Daily Steel News - 03 Nov 10

SBB Prices & Indexes
World price +/-
World HRC $/t 664 -16
World Rebar $/t 626 -6
M'sia Rebar $/t 639

Indexes
SBB World 232 -3
Europe Flat 173 -3
Europe Long 194 -1
Asia Flat 201 -1
Asia Long 286 -1
N.America Flat 178 -4
N.America Long 234 0


Malaysia Steel Assn seeks export duty on iron ore
The newly-formed Malaysia Steel Association (MSA) believes that investment in upstream facilities, especially in iron-making, will enable the steel industry to be more self-sufficient in its raw materials supply and achieve greater cost efficiency. It also wants the Malaysian government to open 3,000~5,000 acres of land containing iron ore and metallurgical coal to local steel producers to undertake commercial mining. MSA also wants “an export duty on iron ore – of say, 30% or RM 140/ tonne ($45.4/t), whichever the higher – to encourage further processing of the ore into finished products locally," MSA president Tan Sri William Cheng said at the association’s launch Tuesday. Noting that Malaysia imports about 3m tonnes/year of scrap and that many countries ban scrap exports to ensure sufficient domestic supplies, Cheng said MSA is appealing for the export duty on scrap to be raised to 30% from the existing 10%, or to RM350/t, whichever is higher. The proposed measures to assist the industry are similar to those practised in other countries, Cheng said, and will provide Malaysian steel producers with a “level playing field to compete more effectively with other foreign steel mills.” The MSA’s nine founding members – Amsteel Mills, Ann Joo Steel, Ann Joo Integrated Steel, Antara Steel Mills, Kinsteel, Malaysia Steel Works, Megasteel, Perfect Channel and Perwaja Holdings – have a combined steel-making capacity exceeding 9m t/y, representing 85% of Malaysian upstream capacity. "Southern Steel (the only other Malaysian crude steel producer) will join MSA,” Chow Chong Long, its coo tells Steel Business Briefing. However, Southern Steel will remain in the Malaysian Iron & Steel Industry Federation
(Misif) and recognises that Misif represents the entire iron and steel industry in Malaysia, SBB understands. Chow is the current president of Misif.

China’s coking coal imports from Mongolia grow rapidly
The importance of Mongolia to China’s coking coal supply is increasing, as Steel Business Briefing learns from industry sources. “We knew little about Mongolia before,” says a trader from Tianjin. “As more ports opened, and China’s demand for imported coking coal increased last year, we are buying more coking coal from Mongolia.” SBB notes that China’s coking coal imports from Mongolia reached 1.2m tonnes in April this year, when winter weather ended in the country, and imports have remained above 1m tonnes/month since then and even surpassed imports from Australia in some months, according to China’s Customs statistics. In September, China imported 1.8m t of coking coal from Australia, up by 112% from 850,000 t in August. Imports from Mongolia reached 1.5m t down 6% from 1.6m t in the previous month. “Mongolia’s coking coal is less expensive than Australian coal,” a trader tells SBB. “Especially for central Chinese provinces such as Shanxi which don’t have sea ports.” Another trader adds that the quality of Mongolia’s coking is quite high and can be “placed directly” in a coke battery. Mongolia imported crude coking coal is currently being sold at around RMB 740/tonne ($111/t) including 17% VAT at ports in the Inner Mongolia autonomous region. Prices of Australian hard coking coal are currently $225-230/t fob E. Australian port.
However, Australia is still the largest coking coal exporter to China. China’s total coking coal imports in January-September were 33.5m t. Imports from Australia for the period were 13.2m t, 39% of the total volume. Imports from Mongolia reached 9.9m t, making up 30% of the total volume for the period.


China’s iron ore port stocks keep falling; demand slipping
Iron ore port stocks at Chinese main ports have dropped further in the past week, while offer prices for the material are up. But in the face of falling demand transactions are being completed at lower prices Steel Business Briefing learns from market sources. Port stocks of iron ore on 29 October was 68.81m t, down by 1% compared with 69.63m t on 22 October, according to data provided by SXcoal. Iron ore port stocks from Australia, Brazil and India all dipped.
“Transactions of port stock iron ore are a little better than a week before,” says a Beijing-based trader. Traders tell SBB port stock iron ore at main northern Chinese ports is selling at RMB 1,180-1,210/wet metric tonne ($177-181/wmt) including 17% VAT on 2 November, up by RMB 10-20/wmt ($2-3/wmt) from RMB 1,160-1,200/wmt on 26 October. However, transaction prices are around RMB 1,150-1,180/wmt as mills’ demand appears to weakening. “My customs are pessimistic about the market’s future, so they are delaying their purchases,” says the Beijing trader. “There is lots of room for haggling.” “Many of my customers are located in Hebei province’s Tangshan city,” adds another trader in Shanghai. “So demand there is limited due steel production cuts in support of the provincial government’s energy conservation policy.”


Iron ore port stocks at China's main ports
Million tonnes
Month-on-month change
Total 68.81 -1.2%
Australia 24.16 -1.2%
Brazil 17.26 -1.1%

Daily Steel News - 01 Nov 10

SBB Prices & Indexes
World price +/-
World HRC $/t 680 -4
World Rebar $/t 639 +5
Indexes
SBB World 236 +1
Europe Flat 177 -13
Europe Long 204 -2
Asia Flat 201 -1
Asia Long 286 -1
N.America Flat 178 -4
N.America Long 234 0

Suppliers hike offer prices of billet to SE Asia
Offer prices of billet to Asia have been hiked by $10/tonne or more in recent days. Transaction prices had
earlier hit lows of around $555-560/tonne cfr Southeast Asia last week. Russian billet was heard booked to the Philippines at $555/t cfr and Korean billet at $560/t cfr. Since Korean billet entering the Philippines enjoys duty exemption of 3%, this is equivalent to $543/t, local trading sources tell Steel Business Briefing. "Suppliers of Korean billet were aggressive last week," a local trader tells SBB. However, offer prices have since rebounded. New offers are now prevailing at around $575/t cfr Philippines for material from Taiwan and Korea. Taiwanese-origin is now being offered at $580/t cfr Indonesia. In Taiwan, offers of Russian-origin billet were heard last week at around $560/t cfr but local importers are bidding at $545/t cfr. “Domestic billet is cheaper in Taiwan but I expect billet prices to rise very soon because scrap is going up,” a trader in Taipei says. Importers have also stayed away for a while and will need to resume buying to replenish inventory, he adds. “Domestic debar prices are being pushed up (so) billet prices will rise,” another local trader says. Korean billet from Vietnam was also booked at around $560/t cfr last week. However, new offers for Koreanorigin billet have since risen to around $580/t cfr. Russian-origin billet is offered at a minimum of $570/t cfr Vietnam and of $575/t cfr Thailand. Many Thai importers are bidding at $540-550/t cfr. Thai mills are aiming to export billet at $575-580/t fob and Malaysian mills, $580/t fob. Traders tell SBB that these export prices, around $595-605/t cfr SE Asia, are uncompetitive.


Sims on scrap: near-term steady, long-term more volatile
The outlook for scrap markets in the current quarter is without significant volatility, according to executives
at recycler Sims Metal Management, though the longer term outlook remains uncertain Steel Business Briefing notes. “General tightness in scrap availability, especially in North America, could result in seasonally higher selling prices with the onset of Northern Hemisphere winter, especially in the important deep sea ferrous markets, but we do not expect to encounter significant price volatility over the balance of this half-year period,” Sims said in a quarterly earnings statement. “Additionally, a weaker US dollar could support higher deep sea ferrous scrap prices in the near-term, particularly for US-generated material. However, until ferrous demand becomes more consistent, we expect to see continued volatility in the longer term beyond our second quarter.” The company reported a net profit of Australian $8.2m (US $7.9m) on revenues of A$1.88bn (US $) for its fiscal 2011 first quarter, which ended September 30. Scrap flows and margins remain constrained, especially in North America, the company said. Sims purchased 3.4m tonnes and shipped 2.9m t during the quarter, compared to 3.6m t purchased and 3.4m t shipped in the previous quarter.


TSI reports higher 62% Fe iron ore monthly average price
The daily iron ore reference prices released by The Steel Index (TSI) yesterday show that at the end of October the price for 62% Fe content iron ore was higher than a month earlier. The reference price for 62% Fe content iron ore fines finished the month at $149.10/dry metric tonne CFR Tianjin port, China. This is $8.00/dmt above the price at the end of September. TSI’s monthly average price for October was $148.48/dmt for the 62% Fe content reference product, calculated as the mean of all the daily 62% reference prices during the calendar month. This is used as the final settlement price for October for iron ore swaps cleared on the Singapore Exchange (SGX), LCH.Clearnet (London) and CME Group (Chicago), and will be used by NOS Clearing (Oslo) from today. The October settlement price is 5.6% higher than that for September. TSI's two-month average 62% Fe price for September-October is $144.46/dmt. This is 4.4% higher than the average of the “pricing quarter” of June-August, which is being used as a basis in many index-linked iron ore supply arrangements for the October to December quarter. Some contracts specify that the quarterly price will remain unchanged if the reference price change quarter-on-quarter is less than 5%.