Iraq confirms steelworks revamp, capacity set at 1.3mil mt/y

Iraq's ministry of industry and minerals has confirmed that it has finalised a $700 million contract with Turkish industrial group United Brothers Holding (UB) to revamp and upgrade Iraq's State Company for Iron & Steel (SCIS), which has been out of action since April 2003. SCIS, located on the southern outskirts of Basra, had a design capacity of 440,000 metric tons/year of 12-32mm diameter rebar and round bar. It achieved its highest output of 200,000 mt in 1989 before the first Gulf war. Limited operation was carried out between 1991 and 2003 before the mill was shut due to lack of funding. The plant will be revamped in three stages. The first – due for completion in the third quarter of 2014 – will see a new 820,000 mt/y 8-32mm diameter rebar mill installed, along with electric arc furnace meltshop and 130-150mm square billet continuous caster. Thereafter melting capacity will be doubled to over 1 million mt/y and billet output expanded to 130-180mm with an additional caster. A 250,000 mt/y medium sections mill will be installed for production of IPE, IPN and UPN 80-160 sections, as well as 60-70mm angles. SCIS's existing rolling mill will also be modified to produce up to 250,000 mt/y of light sections and rebar, giving the firm a finished long products capacity of 1.32 million mt/y by Q2 2015. In the final stage, the two direct reduced iron plants at the site will be dismantled and a new 1.2 million mt/y capacity DRI unit constructed, most likely using either ZR-Reformer or Midrex technology, a UB representative told Platts. The rehabilitation work is expected to be completed in Q2 2016. The contract stipulates that UB will also operate SCIS for a period of 18 years and train its staff. Profits from the plant will be divided between the Turkish company and Basra province, according to the ministry.

  Rajhi Steel mulls new billet plant

Saudi Arabian steelmaker Rajhi Steel is mulling the installation of a new billet plant to reduce the need for imports of the semi-product which currently amount to around 1 million metric tons/year, according to company marketing director Faisal Bin Edan. Rajhi's billet capacity is 850,000 mt/y, while long product rolling capacity is 1.8 million mt/y.“If we want talk provisionally about how to make good profit, the background is full integration – so we have to do a new meltshop for at least 1 million mt/y. It's only an idea on paper. Logically, you have to make [your feedstock] because 1 million mt/y of imports is hectic. It's not about money, nor about sources, but it's about the supply chain,” Bin Edan told Platts in Cairo. The firm currently sources billet from Turkey, CIS and Brazil. Asked whether Rajhi is currently experiencing strong profit margins, given CIS billet export offers are at $530/metric ton FOB Black Sea while rebar prices in Saudi are fixed at SAR 2,900/mt ($773) ex-works, Bin Edan said: “There are no billets now on the market [because producers have reduced output]; everybody is fighting for them… When [producers] do that of course the shortage will be high, the demand will be higher – definitely prices will go up.”
The director brushed off suggestions Saudi end-users were frustrated by paying the government-fixed price for rebar, while prices on international markets are cheaper, arguing instead that this helps consumers calculate costs. “When [rebar] prices start increasing in the international market, prices remain fixed [in Saudi]. We [as producers] are importing billet from outside, so [rebar mills'] expenses increase, but we have the same finished product price, which means we are losing out. But it's a win-win game for the end-user,” he said, adding that sourcing rebar locally ensures minimal lead-time and strong after sales service.In terms of the outlook for Saudi rebar demand in the next 4-5 years, the market will be “booming” thanks to large government budget surpluses, Bin Edan forecast.

  Steel scrap levels remain low as despite Turkish interest

Recently there has been flurry in buying interest by Turkish mills. Opening buying after a gap of nearly 2 months came as welcome change in otherwise sluggish market. Scrap levels recently had taken a beating by USD 15-20 per tonne owing to lack of interest by Turkish mills till a fortnight ago. Recently some transaction has been concluded at USD 385-390 per tonne, CNF, Turkey. Bulk of the offers is from European sources since US material is in short supply after the pick-up in steel production domestically.Surprisingly despite uptick in Turkish interest the transactions levels have remained unchanged indicating too many players and no major opening of buying by Turkish mills.Given the recent downtrend in global steel price any major swing in price in unlikely unless Turkish mills start buying in major way.

  Qatar Steel enters DRI supply agreement with Saudi mill

Qatar Steel has signed an agreement to supply up to 600,000 metric tons/year of direct reduced iron to Saudi Arabian steelmaker Solb Steel, in which it owns a 31.04% stake. The launch of the Saudi rebar steelworks last year in Jazan Economic City has boosted Qatar Steel's position in its main export market, according to Abdul rahman Al-Shaibi, chief coordinator of parent company Industries Qatar (IQ). “The commercial launch of Solb Steel Company in Saudi Arabia provided the group's steel subsidiary with an assured off-take market, and rebar volumes increased due to buoyant local and regional demand,” IQ said in a statement. Solb Steel last May commissioned a 1 million mt/y electric arc furnace-based billet plant and 500,000 mt/y rebar mill. A further 500,000 mt/y rebar and wire rod mill will be added in the first quarter of 2014. Explaining IQ's investment in Saudi Arabia, Al-Shaibi said: “Firstly, Saudi Arabia is our largest steel export market, and any investment that strengthens our position in this large, growing market is critical. Secondly, our steel subsidiary has secured an offtake agreement with Solb Steel whereby Qatar Steel will supply up to 600,000 mt/y of DRI. This will provide an assured market to Qatar Steel, allowing it to operate its DRI facilities at full utilization”.
Qatar Steel has a 2.3 million mt/year DRI capacity spread over two units. Solb Steel is studying the possibility of adding its own 2.6 million mt/y DRI plant after 2016.
Separately, Qatar Steel finalized last month a joint venture agreement with Algeria's government for its 2 million mt/y DRI-based rebar steelworks in Jijel. The plant, currently under due diligence, will cost the steelmaker QR 0.5 billion ($137.3 million).

Saudi Steel Pipe Q1 net income up 26.1%

Saudi Steel Pipe's net income for the Q1 increased to SAR 23.10 million, which is 26.1% higher than the same period last year of SAR 18.32 million. The company said that the Q1 net profit rose by 65% compared to the Q4 2012 of SR 14 million, According to its interim financial results for Q1 2013 gross profit for the first quarter increased to SAR 37.91 million which is 30.1% higher than the same period last year of SAR 29.13 million. Operating profit for the first quarter increased to SAR 24.08 million, which is higher than the same period last year of SAR 19.01 million by 26.6%. Earnings per share for the first three months of 2013 was SAR 0.45, while on the same period last year it was SAR 0.36.
The reason for the increase in net income for Q1 2013 compared to the same period last year was because of the increase in Saudi Aramco project deliveries and the increase in total sales for the first quarter at SAR 248 million up 20% compared to the same period last year of SAR 206 million and increase in delivered quantity for Q1 2013 by 13% compared to the same period last year. The reason for the increase in net income for Q1 2013 compared to Q4 2012 was because of the increase in sales to SAR 248 million from SAR 179 million, up by 38% due to increase in Saudi Aramco project deliveries.

  Turkey slab imports fall further month on month in February

According to the customs statistics provided by the Turkish Statistical Institute Turkey's slab imports amounted to 164,269 tonne in February this year, falling 7.8% compared to the previous month, the second consecutive month of MoM decrease, after 4 months of increase and having reached an all time monthly high in December 2012.However, Turkey's slab imports in February this year indicated a very strong increase compared to the 49,183 tonne recorded in the same month of 2012.In the first 2 months of the year, Turkey's slab imports increased to 342,517 tonne compared to the 74,194 tonne recorded in the corresponding period of 2012. Turkey's biggest slab import source in the first 2 months of the year was Russia with 183,982 tonne with the import volume from Russia rising gradually since September last year on MoM basis, while the UK followed Russia, exporting 90,597 tonne of slab to Turkey in January to February. The UK, Turkey's top slab import source in 2012 supplied 90,597 tonne in the 2 months in question, with no record of UK slab exports to Turkey in the corresponding period of 2012.