MAY   2009

 Steelworld Home

From the CEO's Desk

Dear Readers,


Global iron & steel industry is suffering from demand crisis and it seems the world steel production in 2009 will be lower than 2008 by about 12 to 15 %. World Steel Association (formerly known as International Iron & Steel Institute) has also made similar projections based on the feedback it receives from more than 66 countries. Have we reached the bottom ? When will the recovery start ? How fast can we make the lost ground ?
In this regard we have to understand that different regions are at different stages of this crisis and will have different recovery patterns. In the case of America and Europe, the economies were already stagnated and there was no generation of additional demand in these regions even before the meltdown started. Now, the steel production in these regions has gone down by around 40 % and still there are no signs of improvement. Last time we had discussed about a recovery curve of U shape with elongated bottom. Now experts are talking about 'W' and 'L' shape. W shaped means that there will be a small recovery in coming months but it will not be sustainable and again the downturn will start. According to this theory, the real recovery will start in 2011 and 1012. The later one (L shape) means that America and Europe will never ever reach the level of 2008. Fact is that nobody can read the future perfectly.
In case of Asia, the situation is quite different. Though the infrastructure projects were halted temporarily, many of them have restarted. Many Greenfield and Brownfield expansions in steel industry have started, though with lesser pace. Construction industry has started moving ahead with a sizable price correction. Auto production for the last 1-2 months is showing improvement. Infact, in this very period of global meltdown, there were two major launches in Indian auto industry. 'Zylo' from M & M and 'Nano' from Tata Motors. Is it not quite remarkable ?
In my opinion, Asia (and more particularly India) has passed the bottom and is on a steady recovery track. Obviously this road is very long and the improvement will be gradual. One cannot expect fast results and has to have a lot of patience. The newly installed stable government in India can further impart a positive sentiment to the industry.

 D.A.Chandekar
Editor & CEO

Headlines

NEWS - VIEWS

India pips US, Russia to be world's 3rd largest steel producer

Big corporates line up for NMDC's steel plant contract

Tata Steel UK to prepay 200 mln pounds of Corus' loan

District administration warns action against Bhushan Steel

Subdued economy pulls down world steel output

Essar Steel plant expansion plan on track

Flat steel imports face duty barrier

Steel production up 4% in April

POSCO expands Indian, Thai steel processing plants

Indian iron ore in demand

Construction & Business Records organises INDIA INFRATECH 2009

JSL scraps $1.2-bn JV project in Indonesia


GULF DIARY

Ezz Steel raises rebar prices

Raw materials prices begin to revive in UAE

Turkish steel exports double to the Arabian markets

Al Rajhi Steel, Saudi Fransi in $720m financing deal

Hadeed Hama to increase its billet production capacity

Egypt becomes largest steel importer in Middle East



 
SOUTH EAST ASIAN DIARY

Japan crude steel production decline set the highest record in 2008

Stainless steel producers expect market recovery in Taiwan

ArcelorMittal shelves steel project in Indonesia

UBS sees POSCO cutting steel price again in Q3

Nippon Steel raises stainless price for May contract

JISF sees Japanese steel demand recovery by upto 5 years




CHINA CALLING


China steel industry may decline in 09

Wuhan Steel predicts over 50% profit falls in H1

China 09 steel oversupply seen at 100 mln tons

Chinese steel mills turn to more imported iron ore

WISCO bags 5 mln tons steel contracts

Steel prices to continue at low levels amid surplus - CISA

Chinese raw materials industry posts 5.3% growth in 4 months

 



EUROPE-AMERICA NEWS

ArcelorMittal sees global steel demand down 15-20%

Acerinox sees stainless steel pickup in Q3

Russia Severstal Q1 steel output down 21% y/y

Outokumpu may cut 110 more jobs
EU steel makers say demand to be almost halved

ArcelorMittal to raise $3 bln in share, bond sale

 



 

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India pips US, Russia to be world's 3rd largest steel producer   

India has emerged as the third largest steel producer in the world, leaving behind Russia and the U.S., in the first quarter of 2009. As per the World Steel Association estimates for the January-March period of 2009, India reported 1.02 percent increase in output at 13.17 million tons for three months ended against the year-ago period. China and Japan maintained their supremacy in terms of steel output to hold the first and the second slot respectively for the January-March period. China recorded a steel production of about 126 million tons, while Japan had 17.60 million tons in the three months.
On the contrary, Russia and the US saw their production plunging by 33 percent and 53 percent to 12.88 million tons and 12.09 million tons, respectively, in the period. Acknowledging India's rise as the third largest steel producer in the world, steel Secretary P. K. Rastogi said demand for the commodity in the country is rising, contrary to the global scenario. “This shows there is demand for steel in the economy. While world's average per capita steel consumption declined, in India it did not,” he said.
In terms of annual steel output, India holds fifth rank in the world with a production of over 55 million tons.

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Big corporates line up for NMDC's steel plant contract

More than two dozen corporates, including Larsen and Turbo, Siemens VAI, SMS Siemag and Paul Wurth, have evinced interest for nine turn-key contracts of state-run NMDC for the PSU's Rs 14,000 crore steel plant in Chhattisgarh.
The company plans to award the contracts for installation of blast furnace, slab caster, hot strip mill, coke oven, sinter plant, bi-product mill and continuous casting mill, among others, NMDC sources said. The interested engineering companies would be giving presentations before Mecon, the project consultant of NMDC's proposed three million tons per annum steel plant at Nagarnar in Chhattisgarh. NMDC Chairman and Managing Director Rana Som confirmed that corporates have shown interest in taking up the turn-key contracts and said the short-listing process would be done soon to ensure the plant's construction starts in time.
Navratna PSU NMDC plans to commence production from the plant in a span of over three years after the construction work starts. In addition to establishing a greenfield steel plant in Chhattisgarh, NMDC has submitted a proposal with Karnataka Government for setting up a 10-million tons steel mill in the state, provided it is allocated adequate iron ore resources. As part of its diversification programme, the Indian miner is putting up two pellet plants in Chhattisgarh and Karnataka. The company is also exploring the feasibility of setting up a 0.8 million ton pig iron plant in Chhattisgarh using HI-smelt technology of global miner Rio Tinto. HI-smelt is a technology which uses low-grade iron ore for making pig iron that can be processed into steel. Unlike the conventional blast furnace route, it does not require coking coal.

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Tata Steel UK to prepay 200 mln pounds of Corus' loan  

India's leading steel producer Tata Steel said that there was sufficient liquidity at its UK operations and it plans to pre-pay 200 million pounds out of its loan taken for acquisition of Anglo-Dutch steel major Corus. Besides, the company has sought resetting of certain terms of the loan facility with the lenders in view of the adverse impact of global slowdown on demand.
Tata Steel UK, a 100 per cent direct subsidiary of Tata Steel, held discussions with its banking syndicate which participated in the debt financing for the acquisition of Corus Group plc, on the current environment and the potential future impact on some covenant requirements under the company's debt package. “As part of the covenant reset package being sought, the company will prepay, voluntarily, over 200 million pound of non-recourse debt to continue its objective of de-leveraging its European operations.
Reports said that the “company (Tata Steel UK) has asked for a resetting of its covenants, in particular a suspension of testing of covenants for the rest of the year.” They also said that Tata Steel UK had asked its banks for an easing in the terms of some three billion pound of loans put in place for the Corus acquisition.

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District administration warns action against Bhushan Steel  

Concerned over the rise in cases of fatal accidents at the Bhushan Steel Plant at Meramandali in Dhenkanal district, the district collector has warned of stringent action against the company if such accidents continued unabated, reports said.
The district collector has even warned that she would write to the Orissa government seeking closure of the Bhushan Steel Plant if no remedial measures are taken by the company authorities. Thirty deaths have been reported in the premises of the steel plant since the start of construction of the project in 2005 though the unofficial sources put the death toll at 60. Two deaths were reported in May this year triggering public outcry on lack of safety in the plant.
At a review meeting between the district administration and different industries held on May 12, Mrinalini Darswall, the Dhenkanal district collector and the superintendent of police expressed concern over the spate of deaths in the Bhushan Steel plant. Nine industries participated in the meeting. Besides Bhushan Steel, they included Lanco, GMR Power, Mahalaxmi Power, and Rungta Mines. The district collector asked the inspector of factories stationed at National Aluminium Company (Nalco) to submit a detailed report on the fatal accidents that have occurred so far in the Bhushan Steel Plant. The meeting took serious note of safety and environmental issues and Bhushan Steel was accused of severe pollution and unsafe practices which put the workers as well as the local people at risk. The district police chief, Satish Gajviye stressed on the need for a peaceful solution to the problems. He advised industries to help create conducive atmosphere and take proper safety measures to curb the accidents. Apart from safety and environmental issues, the meeting also focused on land acquisition and peripheral development.
It was decided that the retired government officials having experience in revenue matters would be engaged by the industries to expedite land acquisition. On the peripheral development front, the industries were asked to be flexible in granting money to ward off any public discontent.

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Subdued economy pulls down world steel output


The nearly 23 percent fall in world steel production to 264 million tons in the first quarter of 2009 over the same period last year is to be taken as a statement of the continuing difficult times for the manufacturing and construction sectors.
The setback in steel production in North America was 52.1 percent to 16.6 million tons and in European Union 43.8 percent to 30 million tons. Thanks to China, where production rose 1.4 percent, the fall in Asian steel output was comparatively modest at 8.9 percent to 173 million tons. The major setback in world steel production in the first quarter is, however, not surprising as distributors and actual users around the world continues to draw heavily from inventories built earlier. Buying is restricted to the bare minimum.
Subdued economic activity in spite of the country specific and G20 stimulus packages has meant that steelmakers around the world are seeing demand for shipments being almost halved compared with a year ago. Not surprisingly, therefore, steel prices fell by nearly 50 percent since July. A Credit Suisse analyst says that the steel industry has seen the “bottom of the trough” in the first quarter. ArcelorMittal, which has nearly 10 percent share of the global steel production, is also seeing potential for price improvements in the current and third quarter across major markets and products. For the first time in nine months, Indian steel makers could post some rises in long products pries. This would not have come about unless there are some stirrings in construction activity.
The world steel industry is now drawing some comfort from the beginning of a turnaround of the Chinese manufacturing sector. Some price revisions here and there are not the same as feeling a bounce in demand. It remains a subject of speculation as to when that bounce will actually be felt. The negotiation of demand recession has required of the world steel industry to resort to some drastic cut in production making thousands of workers idle. Unlike ever in the past, the steel industry has given a demonstration of discipline by mothballing capacity in steps with falling demand for the metal. Lakshmi Mittal, who has created history by championing the cause of capacity consolidation in a highly fragmented industry, was not found shy of cutting production in “recent months by nearly 50 per cent.

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Essar Steel plant expansion plan on track

Essar Steel's expansion at its Hazira plant is in full swing, but the company is putting on hold all of its greenfield expansion plans due to weakening global demand.
The company is expanding capacity at Hazira to 10 million metric tons a year from the current 4.6 million tons, which is likely to come on stream by June 2010, after investment of $2.7 billion to 2.8 billion.
"There is a great recession in steel. But India is growing on planned investment in infrastructure," Essar Steel CEO J. Mehra said. India's steel consumption is expected to grow 1.7 percent in 2009 to 53.5 million metric tons, while global steel consumption is expected to contract 14.9 percent to 1.02 billion metric tons, according to the World Steel Association's short-range outlook.
The company has also put on hold to build manufacturing capacity in Vietnam, Trinidad and Tobago, and the U.S. state of Minnesota.
The expanded capacity at Hazira will be coal-based, while the existing capacity uses nine million metric standard cubic meters a day of natural gas, said Mehra.
Essar Steel procures about 3.3 MMSCMD of gas through long- term contracts, and sources the remainder from the spot market. The company has asked the government to provide gas for its plant from Reliance Industries Ltd.'s Krishna Godavari basin, Mehra said.
Meanwhile, Mehra said Essar expects to produce 4.5 million metric tons of saleable steel in the current fiscal year, up from output in the financial year that ended March 31 of 3 million tons. Production was lower in the last financial year due to fuel shortages and forced shutdowns related to low demand, he said.
Essar is planning to open retail outlets to expand its reach to rural markets, Mehra added.

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Flat steel imports face duty barrier

After slapping provisional anti- dumping duty on high- end stainless steel products, the government is planning imposing a safeguard duty of 25 percent on flat steel products from several countries, including the world largest steelmaker- China and Japan, to protect domestic producers from cheap imports.
According to a report, the Directorate-General of Safeguards has urged the commerce ministry to levy a safeguard duty on hot-rolled coils, sheets and strips that are shipped at rates below $600 per ton. Those products are used by automakers and infrastructure projects.
The directorate's recommendation comes after preliminary investigations found that increased imports had caused "serious injury" to the domestic steel industry. The investigation was launched after Essar Steel and Ispat Industries filed a petition for such a duty. Their petition was supported by SAIL and JSW Steel.
The four companies together accounted for about 80 percent of the country's total steel production between April 2008 and February 2009. In the petition, Essar and Ispat said the surge in imports led to a steep decline in their sales volumes and lower capacity utilisation of the plants.
In April, the government slapped a provisional anti-dumping duty on some high-end stainless steel products to guard domestic industry from cheap imports from eight nations, including China, Thailand and the US. Consumer-industries have opposed such duty on the ground that they need to import certain grades of the alloy that are not available locally. The finance ministry notified a maximum levy of $1,823 per ton on import of cold-rolled flat stainless products, mainly used by the automotive industry, for six months.

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Steel production up 4% in April

Improved demand from automobile and construction sectors has helped the country's steel production to grow by nearly 4 per cent to 4.49 million tons in April compared to the corresponding month last year. In April 2008, the finished steel production stood at 4.33 million tons.
Even as the overall steel production went up, the country's two major steel producers- SAIL and RINL-posted 2.6 percent drop in production at 1.36 million tons from 1.39 million tons, said a report.
SAIL produced 7.72 lakh tons against 8.08 lakh tons, however, RINL's production dipped to 1.91 lakh tons from 2.32 lakh tons. Among the main producers, Tata Steel registered a double digit growth in output at over 5 lakh tons.
Steel Secretary P K Rastogi attributed the overall increase in April production to robust demand from consuming sectors as also clearing of inventories by steel companies.
"They (companies) have cleared their inventories and are producing more. It is a good sign for the sector," he said. During the month under review, the import of steel items increased by 5.6 percent to 3.80 lakh tons as against 3.60 lakh tons. Exports, however, took a beating and fell nearly 16 percent to 3.10 lakh tons from 3.68 lakh tons.

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POSCO expands Indian, Thai steel processing plants

South Korean steel major POSCO has expanded annual capacity of its steel processing plants in India and Thailand by 120,000 tons each to supply auto and electronics steel in the region.
The move comes after the world's No.4 steelmaker expanded its customer base this year by signing a supply deal with Sony Corp for LCD television manufacturing outside Japan and an auto sheet sales deal with Toyota Motor for production in Japan.
"The two centres will mainly process steel coil for customised use in such products as auto and electronics and also serve as warehouses and distribution points," POSCO said in a statement. Its Indian plant is in Maharashtra, where several global auto firms are based.
POSCO's Thai plant in the Wellgrow industrial estate will support Japanese automakers and South Korean electronics firms.

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Indian iron ore in demand

India's iron ore demand has again picked by the traditional Chinese buyers on rising international freight rates. Chinese iron ore importers had since mid-March turned towards other destinations including Australia and Brazil resulting into a stagnation in Indian demand of steel making raw material. “There is a lot of demand, people are asking for good quantities,” said one large miner in east India, who said he had last sold on May12 and did not have much stock now. The miner said he was offering material at $68 a tonne levels for ores with 63.5 percent iron, compared to Friday's actual deal at $66.5. The Baltic Exchange's main sea freight index, which tracks rates to ship dry commodities, hit a new 2009 high on May 13, driven by continued demand for goods by China. On the buying side, a Chinese dealer said demand remained good though supplies were ample. “Miners are dumping ores to China because they have nowhere to ship, but demand is good especially in small and medium (steel) mills,” a Beijing-based manager at a state-owned trading firm said. “They feel their supplies are secured. It is spot market, but I feel it is no different from the long-term contract-based market when the supply is ample,” the manager in China added. China is India's biggest client for iron ore, taking a major part of the roughly 100 million tons of iron ore it exports each year. The north Asian giant showed record high imports of iron ore in April as its industry grappled with falling domestic ore output due to a high cost of production compared with Australia, Brazil and India. Prices of steel in China also firmed as traders built up stocks and even resorted to imports. An upcoming closure in India's western port of Goa ahead of the monsoon at the end of this month, also contributed to an increase in demand, traders said. “It is not unusual, this is always the case every year,” said a mid-sized miner in Goa, who said prices were flat and demand from China steady. Goa is China's favourite spot for buying ores of low grade to blend with high grades, but will be unavailable till September when India's annual monsoon ends. Most Goan ores are fines that can not be shipped in moisture-laden conditions. The Goa miner said the waiting time for vessels continued to be six to seven days against the usual two to three at Goa port.

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Construction & Business Records organises INDIA INFRATECH 2009

Construction & Business Records, in association with H&K India and TRMA, held an international seminar, “India Infratech 2009” on recently at Mumbai. The theme of the seminar was 'Mass Rapid Transport Systems” (MRTS). The seminar drew huge response from participants. Over 230 delegates from India, Germany, France, Malaysia, and Japan attended the conference.
It was learnt at the conference that the MRTS requirement for Greater Mumbai Region (incl. Navi Mumbai) was based on a projected population of 34 million in 2034 but plans were being made for about 50 million. Detailed study of present problems, current density of different travel modes, projected future requirements and plans that are being pursued were presented. Each of the MRTS options available, considering present technology, experience at other metro regions in the world were also highlighted at the conference. A pre-feasibility study of a high speed train (300kph) between Mumbai and Nagpur (1000kms) with a travel time of about 4 hours is under way, it was learnt. A vision of high speed train network from Mumbai to Kolkata and New Delhi to Chennai, with Nagpur as the intersection point, was discussed. Delegates informed of plans to convert the Mumbai suburban train services from the old 1500V DC to the modern 15000V AC system.
The speakers included renowned experts from the private and public sectors. They included reputed town planner, RK Jha (Conference Chairman), SK Lohia, OSD (MRTS) Jt. Secy. Min of Urban Development, Govt of India, PRK Murthy, Chief-T&C, MMRDA, Dr. PC Sehgal, MD, MRVC, JC Vollery of Systra France, H Bochardt of Voessing, Germany, RK Markan (Conference Co-Chairman), U Pandey of Scomi, Malaysia (Conference Organising Secy), Prof. KV Krishna Rao of IIT and many others. Vishveshvaraiya Awards and Citations for 2008 were presented at the seminar by the Chairman and Co-Chairman - 'Life Time Achievement Award' to Dr. PC Sehgal, 'Eminent Engineer Award' to PRK Murthy, and 'Eminent Technologist Award' to RK Jain.

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JSL scraps $1.2-bn JV project in Indonesia

 Hit by the prevailing industrial downturn, the country's largest stainless steel producer, JSL, has shelved its $1.2-billion joint venture project with Indonesia's PT Antam TBK in the South East Asian country.
"The project is no more commercially viable, so we have decided to shelve it," JSL Director (Strategy & Business Development) Arvind Parakh said.
JSL Ltd (formerly Jindal Stainless) had last year entered into a joint venture with the mining firm PT Antam to build a 20,000-ton ferro-nickel plant and 3-lakh-ton stainless steel slab unit in Indonesia. However, with prices of nickel, a vital input for producing the alloy, dipping sharply, the Indian firm has decided to drop the project.
"Nickel prices were hovering at $ 20,000-22,000 tons last year when we entered in to the 55:45 JV with PT Antam, but now the prices have plummeted to USD 10,000 tons making the project unviable," he added.
However, the Indian firm would continue to source nickel from the Indonesian company, which is currently scouting for possible buyers of JSL's stake in the joint venture, he said.
JSL has already spent about $ 4.5 million in the project and hopes to recover it soon, Parakh added.
The company has capacity to produce 7.2 lakh tons of the alloy in India. It is spending Rs 5,700 crore to set up a 1.5 million tons per annum stainless steel plant in Orissa.

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Ezz Steel raises rebar prices    

Ezz Steel Group, a leading steelmaker in Gulf, raised steel prices by LE 150. As a consequence, factories raised their prices as well, bringing them to LE 3,400 a ton for consumers.
Many consumers tend to build real estates now, as summer is drawing close and Egyptians working abroad are coming back. Investment companies are expected to back down on the current prices due to poor demand by consumers, as 200,000 tons of imported steel are being kept in warehouses and ports at LE 350 less than the price of local factories.
Ezz Group made LE 1.2 billion of overall profits last year but also suffered an estimated LE 300 million of losses in the last quarter of 2008. Its losses are still continuing due to the global crisis, while its stake in the market is shrinking as consumers are buying more and more Turkish steel.
George Matta chairman of the Group's marketing sector said the price that the company had decided to adopt in May had been postponed since the announcement of the prices last April. Mohammed Hanafi director of the Chamber of Mining Industries predicted that prices would oscillate and that they might decrease next month.

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Raw materials prices begin to revive in UAE        

Rising steel, aluminium and copper prices are set to drive up the cost of developing real estate this year. The cost of building real estate developments in the UAE is expected to rise in the H2 of this year following an increase in raw materials prices in May, the first such increase since the middle of 2008.
The rise in the cost of steel is the most significant change in materials prices. Along with cement and aggregate, it is one of the 3 most widely used raw materials in construction projects.
The price of steel reinforcement bars in the UAE climbed to AED 1,950 a ton in May for the first time since November 2008. UAE rebar prices peaked at AED 5,750 a ton in July 2008.
A source at one Asian contractor working across the Gulf said that "Straight-bar prices are just under AED 2,000 at about AED 1,950 but cut and bent rebar is typically worth AED 150 to AED 200 more and is now trading at about AED 2,150 a ton. It is the first time this year prices have gone above AED 2,000 tons."
Aluminium and copper prices are also rising. Both materials are used widely by contractors. Builders use aluminium to clad buildings and copper for electrical wiring. Since March, aluminium prices have risen from AED 1,320 a ton to AED 1,480 a ton. Prices peaked at AED 3,042 a ton in July of 2008.
Copper prices have climbed steadily to AED 4,540 a tonne from AED 3,290 a tonne in February. Prices peaked at AED 8,660 in April 2008. In July of 2008, they were AED 8,350, before falling sharply to AED 3,000 at the start of 2009. Contractors do not know why material prices are rising in the UAE when the construction industry has yet to recover from the collapse of the real estate sector in the H2 of 2008. One Dubai based contractor said that "It could be because people are trying to finish work before the summer period. It might be because producers have cut back on capacity and it might be because the oil price has had an effect on the cost of shipping."
Although rising raw materials prices will drive up contractors' costs, most are likely to absorb the increases themselves rather than pass them on to clients as they are desperate to keep their existing contracts.

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Turkish steel exports double to the Arabian markets        

Turkish exports to the Arab markets during the first four months of this year reached 4.2 million tons against 2.9 million tons in the same period of 2008, up by 45 percent YoY.
The Egyptian market is the largest importer of the steel products from Turkey. Its total imports during the first four months of this year amounted to 1.7 million tons against 58,000 tons in the same period of 2008, which pushed the Egyptian market to occupy the first rank instead of the United Arab Emirates.
UAE's imports during the first four months of this year declined to 553,000 tons against 1.7 million tons in the same period of 2008. Iraq ranked third in terms of the volume of its imports, followed by Algeria, which took rank four.
The total imports of these four countries reached 3.1 million tonnes during the first four months of this year against 2.3 million tons in the same period of 2008.

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Al Rajhi Steel, Saudi Fransi in $720m financing deal        

Mohamed Abdulaziz Al-Rajhi & Sons Industry Holding signed an agreement with Banque Saudi Fransi for a $720 million financing for the expansion of its Saudi steel operations. The privately-owned holding said in a statement the agreement appointed the French Calyon's affiliate, as financial advisor and arranger for the financing.
The size of the loan may change "depending on the requirements of the credit market", the firm said. A spokesman for the holding said, "The financing is currently being arranged by Fransi." He could not say when it would be finalised. The owners of Mohamed Abddulaziz's Holding are related to the main owners of Al-Rajhi Bank. The holding needs the cash to help finance expanding its Rajhi Steel Industries' subsidiary. "The company will immediately start building the new reinforced steel plant in Jeddah with a production capacity of one million tonnes per year," the holding said in the statement.
The expansion will cost a total of four billion riyals and will more than double its production capacity by as early as 2012.
Rajhi Steel's Chief Executive Mehdi bin Nasser Al-Qahtani had said that his firm was expecting an equity injection from the holding's owners and loans from state-run Saudi Industrial Development Fund and other banks. Many projects in the Kingdom have been delayed because of scarce financing as the global financial crisis forced local banks to opt for greater caution on lending until visibility improves.
Property developer Jabal Omar Development said its appointed financial advisor Jadwa Investment failed to arrange a $3.3bn financing within the agreed deadlines for a property project near the holy shrines at Makkah. However, Saudi Arabia's Al Ittefaq Steel Products, part of the local Al Tuwairqi Group, is in talks with 26 banks to restructure more than $1bn (Dh3.67bn) in loans, said a report.
Al Ittefaq is seeking to restructure its debt as its finances have suffered amid a steep drop in steel prices, a slowdown in the construction market and the ban on excess inventory exports, it said, citing bankers in the Kingdom. The steel company hopes to finalise talks by the end of May with banks including National Commercial Bank, Samba, Al Rajhi, Saudi Hollandi Bank, National Bank of Kuwait, and Standard Chartered Bank. Al Ittefaq in December announced that 1,800 of its 2,145 workers were being sent on leave without pay from January 1.

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Hadeed Hama to increase its billet production capacity   

Production at General Company for Iron and Steel Products in Syria amounted to 54.363 tons in 2008 against 68.502 tons in 2007. The company is the only played in the Syrian market which produces billets. Its production in 2008 amounted to 63.040 tons against 70.008 tonnes in 2007.
The company is planning to introduce new expansions in the production capacity of billets as to reach 288 000 tons per year. A contract has been concluded to upgrade the melt shop with the Indian Apollo company which will execute this upgrading process. This contract has been ratified by the tutelary authorities.

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Egypt becomes largest steel importer in Middle East            

The League of Arab States Iron and Steel Federation reported that Egypt become the largest steel importer in Middle East in the first quarter of 2009.
According the report, Egypt imported 2.2 million tonnes of steel, accounting 22% of the total steel import for all the Arab countries.
The market director of Egypt Ezz Group said that because the infrastructure constructions in Egypt increased sharply there will be a rigid demand for steel products in Egypt.

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Japan crude steel production decline set the highest record in 2008

The sluggish demand from automobile sector has driven low crude steel production in Japan. The crude steel production was stood at 105.5 million ton in the fiscal year of 2008; sharply decreased by 13.2 percent compared with last year, which sets the record in historical decline, said Japanese Steel Federation.
According to a report, the sharp decline is the first in the three years, which mainly resulted from the slow globally economy. Because the large demand in emerging markets, Japan crude steel production had reached the highest level in history in the fiscal year of 2007. However, the deteriorating global economic situation forced Japan steel industry to slam the brake in 2008.
From the perspective of specific categories, the production of special steel used for automobile making significantly dropped 15.8 percent to 22.22million tons, and the more extensive used steel production also declined 12.4 percent to 83.28 million tons in 2008. Japan Steel Federation also said that Japan crude steel outputs slumped 46.7 percent in March this year, which was the six consecutive declines and the drop was the highest.

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Stainless steel producers expect market recovery in Taiwan   

Taiwanese leading stainless steel makers have posted substantially improved sales in April, kindling hopes that the market has at least touched the bottom, if not yet started to rebound.
Yieh United Steel Corp. in Kaohsiung County, the largest integrated stainless steel mill in Southeast Asia with an annual capacity of 1 million metric tons, indicated that thanks to rising international nickel prices, its stainless steel supply in April is expected to reach 70,000 metric tons. The estimated volume for April is a significant increase from the historical monthly lows of 40,000 tons in January and February and around 60,000 tons in March, the mill said.
Tang Eng Iron Works Co. in Kaohsiung, a specialized producer of stainless steel with an annual capacity is 260,000 metric tons, also reported that its capacity utilization rate has increased from 20 percent in February to 80 percent in April, with total production in April estimated to triple to 24,000 metric tons from the monthly average of the first quarter.
Both Yieh United and Tang Eng hiked their stainless steel prices in mid-April, prompting a wave of price increases by downstream producers, including Yeun Chyang Industrial Co., Froch Enterprise Co., Chien Shing Stainless Steel Co., Yeou Yih Steel Co., Sinkang Industries Co., Ta Chen Stainless Pipe Co., and Rodex Fasteners Corp.
Most producers said they believe that as long as nickel prices remain above US$10,000 per metric ton in May and June, their monthly revenues in the second quarter will continue to recover.
Stainless-steel producers use about two-thirds of global nickel supplies, as the alloy contains up to 9 percent nickel, which accounts for about half of total stainless-steel production costs. Nickel traded at an average price of US$9,686 per ton in January on the London Metal Exchange and rose 15 percent to slightly above US$10,000 per ton in February and mid-March before dipping below US$10,000 per ton again in late March.

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ArcelorMittal shelves steel project in Indonesia 

The world's largest steel producer ArcelorMittal has shelved its plans of setting up steel facilities in Indonesia after finding the proposed endeavour to be unviable in the wake of the global economic slowdown.
"We have looked at the feasibility of establishing steel facilities in Indonesia and, at this time, we are not pursuing the project," ArcelorMittal Chairman and CEO L N Mittal has said after announcing the company's results. The steel giant had not made any formal announcement about the investment proposed in the Indonesia project, but media reports said it was to the tune of USD 10 billion.
"We were evaluating it. So, it was never part of our strategy. Historically, there was a press news by the Indonesian government that ArcelorMttal was looking for a USD 10-billion investment, but never an announcement from our side," Mittal said. Asked if the company would consider the project in future, the India-born billionaire said he could not be futuristic.
"Future we don't know, but at this (point of) time, in short to medium term, I don't see feasibility of any greenfield project in Indonesia," Mittal said.
esides Indonesia, the steel major has proposed USD 20- billion greenfield project in India, where it plans to set up integrated steel plants of 12-million tons annual capacity each in Jharkhand and Orissa.

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UBS sees POSCO cutting steel price again in Q3  

South Korea's POSCO to lower steel prices again in the third quarter following its earlier-than-expected price reduction announced on Thursday to further reflect falling raw material costs.
POSCO, which had refused to cut prices until negotiations over raw material imports were settled due to the impact of its move on earnings, unexpectedly cut its domestic steel prices by up to 20 percent, its biggest ever reduction, to narrow a widening price gap with cheaper imports.
Prior to the cut, POSCO products cost over $100 a ton more than imported steel, and they are still quoted higher than Chinese and Japanese imports even after Thursday's reductions. "We expect another price cut of 8-10 percent in the third quarter with hot-rolled coil prices at 640,000 won, as falling input costs put pressure on steel prices," UBS said in a note. "However, we expect a modest rise in product prices from the fourth quarter as demand recovers."
Some analysts have downgraded their earnings forecasts for POSCO following the price adjustments, as POSCO forecast the move would reduce annual sales by 2.7 trillion won and as uncertainty mounts over the depth of price cuts in already protracted iron ore talks.
"We expect such changes to impose further pricing impact on raw material price negotiations... We believe the degree of price fall will likely exceed our original expectations of 61 percent in coking coal and 36 percent in iron ore," Citi analyst Brian Cho said in a note.
Citi cut its earnings estimates for POSCO but raised its target price by 12 percent, citing expected demand recovery in the second half, while Nomura International reduced POSCO's 2009 net profit target by 8 percent.

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Nippon Steel raises stainless price for May contract 

Japan's largest steelmaker of the alloy, Nippon Steel & Sumikin Stainless Steel Corp., raised prices for nickel-based sheets for the first time in a year because of increased costs for the ingredient and a weaker yen. The stainless steel will be priced at 290,000 yen ($3,036) a metric ton for May contracts, the first increase since May 2008, the Tokyo-based company said in a statement.
That's 1.8 percent, or 5,000 yen, more than a month earlier. Nippon Steel & Sumikin, 80 percent owned by Nippon Steel Corp., Japan's largest steelmaker, cut prices of stainless steel using chromium to 244,000 yen a ton. That¿s down 16,000 yen, or 6.2 percent, compared with a month earlier.

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JISF sees Japanese steel demand recovery by upto 5 years

Japanese steel industry may take 3 to 5 years to recovery demand to level before this recession, said Shoji Muneoka chairman of Japan Iron & Steel Federation.
"I expect it will take time before demand is restored to 2007 peak levels. Developing nations are likely to recover faster. It's difficult to consider the US market will be the first to see a recovery." he added.
He said that the country's steel production dropped by a record 13 percent to 105.5 million tons for the year ended March 31,2009, the lowest in last 8 years, as financial crisis pulled down demand from automobile and electronics manufactures. . He added that production this quarter will bottom before output improves next quarter.
Muneoka also the president of Nippon Steel Corporation said that it will keep a blast furnace in Oita, southern Japan, idle for at least this quarter. The furnace was scheduled to resume operations in mid May. He added that Nippon Steel and other Japanese mills, in iron ore price talks with BHP Billiton Limited and other producers, may take some more time to conclude.

 

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China steel industry may decline in 09

China's steel industry may register a loss for 2009 as overproduction persists in a weak global market, Xu Lejiang, the chairman of China's largest steelmaker Baosteel Group said.
He added that Baosteel, parent of Shanghai-listed Baoshan Iron and Steel Co, would pursue further consolidation and restructuring to bolster its competitiveness.
The government of China, the world's largest steelmaking country, has vowed to crack down on producers that continue to raise output despite an oversupplied market.

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Wuhan Steel predicts over 50% profit falls in H1    

The listed unit of Wuhan Ioron & Steel Group Wuhan Iron & Steel Co Ltd predicts that its H1 profit would decline by over 50 percent.
The China's second largest listed steel mill also issued its earnings reports for last year and the Q1 of this year with profits in the period dropping sharply due to huge amount of preparation for stocks devaluation as well as the demand collapse.
The mill realized CNY 73.34 billion of operating revenue in 2008 up by 35.41 percent YoY from a year ago. However, profit in the year fell 20 percent to CNY 5.19 billion with earnings per share also sliding to CNY 0.662 from CNY 0.832 posted in the year before. And the profit downtrend has dragged into the Q1 of this year. In the first trimester, Wuhan Steel realized operating revenue of CNY 10.91 billion down by 30 percent YoY with net profit prevailing at CNY 263 million merely a eighth of the profit posted in the same period of last year.
Earnings per share in the period post at merely CNY 0.3. And the steel mill said the combined net in the first half would shed over 50 percent adversely impacted by the spreading global financial crisis.
According to the mill, China's economy in 2009 would continue the downtrend with slacking demand and massive supply overhang. And the mill aims to produce 15.84 million tons of pig iron, 16.85 million tons of crude steel and 14.42 million tons of finished products in 2009, with operating revenue reaching over CNY 59.6 billion.
Wuhan Steel also released its investment plan in the year, and plans to spend CNY 6.05 billion in cold rolled and silicon steel projects etc.

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China 09 steel oversupply seen at 100 mln tons      

China, the world's largest steel maker and consumer, may be flooded with oversupply of more than 100 million tons of crude steel this year, said an official from the Ministry of Industry and Information Technology.
Zhu, director of the Ministry's Department of Operations Monitoring and Coordination, also said capacity was slack in the non-ferrous metals, chemicals and electronic sectors, without giving specific numbers.

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Chinese steel mills turn to more imported iron ore       

Chinese domestic steel mill Tangshan Ganglu Iron and Steel Co. Ltd has been using 100 percent imported iron ore in production since March-- though in January, domestic iron ore made up for about 30 percent of the total raw materials.
The company, based in Zunhua in north China's Hebei Province, is one of the domestic mills that have been using more imported iron ore.
"Imported iron ore is cheaper than domestic one and with higher quality," said a report citing a manager with the company who declined to be named.
Analysts said the global iron ore big three, Vale, Rio Tinto and BHP, have been competing for Chinese markets as the demand in parts of the world has been shrinking amid global financial crisis. Zhu Kai, Vale's China manager, said that about 100 million tons of domestic iron ore at high costs might be replaced by imported iron ore which had price advantages.
China imported a record volume of iron ore in March, 52.08 million tons. It beat the previous record set in February when the country imported 46.74 million tons of iron ore. The country imported 130 million tonnes of iron ore in the first quarter. The three global giants "dumping" iron ore to China will suppress domestic supply and cement their control over global mineral resources, said Zhang Ye, deputy-general-manager of China National Minerals Co., Ltd. China might have a lesser say in the ongoing benchmark iron ore price negotiations, Zhang said.
Analysts reckoned the negotiations between China's steel companies and iron ore miners could last until mid-year, which would be a record. The benchmark price for China is significant for the overall situation of the iron ore firms, as China's demand for iron ore in 2008 was 444 million tons, more than half of the world's total.
Iron ore and steel companies usually agree on the year's long-term contract prices by April 1, the start of a financial year. However, steel makers and iron ore companies are deadlocked this year.

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WISCO bags 5 mln tons steel contracts

Hubei Wuhan Iron & Steel Corp has inked strategic cooperation agreements with 22 local major steel consumers like Dongfeng Motor Corp so far, with contract tonnages hitting 5.04 million tons.
Recently Hubei provincial government organized over 300 local leading steel users to WISCO to talk about possible cooperation. And totaling 0.93 million tons of contracts were signed on spot.
WISCO, the top steel mill in Hubei with annual output value of up to CNY 100 billion was hit hard by the spreading global financial crisis since last year in steel production and sales. To support the steel major, local government has tried every possible means to help it walk out of the dire, and convened a meeting this Feb to promote the steel mill's products sales in local province.
According to survey, steel demand in Hubei province would reach 18 million tonnes this year equivalent to the production of WISCO Qingshan headquarter; while last year, the steelmaker sold merely 3.96 million tons of products in local.

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Steel prices to continue at low levels amid surplus - CISA

China Iron & Steel Association said China's steel industry is still faced with tough conditions combining high cost, low price and massive losses.
According to a report quoted a latest report by CISA, saying the steel market will continue running at a low level with small vibration in future, given a stream of factors including diminishing overseas demand, tougher export and home surplus, despite that the domestic demand has increased with implementation of the national stimulus policies.
The domestic steel prices were going toward stabilizing as demand gradually revived and stocks descended in April when the demand is boosting & growth sustaining measures phased in. By end of April, the nation's composite steel price index went to 95.56 down by 2.03 or 2.08 percent MoM the percent down 3.8 points than of the previous month.
The association attributed the stabilizing trend to rise in demand, especially from the real estate and automotive sectors, which pulled down the social inventory and beefed up market confidence. Another factor supporting the steel price is slower price dips for fuel and the materials.
But the association kept not optimistic on the future market, citing a big crude steel output so far. In January to April, China produced a total of 170.8565 million tons crude steel, a daily equivalent of 1.4238 million tons higher than last year's figure of 1.3675 million tons. This will equal to an annualized yield of 520 million tons. The overcapacity problem is expected to linger on further given new installations in Bayuquan, Caofeidian and other projects.

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Chinese raw materials industry posts 5.3% growth in 4 months      

China's raw material industries reported a 5.3 percent growth in industrial production over the past four months, supported by the government's stimulus package and growing domestic demand, said the Ministry of Industry and Information Technology.
MIIT statistics showed in April alone, the industrial output grew 7 percent. The nonferrous metal industry began to make profits because market prices were rising. From January to April, 71 major manufacturers reported a net loss of CNY 490 million. But they registered profits of CNY 1.73 billion in March and CNY 1.65 billion in April. The construction materials industry grew too. In past four months, the country's cement output rose 13 percent YoY. The growth was 3.1 percentage points larger than that of a year ago. Growth was also reported in the chemical industry with the output up 10.6 percent in April, a second month to score a double digit growth. But the steel industry, trapped by overcapacity and oversupply was in the red. The first four months saw 40 percent of the 72 major producers reported a net loss of CNY 5.18 billion.

 

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ArcelorMittal sees global steel demand down 15-20% 

ArcelorMittal, the world's biggest steelmaker, said global demand for the metal may drop by 15 to 20 percent this year on weakness in European and U.S. economies.
“There's no point in making steel that we cannot sell,” Chief Executive Officer Lakshmi Mittal said in a shareholders' meeting in Luxembourg as workers protested outside. “We are really frustrated, as we want to make steel.”
ArcelorMittal, formed from the 2006 merger of Arcelor SA and Mittal Steel Co., has cut production to half of capacity, shed jobs and scaled back growth plans as the global economy slumped. Worldwide steel output will fall 15 percent in 2009, the Brussels-based World Steel Association said.
“The environment remains challenging, and production cuts will remain at 50 percent of capacity,” the CEO said. “This is probably the worst crisis since the Second World War.”
Luxembourg-based ArcelorMittal posted a first-quarter loss of $1.06 billion on April 29, the second loss in a row. The company said that it raised $4 billion from a sale of shares and bonds to gain more time for repaying borrowings as falling demand and metals prices eroded earnings.
Demonstrators threw objects from cobblestones and glass shards to flares and smoke bombs at the police. About 200 officers responded with pepper spray and rubber bullets shot from compressed-air guns, injuring a cameraman's hand, according to a police statement. Demand for steel will begin to recover as customers use up inventories, according to Mittal.
“As destocking ends, we shall see an improvement in the U.S. and Europe, even though demand remains weak,” he said, adding that customers will have completed running down stocks globally by the end of this quarter and have already finished in the U.S. European inventories remain high, he said. The company has held market share during the slump and will prioritize restarting its most-competitive smelters, the CEO said.

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Acerinox sees stainless steel pickup in Q3     

The world's biggest stainless steel producer Acerinox anticipated that the market recovering in the third quarter after poor sales and weak prices pushed the Spanish firm into a first quarter loss.
"The stability of nickel in recent months together with the very low level of stocks in all markets gives us confidence in a recovery of the market in the third quarter," said the company. Acerinox fell to a 93 million euro loss compared with a 67 million euro profit in the first quarter of 2008.
Weak demand forced the company to cut production to 339,600 tons -- down 46 percent on a year ago but up 19 percent on the fourth quarter -- and that pushed revenues down to 617 million compared to 1.57 billion euros in the first three months of 2008." In recent weeks signs of a recovery in the principal markets have started to appear which have allowed us to announce price rises in Europe and the United States," said Acerinox.
The company said it raised European and U.S. base prices by some 100 euros a ton in April. The company has cut production at its three factories to 50 percent of their capacity as the economic crisis suffocates demand for the rust-proof alloy used in kitchen fittings and equipment. After posting worse-than-expected results last month, Finnish rival Outokumpu indicated stainless steel producers would continue to feel the pain of the global economic crisis in the second quarter at the very least.
Acerinox said losses before interest, tax, depreciation and amortisation was 98 million euros compared with earnings of 137 million a year earlier.

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Russia Severstal Q1 steel output down 21% y/y    

Russia's largest steelmaker Severstal produced 3.8 million tons, about 21 percent less, crude steel in the first quarter than a year ago, joining domestic rivals in cutting output in response to weak demand and lower prices.
The company's average prices for rolled products fell 16 percent year – on – year to $645 per ton.
Evraz Group reported first quarter production that declined 29 percent year-on-year, while Mechel and Magnitogorsk Iron & Steel Works reported output decline of 30 percent and 43 percent respectively. However, Russian steel makers have boosted production from the lows of the fourth quarter, taking advantage of the weak rouble to increase exports.
Severstal said its crude steel output was up 21 percent from the fourth quarter.
In Russia, the company's first quarter crude steel production fell to 2.1 million tons, down 35 percent from the year-earlier period. Output at its North American mills rose 89 percent to 1.3 million tons thanks to a series of acquisitions. Its first quarter coal production fell 5 percent to 1.7 million tons. Severstal's gold mining operations produced 3,514 kg of gold, up 290 percent from the first quarter of 2008.

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Outokumpu may cut 110 more jobs   

Steel major Outokumpu is likely to layoff another 110 jobs in Sheffield- four months after cutting 50 jobs- amid continuing slump in orders. The company said that it was in discussions with trade unions about the fresh round of redundancies.
Outokumpu also planned to curb annual stainless steel production at its Sheffield by 150,000 tons. The move came as it reported worse-than-expected first quarter loss of 252 million euros as its sales plunged 60 percent.
Outokumpu HR manager Martin Pinder said, "You never like to announce job cuts, we would much rather announce that we were able to invest and recruit more people.”
“However, along with many manufacturing companies worldwide, the recession is biting and our order book is significantly down and we are having to respond to that.

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EU steel makers say demand to be almost halved 

Steel demand in European countries will be halved in the first six months as the global financial crisis hit key sectors such as auto and construction sectors, EU steel makers said.
Eurofer - an group representing ArcelorMittal SA, ThyssenKrupp AG, Corus Group and others - said the European Union industry has been hit hard by falling exports and tight credit supply.
"The outlook for the steel-using industries in 2009-2010 is very grim: all sectors will be seeing strongly reduced output levels, particularly in the first half of this year," it said.
Steel is used to build cars, machinery and household goods and to construct buildings and bridges. A slump in consumer demand has decimated car sales while the bursting of a housing bubble has caused the construction sector to contract sharply.
Eurofer said steel users are still saying that they have far more stocks of steel than they need and this meant that orders at steel mills would stay "at unprecedented low levels for the time being."
"The latest forecasts show apparent steel consumption falling by 40 to 45 percent year on year in the first half of this year and by almost 30 percent in the whole of 2009," it said. It saw no joy ahead, saying its outlook for 2010 was depressed and real steel consumption would remain low even as some customers ordered new steel as stocks ran out.
It said some planned economic stimulus programs might help by paying for more infrastructure and public buildings such as schools and hospitals but that the impact on steel makers would be small as demand remained low in other sectors.

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ArcelorMittal to raise $3 bln in share, bond sale

The world's largest steelmaker ArcelorMittal plans to raise $3 billion from a sale of shares and bonds to gear up the company's debt reduction programe. The company, which reported a second straight quarterly loss, is seeking $2.5 billion from a stock offering and $500 million from convertible notes due 2014, Luxembourg-based ArcelorMittal said. The Mittal family will subscribe to at least 10 percent of the shares. Weakening demand and prices have pulled down the company's revenue and cut he value of stockpiles, encouraging the steelmaker to reduce debt and lengthen the repayment period for the remaining borrowings.
“In the long term, they are strengthening their financial position so it's good for them but it's not so great for shareholders now,” an analyst at Theodoor Gilissen Bankiers in Amsterdam, said.

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