at RMB 4,180/t ($612/t), with VAT and on a cash payment basis. Prices last Wednesday were around RMB 3,980/t ($583/t). Since early March, prices have increased by about RMB 780/t ($114/t). As SBB has reported, since last weekend leading steel mills such as Shagang and Hebei Iron & Steel have decided to further increase their ex-works prices by RMB 150-250/t ($22-37/t) to cover higher production costs or expected rises in those costs. With much higher raw material prices from last year, the current billet prices have well exceeded their previous highs of about RMB 3,900/t ($571/t) achieved in early August of 2009. But a local billet producer tells SBB that some traders started loosening their prices late on Tuesday, because of slowing transactions. They initially were offering at RMB 4,190/t ($614/t) delivered to local buyers, and reduced offers to about RMB 4,150/t ($608/t). He suggests most mills will keep their ex-works prices stable over the next few days to wait for a clear market direction. They might make slight price cuts if slow buying conditions go on, but no deep adjustments are expected in the short term.
Major Taiwanese rebar producers have again raised their prices because of higher scrap prices and strong demand, taking ex-works list prices to TWD 21,600-21,700/tonne ($684-688/t) this week. Prices have risen by TWD 1,600-2,200/t ($51-70/t) since the beginning of April. Feng Hsin Iron & Steel in central Taichung increased prices of its standard SD280 medium-sized rebars by TWD 1,000/t ($32/t) to TWD 21,700/t this week. The recent surge in rebar prices has not dampened orders, a Feng Hsin spokesman tells Steel Business Briefing. “Customers understand that the raw materials price rise is the reason for the increase,” he says. Wei Chih Steel in southern Tainan raised its SD280 prices by TWD 1,200/t ($38/t) to TWD 21,700/t this week. Demand, particularly from Southeast Asia, remains strong, says a senior Wei Chih official. “Customers have no problems accepting the price increases as their inventory is low as well,” he adds. Hai Kwang Enterprise in southern Kaohsiung raised its SD280 prices to TWD 21,600/t this week. Hai Kwang, which did not table offer prices at the beginning of last week, later raised its prices firstly to TWD 21,000/t and then to TWD 21,300/t over the course of the week, from TWD 20,000/t in late March. The company is selling a limited quantity of rebars this week as raw materials prices are rising too rapidly, and it does not rule out another price hike in the near-term, says a Hai Kwang spokeswoman. “Customers are worried that if they don’t buy now, prices will rise even further later on,” she adds.
Billet prices approaching $615/t in northern China
Spurred by rising raw material and steel prices, billet prices in northern China’s Tangshan city have galloped to a level close to RMB 4,200/tonne ($615/t), Steel Business Briefing learns from industry sources. In Tangshan, ex-works prices for 150x150mm Q235 billet are prevailingly at RMB 4,180/t ($612/t), with VAT and on a cash payment basis. Prices last Wednesday were around RMB 3,980/t ($583/t). Since early March, prices have increased by about RMB 780/t ($114/t). As SBB has reported, since last weekend leading steel mills such as Shagang and Hebei Iron & Steel have decided to further increase their ex-works prices by RMB 150-250/t ($22-37/t) to cover higher production costs or expected rises in those costs. With much higher raw material prices from last year, the current billet prices have well exceeded their previous highs of about RMB 3,900/t ($571/t) achieved in early August of 2009. But a local billet producer tells SBB that some traders started loosening their prices late on Tuesday, because of slowing transactions. They initially were offering at RMB 4,190/t ($614/t) delivered to local buyers, and reduced offers to about RMB 4,150/t ($608/t). He suggests most mills will keep their ex-works prices stable over the next few days to wait for a clear market direction. They might make slight price cuts if slow buying conditions go on, but no deep adjustments are expected in the short term.
Tuesday, April 13, 2010
Daily Steel news - 13 Apr 10
Rebar import prices edge upwards in Singapore
Rebar import prices in Singapore have moved up over recent days. Korean-origin rebar was last week transacted at $680/tonne cfr Singapore, up from bookings at around $670/t cfr for both Korean and Taiwanese rebar at end-March. Domestic rebar prices in Singapore – prevailing at the equivalent of around $660-680/t delivered to site – may be deterring importers from booking higher-priced imports, traders tell Steel Business Briefing. Offers of Turkish rebar at $750-760/t cfr Singapore are finding no takers. Chinese boron-added rebar is offered at $665-670/t whereas those without boron are offered at close to $700/t cfr because they are subject to higher export duty. There are no offers recently heard from Taiwan, but traders estimate that mills in that country would be seeking to export at close to $700/t cfr. Rebar producers in the region have been hiking their domestic prices significantly to keep up with rising feed costs. Despite awareness among buyers that the mills have little choice but to raise their prices, buying at these hiked prices is not strong, SBB understands. Trading sources say that buyers are concerned about price ustainability because these price hikes are mostly due to cost-push factors. “Current market demand may not justify these fast rising prices,” a trader notes.
LME billet price continues rising
The Mediterranean billet futures contract prices on the London Metal Exchange continue to rise and have now breached the previous highs reported by Steel Business Briefing in March. At the end of last week, Mediterranean contract prices were at $600-601/tonne (cash) and $611-616/t (three months). This radual increase over the last month is “a reflection of current market conditions and is likely to continue for the short term at least”, a trader tells SBB. He adds that prices are likely to continue rising as a result of the greater overall demand for raw materials, particularly from the Far East and domestic demand in Turkey. However, demand in Europe still remains flat.
Iron ore in deficit for next three years: Deutsche Bank
Demand for iron ore is expected to run ahead of supply until 2013, when Chinese demand slows and a number of new iron ore projects are commissioned globally, Steel Business Briefing learns from a recent research report by Deutsche Bank. According to the investment bank’s forecasts, apparent demand for iron ore will increase from an estimated 1,663 million tonnes worldwide in 2009 to 1,896m t this year and 2,057m t in 2011. Global production in 2010 and 2011 of 1,893m t and 2,051m t, espectively, will thus leave a shortfall of 4-6m tonnes over the next two years. The deficit is expected to widen to 42m t in 2012, with forecast production of iron ore to reach 2,213m t against apparent demand of 2,255m t. However, iron ore supply is expected to move back into a surplus of 50m t in 2013, when global output of 2,411m t exceeds forecast demand of 2,361m t. Meanwhile, Deutsche Bank expects higher iron ore prices to last through 2012, with the FOB price of Australian fines to Asia rising 34% this year and 3% the following year, before remaining flat in 2012. However, a slight dip is expected at the end of this year: prices are forecast to rise 65% for the current quarter followed by a further 10% rise in Q3, but decline by 15% in Q4 Chinese demand growth slows.
Chinese mills increase rebar/rod prices
Chinese bar and rod producers have kept raising their ex-works prices, and this has helped to further strengthening spot market prices, Steel Business Briefing learns from market sources. Over the weekend, eastern China’s Shagang hiked 16-25mm HRB335 rebar by RMB 200/tonne ($29/t) for mid-April delivery to RMB 4,550/t ($667/t), with 17% VAT. Prices for 6.5mm Q235 wire rod were lifted by RMB
150/t ($22/t) to RMB 4,650/t ($681/t). Meanwhile, Hebei Iron & Steel (Hegang) in northern China increased its 16-25mm HRB335 rebar and 6.5mm Q235 wire rod prices by RMB 250/t ($37/t) and RMB 150/t respectively to RMB 4,600/t ($674/t) and RMB 4,500/t ($659/t), also with VAT. The announcement of new price increases generated more price increases on the spot markets. Hangzhou prices for 18-25mm HRB335 produced by Shagang have risen by RMB 50/t ($7/t) or so from last Friday to a prevailing RMB 4,500/t, with 17% VAT, and some traders are offering the same product as high as RMB 4,530/t ($664/t). Compared with the beginning of April, prices have risen by about RMB 200/t. In Shanghai, 18-25mm HRB335 rebar, sourced from tier-two mills, is offered at about RMB 4,260-4,300/t ($624-630/t), up by at least RMB 40/t ($6/t) from last Friday. Some market players halted sales on Monday afternoon in expectations of further increases the next day. Similarly, Beijing prices for Hegang-sourced HRB335 rebar have increased by up to RMB 70/t ($10/t) to RMB 4,700-4,720/t ($689-691/t), with certain high offers already achieving RMB 4,750/t ($696/t).
Rebar import prices in Singapore have moved up over recent days. Korean-origin rebar was last week transacted at $680/tonne cfr Singapore, up from bookings at around $670/t cfr for both Korean and Taiwanese rebar at end-March. Domestic rebar prices in Singapore – prevailing at the equivalent of around $660-680/t delivered to site – may be deterring importers from booking higher-priced imports, traders tell Steel Business Briefing. Offers of Turkish rebar at $750-760/t cfr Singapore are finding no takers. Chinese boron-added rebar is offered at $665-670/t whereas those without boron are offered at close to $700/t cfr because they are subject to higher export duty. There are no offers recently heard from Taiwan, but traders estimate that mills in that country would be seeking to export at close to $700/t cfr. Rebar producers in the region have been hiking their domestic prices significantly to keep up with rising feed costs. Despite awareness among buyers that the mills have little choice but to raise their prices, buying at these hiked prices is not strong, SBB understands. Trading sources say that buyers are concerned about price ustainability because these price hikes are mostly due to cost-push factors. “Current market demand may not justify these fast rising prices,” a trader notes.
LME billet price continues rising
The Mediterranean billet futures contract prices on the London Metal Exchange continue to rise and have now breached the previous highs reported by Steel Business Briefing in March. At the end of last week, Mediterranean contract prices were at $600-601/tonne (cash) and $611-616/t (three months). This radual increase over the last month is “a reflection of current market conditions and is likely to continue for the short term at least”, a trader tells SBB. He adds that prices are likely to continue rising as a result of the greater overall demand for raw materials, particularly from the Far East and domestic demand in Turkey. However, demand in Europe still remains flat.
Iron ore in deficit for next three years: Deutsche Bank
Demand for iron ore is expected to run ahead of supply until 2013, when Chinese demand slows and a number of new iron ore projects are commissioned globally, Steel Business Briefing learns from a recent research report by Deutsche Bank. According to the investment bank’s forecasts, apparent demand for iron ore will increase from an estimated 1,663 million tonnes worldwide in 2009 to 1,896m t this year and 2,057m t in 2011. Global production in 2010 and 2011 of 1,893m t and 2,051m t, espectively, will thus leave a shortfall of 4-6m tonnes over the next two years. The deficit is expected to widen to 42m t in 2012, with forecast production of iron ore to reach 2,213m t against apparent demand of 2,255m t. However, iron ore supply is expected to move back into a surplus of 50m t in 2013, when global output of 2,411m t exceeds forecast demand of 2,361m t. Meanwhile, Deutsche Bank expects higher iron ore prices to last through 2012, with the FOB price of Australian fines to Asia rising 34% this year and 3% the following year, before remaining flat in 2012. However, a slight dip is expected at the end of this year: prices are forecast to rise 65% for the current quarter followed by a further 10% rise in Q3, but decline by 15% in Q4 Chinese demand growth slows.
Chinese mills increase rebar/rod prices
Chinese bar and rod producers have kept raising their ex-works prices, and this has helped to further strengthening spot market prices, Steel Business Briefing learns from market sources. Over the weekend, eastern China’s Shagang hiked 16-25mm HRB335 rebar by RMB 200/tonne ($29/t) for mid-April delivery to RMB 4,550/t ($667/t), with 17% VAT. Prices for 6.5mm Q235 wire rod were lifted by RMB
150/t ($22/t) to RMB 4,650/t ($681/t). Meanwhile, Hebei Iron & Steel (Hegang) in northern China increased its 16-25mm HRB335 rebar and 6.5mm Q235 wire rod prices by RMB 250/t ($37/t) and RMB 150/t respectively to RMB 4,600/t ($674/t) and RMB 4,500/t ($659/t), also with VAT. The announcement of new price increases generated more price increases on the spot markets. Hangzhou prices for 18-25mm HRB335 produced by Shagang have risen by RMB 50/t ($7/t) or so from last Friday to a prevailing RMB 4,500/t, with 17% VAT, and some traders are offering the same product as high as RMB 4,530/t ($664/t). Compared with the beginning of April, prices have risen by about RMB 200/t. In Shanghai, 18-25mm HRB335 rebar, sourced from tier-two mills, is offered at about RMB 4,260-4,300/t ($624-630/t), up by at least RMB 40/t ($6/t) from last Friday. Some market players halted sales on Monday afternoon in expectations of further increases the next day. Similarly, Beijing prices for Hegang-sourced HRB335 rebar have increased by up to RMB 70/t ($10/t) to RMB 4,700-4,720/t ($689-691/t), with certain high offers already achieving RMB 4,750/t ($696/t).
Monday, April 12, 2010
Daily Steel News - 12 Apr 10
Export prices jump in latest Japanese scrap auction
The highest winning bid in the export auction for H2 grade Japanese scrap held on 9 April by the Kanto Tetsugen group of scrap dealers increased by ¥5,050/tonne ($54/t) from last month’s auction. The winning bids were ¥39,100/tonne ($417.8/t) for 5,000 tonnes, ¥38,800/t for 10,000t and ¥38,550/t for two winners 6,000t and 5,000t. In total 26,000t was traded. “The winning bids were much higher than we expected and we were surprised,” a Tokyo-based scrap trader tells Steel Business Briefing. Trading sources in Japan believe that the cargoes will be exported to Taiwan or China, and that Korean mills, which have been holding off buying Japanese H2 grade scrap, will feel the urgency and may soon start lifting their offer prices. The trader says that the export price for Japanese scrap will continue to be strong and that Korean mills will soon bid at above ¥39,000/t fob. Korean mills last booked Japanese H2 scrap at ¥38,500/t fob, equivalent to ¥37,500/t fas about two weeks ago. The Japanese mini-mills may also have to lift their prices, in line with rising export prices, particularly since they are due to start securing sufficient scrap so that they can operate during Japan’s Golden Week holidays starting 29 April to take advantage of lower electricity rates. Tokyo Steel Manufacturing last raised its scrap buying prices by ¥1,000/t for all grades at all works effective 30 March arrivals. The H2 price at its Utsunomiya works in northern Kanto is currently ¥39,000/t.
UK scrap market direction unclear, say merchants
Not all UK scrap prices for this month are settled and views vary on the market’s direction, local participants tell Steel Business Briefing. Some scrap merchants say one domestic steel producer has agreed to price hikes as high as £50/tone for April deliveries, taking prices for obsolete material to around £260-280/t ($398-429/t) delivered, with shredded pegged at similar levels. Other mills will have to follow suit, they say. HMS 80:20 scrap has been sold at £295/t delivered into India, one merchant notes. “It is crazy, scrap should not jump by this much,” he continues. Mill inventories are low and material is scarce, one merchant adds, suggesting April prices have increased by £45-55/t depending on grade. However, other merchants believe the market is “overheated” and “overtalked”, with even smaller increases of £20-30/t unobtainable. Turkish buying, which had forced up prices considerably, seems to have hit a plateau for the time being, as most mills that wanted to buy have bought. “Turkish mills are pulling out of the market. Do not think this market is up, up and going to remain up forever,” one trader says. “The fundamentals have changed in that now steel order books are much better, but it will come down, there is no doubt,” he adds.
Monday Market Monitor - India (WEEK 14) - Longs start cooling off
Indian domestic steel prices exhibited mixed sentiments last week. After climbing for 5 consecutive week chinks began appearing for long products last week as they retracted by about 1%. But the loss is negligible as compared to the rally of more than 15% in 5 previous weeks. The price correction in last week, for long products especially rebars, strengthens our belief that the surge in prices during March was not on account of real growth in demand but was due to end users as well as stockiest preponing their purchases to avoid escalated prices in April as the general perception among them was that steel majors would go for a major hike on account of increased raw material costs. An important point to be noted is that the market for long product has weakened despite price hike announced by Indian steel majors and reflects the ground level situation as far as real demand pick up is concerned. On the other hand, the cost hype led price push prevailed for flat products although the current prices are far above the cost of Indian steel makers, even if we assume that they are paying spot prices for iron ore and coking coal, which probably they are not as some of tem have their own captive iron ore mines which results in less than USD 10 per tonne for own iron ore as against global spot levels of USD 170 per tonne. The surge in Indian domestic prices of flats has far exceeded rising global levels which are at USD 700 per tonne CFR levels, translating to INR 34,000 per tonne without MODVAT component. Indian steel minister Mr Virbhadra Singh during an interview expressed his concern on rising steel prices in India and warned that “I believe steel companies need to have a relook at prices because they have to do business with responsibility. Today, steel is not a luxury item, it is a necessary item. If prices are increased without justification, it will harm projects related to housing, road construction and highways. But steel is a deregulated subject and so the government has no control over its prices. What we do exercise is moral authority. I am going to soon tell them to hold prices. The present hike in prices has taken place on the basis of a high degree of speculation. The steel industry in India should not work as a cartel. I want a more responsible stance from them.”
Monday Market Monitor - Middle East (WEEK 14) – Hibernating
After unprecedented hike last 30 days, the steel market paused last week in most the markets in Middle East as the buyers went into hibernation and trade remained extremely thin. It seems that the shock of this surge put the buyers, especially projects, in a quandary as they have to review their project costs. As a result although the sellers and stockiest continued to offer at new levels, most of the buyers abstained from the market. In other words, the limited demand of steel has been further hit in the region as the steel prices increase was certainly not demand driven and was a result of hype created on cost push as well as surging import offers. The highest surge has been in the prices of rebars, which is an essential component for construction activity. Rebar prices have zoomed, in last 30 days, by 35% in Bahrain, 37% in Kuwait, 50% in Saudi Arabia and 46% in UAE. As a result respective governments are quite concerned on this surge and are planning to bring in some order to the market. On the other hand, buyers are hoping that this frenzy would end in some time and they would be able to resume buying steel at reasonable levels for their projects.
Monday Market Monitor - CIS (WEEK 14) - Unabated frenzy
The steel market at Black Sea remained in top gear last week and mills & sellers continued to hike their offers by each passing day. In case of billets, it was seen that some big market players suspended their offers adding fuel to the fire. It is rumored that traders are ready to buy at USD 620 per tonne to USD 625 per tonne FOB Black Sea but producers are already sure to achieve minimum USD 630 per tonne. So, it seems like rally continues but we have to see for how long as the average costing is mush lesser and mills are reported to be running hand to mouth on their order books. For finished longs also some of major steel mills held their offers and did not trade much last week. We heard that the biggest steel mill offered rebars at USD 660 per tonne to USD 670 per tonne on FOB basis and WRC at USD 670 per tonne to USD 690 per tonne. For finished flats, prices have risen last week. The Ukrainian quotations are now close to USD 650 per tonne to USD 660 per tonne for HRC and producers have already started to push prices up to USD 670 per tonne to USD 680per tonne FOB black Sea. The Russians current offers are at USD 680 per tonne to USD 700 per tonne FOB Black Sea. It seems like that more and more people are thinking about lasting of current trends and expect severe market correction.
Monday Market Monitor - Iron Ore (WEEK 14) - Crosses USD 170 CFR
Spot prices of Indian iron ore fines for higher and medium grades continued to march north last week with 3% to 8% gains on FOB India basis.
Some of the key factors affecting the iron ore market in India have been as follows
1. Severe crack down by government on illegal mining leading to curtailed availability and hiked prices on East Coast
2. Hike in railway freight by INR 300 per tonne
3. Imposition of 5% and 10% export duty iron ore fines and lumps
4. Iron ore majors Vale, BHP Billiton and Rio Tinto targeting quarterly pricing rather than annual with a 100% hike in prices leading to an imbroglio with Chinese buyers once again
5. Clamor by steel ministry for 20% export duty on iron ore fines to discourage export to augment domestic availability mills vie for capacity expansion.
6. Restrictive approach of Chinese buyers by banning import by traders with turnover of less than 1 million tonne is 2009
7. Banning import of lower grade iron ore below Fe 60% through traders
8. Banning import of iron ore for 2 months to arm twist Big 3 from dictating price levels for quarterly contracts.
9. Anticipated devaluation of Chinese currency under pressure from Western world.
All the above factors cumulatively is bound to exert downward pressure in the market sentiments as India being a major player in lower grade iron ore will be left with surplus volume to be ultimately diverted to domestic market thereby bring down the prices. However it should be music to Indian manufacturers in the long run as cost deescalates bloating their margin.
Extensive report on iron ore sector in India
The global iron ore market is hot. Everything good or bad about economic activities is visible here. On the one hand, there is strong recovery of demand with the global economic prospects back on track, statistically so till date, concerns nevertheless remain. On the other, speculators are back with panic driven Chinese steel industry rushing to build stock before they set the table for talks with the iron ore mining industry for the year’s contract. The spot prices for iron ore fines have shot over USD 145 per tonne on China’s coast. This means, the contracts for 2010 will be at levels at least 40% higher than in 2009. The Indian government’s action to impose an export tax on fines and raise the same on lumps will help the iron ore majors to stand firm in talks when it comes to the Chinese. Last year’ the Chinese mills made a strategic blunder not signing the annual contract. They won’t repeat that this time around. The future of the global iron ore industry depends on China. Many believe the steel industry’s growth in China will slow down. At this stage, such a statement will be termed speculative only. The Chinese mills, however, may not yield much ground. They will dig more into their own resources, import more from the spot market and thereby reduce their dependence on contracted volumes, if the prices are not favorable. They have also invested heavily overseas on iron ore assets and will bring in substantial quantities from there to meet some critical needs. The iron ore industry knows that pushing the Chinese mills to a tightrope will boomerang in the long term. More the Chinese mills are stressed, more assets will they acquire, which ultimately will reduce the dependence on the global iron ore cartel. China cannot be ignored by the iron ore miners after all they produce nearly half of world’s steel. A question has always been in the forefront : should the global coal or iron ore contracts be floating types indexed to steel prices, or a market based free float, or of a short duration, say, a month or a quarter? So far, the global majors, tied to annual contracts, have not been able to capitalize on the higher spot prices running through the year on the average. It is not necessary that this will happen every year. Yet, an optimistic mining industry globally is pushing for this. This will effectively bring an end to the annual contracts. The rise in global ocean freight has a very significant impact on the iron ore prices. A higher freight will effectively reduce the contract levels set on fob basis. Any attempt to push the burden of rising ocean freight on to the buyer will be resisted. And if iron ore shipping volumes drop, the dry bulk rates will also crash! One does not really know who will bear the brunt of this. It depends on the strength of the market: who is weak and who is not on the negotiating table. India has taken a protectionist stance. The government needs revenue to support the routine development expenditure and also the stimulus measures. This also sends a signal to the local industry that rampant exports cannot be permitted forever when the local industry faces shortage. In addition, it has sent a strong signal that illegal mining has to stop. Many mines are currently under investigation with their mines lying closed. The local mining industry is lobbying hard to get out of the multiple crises. “India’s Iron Ore: Following the Global Meltdown” is the latest report form SNRS. The report discusses the current iron ore business in India, prospects for the future and unfolds the opportunities to provide strategic guidance to investors and all others related to iron ore business in India.
The highest winning bid in the export auction for H2 grade Japanese scrap held on 9 April by the Kanto Tetsugen group of scrap dealers increased by ¥5,050/tonne ($54/t) from last month’s auction. The winning bids were ¥39,100/tonne ($417.8/t) for 5,000 tonnes, ¥38,800/t for 10,000t and ¥38,550/t for two winners 6,000t and 5,000t. In total 26,000t was traded. “The winning bids were much higher than we expected and we were surprised,” a Tokyo-based scrap trader tells Steel Business Briefing. Trading sources in Japan believe that the cargoes will be exported to Taiwan or China, and that Korean mills, which have been holding off buying Japanese H2 grade scrap, will feel the urgency and may soon start lifting their offer prices. The trader says that the export price for Japanese scrap will continue to be strong and that Korean mills will soon bid at above ¥39,000/t fob. Korean mills last booked Japanese H2 scrap at ¥38,500/t fob, equivalent to ¥37,500/t fas about two weeks ago. The Japanese mini-mills may also have to lift their prices, in line with rising export prices, particularly since they are due to start securing sufficient scrap so that they can operate during Japan’s Golden Week holidays starting 29 April to take advantage of lower electricity rates. Tokyo Steel Manufacturing last raised its scrap buying prices by ¥1,000/t for all grades at all works effective 30 March arrivals. The H2 price at its Utsunomiya works in northern Kanto is currently ¥39,000/t.
UK scrap market direction unclear, say merchants
Not all UK scrap prices for this month are settled and views vary on the market’s direction, local participants tell Steel Business Briefing. Some scrap merchants say one domestic steel producer has agreed to price hikes as high as £50/tone for April deliveries, taking prices for obsolete material to around £260-280/t ($398-429/t) delivered, with shredded pegged at similar levels. Other mills will have to follow suit, they say. HMS 80:20 scrap has been sold at £295/t delivered into India, one merchant notes. “It is crazy, scrap should not jump by this much,” he continues. Mill inventories are low and material is scarce, one merchant adds, suggesting April prices have increased by £45-55/t depending on grade. However, other merchants believe the market is “overheated” and “overtalked”, with even smaller increases of £20-30/t unobtainable. Turkish buying, which had forced up prices considerably, seems to have hit a plateau for the time being, as most mills that wanted to buy have bought. “Turkish mills are pulling out of the market. Do not think this market is up, up and going to remain up forever,” one trader says. “The fundamentals have changed in that now steel order books are much better, but it will come down, there is no doubt,” he adds.
Monday Market Monitor - India (WEEK 14) - Longs start cooling off
Indian domestic steel prices exhibited mixed sentiments last week. After climbing for 5 consecutive week chinks began appearing for long products last week as they retracted by about 1%. But the loss is negligible as compared to the rally of more than 15% in 5 previous weeks. The price correction in last week, for long products especially rebars, strengthens our belief that the surge in prices during March was not on account of real growth in demand but was due to end users as well as stockiest preponing their purchases to avoid escalated prices in April as the general perception among them was that steel majors would go for a major hike on account of increased raw material costs. An important point to be noted is that the market for long product has weakened despite price hike announced by Indian steel majors and reflects the ground level situation as far as real demand pick up is concerned. On the other hand, the cost hype led price push prevailed for flat products although the current prices are far above the cost of Indian steel makers, even if we assume that they are paying spot prices for iron ore and coking coal, which probably they are not as some of tem have their own captive iron ore mines which results in less than USD 10 per tonne for own iron ore as against global spot levels of USD 170 per tonne. The surge in Indian domestic prices of flats has far exceeded rising global levels which are at USD 700 per tonne CFR levels, translating to INR 34,000 per tonne without MODVAT component. Indian steel minister Mr Virbhadra Singh during an interview expressed his concern on rising steel prices in India and warned that “I believe steel companies need to have a relook at prices because they have to do business with responsibility. Today, steel is not a luxury item, it is a necessary item. If prices are increased without justification, it will harm projects related to housing, road construction and highways. But steel is a deregulated subject and so the government has no control over its prices. What we do exercise is moral authority. I am going to soon tell them to hold prices. The present hike in prices has taken place on the basis of a high degree of speculation. The steel industry in India should not work as a cartel. I want a more responsible stance from them.”
Monday Market Monitor - Middle East (WEEK 14) – Hibernating
After unprecedented hike last 30 days, the steel market paused last week in most the markets in Middle East as the buyers went into hibernation and trade remained extremely thin. It seems that the shock of this surge put the buyers, especially projects, in a quandary as they have to review their project costs. As a result although the sellers and stockiest continued to offer at new levels, most of the buyers abstained from the market. In other words, the limited demand of steel has been further hit in the region as the steel prices increase was certainly not demand driven and was a result of hype created on cost push as well as surging import offers. The highest surge has been in the prices of rebars, which is an essential component for construction activity. Rebar prices have zoomed, in last 30 days, by 35% in Bahrain, 37% in Kuwait, 50% in Saudi Arabia and 46% in UAE. As a result respective governments are quite concerned on this surge and are planning to bring in some order to the market. On the other hand, buyers are hoping that this frenzy would end in some time and they would be able to resume buying steel at reasonable levels for their projects.
Monday Market Monitor - CIS (WEEK 14) - Unabated frenzy
The steel market at Black Sea remained in top gear last week and mills & sellers continued to hike their offers by each passing day. In case of billets, it was seen that some big market players suspended their offers adding fuel to the fire. It is rumored that traders are ready to buy at USD 620 per tonne to USD 625 per tonne FOB Black Sea but producers are already sure to achieve minimum USD 630 per tonne. So, it seems like rally continues but we have to see for how long as the average costing is mush lesser and mills are reported to be running hand to mouth on their order books. For finished longs also some of major steel mills held their offers and did not trade much last week. We heard that the biggest steel mill offered rebars at USD 660 per tonne to USD 670 per tonne on FOB basis and WRC at USD 670 per tonne to USD 690 per tonne. For finished flats, prices have risen last week. The Ukrainian quotations are now close to USD 650 per tonne to USD 660 per tonne for HRC and producers have already started to push prices up to USD 670 per tonne to USD 680per tonne FOB black Sea. The Russians current offers are at USD 680 per tonne to USD 700 per tonne FOB Black Sea. It seems like that more and more people are thinking about lasting of current trends and expect severe market correction.
Monday Market Monitor - Iron Ore (WEEK 14) - Crosses USD 170 CFR
Spot prices of Indian iron ore fines for higher and medium grades continued to march north last week with 3% to 8% gains on FOB India basis.
Some of the key factors affecting the iron ore market in India have been as follows
1. Severe crack down by government on illegal mining leading to curtailed availability and hiked prices on East Coast
2. Hike in railway freight by INR 300 per tonne
3. Imposition of 5% and 10% export duty iron ore fines and lumps
4. Iron ore majors Vale, BHP Billiton and Rio Tinto targeting quarterly pricing rather than annual with a 100% hike in prices leading to an imbroglio with Chinese buyers once again
5. Clamor by steel ministry for 20% export duty on iron ore fines to discourage export to augment domestic availability mills vie for capacity expansion.
6. Restrictive approach of Chinese buyers by banning import by traders with turnover of less than 1 million tonne is 2009
7. Banning import of lower grade iron ore below Fe 60% through traders
8. Banning import of iron ore for 2 months to arm twist Big 3 from dictating price levels for quarterly contracts.
9. Anticipated devaluation of Chinese currency under pressure from Western world.
All the above factors cumulatively is bound to exert downward pressure in the market sentiments as India being a major player in lower grade iron ore will be left with surplus volume to be ultimately diverted to domestic market thereby bring down the prices. However it should be music to Indian manufacturers in the long run as cost deescalates bloating their margin.
Extensive report on iron ore sector in India
The global iron ore market is hot. Everything good or bad about economic activities is visible here. On the one hand, there is strong recovery of demand with the global economic prospects back on track, statistically so till date, concerns nevertheless remain. On the other, speculators are back with panic driven Chinese steel industry rushing to build stock before they set the table for talks with the iron ore mining industry for the year’s contract. The spot prices for iron ore fines have shot over USD 145 per tonne on China’s coast. This means, the contracts for 2010 will be at levels at least 40% higher than in 2009. The Indian government’s action to impose an export tax on fines and raise the same on lumps will help the iron ore majors to stand firm in talks when it comes to the Chinese. Last year’ the Chinese mills made a strategic blunder not signing the annual contract. They won’t repeat that this time around. The future of the global iron ore industry depends on China. Many believe the steel industry’s growth in China will slow down. At this stage, such a statement will be termed speculative only. The Chinese mills, however, may not yield much ground. They will dig more into their own resources, import more from the spot market and thereby reduce their dependence on contracted volumes, if the prices are not favorable. They have also invested heavily overseas on iron ore assets and will bring in substantial quantities from there to meet some critical needs. The iron ore industry knows that pushing the Chinese mills to a tightrope will boomerang in the long term. More the Chinese mills are stressed, more assets will they acquire, which ultimately will reduce the dependence on the global iron ore cartel. China cannot be ignored by the iron ore miners after all they produce nearly half of world’s steel. A question has always been in the forefront : should the global coal or iron ore contracts be floating types indexed to steel prices, or a market based free float, or of a short duration, say, a month or a quarter? So far, the global majors, tied to annual contracts, have not been able to capitalize on the higher spot prices running through the year on the average. It is not necessary that this will happen every year. Yet, an optimistic mining industry globally is pushing for this. This will effectively bring an end to the annual contracts. The rise in global ocean freight has a very significant impact on the iron ore prices. A higher freight will effectively reduce the contract levels set on fob basis. Any attempt to push the burden of rising ocean freight on to the buyer will be resisted. And if iron ore shipping volumes drop, the dry bulk rates will also crash! One does not really know who will bear the brunt of this. It depends on the strength of the market: who is weak and who is not on the negotiating table. India has taken a protectionist stance. The government needs revenue to support the routine development expenditure and also the stimulus measures. This also sends a signal to the local industry that rampant exports cannot be permitted forever when the local industry faces shortage. In addition, it has sent a strong signal that illegal mining has to stop. Many mines are currently under investigation with their mines lying closed. The local mining industry is lobbying hard to get out of the multiple crises. “India’s Iron Ore: Following the Global Meltdown” is the latest report form SNRS. The report discusses the current iron ore business in India, prospects for the future and unfolds the opportunities to provide strategic guidance to investors and all others related to iron ore business in India.
Friday, April 9, 2010
Daily Steel News - 9 Apr 10
Billet prices rise in SE Asia, suppliers hike prices further
Suppliers continue to raise their billet export prices in Southeast Asia. New offers of Taiwanese billet are now $630/tonne fob ($650-660/t cfr SE Asia), up from $620/t fob earlier this week. Certain Malaysian mills
are indicating an export price of $660/t fob ($680-685/t cfr), up from $650/t fob. “If you estimate scrap at $480/t cfr today, the price of billet should be around $630/t fob, assuming conversion cost of $150/t,” a Hong Kong trader tells Steel Business Briefing. Russian-origin billet was recently booked at $615/t cfr Philippines, up from $605/t cfr in late-March. Malaysian billet was also concluded at $645/t cfr Vietnam. A trader’s position cargo of billet, believed to be Taiwanese-origin, was sold earlier this week at $625/t cfr Vietnam. There are a few offers of CIS billet at $660-670/t cfr Indonesia. Brazilian-origin billet was heard offered at $680/t cfr Vietnam. “It is still positive for at least a month,” a regional trader tells SBB. Supply is tight due to the lack of offers, but buying is slow since offer prices are high, he adds. Since rebar prices in regional domestic markets have risen significantly, billet importers can afford to pay more. Indonesian re-rollers raised their bids for imported billet by $20/t from last week to $$630-640/t cfr after increasing domestic rebar prices several times. But there are limits, some traders caution. “Billet offer prices are being hiked more than once in one week,” one tells SBB. Despite rising rebar prices, rebar demand is not strong enough to support such frequent price hikes for billet. “Prices may collapse if billet prices keep shooting up,” he warns.
Korean mills pay more for scrap imports
Korea’s Posco on 7 April booked Japanese scrap at ¥43,900/tonne ($471/t) cfr for both Shindachi and HS grades. The estimated 10,000-tonne purchase will be delivered during this month and next, local trading sources tell Steel Business Briefing. These prices reflect a surge of some ¥3,000/t compared with Posco’s buying price of ¥41,000/t cfr for Shindachi in mid-March. No new booking of H2 grade scrap is heard since the last concluded purchase at ¥38,500/t around two weeks ago. “The Kanto Tetsugen tender will be held on 9 April and the market is expected to come back to book H2 next week,” a Korean trader tells SBB Over a week ago, Hyundai booked two bulk cargoes of US scrap at $455/tonne cfr for HMS No.1 for May deliveries, up from $448/t cfr in mid-March. However, some medium and small-sized Korean mini mills are still monitoring the international scrap market trend. They are adopting a wait-and-see attitude after scrap deliveries from local dealers to these mills’ yards improved recently following a hike in domestic scrap prices, a mini mill source tells SBB. Meanwhile, the country’s total imports of scrap in March rose by 7% month-on-month to 730,000 t, representing the highest level during the past ten months, according to Korea Iron & Steel Association. The US was the largest scrap exporter to Korea, delivering 344,000 t of scrap last month, more than a threefold increase compared with February’s 101,000 t. Japan is the next largest with 251,000 t, but scrap volume from Japan plummeted by 51% m-o-m.
Mills face steep cost increases: not much froth - WSR
Large iron ore price rises and the introduction of quarterly iron ore contracts dominated the markets last week. Details of the new costs to be faced by steel producers are scant: however, rises of 80-130%, depending on the supplier, buyer, quality, freight, volume and duration of the contract, seem likely. In addition, coking coal cost increases of around 55% were confirmed by Posco, and global scrap prices continued to strengthen in many (but not all) parts of the world. These trends left most buyers uncertain. Some responded by buying smaller volumes, adopting a waitand- see approach, fearing offer prices would collapse. Others bought more, fearing prices would rise; both are possible. The cost increases are the immediate cause of the higher finished asking prices. And as many of the new 2010 April-to-June quarter iron ore prices seem pegged to the average of spot prices in January to February, or March, depending on supplier, an immediate collapse seems unlikely. However, the iron ore forward curves are suggesting some softness in the second half of 2010. This would impact prices in October-December 2010 and early 2011. Some mills and a small number of steel buyers are already hedging their purchases - either on an exchange, or an Over the Counter (OTC) market given this uncertainty. A decline in global raw material costs is possible if Beijing seriously cools China’s economy: they would then feed into lower finished steel prices. Alternatively, if China’s steel production continues to grow, requiring more raw material imports, supply bottlenecks may keep coking coal and iron ore prices high, pumping up finished prices further. For mini-mills, where scrap is the main feedstock, scrap pricing seems likely to mirror iron ore price developments: so they will not escape a squeeze on margins.
BHPB settles quarterly iron ore price with ArcelorMittal
ArcelorMittal has settled prices to buy iron ore from BHP Billiton during the April-June quarter, Steel Business Briefing has learned from informed market observers. Both BHPB and ArcelorMittal declined to comment on the matter. Rio Tinto also declined to comment on whether it had settled prices as yet. The agreed price is based on average published prices in January-February for CFR China spot business, adjusted for freight. An independent trader tells SBB that this deal appears to make sense in relation to the quarterly pricing that BHPB has agreed with Asian steelmakers, highlighting the continuing interdependence of the global iron ore market. A number of analysts, both independent and those at investment banks, yesterday confirmed the ArcelorMittal/ BHPB price settlement. Macquarie Bank also quoted Japanese steel industry sources, who indicated that BHPB had now settled with most of its Asian customers at a price of $120.08/tonne fob for 62% Fe fines. One analyst said that the move to quarterly pricing marks the next step in the revolution of iron ore sales, allowing for an increased flexibility in price while retaining a stability not found in LME traded metals with their daily price changes.
Suppliers continue to raise their billet export prices in Southeast Asia. New offers of Taiwanese billet are now $630/tonne fob ($650-660/t cfr SE Asia), up from $620/t fob earlier this week. Certain Malaysian mills
are indicating an export price of $660/t fob ($680-685/t cfr), up from $650/t fob. “If you estimate scrap at $480/t cfr today, the price of billet should be around $630/t fob, assuming conversion cost of $150/t,” a Hong Kong trader tells Steel Business Briefing. Russian-origin billet was recently booked at $615/t cfr Philippines, up from $605/t cfr in late-March. Malaysian billet was also concluded at $645/t cfr Vietnam. A trader’s position cargo of billet, believed to be Taiwanese-origin, was sold earlier this week at $625/t cfr Vietnam. There are a few offers of CIS billet at $660-670/t cfr Indonesia. Brazilian-origin billet was heard offered at $680/t cfr Vietnam. “It is still positive for at least a month,” a regional trader tells SBB. Supply is tight due to the lack of offers, but buying is slow since offer prices are high, he adds. Since rebar prices in regional domestic markets have risen significantly, billet importers can afford to pay more. Indonesian re-rollers raised their bids for imported billet by $20/t from last week to $$630-640/t cfr after increasing domestic rebar prices several times. But there are limits, some traders caution. “Billet offer prices are being hiked more than once in one week,” one tells SBB. Despite rising rebar prices, rebar demand is not strong enough to support such frequent price hikes for billet. “Prices may collapse if billet prices keep shooting up,” he warns.
Korean mills pay more for scrap imports
Korea’s Posco on 7 April booked Japanese scrap at ¥43,900/tonne ($471/t) cfr for both Shindachi and HS grades. The estimated 10,000-tonne purchase will be delivered during this month and next, local trading sources tell Steel Business Briefing. These prices reflect a surge of some ¥3,000/t compared with Posco’s buying price of ¥41,000/t cfr for Shindachi in mid-March. No new booking of H2 grade scrap is heard since the last concluded purchase at ¥38,500/t around two weeks ago. “The Kanto Tetsugen tender will be held on 9 April and the market is expected to come back to book H2 next week,” a Korean trader tells SBB Over a week ago, Hyundai booked two bulk cargoes of US scrap at $455/tonne cfr for HMS No.1 for May deliveries, up from $448/t cfr in mid-March. However, some medium and small-sized Korean mini mills are still monitoring the international scrap market trend. They are adopting a wait-and-see attitude after scrap deliveries from local dealers to these mills’ yards improved recently following a hike in domestic scrap prices, a mini mill source tells SBB. Meanwhile, the country’s total imports of scrap in March rose by 7% month-on-month to 730,000 t, representing the highest level during the past ten months, according to Korea Iron & Steel Association. The US was the largest scrap exporter to Korea, delivering 344,000 t of scrap last month, more than a threefold increase compared with February’s 101,000 t. Japan is the next largest with 251,000 t, but scrap volume from Japan plummeted by 51% m-o-m.
Mills face steep cost increases: not much froth - WSR
Large iron ore price rises and the introduction of quarterly iron ore contracts dominated the markets last week. Details of the new costs to be faced by steel producers are scant: however, rises of 80-130%, depending on the supplier, buyer, quality, freight, volume and duration of the contract, seem likely. In addition, coking coal cost increases of around 55% were confirmed by Posco, and global scrap prices continued to strengthen in many (but not all) parts of the world. These trends left most buyers uncertain. Some responded by buying smaller volumes, adopting a waitand- see approach, fearing offer prices would collapse. Others bought more, fearing prices would rise; both are possible. The cost increases are the immediate cause of the higher finished asking prices. And as many of the new 2010 April-to-June quarter iron ore prices seem pegged to the average of spot prices in January to February, or March, depending on supplier, an immediate collapse seems unlikely. However, the iron ore forward curves are suggesting some softness in the second half of 2010. This would impact prices in October-December 2010 and early 2011. Some mills and a small number of steel buyers are already hedging their purchases - either on an exchange, or an Over the Counter (OTC) market given this uncertainty. A decline in global raw material costs is possible if Beijing seriously cools China’s economy: they would then feed into lower finished steel prices. Alternatively, if China’s steel production continues to grow, requiring more raw material imports, supply bottlenecks may keep coking coal and iron ore prices high, pumping up finished prices further. For mini-mills, where scrap is the main feedstock, scrap pricing seems likely to mirror iron ore price developments: so they will not escape a squeeze on margins.
BHPB settles quarterly iron ore price with ArcelorMittal
ArcelorMittal has settled prices to buy iron ore from BHP Billiton during the April-June quarter, Steel Business Briefing has learned from informed market observers. Both BHPB and ArcelorMittal declined to comment on the matter. Rio Tinto also declined to comment on whether it had settled prices as yet. The agreed price is based on average published prices in January-February for CFR China spot business, adjusted for freight. An independent trader tells SBB that this deal appears to make sense in relation to the quarterly pricing that BHPB has agreed with Asian steelmakers, highlighting the continuing interdependence of the global iron ore market. A number of analysts, both independent and those at investment banks, yesterday confirmed the ArcelorMittal/ BHPB price settlement. Macquarie Bank also quoted Japanese steel industry sources, who indicated that BHPB had now settled with most of its Asian customers at a price of $120.08/tonne fob for 62% Fe fines. One analyst said that the move to quarterly pricing marks the next step in the revolution of iron ore sales, allowing for an increased flexibility in price while retaining a stability not found in LME traded metals with their daily price changes.
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