News in the Steel Industry

US Steel says investments spur confidence in future

Posted on 06 May 2019

 

Source: Kallanish

US Steel’s decision to spend $1.2 billion on its Mon Valley Works ensures that the company remains relevant for the long-term, according to ceo David Burritt.

On the company’s first-quarter conference call, Burritt highlighted the advantages of a new thin-slab caster at its Edgar Thomson mill in Braddock, Pennsylvania, and a cogeneration plant at its Clairton, Pennsylvania, coke works.

“We expect to achieve a $35/short ton reduction in operating costs,” he says. “We’re creating new product boundaries that create a moat around the most attractive markets we serve, gauging with combinations not available today in the United States. And we expect to deliver significant environmental improvements.”

Burritt adds that the $35/st expected reduction is on top of the mill’s extant position as a low-cost producer, Kallanish notes.

“This investment is truly transformative. Again, here’s the proof. The Mon Valley is currently a low-cost mill in the steel industry and we’re now combining the best of both our high-quality integrated steelmaking process with industry-leading casting technology,” he says. “To be clear, we are not adding steelmaking capacity. Instead, we are transforming our footprint to capture market share. I’ve never been more confident in our future than I am right now.”

Section 232 Creates Boom and Bust in US Steel Prices

Posted on 03 May 2019
Source: MEPS
While US steel selling values continue to be amongst the highest in the world, domestic steelmakers have lost a large part of the pricing gains they secured in late 2017/early 2018.It is widely accepted that US steel producers capitalized initially, on the speculation, and then the implementation of strong import protection measures, in March, last year. This enabled domestic mills to pass through a succession of list price hikes with little resistance from buyers. Amid a healthy trading environment, US steel values advanced rapidly.MEPS contends that the Section 232 measures were the catalyst for the rapid escalation of US steel prices – while playing a leading role in their fall, in the subsequent period.

Domestic scrap-based producers, who were enticed by the rising financial returns, took steps to build new facilities or restart idled capacity. Year-to-date capacity utilization, in the US, is 81.9 percent, up from 75.6 percent in the equivalent period in 2018. However, in the same timeframe, demand from the automotive industry, notably for passenger cars, and the construction sector, has slowed. This has put negative pressure on local steel selling figures.

Despite existing trade legislation, offshore volumes continue to influence the US steel sector. Significant quantities of foreign material are still entering the country, most notably on the west coast and in the southern states.

The Section 232 measures have, arguably, created a level playing field for foreign, and specifically, new suppliers to target sales in the United States.

A number of political and economic uncertainties exist in the US. The ongoing trade disputes with China and the European Union are doing little to boost market sentiment, amid the expectation of a slowing economy. Cross-border trade with near neighbors, Canada and Mexico, is being adversely affected by the tariffs, despite the recent USMCA deal. Both countries have introduced reciprocal measures against US steel exports. This protectionist climate is likely to continue under the current US administration.

Compared with their global counterparts, US steel prices will remain at elevated levels. This is likely to reduce the competitiveness of US manufacturers, both in local and export markets

Essar Steel inching towards resolution

Tuesday, Mar 19, 2019

ArcelorMittal moved a step closer to acquiring Essar Steel with the National Company Law Appellate Tribunal (NCLAT) allowing the implementation of its Rs 42,000 crore resolution plan for the debt-laden steel company, pending its final ruling.

It asked ArcelorMittal to deposit Rs 42,000 crore with the committee of creditors (CoC), which may disburse funds but the distribution will be subject to the tribunal’s ultimate decision.

“We are not going to interfere with the resolution plan. We have not passed a stay order,” said the two-member bench led by justice SJ Mukhopahdyaya on Monday. “We are looking into the question of apportionment to creditors.”

This means that ArcelorMittal’s resolution plan approved by the Ahmedabad bench of the National Company Law Tribunal (NCLT) can proceed.

The lenders of Essar Steel are likely to soon receive payments toward their dues in accordance with the plan but subject to any changes in case NCLAT modifies the distribution of funds under the proposal.

Essar Steel Asia Holdings (ESAH) had appealed against the NCLT’s rejection of its Rs 54,389 crore resolution plan.

 

Source: economictimes.indiatimes.com

Small Australian copper producer makes $575 million offer for Glencore mine

Wednesday, Mar 20, 2019

Small Australian copper producer Aeris Resources Ltd on Wednesday said it had offered to buy global trader and miner Glencore’s CSA copper mine in the state of New South Wales for $575 million.

Aeris said in a statement that negotiations to buy the mine in Cobar were at a late stage, with the offer comprising $525 million in cash, $50 million in Aeris shares and a royalty payable to Glencore.

A spokesman for Glencore declined to comment.

The Queensland-headquartered Aeris, with a market value of A$78 million ($55.19 million), said the acquisition could be funded through a combination of debt, an equity capital raising and a so-called streaming agreement through which it would sell silver produced at the mine alongside copper to Glencore.

“(Aeris) have a mine down the road, so as to that, it makes sense and the asset had been flagged for sale for a while,” said an analyst in Sydney, declining to be identified as the deal has not been finalised.

“Cobar produces around 50,000 tons of copper a year, so that would make for a mid-tier copper player in Australia.”

Glencore had put the mine up for sale in 2015, but withdrew it from the market in 2016 after failing to agree a deal with potential buyers.

The debt component of the acquisition would stand at between $250 million and $300 million, with the capital raising at between $185 million and $240 million and Glencore’s streaming deal at $35 million to $40 million, Aeris said.

Aeris said it was in late stage discussions on funding with major shareholder Special Portfolio Opportunity V Limited, which is a subsidiary of a fund managed by Asia-based alternative investment manager PAG, as well with Orion Mine Finance and others.

The equity component of the raising is being managed by RBC Capital Markets and Macquarie Capital, it said.

 

Source: reuters.com

Maksteel USA Completes Acquisition of LexWest Steel

Friday, Mar 08, 2019

Union Partners is pleased to announce that one of its world-class steel service centers, Maksteel, has completed the acquisition of LexWest Steel based in Los Angeles, California. LexWest Steel is a full-line distributor of flat rolled steel products and will be rebranded as Maksteel USA under the expanding Union Partners portfolio.

Maksteel USA is a US division of Maksteel, which is based in Canada.  Maksteel’s geographic footprint and processing capabilities grow with this addition and US distribution now spans from the midwest and south regions to strategic locations in Los Angeles, California, and a soon-to-be announced expansion in Arizona. This westward growth is key for Maksteel as they continue to pride themselves on providing superior service, products and capabilities to their customers, vendors and suppliers across the country.

LexWest Steel was founded in 2001 and currently operates out of Los Angeles, with sales offices in Arizona and Texas. Over the past 18 years, LexWest has grown into one of the most successful independent service centers on the west coast. The company offers slitting and cut-to-length capabilities, and carries a variety of hot rolled, cold rolled, coated and pre-painted flat rolled products.  With the addition of LexWest, Maksteel now operates out of nine facilities in the US and Canada.

Union Partners co-founder, Paul Douglass, said of the acquisition, “LexWest is a trusted and familiar name, and I am confident that our LexWest team and operations will thrive under Maksteel.”

“We are thrilled to announce the addition of LexWest and welcome them to the Maksteel family,” said Union Partners co-founder, Chris Hutter. “This acquisition allows us to continue our mission of providing superior service through strategic expansion and enhanced capabilities.”

 

Source: prnewswire.com

Iron ore’s plunge is about finally catching up to steel’s slump

Wednesday, Nov 28, 2018

The 15 percent plunge in iron ore prices in the past week certainly looks dramatic, but is more a case of the raw material finally catching up to a more established trend of weakness in Chinese steel prices.

However, the drop in iron ore is more than just a cause for concern for miners in Australia, Brazil and South Africa, as it may alter the dynamics of what quality of ore Chinese mills prefer.

The spot price of ore with 62 percent iron content MT-IO-QIN62=ARG, as assessed by Argus Media, dropped to $64.60 a ton on Monday, down 6.9 percent from its previous close.

Since its recent peak of $77.80 a ton on Nov. 9, it has shed 17 percent, a relatively steep decline in a short time period.

Shanghai steel rebar futures have dropped by more than iron ore, but over a longer time span.

The contract fell as low as 3,496 yuan ($503.75) a ton during Monday’s trade, formally putting Chinese steel in a bear market, having slumped 21 percent from the seven-year high of 4,418 yuan on Aug. 22.

Steel rebar has been in a downward trend since the August high, while at the same time iron ore prices were actually still gaining, at least until about a week ago.

Iron ore futures on the Dalian Commodity Exchange rose 12.4 percent from Sept. 29 to their recent peak of 540.5 yuan a ton on Oct. 29.

Similar to spot prices, iron ore futures then moved modestly down until Nov. 22, when they started to correct sharply.

Given the historical correlation between steel and iron ore prices, it was always likely a matter of time before iron ore caught up to the weakness in steel.

It was likely the general weakness in commodity prices, especially the capitulation in crude oil, that provided a trigger for iron ore to stop defying gravity.

BOOST FOR LOW-GRADE IRON ORE?

It’s also worth noting that so far iron ore volumes are holding up on the seaborne market, with vessel-tracking and port data compiled by Refinitiv pointing to China’s imports being at least steady in November from October.

As of Nov. 26, 78.14 million tons of iron ore has been discharged at Chinese ports, or was awaiting unloading, for the month.

With four more days left in the month, it’s likely the final number will be around 90 million tons, higher than the customs figure of 88.4 million for October, but below the ship-tracking number of 93.3 million tons.

The vessel-tracking data and customs numbers don’t align perfectly because of slight differences in when cargoes are processed, and also because China imports small volumes of iron ore overland.

The short-term outlook for iron ore prices is being clouded by several factors, including how widespread and effective will China’s closure of steel mills over winter be, and the ongoing rising and dashing of hopes of a resolution of the trade dispute with U.S. President Donald Trump.

However, it is likely that if weakness persists in steel and iron ore prices, the dynamic so far this year of Chinese steel mills preferring high grade iron ore may start to unwind.

Steel mills have been paying a premium for higher quality iron ore in order to maximize output from their blast furnaces.

They were doing this because the profit margin for a ton of steel rose as high as 1,200 yuan a ton earlier in the year, meaning maximizing output made sense.

However, the retreat in steel prices has eroded margins and it may prompt steel mills to use lower quality iron ore in order to cut costs.

There’s not too much sign of this yet, although the spot price of 58 percent iron ore MT-IO-QIN58=ARG, as assessed by Argus Media, has somewhat outperformed the higher grade 62 percent ore in the recent price decline.

The lower quality ore has shed 15.1 percent of its value from its recent peak on Nov. 9, while the 62-percent grade has dropped 17 percent.

That’s not yet a significant difference, but this may widen if steel prices remain under pressure.

 

Source: reuters.com

Tokyo Steel to raise heavy plate prices for December

Monday, Nov 19, 2018

Tokyo Steel Manufacturing Co Ltd , Japan’s top electric-arc furnace steelmaker, on Monday said it will raise prices for its heavy plates in December by 2.5 percent to reflect tight market conditions amid solid construction demand.

This will mark the company’s first hike for heavy plates in eleven months. Tokyo Steel will keep prices steady for other products, though, including its main one, H-shaped beams.

The steelmaker last raised prices for heavy plates in January, and for other products except for galvanized sheet coils in February.

“Domestic construction demand for heavy plates has been very strong and we expect this situation to continue for a while,” Tokyo Steel Managing Director Kiyoshi Imamura told reporters at a briefing.

“Also, we don’t expect imported products will easily replace local supplies due to strict requirements including quality from customers in Japan,” he said.

Prices for heavy plates will be lifted to 83,000 yen ($737) per ton from 81,000 yen. Prices for steel bars, including rebar, will remain at 69,000 yen a ton. H-shaped beams will stay at 89,000 yen.

Tokyo Steel’s pricing is closely watched by Asian rivals such as South Korea’s Posco and Hyundai Steel , and China’s Baoshan Iron & Steel Co Ltd (Baosteel) .

Imamura also said the recent price plunge in some steel products such as hot coils and slabs in the rest of Asia worried the company.

“With concerns that the escalating U.S.-Sino trade spat may cool the economy in China and the rest of the world, some mills in China, Russia and Turkey are lowering their offer prices for hot coils and slabs,” he said.

“We need to closely watch the market trend in Asia.”

 

Source: reuters.com

Nickel slumps to 11-month low on stainless steel worries

Tuesday, Nov 13, 2018

Nickel fell to an 11-month low on Monday on worries about stainless steel, while other base metals were pressured by uncertainty about the global economy.

Aluminum touched the weakest since August last year as speculators piled on more bearish positions.

“The macro pressures continue to weigh on the downside, such as China’s growth situation, Europe’s political uncertainty and also the dollar’s pretty strong,” said Geordie Wilkes, head of research at Sucden Financial in London.

“People are now looking to the G20 for some sort of clarification, but I’m cautious about the negotiations on the (China-U.S.) trade war.”

In addition to the macro-economic concerns, nickel was weighed down by the stainless steel market, the main source of demand for the metal.

“Stainless steel prices dropped a lot in the last two weeks because production is too high … Investors are quite bearish about the futures market,” said Peter Peng of CRU Group.

Increasing nickel pig iron production and rising Shanghai nickel inventory also pointed to further nickel weakness in the short term, said analyst Helen Lau of Argonaut Securities.

Three-month nickel on the London Metal Exchange shed 0.7 percent to $11,375 a ton in official open outcry trading, its lowest since Dec. 15 last year.

* DOLLAR: The dollar climbed to a 16-month high, making dollar-denominated metals more expensive for buyers paying in other currencies.

* STEEL: Shanghai rebar steel prices tumbled nearly 4 percent to the lowest since late July, pressured by worries over slowing demand in top consumer China over the seasonally weak winter period.

That weighed on zinc, mainly used in galvanized steel, with the LME price 1.8 percent weaker at $2,478.50 a ton in official activity.

* ALUMINIUM INVENTORIES: LME on-warrant aluminum stocks MALSTX-TOTAL, those not earmarked for delivery, rose 5,550 tons to 745,750, data showed on Monday. They have climbed 22 percent over the past month.

LME aluminum, untraded in official rings, was bid down 0.7 percent to $1,942 a ton, the lowest since Aug. 7 last year.

* RUSAL: The United States said on Friday it was postponing the enforcement of sanctions on Russia’s Rusal, the world’s second-biggest producer, until Dec. 12 as its top shareholder works on a plan to cut his stakes.

* COPPER: LME copper bucked the weaker trend, bid up 0.1 percent at $6,060 a ton.

“Some Far Eastern short-covering on the London open today has been met by a resumption of CTA (Commodity Trade Advisor) selling,” Alastair Munro at broker Marex Spectron said in a note.

* PRICES: Lead was bid down 2.4 percent at $1,930 a ton in official rings, while tin traded up 0.7 percent at $19,275.

South Africa says U.S. exempts it from some steel, aluminum tariffs

Thursday, Oct 25, 2018

South Africa said on Wednesday that the United States had granted some local steel and aluminum producers exemptions from tariffs imposed by U.S. President Donald Trump this year.

Trump’s decision to impose a 25 percent tariff on steel imports and a 10 percent tariff on aluminum riled metals producers worldwide, though some major exporting nations secured exemptions for all their steel and aluminum products.

The U.S. Department of Commerce granted exemptions for 161 aluminum and 36 steel products made by companies whose U.S. customers asked for the exemptions, South Africa’s Department of Trade and Industry (DTI) said on Wednesday.

Exempted products included aluminum foil and aluminum plates, sheets and strip, as well as steel hot-rolled bars, hot-rolled sheets, cold-rolled sheets, plates cut and plates in coils, the DTI said.

Shares in ArcelorMittal’s South African unit, which produces some of the products covered by the exemptions, were up 8 percent at 1044 GMT.

The DTI, which earlier warned the tariffs could lead to job losses in manufacturing and mining, said it was still trying to get exemptions for all South African steel and aluminum products.

South African exports of aluminum products account for about 1.6 percent of total U.S. aluminum imports.

“The exemption of these products will contribute towards ensuring that jobs in companies producing these products are retained,” the DTI said.

Job cuts are a hot-button issue in South Africa, which is faced with near-record unemployment of about 27 percent and subdued growth in mining and manufacturing.

Source: reuters.com

Europe hit by steel import surge from U.S. tariffs

Thursday, Oct 25, 2018

Steel imports into Europe have risen sharply as a result of U.S. tariffs, particularly from Turkey, threatening European steelmakers as demand growth in the continent slows, European steel association Eurofer said on Wednesday.

Eurofer said in its quarterly review it expected European Union apparent steel consumption, a reflection of supply to the market, would rise by 2.2 percent this year and by 1.1 percent in 2019.

Trade frictions with the United States and cooling global demand had weakened prospects for EU steel users, Eurofer said.

U.S. President Donald Trump imposed import tariffs of 25 percent on steel from most countries from March 23. It added Canada, Mexico and the European Union to the list on June 1 and doubled the rate to 50 percent for Turkey in August.

Karl Tachelet, Eurofer’s trade director, said the U.S. tariffs had led to a surge in U.S. steel prices of some 40 percent, meaning European producers could still sell some steel there.

“The question for us is how long are the U.S. prices going to stay that high. There will be some correction and when prices go down the 25 percent will be more prohibitive,” he continued.

The main impact to date was that steel that might have gone to the United States was being redirected to Europe.

Turkey, facing a 50 percent tariff, could no longer realistically sell across the Atlantic, while slowing domestic growth left it with more steel to sell.

“They are pushing a lot of volumes into the EU market at any cost,” said Jeroen Vermeij, director of economic studies at Eurofer.

Russia, a traditional exporter of steel to Turkey, was likewise, needing an outlet for its production, Eurofer said.

In the third quarter 2018, Eurofer said steel consumption had risen by just 0.6 percent, but imports increased by 10 percent, meaning EU mills were at best only able to deliver the same amount of steel as last year. Imports now make up some 25 percent of the EU market.

Imports from Turkey and Russia increased by most – from Turkey by 57 percent in the first nine months and from Russia by 56 percent.

The European Union did put in place safeguards to limit steel imports in the light of U.S. tariffs

Eurofer said it was broadly content with the system, but the quotas were global and that country-specific quotas should apply to major exporters to help stabilize the market.

 

Source: reuters.com

Ramp-up for Anglo American’s Minas Rio mine likely delayed to 2021

Wednesday, Oct 17, 2018

Anglo American Plc should restart operations at its Brazilian Minas Rio iron ore mine in November or December but a planned ramp-up to 26.5 million tons per year is likely to be pushed back to 2021 from 2020 as previously expected, the miner’s Brazil chief said on Tuesday.

The company halted production at its Minas Rio mine after two leaks in March in a pipeline that channels slurry more than 500 km (310 miles) from the mine in Minas Gerais state to a port in Rio de Janeiro state.

It has been inspecting the pipeline from April through October, and is working to change out about 4 kilometers of it out of caution after it discovered cracks in the welding.

“We should finish the replacement in November. So everything is on track for us to resume operations in the fourth quarter. It could be in November or December,” Brazil Chief Executive Ruben Fernandes told Reuters on the sidelines of a commodities conference in Rio de Janeiro.

Purchased at the height of the commodities boom a decade ago for $5.5 billion, Minas Rio is Anglo American’s biggest development project. The London-based company was once counting on Minas-Rio to produce 26.5 million tons of iron ore by 2016. As the project hit delays, it had shifted that output goal for 2020.

The company clinched two key permits to ramp up production towards that goal in January, but now expects to receive the key operating license in May, 2019. That means production is likely to hit that long-awaited target of 26.5 million tons in 2021.

“It would be around 2021. It is not a very firm date because it depends on the plant’s performance,” Fernandes said, adding that production should hit the target pace by the last few months of 2020.

Fernandes reiterated Anglo American’s prior estimate of a $300 million to $400 million impact on earnings from the spills this year.

In June, Reuters reported that Anglo American had suspended a nearly $1 billion annual contract to supply Bahrain Steel with iron ore by declaring force majeure in April after the spills.

At the time, Anglo American declined to comment. On Tuesday, Fernandes acknowledged that the two companies were already in arbitration to renegotiate the contract prior to the declaration of force majeure following the spills.

He described the talks as friendly, noting that they include issues like volume and quality, in addition to the incident.

“Without a doubt they are an excellent client,” he said of the Gulf-based company. “There is no reason why we won’t reach a long term deal with them.”

Fernandes said Anglo was also in arbitration with Ferroport, a joint venture it has with port operator Prumo Logistica SA , after declaring force majeure on that contract as well.

 

Source: reuters.com