News in the Steel Industry

U.S. willing to exempt Indian steel, aluminum exports from high tariff with riders

Wednesday, Sep 19, 2018

The United States is willing to grant a conditional waiver to Indian steel and aluminum products from higher import tariff, television channel ET NOW said on Tuesday citing sources.

India has written to the U.S. government seeking exemption from the 25 percent levy on steel and 10 percent on aluminum as exports of the two products from India did not pose a security threat to America, Reuters reported in March.

In response to Washington’s refusal to exempt it from its new steel and aluminum tariffs, New Delhi decided in June to raise the import tax from Aug. 4 on some U.S. products, including almonds, walnuts and apples.

However, India has twice deferred imposing the tax.



Nexa says to invest $1.17 billion in Peru, Brazil in five years

Tuesday, Sep 18, 2018

Brazilian mining company Nexa Resources plans to invest some $1.17 billion in copper and zinc projects in Peru and Brazil over the next five years, the company’s general manager Ricardo Porta said on Friday.

About $816 million will be invested in Peru, including $555 million in copper projects and $216 million in zinc, Porta said in an interview.

The proposed mine closest to being developed is Aripuana, a $354 million zinc project in Brazil slated to start production in 2020. “We hope to achieve final (government) approval of the project in coming months,” Porta said on the sidelines of a mining conference in Lima.

The Shalipayco zinc project and the Magistral and Pukaqaqa copper projects in Peru would follow, Porta said. Shalipayco would likely start production in 2021, Magistral in 2022 and Pukaqaqa in 2023, he said.

“Between Brazil and Peru we have seven projects,” Porta said, adding that the company’s priority was to raise its reserves, which have been growing at about 5 percent per year.

Nexa operates five mines in Brazil and the Milpo, Atacocha and El Porvenir mines and the Cajamarquilla zinc refinery in Peru.

The company expects to produce 600,000 tons of zinc this year, Porta said.



Teck’s copper project attracts interest before end-September deadline

Friday, Sep 14, 2018

Mining companies and commodities trading houses are expected to table first-round offers by a September 28 deadline for a stake in Teck Resources Ltd’s Quebrada Blanca copper mine expansion in northern Chile, two sources with knowledge of the matter said.

Canada’s Teck has said a development partner could contribute $2 billion for a 30 percent to 40 percent stake in the $4.8 billion Phase 2 project, an investment deal it expects to close in the fourth quarter.

Interest is expected to be strong, reflecting lower exploration investment and fewer discoveries since a 2015-16 commodity price crash. Demand for copper is also rising due to the expansion of electricity grids and growing electric vehicles market.

Initial offers are expected from Japanese trading houses Mitsubishi Corp and Sumitomo Corp, two sources said.

Mitsubishi, which recently agreed to raise its stake in the Quellaveco copper project in Peru it shares with Anglo American Plc, declined to comment. Sumitomo was not immediately available for comment.

Japanese trading companies are scouting for mining assets to buy with their growing profit, driven by higher prices for commodities from coking coal and copper to oil and natural gas.

Interested mining companies include Freeport-McMoRan Inc, the world’s largest publicly-traded copper company, China’s state-owned Aluminum Corp of China (Chinalco), and Canadian base metals miner Lundin Mining Corp, one of the sources said.

Spokespeople for Freeport and Lundin, previous partners at the Tenke Fungurume copper and cobalt mine in the Democratic Republic of Congo, declined to comment. Lundin, which has C$1.5 billion ($1.15 billion) in cash, was recently outbid by China’s Zijin Mining Group in a deal for Canadian copper and zinc miner Nevsun Resources.

Chinalco was not immediately available to comment.

Teck owns 90 percent of the Quebrada Blanca project while Chilean state agency ENAMI holds the remaining stake but is not required to fund project capital spending.

The expansion plan, known as QB2, won regulatory approval in August and is expected to extend the ageing deposit’s life by 25 years and substantially boost production to 300,000 tonnes of copper annually from 23,400 tons in 2017.

Teck, which also produces zinc, coal, gold and oil, has hired investment banks Rothschild & Co and Toronto Dominion (TD) to run the bidding process, two sources said.

A Teck spokesman said the company does not comment on market rumors or speculation. Rothschild was not immediately available to comment and TD declined to comment.

Teck CEO Don Lindsay said last year that he had held talks about sharing port infrastructure for QB2 with Anglo American, for its neighboring Callahausi copper mine.



Steel, raw materials extend slump in China as flexible cuts eyed

Wednesday, Sep 12, 2018

Prices of steel and its raw materials fell sharply in China for a second session on Wednesday, hitting multi-week lows, as more investors liquidated positions with oversupply risks rising as Beijing mulls a flexible implementation of its output curbs.

China is considering allowing its northern provinces to decide individual output cuts by heavy industry to rein in emissions during the winter, a source involved with the plan said on Tuesday.

That would be in contrast with an initial draft plan that called for cuts of 50 percent in steel production and 30 percent in primary aluminum in some areas, similar to last winter’s measures.

The most-traded January rebar on the Shanghai Futures Exchange was down 3.8 percent at 4,005 yuan ($582) a ton by 0205 GMT, after falling as far as 3,993 yuan earlier, its weakest since Aug. 6.

Hot rolled coil was down 3 percent at 3,932 yuan per ton, having touched a two-month low of 3,913 yuan initially.

China’s production restrictions as part of its fight to limit pollution had spurred a strong rally in steel prices since last year, pushing rebar to a seven-year peak and hot rolled coil to a record high in August.

With China potentially allowing individual provinces to set their own output curbs over winter, “this policy shift (may result in) oversupply when steel demand during the winter season is low,” said Argonaut Securities analyst Helen Lau.

“Local governments also tend to be more lenient on policy implementation when they are given flexibility, especially since increasing steel production will help boost jobs and add to government tax revenues,” she said.

Prices of steelmaking raw materials fell alongside steel, led by coke, the processed form of coking coal.

Coke futures on the Dalian Commodity Exchange fell as much as 4.7 percent to 2,220 yuan per ton, the lowest since July 30, and was last down 4.2 percent at 2,232 yuan.

Coking coal slid 3.8 percent to 1,245.50 yuan a ton and iron ore lost 2.1 percent to 485 yuan.

Spot iron ore for delivery to China’s Qingdao port .

India may impose anti-dumping on certain types of Chinese steel

Monday, Sep 10, 2018

India may impose anti-dumping duty of up to USD 185.51 per ton for five years on certain varieties of Chinese steel with a view to guard domestic players from cheap imports of the commodity from the neighboring country. JSW Steel Ltd, Sunflag Iron & Steel Co, Usha Martin, Gerdau Steel India, Vardhman Special Steels and Jayaswal Neco Industries Ltd had jointly filed an application for initiation of investigations and levying of anti-dumping duties on the steel.

In its anti-dumping investigations, the Directorate General of Trade Remedies (DGTR) has stated that dumped imports of ‘straight length bars and rods of alloy steel’ from China have increased in absolute terms during the period of probe (2016-17).

It said that the dumped imports are undercutting the prices of the domestic industry and due to this the domestic industry’s profits, return on capital employed and cash profits have declined during 2016-17.

“The authority recommends imposition of anti-dumping duty” on the imports from China “for period of five years,” the DGTR has said in a notification.

It has recommended duty in the range of USD 44.89 per ton and USD 185.51 per ton.

However, it added that no anti-dumping duty shall be payable on imports of forged bars and tool and die steel if their landed value is above USD 659.91 per ton.

If the landed value is lower than USD 659.91 per ton, then the difference between that value and USD 659.91 per ton shall be payable as anti-dumping duty, it added.

While the DGTR, under the commerce ministry, recommends the duty, the final call is being taken by the finance ministry.

Imports of straight length bars and rods of alloy steel from China have increased to 1,80,959 tons in 2016-17 from 56,690 tons in 2013-14. India’s total imports rose to 2,56,004 tons in 2016-17 from 1,32,933 tons in 2013-14.

The demand of this steel in India too increased to 16,69,653 tons in 2016-17 from 15,14,795 tons in 2013-14.

Domestic steel manufacturers always flag concerns over the imports from the neighboring country, with which India has a huge trade deficit.

The trade gap with China has increased to USD 63.12 billion in 2017-18 from USD 51.11 billion in the previous financial year.

The DGTR has also stated it recognizes that the imposition of anti-dumping duties might affect the price levels of the product in India. However, fair competition in the market will not be impacted by the imposition of these trade remedy measures.

On the contrary, imposition of anti-dumping measures would remove the unfair advantages gained by dumping practices, prevent the decline of the domestic industry and help maintain availability of wider choice to the consumers of these goods, it added.

In general, the purpose of these duties is to eliminate injury caused to the domestic industry by the unfair trade practices of dumping so as to re-establish a situation of open and fair competition in the Indian market, which is in interest of the country.

“Imposition of anti-dumping duties, therefore, would not affect the availability of the product to the consumers,” it said.



Italian steelmaker Ilva gives approval to the company’s acquisition by ArcelorMittal

Friday, Sep 07, 2018

Union representatives of Italian steelmaker Ilva have given approval to the company’s acquisition by ArcelorMittal, S&P Global Platts said quoting union sources on Thursday. Ilva, Italy’s largest mill, is also Europe’s largest single steel producer site.

The final agreement still must go before union members for referendum approval, but a joint statement is expected to be released later in the day, the Platts report said. ArcelorMittal declined to comment, it added.

The acquisition brings resolution to years of uncertainty for Ilva, whose future was unclear until ArcelorMittal stepped forward to buy it. According to a union source, ArcelorMittal will employ 10,700 workers through 2020, nearly 700 more than it had previously agreed. Another 2,000 will receive compensation under a separate agreement through 2023, the Platts report said.

ArcelorMittal plans to spend Euro 2.3 billion ($2.67 billion) boosting safety conditions at Ilva and curbing pollution. ArcelorMittal said it plans to increase Ilva’s output to 6 million ton /year of crude steel from 4.5 mt /year currently, and to systematically increase to 9.5 mt/year by 2023.

ArcelorMittal committed to shedding certain European assets in Italy, Romania, Macedonia and the Czech Republic to get approval from the European Commission’s antitrust authorities for the Ilva takeover.



Builders on Canada’s coasts brace for new steel protections

Monday, Aug 27, 2018

Canada’s latest steel tariff proposal has alarmed construction companies, who have warned it could have an outsized impact on the country’s coasts, boosting costs in places like Vancouver, already Canada’s most expensive housing market, while protecting steel producers in central Canada.

The new measures could make steel more expensive in regions that depend on imports from overseas, raising the cost of large building projects like condominium towers as subcontractors pay new duties on supplies like rebar, used to reinforce concrete.

“It’s baffling to me. They’re trying to appease a very small group of east coast mills – there is no west coast support,” said Ron McNeil, chief executive of LMS Reinforcing Steel in British Columbia, where there is no primary steel production.

The Canadian government is considering safeguards – special limits on steel imports from all countries in seven product categories – to protect steelmakers as U.S. President Donald Trump’s tariffs send overseas producers in search of new markets.

Safeguards would protect plants owned by Stelco Holdings (STLC.TO), ArcelorMittal Dofasco (MT.AS) and others. They come on top of retaliatory duties that have made it more expensive to import U.S. steel, Canada’s response to Trump’s tariffs.

With about 1,000 employees, McNeil’s LMS imports some 90 percent of its rebar from Asia. The closest Canadian mill, Edmonton’s AltaSteel, supplies some of LMS’s Alberta projects, but their capacity is limited. McNeil said it does not make sense to move rebar by rail from Ontario because transportation costs would be triple what they are from Asia.

Fabricators typically quote fixed prices and lose money when steel prices rise.

“The shipping cost is five times more to ship it from Quebec to Newfoundland as opposed to Turkey,” said Cory Pittman, operations manager at Allstar Rebar in St. John’s, Newfoundland on Canada’s Atlantic coast.

Pittman, who said all Newfoundland’s construction steel comes from overseas, is part of the new Canadian Coalition for Construction Steel that is urging the government to proceed carefully on safeguards.

Canada’s finance department said any new measures would stabilize “the impact of steel imports, and minimize trade disruptions.”

But it was not clear how the government can ensure shifting supply lines do not disrupt some regions.

A July study commissioned by the construction coalition estimated that tariffs on U.S. steel would raise the average price of rebar by 6 percent in British Columbia and safeguards would add another 7 percent, while reducing shipments.

“We know that not all provinces have equal access to steel, just by their geography,” said Mary Van Buren, president of the Canadian Construction Association. “That could create a shortage of steel and then secondly could lead to price escalation.”

Steel is a relatively small part of the cost of most buildings. Real estate consultants Altus Group estimates rebar is about 4 percent the total building cost of an average condominium tower in Toronto.

Other factors like labor shortages have already raised costs this year, and every new expense hurts when revenue is fixed due to advance sales, said David Schoonjans, senior director at Altus.

“Even if it’s done with the best of intentions, I think there’s a high risk of things happening that nobody foresaw,” he said.



Aluminum products maker Arconic in talks to sell itself

Monday, Aug 27, 2018

Aluminum products maker Arconic Inc is discussing acquisition offers for the entire company, even though it announced a sale process last month only for its building and construction systems unit, people familiar with the matter said.

The move comes after Arconic, which was spun out of Alcoa Corp in 2016, said in February it would carry out a “strategy and portfolio review,” to be completed by the end of 2018, but has provided little detail about what this entails.

Arconic is speaking with private equity firms that have shown interest in acquiring the company, including a consortium of Blackstone Group LP and Carlyle Group LP, another consortium of KKR & Co and Onex Corp, as well as Apollo Global Management LLC, the sources said on Friday.

Arconic shares jumped on the news to end trading on Friday up 4.7 percent at $22.23, giving the company a market capitalization of $10.7 billion.

Activist hedge fund Elliott Management Corp, which won board representation at Arconic last year following a proxy contest, has been instrumental in pushing the company to explore a sale, the sources said. However, some of the private equity firms have expressed doubts over whether the company’s high price expectations for a sale can be met, some of the sources added.

The sources cautioned no deal may be reached and asked not to be identified because the matter is confidential.

Arconic, Elliott, KKR and Onex did not immediately respond to requests for comment. Apollo, Carlyle and Blackstone declined to comment.

The Wall Street Journal first reported last month that Arconic was attracting interest from private equity firms.

Arconic has said it will announce the outcome of its strategic review by the time it holds its investor day in November 2018.

Arconic’s products, which are made of aluminum, titanium or nickel, are used around the world by aerospace, automotive, commercial transportation and packaging manufacturers.

As planemakers ramp up production to satisfy growing global demand for air travel, Pittsburgh-based Arconic is paying more attention to aircraft parts. Several parts suppliers are increasing hiring and capital expenditure to meet delivery targets.

The announcement of the plan to sell Arconic’s building and construction systems division, which makes facades, windows and framing products, came one year after a major fire broke out at London’s Grenfell Tower apartment complex, where the company’s Reynobond PE panels were used in the cladding. More than 70 people were killed in the blaze.

Higher aluminum prices lowered Arconic’s operating income by $20 million in the second quarter, Chief Financial Officer Kenneth Giacobbe said on a conference call with analysts last month.

However, sales across Arconic’s three major businesses – transportation and construction, engineered products and global rolled products – increased between 7.5 percent and 14 percent.



United States Steel Corporation Plans Major Upgrade at Gary, Indiana, Plant

Saturday, Aug 18, 2018

United States Steel Corporation plans to make significant upgrades at its Gary Works plant in Indiana, through a $750 million asset revitalization investment that will increase efficiencies and position the facility for long-term success in Indiana.

“We are pleased to be making this significant investment at Gary Works, which will improve the facility’s environmental performance, bolster our competitiveness and benefit the local community for years to come,” said David B. Burritt, U.S. Steel President & CEO.

“Through the skill and determination of our employees, support from the state and city, without which this project would not be possible, and favorable trade policies with the strong Section 232 national security action on steel imports, we are experiencing a renaissance at U.S. Steel,” he added.

Located on the south shore of Lake Michigan, Gary Works is U. S. Steel’s largest manufacturing plant and the largest integrated steel mill in North America. Gary Works has been in operation in Northwest Indiana since 1908. Comprised of both steelmaking and finishing facilities, Gary Works has an annual raw steelmaking capability of 7.5 million net tons. The facility provides more than 3,800 full-time jobs and manufactures sheet products, strip mill plate in coils, and tin products.

This includes the installation of new, state-of-the-art production equipment, machinery, and modernizing technology to better serve customers in the automotive, energy, industrial, metal building components, home construction, appliance and container industries.

With the increases in investment due to U. S. Steel’s $2 billion asset revitalization program, a minimum of $750 million in capital investments will be made over five years to modernize and enhance the company’s flagship operation in Gary, through building expansion and improvement.

Subject to the approval of the Indiana Economic Development Corporation board of directors, the IEDC will offer U. S. Steel up to $10 million in conditional tax credits over a 10-year period based on the company’s commitment to retain 3,875 Hoosier jobs. This offer of tax credits is also subject to the review of the State Budget Committee. The IEDC will also offer up to $2 million in Skills Enhancement Fund (SEF) training grants to support workforce development and training for Gary Works employees.

Additionally, the city of Gary will offer tax increment financing valued at approximately $35 million over 25 years based on a $750 million investment that will then be ameliorated through a development agreement in partnership with U. S. Steel to allow the city, the Gary Community School Corporation, the Gary Public Library and U. S. Steel to share the benefit of the company’s investment. This incentive and economic development financing method, which is subject to the Gary Common Council’s approval, will help generate immediate tax revenue for the city, create a Community Development Fund to further economic growth, and increase the city’s partnership with U. S. Steel.