Daily Steel News - 27 Oct 10

SBB Prices & Indexes
World price +/-
World HRC $/t 681 -3
World Rebar $/t 639 +5
M'sia Rebar $/t 632
Indexes
SBB World 237 +2
Europe Flat 177 -13
Europe Long 204 -2
Asia Flat 204 -2
Asia Long 288 -5
N.America Flat 183 -5
N.America Long 234 +8

SE Asia rebar import market sees offer prices rebound
Mills are trying to raise their offer prices for rebar into Southeast Asia. New offers for theoretical weight rebar from Turkey are now at $600-610/tonne cfr Singapore. There are no offers heard for Korean nor Taiwanese rebar to Singapore. Prices were previously under $600/t cfr. Several bookings of Turkish-origin theoretical weight rebar were last concluded at $575-585/t cfr Singapore around two weeks ago. About ten days ago, rebar of theoretical weight from Korea transacted at around $585/t cfr Singapore and for actual weight, $590-595/t cfr Hong Kong. Traders tell Steel Business Briefing that offer prices have risen because of the firming scrap market. “Mills have to hike their prices because they cannot afford to sell at previous levels,” a trader tells SBB. However, trading sources stressed that, while offer prices have risen, no confirmed deals at these prices have been struck as yet. Chinese-origin boron-added rebar was last concluded at $585/t cfr Hong Kong. There was a position cargo of this grade and origin rebar at the same price to Singapore. This is likely to have been booked, since this is the price buyers are willing to pay, traders tell SBB. Demand in Hong Kong for imported rebar is described as steady. In Singapore, buyers are generally
adopting a wait-and-see approach because they are uncertain of market direction.

China's iron ore demand may slow until 2020
Liu Yongshun, a former official with Baosteel’s iron ore negotiating group, has predicted that the growth rate of Chinese iron ore demand will slow until 2020. “Under the supposition that China’s GDP increases 8% each year for the next ten years, the growth rate of Chinese crude steel production will be 5%, the same as the global average,” Liu told a conference in eastern China’s Hefei city. Therefore Liu expects China’s iron ore demand to slow, as steel demand will also decline during that time. But Liu did not add why he expects steel demand to pick up in 2020. Steel Business Briefing notes that Chinese crude steel production grew 13% in 2009. However, industry analysts express their suspicions about Liu’s analysis. “The GDP growth rate may not hold at 8% in the following ten years,” says a Shanghai-based analyst. He adds that development of China's central and western regions has not been strong enough to indicate that those regions can replace eastern China in leading the country's economic growth and maintaining steel demand. Another analyst from Shanghai agrees, saying Liu's prediction is for "too a long period”.
Beijing has not suggested a clear target for China’s GDP growth rate in the next five-year plan (2011- 2015), which has left analysts guessing whether China will reduce its focus on GDP growth, SBB notes.

US scrap prices rebound as exports grow
Anticipation that ferrous scrap prices will rise in the US market next month is already pushing US scrap export prices higher, according to Blake Kelley of Sims Group. Until now, domestic prices were mostly levelpegged with exports, he told the BIR scrap conference in Brussels yesterday. US scrap export volumes began to grow significantly in August to 21.6m tonnes, if calculated on an annualised basis, he notes. This compares with a year-to-date annualised average of 19.7m t, and “was one of the first indications that world scrap prices were about to increase”, he says. US prices are already up in some areas by about $25/t, compared to the bottom of the market earlier this month, he told Steel Business Briefing. This was when HMS was about $320/t delivered, shredded at $345/t and busheling at $385/t. Many believe a key factor for the rebound is “inadequate supply and low collection rates, especially for unprepared shredder feed”, he said. “Steel producers simply did not initially buy all they wanted, and when they re-entered the market for more, supplier attitudes changed,” he concludes. Meanwhile, domestic prices in Canada are unlikely to fall further, especially as the cold winter approaches, he added. The US dollar is at a 15 year low against the yen, and at relatively lower values compared to other major industry currencies, he noted.

Iron ore swaps prices edge higher despite physical weakness
Iron ore swaps prices have moved up over the last week after a period of selling, sources in the market tell Steel Business Briefing. January prices jumped from $141/tonne on 18 October to $143.50/t on 25 October, according to Iron Ore & Steel Derivatives Association data seen by SBB. February swaps prices increased from $140.85/t to $142.50/t, while March prices rose from $140.71/t to $141.50/t. Prices have risen after a period of selling when people sensed the physical market weakening, one source says. While swaps prices have risen over the last week, physical prices have softened. The Steel Index’s reference price for 62% Fe fines delivered into China, used to settle swaps on the Singapore Exchange and LCH.Clearnet, moved down 1.8% over the course of last week, hitting $149.4/t on Monday (25 October). “We have seen some decline of demand out of China on the physical side, there’s only been a couple of cargoes gone through in the last week or so,” one broker says. Certain sellers are apparently offering ore, for November delivery, at cheap prices and increased pressure from the Chinese government on energy
conservation is seeing mills cut production again. All this, combined with higher supply as the Indian monsoon season finishes, may result in another period of paper selling, SBB hears. The volume of swaps cleared on the Singapore Exchange fell from 3,105 lots in August, equating to around 1.5m tonnes, to 2,682 lots (1.3mt) in September.

Daily Steel News - 22 Oct 10

Iron ore reference prices stable - The Steel Index
The latest daily iron ore reference prices released by The Steel Index (TSI) yesterday, show that the prices for both 62% and 58% Fe content iron ore have been fairly stable during the past week, after the sharp increases from a week earlier. The 62% Fe content price wavered on a daily basis, ending slightly lower. Both prices are still around 9% higher than four weeks ago. Average weekly freight rates from Australia and Brazil were stable, but average rates from both coasts of India rose steadily. The reference price for 62% Fe content iron ore fines stood at $151.80/dry metric tonne CFR Tianjin port, China. This is a $0.90/dmt, or 0.6%, decrease on the price a week ago. The reference price for 58% Fe content iron ore fines ended the week $1.10/dmt, or 0.9%, above the level of a week earlier. Daily freight rates from Australia and Brazil to China rose by 3% at the start of the week. Rates from Australia slipped back later, but rates from Brazil continued to firm. Daily freight rates for shipments from east coast of India rose 4.5% from the level at the end of the previous week, while rates from west coast of India rose 8% in midweek before falling back again. TSI 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.

World output falls for fourth month in a row
Crude steel production fell for the fourth successive month in September, according to World Steel Association data covering 66 countries. Steel Business Briefing calculates that monthly production has
dropped by almost 10% since it peaked at 124m tonnes in May. September output of 111mt was 0.9% higher than in the same month last year. It took the total for the first nine months of this year to 1,045mt, 19% more than last year’s equivalent figure. China’s September production of 47.9mt was almost 6% lower than the same month in 2009, as steelmakers cut output to meet government-mandated energy saving targets. In contrast, the month saw increases in other Asian countries’ production – of 11% in Japan, 6% in India and 3% in Korea. North American September output, of 9.3mt, was 18% ahead of that of September 2009. The USA, Mexico and Canada all reported gains, but South American production last month was down by 2% year-on-year mostly because of a 36% fall in Venezuela. September production in the European Union was almost 4% greater than the same 2009 month, aided by a near-20% increase in the EU’s second largest steelmaking country, Italy. Turkish production last month was up almost 18%.
CIS crude steel output of 8.7mt was 1.5% lower than in September last year as Ukraine’s output fell 12%.