As we welcome the New Year, I would like to take this opportunity to highlight some of the important events and activities of SEAISI in 2016.

The first major event of the year for the Institute is the 2016 Travelling Seminar. With the theme “Management Tolls for Opera-tional Excellence”, the seminar is scheduled to be held from 21 to 30 March 2016 in Malaysia, Vietnam, Thailand, Indonesia and Philippines. Speakers will be provided by OneSteel of Australia, Nippon Steel & Sumi-tomo Metal Corporation of Japan, POSCO of Korea and Walsin Lihwa Corporation of Taiwan.

The most anticipated event of the year is the 2016 SEAISI Conference and Exhibition. The event will be held at JW Marriott Hotel in Hanoi, Vietnam from 30 May to 2 June 2016. The theme of the conference is “Innovating and Sustaining Competitiveness in ASEAN Steel Industry”.

The highlight of the conference is the Keynote Session which will feature several prominent keynote speakers and a CEO panel discussion involving some of the top executives of steel companies in the region. The confirmed keynote speakers so far are Mr. Chen Yuan-Cheng, Chairman of Formosa Ha Tinh Steel Corporation and Mr. Nghiem Xuan Da, General Director of Vietnam Steel Corporation. Another thing to look out for is

Message from the Secretary General

2016 SEAISI Conference & Exhibition JW Marriott Hanoi, Vietnam30 May - 2 June 2016

Another endeavour by the Institute to provide useful information to its members is the publication of an updated version of the Map of the ASEAN Steel Industry. The map, first published in May 2009, has been well received as it is the only publication of its kind on the ASEAN steel industry. The new map is also expected to be published in the middle of 2016.

We look forward to your continued support and participation in the events and activities of the Institute. TAN AH YONG

the plant tour programme on the last day of the event which will provide options for delegates to visit some of the leading steel establishments in Vietnam including the Hoa Phat Integrated Steel Mill and the newly commissioned Formosa Ha Tinh Integrated Steel Mill.

In conjunction with the conference, a training course on “Understanding Metal-lurgy Involved in Continuous Casting and How This Can Improve Product Quality” will be organised on 29 May 2016. The training will be conducted by Mr. Michael Wright of Modern Metal Solutions Pte Ltd.

The 2016 SEAISI Training Programme will be hosted by the Australia National Committee and is expected to take place in the later part of October this year.

The year-end event of the Institute is the 2016 ASEAN Iron and Steel Sustainability Forum which is scheduled to be held in the final week of November in Bangkok, Thailand.

Other things to look out for include the publication of the all-new 2016/17 SEAISI Directory, due out in February, and the 2016 Steel Statistical Yearbook, which will be published in July/August.

In addition to the above, the Institute is currently working on a complete revamp of its official website to make it more attrac-tive, informative and user friendly. The new website, expected to be ready by the middle of 2016, will contain new features that will facilitate mobile application access; provide for highlights and pop-up news/breaking news; carry more news, articles and reports of interest; create platform for interaction and connectivity among members as well as participants of the Institute’s events; and facilitate E-commerce activities.

SEAISI

NEWSLETTER JANUARY 2016

South East Asia Iron and Steel Institute

Publisher: SEAISI Editor: Pichsini Tepa-Apirak Contributing Editor: Josephine Fong Printer: Yeohprinco Sdn. Bhd.Email: seaisi@seaisi.org Tel: 603 55191102 Fax: 603 55191159 Website: www.seaisi.org

ISSN 0166-9645

UPCOMING EVENT

NEWS HIGHLIGHTS

Japan’s JFE Steel starts production in Indonesia ... Pg. 2

Megasteel disappointed as Miti terminates HRC safeguard probe .... Pg. 3

Malaysia sets provisional AD duties on CRC from China, S Korea, Vietnam ... Pg. 4

Chinese government working on ‘de-capacity’ guidelines: CISA ... Pg. 11

Steel applications in construction sector ... Pg. 15

2 SEAISI Newsletter, January 2016

ContentsMessage from Secretary General ....................................................... 1

Arrium calls for more effective anti-dumping system in Australia ... 2

Japan’s JFE Steel starts production in Indonesia .............................. 2

Steel orders at Japan’s manufacturing sector post first rise in

13 months ........................................................................................... 3

POSCO to present steel technology at Detroit auto show ................ 3

Megasteel disappointed as Miti terminates HRC safeguard probe . 3

Misif expresses support of TPPA ......................................................... 4

Malaysia sets provisional AD duties on CRC from China,

S Korea, Vietnam ................................................................................. 4

Billet imports in Philippines surge 35% year-on-year in 2015 .......... 5

Buyers in Singapore rebar market remain at sidelines amid

higher prices ....................................................................................... 5

Taiwan’s China Steel to see orders exceed 2.43 M. tonnes

for Jan.-Feb. ......................................................................................... 5

2016 OUTLOOK: Taiwan’s scrap importers brace for another

tough year ........................................................................................... 6

Thailand opens dumping case against HRC from three countries .... 7

Thailand delays decision for quota for Japanese coils ..................... 7

Vietnam’s Hoa Sen gets nod for new steel sheet plant ..................... 8

Vietnam steel producers divided over probe into cheap import ..... 8

Russia boosts semi-finished steel exports by 8% in 2015 ................ 8

Brazil starts anti-dumping probe into China-origin flat bar .............. 9

Brazil motor vehicles sales fall 25.2% in 2015 .................................. 9

Brazil’s flat steel product exports zoomed in 2015 ......................... 10

Steel Ministry to look into import duty on metal scraps ................. 10

Chinese steel sector could lose 600,000 jobs in 2016 ................... 11

Chinese government working on ‘de-capacity’ guidelines: CISA .... 11

China 2015 power, steel output drop for first time in decades ...... 11

China’s daily crude steel output rebounds in early January ......... 12

Glory days of Chinese steel leave behind abandoned mills

and broken lives ................................................................................ 12

China to spend big on cutting coal and steel overcapacity ............ 14

List of largest steel producing nations during 2015 ........................ 14

World’s biggest steel industry shrinks for first time since 1991 .... 14

Global steel output registers first annual decline since 2009 ....... 14

Steel applications in construction sector ....................................... 15

2016 SEAISI Conference & Exhibition: Call for Papers ..................... 16

A U S T R A L I A

Arrium calls for more effective anti-dumping system in Australia

Australian diversified mining and materials company Arrium –which has interests in iron ore, steelmaking and metals recycling– has called for a more effective anti-dumping system to protectthe country’s steel industry.

About 75% of Arrium’s steel output is now subject to preliminaryor final anti-dumping determinations, according its md and ceoAndrew Roberts.

“The global oversupply of steel has led to increased dumpingactivity around the world, particularly from China,” Roberts saidin an anti-dumping update filed to the Australian SecuritiesExchange on Tuesday January 12.

“Our businesses are facing unfair trade in Australia fromincreased levels of dumped and subsidised Chinese product andit is crucial that we have an effective, efficient, andinternationally competitive anti-dumping system,” he added.

At present, the Australian Anti-Dumping Commission has imposedpreliminary dumping duties of between 5.8% and 24.0% on rebar,and between 9.5% and 18.4% on wire rod imported from China.

Arrium said the Anti-Dumping Commission has also launchedan investigation into the company’s allegation – made by Arrium’slong steel subsidiary OneSteel – that Chinese rebar dumped intoAustralia is in receipt of countervailing subsidies from China,further damaging the Australian industry.

In November, the AADC imposed duties of between 2.8% and14.3% on rebar imported from South Korea, Singapore, Spainand Taiwan.

Steel First, January 13, 2016

Japan’s JFE Steel starts production in Indonesia

JFE Steel Galvanizing Indonesia, the wholly-owned local unit ofJapanese JFE Steel Corporation, has started production at itssteel plant in Bekasi, West Java, two months ahead of schedule,the company said in a statement on Friday.

The plant, with a capacity of 400,000 galvanized steel sheets ayear, is JFE’s third plant in Asia outside of Japan, after similarfactories in China and Thailand.

JFE Steel expects to cater to rising demand from automotivemanufacturers, the company said in the statement.

The company pointed to Indonesia’s increasing immersion inthe global automotive supply chain and repositioning itself as ahub for exporting cars from global manufacturers — on top ofits already huge domestic market.

Sales are expected to rise to between 1.05 million and 1.1 millionunits this year, from an estimated 1 million units in 2015, the

I N D O N E S I A

SEAISI Newsletter, January 2016 3

Indonesian Automotive Industry Association (Gaikindo) haspredicted.

Japanese manufacturers Toyota, Honda, Suzuki and Nissan haveall expanded production capacity in Indonesia. Saic GeneralMotor Wuling — a joint venture between General Motors China,Shanghai-based SAIC Motor and Liuzhou-based Liuzhou WulingMotors — is set to begin construction on its $397 million plantin Cikarang which will start production in 2017.

Jakarta Globe, January 18, 2016

Steel orders at Japan’s manufacturing sector post first rise in 13months

Japan’s carbon finished steel orders dropped once again on ayear-on-year basis, but the volume booked by the manufacturingindustry went up for the first time in 13 months.

Total orders fell 1.9% year-on-year to 5.65 million tonnes inNovember 2015, making it the fifth consecutive month of declineon a year-on-year basis, according to data released by the JapanIron & Steel Federation (JISF) early this week.

Domestic orders went down by 1.4%, to 3.52 million tonnes, whileexport orders decreased 2.1% to 2.06 million tonnes, the figuresshowed.

Of the total domestic orders, 902,000 tonnes were booked by theconstruction industry, down by 3.7%, while the manufacturingsector registered a small 0.3% gain, to 1.54 million tonnes.

The last time orders from manufacturers had increased on ayear-on-year basis was in October 2014.

Within the manufacturing sector, orders from shipbuilding andmarine equipment companies rose 10.3% to 341,000 tonnes,while those from the automotive industry slid by 0.2% to 686,000tonnes.

Steel First, January 21, 2016

POSCO to present steel technology at Detroit auto show

South Korea’s leading steelmaker POSCO said Sunday it isshowcasing its automotive steel plate technology for the firsttime at this year’s North American International Auto Show takingplace in Detroit, Michigan, from Jan. 11-24.

Aiming to appeal to global automakers, POSCO is presenting itsself-developed advanced automotive steel technology and some30 types of futuristic car components to be used in next-generation cars at the annual U.S.-based auto show.

The steelmaker will be promoting its self-developed twinninginduced plasticity, or TWIP, steel -an advanced type of steelequipped with upgraded strength and elasticity geared for use infuture vehicles -during the auto show.

J A P A N

K O R E A

TWIP steel is able to withstand up to 100 kilograms per squaremillimeter and boasts up to five times higher formability, theability of sheet metal to be formed into a desired shape withoutnecking or cracking, compared to its conventional counterparts,POSCO said.

Boasting heightened applicability, strength and shock absorptioncapacity, TWIP steel can be applied to the front and back bumpersof vehicles, significantly improving safety, according to thesteelmaker.

In particular, POSCO is displaying a special car frame structureequipped with the firm’s cutting-edge automotive steel plates,which is around 26.4 percent lighter than conventional steelframes of mid-sized sedans and certified by the Euro NCAP andIIHS, during the Detroit auto show.

POSCO currently operates 10 automotive steel manufacturingplants and 24 steel fabrication facilities, and suppliesautomotive steel plates to global automakers including Toyota,Volkswagen and GM as well as auto component manufacturersaround the world.

The Korean steelmaker has set plans to drive up its automotivesteel production volume from the current 8.6 million tons to 10million tons by 2018 and offer clients tailored services on steelmelting procedures to raise the automotive steel segment’s salesportion to 70 percent.

Korea Herald, January 10, 2016

Megasteel disappointed as Miti terminates HRC safeguard probe

Steelmaker Megasteel Sdn Bhd said it was disappointed over thegovernment’s notice to terminate the safeguard investigation withregard to hot-rolled coil (HRC) products imported into Malaysiadespite the evidence of rising imports which have severelyaffected the local HRC industry and the company’s operations.

“We are now in discussion with our trade lawyer on the nextcourse of action,” it said in a statement last Friday.

Megasteel said the Ministry of International Trade & Industry(Miti) issued the notice last Friday.

“The notice states that the investigating authority has found thatthere was an increase in imports of the products during the periodof injury determination from Jan 1, 2014 to Dec 31 2014, but theincrease of the imports is not significant, and has not caused orthreatened to cause serious injury to the domestic industry,” itsaid.

To recap, Miti initiated a safeguard investigation on imports ofHRC following a petition lodged by Megasteel, the country’slargest HRC producer.

In its petition, Megasteel requested the government to imposesafeguard duties on imports of HRC at the rate of 40% on top ofthe existing 15% import duties on the product, with the rate to begradually reduced over four years.

M A L A Y S I A

4 SEAISI Newsletter, January 2016

Megasteel said its petition for safeguards on HRC fulfilled thethree main requisites of surge in imports, serious injury andcausal link.

Megasteel alleged that the authorities had used different sourcesof import data and had excluded duty-exempted quantities whichtherefore showed a much reduced total import figure. It notedthat under World Trade Organisation Agreement Article 15, allimport quantities must be taken into account, and there must beconsistency in the use of import data.

Megasteel also said that in its petition, it submitted evidence ofserious injury suffered due to the drastic drop in orders causedby imports, resulting in a drastic loss of market share and asharp decline in its production volume, as well as deteriorationin the company’s shareholders’ funds to negative.

“All these data, including our losses totalling RM1.24 billion forthe three-year period of 2012-2014, were submitted in our petitionto the authorities which unfortunately do not deem the losses asserious enough,” it said.

Megasteel explained that the current depressed situation in thelocal HRC market is caused by cheap imports dumped by Chinawhich has triggered other foreign producers to also sell theircoils at low prices. This had led to price suppression of its localcoils, resulting in huge losses.

The majority of the Chinese mills, it noted, are state-ownedenterprises and, despite enjoying huge subsidies, are showingmassive losses in their accounts.

“The excessive imports have greatly reduced our local ordersand our production level. As a result, we are not able to achieveeconomies of scale and hence our unit cost per ton has increased.Despite this, the authorities have stated that there is no causallink to show that Megasteel’s injury is caused by imports,” itsaid.

The Sun Daily, January 11, 2016

Misif expresses support of TPPA

The Malaysian Iron and Steel Industry Federation (Misif) todayexpressed its full support toward the government’s plan to be aparticipating country in the Trans-Pacific Partnership Agreement(TPPA).

In a statement today, Misif said the Ministry of InternationalTrade and Industry (Miti) has kept the association regularlyupdated on the developments of the TPPA discussions, as well assought its inputs and preferred positions for adoption on behalfof the domestic iron and steel industry.

“We are pleased that the government has negotiated the marketaccess and Rules of Origin (ROO) issues, basing on the mandateprovided by Misif,” it said, citing this as the reason for itssupportive stance.

Misif warned that a decision not to participate in the TPPA willresult in Malaysian steel exporters being less competitive in theTPP market, because Malaysia will be excluded from the

preferential tariffs, compared with competing countries likeVietnam and Singapore.

Currently, Vietnam is the largest exporter of iron and steelproducts among the Asean countries, Misif explained.

“The impact of that disadvantage will be even more significant,should countries such as China, Indonesia, South Korea, Taiwan,Thailand and other competitors decide to join the TPPA later,”Misif said.

Misif said the TPPA will provide Malaysia with market access tofour trading partners that Malaysia has no free trade agreements(FTA) with; these countries are Canada, Mexica, Peru, and US.

“There is a limit to the domestic market potentials, mainly due tothe relatively small population of Malaysia,” it said.

Misif said being competitive and finding markets overseas wouldbe the “order of the day” in the coming years for local iron andsteel products manufacturers, so as to survive, sustain andexpand their business operations in the long term.

“Hence, the TPPA would serve as a great challenge, as well asprovide opportunities for the Malaysian iron and steelmanufacturers to advance further and progress,” it said.

The Edge, January 191, 2016

Malaysia sets provisional AD duties on CRC from China, S Korea,Vietnam

Malaysia has imposed provisional anti-dumping duties of 4.58-23.78% on alloyed and non-alloyed cold rolled coil importedfrom China, South Korea and Vietnam.

The provisional measure is to prevent further injury to thecountry’s domestic industry while an investigation is carriedout on imports of the product, according to a notice published inthe Malaysian government gazette on Friday January 22.

An interim duty of 23.78% will be applied to all shipments fromChina, except for those from Bengang Steel Plates and JiangsuShagang International Trade, which were given exemptions asthey were found to not have been dumped into Malaysia.

Materials from South Korea’s Hyundai Steel will be levied a dutyof 8.32%, while all other exporters from South Korea face a 21.64%tax, with the exception of Posco, which is exempted from anyduty .

Shipments from Vietnam’s China Steel Sumikin Vietnam aresubject to a duty of 4.58%, while all other exporters from Vietnammust pay a 10.55% tax.

A final determination in relation to the Malaysian government’sinvestigation will be made within 120 days from January 25,according to the document.

The investigation followed an application filed by CSC Steel onbehalf of Malaysia’s domestic industry over the alleged dumpingof the product by exporters in the three countries.

Steel First, January 22, 2016

SEAISI Newsletter, January 2016 5

Billet imports in Philippines surge 35% year-on-year in 2015

Billet imports in the Philippines continued to climb in 2015 afterrising 19% year-on-year in 2014, according to the latest datafrom the Philippine Iron & Steel Institute (PISI).

Imports of the semi-finished steel product totalled 2.7 milliontonnes last year, up 35% from the 2 million tonnes recorded in2014 and well above 2013’s 1.7 million tonnes.

China continued to hold the top spot among source countries,with shipments reaching 2.39 million tonnes - or 88% of lastyear’s total imports, PISI president Roberto Cola told Steel Firston Friday January 22.

This was followed by Russia at 9.7% (261,196 tonnes), Vietnamat 0.9% (23,907 tonnes), Australia at 0.7% (19,332 tonnes) andMalaysia at 0.4% (10,002 tonnes), he said.

China’s dominant share in the Philippine billet import marketwas widely expected, Cola said. But he warned that imports hadtaken a bigger share of the market at the expense of domesticproduction.

Production figures in the Philippines for 2015 were notimmediately available. In 2014, the archipelago’s domestic billetoutput fell 8.5% to 1.2 million tonnes while imports edged up.

Chinese billet continues to dominate markets across SoutheastAsia because of its low prices, with the Philippines accountingfor the largest volume in the region.

Last year, the Philippine domestic steel industry continued tosee strong growth in consumption on the back of increasedgovernment infrastructure spending and reconstruction intyphoon and earthquake-hit areas.

In the first half of 2015, steel consumption in the Philippinesrose 8.9% year-on-year to 3.8 million tonnes, according to datafrom the South East Asia Iron & Steel Institute.

Steel First, January 22, 2016

Buyers in Singapore rebar market remain at sidelines amid higherprices

Buyers continue to take a wait-and-see approach to the Singaporerebar import market as they hold back in anticipation of a pricefall.

The current higher prices were driven by supply-sidedevelopments as Chinese mills cut production to curb oversupplyand stem losses.Offers from Chinese mills were heard at $255-265 per tonne cfron a theoretical weight basis, relatively unchanged from a weekago, though offers from one top-tier Chinese mill were said to beas high as $290 per tonne cfr.

P H I L I P P I N E S

S I N G A P O R E

This compares with a range of $250-260 per tonne cfr a monthearlier.

Short sellers have been relatively absent from the market thesedays because of the firm prices, one importer noted.

He conceded, however, that it is “quite a difficult time right now”as far as business is concerned, as resale prices to localcontractors are getting competitive.

“It doesn’t make sense to pay those higher prices,” he said.

No bookings were reported, which reflects buyer resistancetowards the higher prices.

Buyers were reluctant to accept the price increases as there wasa feeling that the market could start to ease after the ChineseNew Year holiday, market participants said.

A number of stockists are also in no hurry to buy as they hadsufficient materials in their inventories, one trader said.

“They are just waiting for prices to drop,” he said.

Singapore rebar prices are considered a good gauge of regionalmarkets because the country is a big consumer and has no traderestrictions on imports.

Steel First assessed Southeast Asia import rebar prices at $255-260 per tonne cfr on a theoretical-weight basis for the week toMonday January 18, compared with $250-260 per tonne cfr aweek earlier.

Steel First, January 20, 2016

Taiwan’s China Steel to see orders exceed 2.43 M. tonnes for Jan.-Feb.

With steel prices having begun rallying in China recently to spurmarket demand, Taiwan-based China Steel Corp., the largeststeelmaker by size on the island, expects its orders placed bycustomers at home and abroad to exceed 2.43 million tonnes forthe January-February period.

CSC executives indicate that the steel market has actually turnedaround mainly on the strong rebound of steel prices seen inChina. Since the end of last November, prices of hot-rolled andcold-rolled steel plates and silicon steels have increased by 6.38percent, 17.11 percent and 7.29 percent, respectively (as of theend of 2015), as reported in the Shanghai Steel Exchange Center.Meanwhile, prices of hot-rolled steels, cold-rolled steels andsilicon steels in China’s Steel Exchange Center in Guangzhou havealso soared 5.05 percent, 8.71 percent and 7.24 percent,respectively. The price hikes are essentially due to two mainfactors: reduced output by Chinese steelmakers and fallinginventory levels.Under such scenario, CSC executives confirm that the firm hasseen its booked orders significantly increase recently, and henceis relatively optimistic that its order book for the January-February period will likely reach, or even exceed, 2.43 million

T A I W A N

6 SEAISI Newsletter, January 2016

tonnes, compared to its original goal of 2.6 million tonnes forthe whole first quarter of this year.

To fill a flood of orders, CSC has decided to keep all its four blastfurnaces running and reduce days off for employees at its steelmills during the upcoming Chinese New Year holidays, to beFebruary 6 through 14. If all goes well, the firm will reportencouraging performance for the first quarter to reverse thesteady downturn that was seen last year.

Suffering from the bearish steel market, CSC reportedconsolidated revenue of NT$20.302 billion (about US$624.67million) for November, 2015, sharply down 29.58 percent yearlyto a four-year nadir for the single month, even though the fourthquarter is typically a high season. For the first 11 months of theyear, the firm’s cumulative consolidated revenue showed a 21.67percent drop to only NT$263.488 billion (US$8.1 billion)compared to the same period of 2014.

CENS, January 5, 2016

2016 OUTLOOK: Taiwan’s scrap importers brace for another toughyear

Last year was one of the most difficult ever for participants inthe Taiwanese scrap import market, and so far 2016 is not lookingany brighter.

For a start, import volumes into the East Asian territory in 2015will not only have come down again, for the fifth consecutiveyear since 2011, but the fall (once finalised figures are published)is also likely to be the largest over that whole period.

The latest official customs figures show that 3.18 million tonnesof ferrous scrap were imported into Taiwan between Januaryand November last year – an 18.3% plunge from the 3.89 milliontonnes in the corresponding period of 2014.

“We estimate that imports will drop by more than 800,000 tonnesin the whole of 2015,” a local scrap trader told Steel First.

This will mean less than 3.5 million tonnes for the full year,compared with 4.27 million tonnes in 2014. To see a similarlylow number, it is necessary to go back as far as 2005.

Since then, the only other time imports were below 4 million tpywas in 2009, following the outbreak of the global financial crisis.

For 2016, there is little reason to look forward to any significantrecovery in import volumes, traders and other marketparticipants told Steel First.

“I expect no improvement this year in imports,” a second tradersaid.

Displaced outputVolumes have been dropping in recent years mainly because of ageneral trend in Asia and elsewhere whereby cheap iron oreprices have been making blast furnace-based steelmakers muchmore competitive than scrap-consuming electric arc furnace (EAF)mills.

Throughout East Asia and Southeast Asia, EAF mills have beenfaced with the dilemma of whether to produce or not to producesteel.

Meanwhile, blast furnace producers in countries such as China,Japan and South Korea have been stepping up their exports andfilling the void left by displaced output from EAF mills in theregion.

Scrap suppliers have therefore been “struggling to keep pace”with the declines seen in iron ore prices, Adrian Lunt, assistantvp of commodities at the Singapore Exchange (SGX), said in anote to clients early this month.

“While [the price of] scrap has fallen substantially over the pastyear, it has been unable to swing the scrap/iron ore ratio back tolevels seen in previous years,” he said. “As a result, the scrap/iron ore ratio has stayed high, providing a relative tailwind forthe competitiveness of Chinese steel exporters.”

In the case of Taiwan, the structural disadvantage for EAF millshas been reflected in two main ways.

On one hand, the market has been pressured by low-pricedChinese billet imports, while on the other, the share of blastfurnace-based crude steel output has been increasing locally.

Figures from the Taiwan Steel & Iron Industry Assn (TSIIA) showthat there are eight blast furnaces in the territory with total crudesteel capacity of 14.55 million tpy, and 26 EAFs with a combinedcapacity of 13.24 million tpy.

Blast furnace mills thus represent around 52.4% of the island’stotal crude steel capacity of 27.8 million tpy, with EAFs holdingthe remaining 47.6%.

In 2014, however, EAF mills were responsible for only 41.7% ofTaiwan’s crude steel output of 23.2 million tonnes, a steep fallfrom a 49% share just three years before, in 2011.

High import pricesThe main reason behind the increasing output via the blastfurnace route in Taiwan in the past few years has been thecommissioning of two blast furnaces by Dragon Steel.

The company – a wholly owned subsidiary of China Steel Corp(CSC), Taiwan’s biggest steelmaker – was originally only an EAFoperator, but it fired up one 2.5 million-tpy blast furnace in 2010and a similar one in 2013.

Its crude steel capacity has been boosted to 6.2 million tpy, ofwhich only 1.2 million tpy comes from an EAF mill.

Because of the high scrap prices relative to iron ore costs, DragonSteel has been out of the scrap import market since the end of2014, and has been instead buying scrap in Taiwan as well asusing hot metal from its own blast furnaces to feed its EAF, asource at the company told Steel First.

“Taiwanese mills face a tough situation because, in general, theycan’t afford to pay for imported cargoes,” the source said.

SEAISI Newsletter, January 2016 7

Dragon Steel, which has the third-largest EAF capacity in Taiwan,does not plan to turn to imported scrap any time soon, whichmeans that general import volumes in the territory will continueto be low.

All other Taiwanese EAF mills, however, have no blast furnacesto rely on and can therefore only prioritise domestic scrap supplyif they do not want to resort to importing Chinese billets.

Such is the case with Feng Hsin Steel, one of the two largest EAFmills in the island – the other being Tung Ho Steel.

Michael Lin, special assistant to Feng Hsin’s chairman, told SteelFirst in an interview late last year that the prompt availability ofdomestic scrap in the East Asian island – where prices are lowerthan for imported cargoes – was one of the few options availablein the fight against Chinese billet imports.

Year aheadAs local supply in Taiwan is far from enough to meet the territory’stotal needs for scrap, imports will continue to represent a largeshare of mills’ purchases of steelmaking raw materials, with nomajor change expected in that area.

What will probably change, however, is the share of imports permain origin, market participants believe.

The USA has always been the largest scrap supplier to Taiwanesebuyers, selling more than 3 million tpy of the product in both2011 and 2012, with Japan far behind.

Volumes from the Asian nation have been on the rise, though,reaching 872,149 tonnes between January and November lastyear. This was up from 462,796 tonnes in the same period of2014, while shipments from the USA dropped to 1.43 milliontonnes from 2.10 million tonnes in the same comparison.

Taiwanese buyers have been turning to Japanese supply mainlybecause of shorter delivery times, sources explained.

The continuation of this trend will depend on a series of factors,though, including the health of Japan’s own steel industry andthat country’s currency.

Taiwan’s import scrap market participants will also eagerlyfollow what happens in China this year, especially regardingsteel output cuts that could ease the pressure now being exertedby the country’s massive steel exports.

“If China can speed up the [production] cuts, this will be verygood news for us,” one Taiwanese scrap traders told Steel First.

Another trader agreed.

“All the Taiwanese buyers compare scrap prices with Chinesebillet prices, so if China keeps selling billet here, the situationwill not improve,” he pointed out.

One Singapore-based scrap trader noted that the signs so far in2016 have been “very mixed”.“Scrap prices have started the year with overall firmness in Asia,so it seems like a good start,” he said. “But nobody really knowswhere Chinese billet prices are going. In Japan, Tokyo Steel was

cutting prices and then there was an increase in the Kanto[Tetsugen] auction, so you have all these mixed signals.”

One official at a Taiwanese EAF mill, who has been in the businessfor more than 30 years, said that, while “everybody” wasexpecting the market to continue to be “bad” this year, theremight in the end be some improvement arising from the expectedoutput cuts in China.

Does this mean that he is one of the few to have an optimisticoutlook for the year?

“Not really,” he said. “These days, I just keep waiting for themarket.”

Steel First, January 20, 2016

Thailand opens dumping case against HRC from three countries

Thailand has opened an anti-dumping and anti-subsidyinvestigation into imports of hot rolled coils and plates fromBrazil, Iran and Turkey, a notice in the Thai Royal Gazette saidMonday.

It follows a complaint filed by local producer Sahaviriya SteelIndustries and supported by other producers including G Steeland GJ Steel. They have provided evidence that the imports havebeen dumped and unfairly subsidized, the notice said. The lowprices and rising volume of imports have caused injury todomestic producers, it said.

Under investigation are hot rolled products 0.9-100mm thickand 100-3,200mm wide. Apparent dumping margins cited were34.4% for Brazil, 35.07% for Iran and 11.54% for Turkey.

Thailand has also announced the opening of an AD investigationinto iron and steel pipes from China and Korea following a filingby the Thai association of metal pipe producers. They providedevidence that the imports were being unfairly traded anddamaging Thai pipemakers. Dumping margins were cited at58.95% for China and 54.95% for Korea.

The official gazette also published a notice announcing a reviewof AD duties against high carbon wire rod, including alloy rod,from China. Duties of 5.17-33.98% (according to company) wereimposed in 2014, as Platts reported. Wire manufacturer SiamIron & Steel requested a review of the rates of duty.

Platts, January 19, 2016

Thailand delays decision for quota for Japanese coils

The Thai government has delayed announcing its final decisionover the size of this year’s import quota for grades of Japan-origin coils for automotive applications, Platts has learned.Bangkok was to formally reveal in December’s Thai governmentgazette the size of the quota for Japanese re-rolling, interstitial-free steel and pickled coils permitted to enter the country duty-free, as reported.However, an official at Japan’s Ministry of Economy, Trade &Industry (Meti) confirmed Thursday that publication of thedecision has been set back a month. “We have received unofficial

T H A I L A N D

8 SEAISI Newsletter, January 2016

notification of the delay and now we expect the announcementwithin this month,” the Meti official said.

In November, Thailand informed Japan that it had revisedupwards its initial quota for 2016 to 630,000 metric tons – some100,000 mt higher, but far below the 1.5 million mt Japan hadrequested. The two governments have since held working-levelmeetings to strike a compromise.

A Bangkok-based Japanese trader expected the Thai governmentto expand the quota for Japan. “The quota may be increased butwe wonder whether the volume will be enough for Japan toaccept,” he observed. Japan exported a total 1.54 million mt ofHRC to Thailand during January-November 2015, down 0.3% y-o-y, according to the Japan Iron & Steel Federation.

The trader said that the Thai government may press Japan to bepatient for another year as all import duties will be removed in2017 under the terms of the Japan-Thailand economic partnershipagreement.

Core to the issue seems to be differing views on the health ofThailand’s auto-manufacturing sector that is dominated byJapanese brands. The Thai side had earlier been pessimistic about2016 production levels and thus conservative in its estimate ofthe volume of Japanese steel the carmakers would need.

The Japanese, however, had been upbeat in their forecast – anoptimism apparently shared by the Thai government’s Office ofIndustrial Economics which late last year expected the auto sectorto perform “exceptionally well” this year, producing 10% morevehicles at 2,150,000 units, 900,000 of which will be solddomestically, and the remaining 1,250,000 for export.

Platts, January 15, 2016

Vietnam’s Hoa Sen gets nod for new steel sheet plant

Hoa Sen Group, Vietnam’s largest steel sheet producer, hasreceived the approval of local authorities to build a 1.3-trillion-Dong ($57.9 million) steel sheet plant in the central province ofBinh Dinh.

When fully operational, the plant will consist of a 180,000-tpygalvanizing line, a 90,000-tpy colour-coating line, a 200,000-tpycold rolling line and a 400,000-tpy pickling line, a companyofficial confirmed to Steel First on Tuesday January 5.

Another 700 billion Dong ($31 million) will be put into the projectas working capital, which takes the total investment cost up to 2trillion dong ($89 million), he said.

Construction of the galvanizing and colour-coating lines startedin late December and are expected to be completed and ready tobe put into operation by the end of 2016, the official said.

The company will review market conditions before proceedingwith the construction of the cold rolling and pickling lines, headded.The new plant will be funded 85% by bank borrowings, and theremainder through the company’s retained earnings, accordingto the official.

V I E T N A M

Hoa Sen has a number of steel mills and over 150 distributionand retail branches across Vietnam.

Steel First, January 5, 2016

Vietnam steel producers divided over probe into cheap imports

Not long after the Ministry of Industry and Trade launched aninvestigation into steel billet imports following a request of fourmajor producers, many other companies are worried that it maylead to high punitive taxes on imports and eventually hurt theirbusiness.

Unlike the four producers that called for the probe against cheapimports, other steelmakers said they depend on imported semi-finished products and increases in input costs will squeeze profitmargin.

This second group, including Australian-owned SSE and localPomina, therefore urged the government to call off theinvestigation and not to impose a high duty on steel billets.

Le Minh Hai, CEO of Vietnam Germany Steel JSC, a producer in thenorthern province of Vinh Phuc with an annual output of 350,000tons, said given billets make up for 85 percent of input costs,higher taxes will lead to higher prices.

Any safeguard measure against imported steel billets willseriously cause negative impacts on Vietnam’s steel industryand consumers, news website Saigon Times Online quoted Haias saying.

Last year Hoa Phat, Southern Steel, Thai Nguyen, and Vietnam-Italy Steel, which account for nearly 40 percent of Vietnam’ssteel billet output, claimed that increasing imports have hit localproducers and demanded an investigation.

While Vietnam’s steel billet imports saw a three-fold increasefrom 2014 to 1.5 million tons last year, the latest figure wasmuch lower than those of 2008 and 2009 when nearly 2.4 milliontons were imported each year, industry data showed.

The trade ministry’s investigation will wrap up in six months atthe earliest.

Thanh Nien News, January 21, 2016

Russia boosts semi-finished steel exports by 8% in 2015

Export volumes of semi-finished steel products out of Russiaincreased year-on-year by 8% or 940,000 tonnes to 13.2 milliontonnes in 2015, national steel industry association Russtal saidlate on Monday January 25.

Total rolled steel exports stood at 25 million tonnes, up by 7% or1.7 million tonnes year-on-year.

Meanwhile, Russian steelmakers sold a total of 31.5 milliontonnes of steel products in the local market last year, down by6% or 1.98 million tonnes year-on-year, according to Russtal.

R U S S I A

SEAISI Newsletter, January 2016 9

More exportsAs steel consumption in the country dropped by 11% to 40 milliontonnes in 2015, and is expected to decline further, Russianproducers have been looking to increase their exports while therouble is weak.

In particular, coking coal producer Raspadskaya raised its exportvolumes by 19% to 3.63 million tonnes in 2015, while sales withinRussia reached 2.81 million tonnes, down by 5%.

Steelmaker Magnitogorsk Iron & Steel Works (MMK) increasedits export shipments by 26% to 2.59 million tonnes of steelproducts last year, while sales within the CIS region accountedfor 8.42 million tonnes, down by 12% compared with 2014.

More semisWhile boosting export volumes, Russian steelmakers tended toproduce more semi-finished steel products rather than finishedsteel last year.

Evraz’s facilities in Russia and Kazakhstan made almost 5 milliontonnes of semi-finished steel in 2015, up by 4%, and 5.46 milliontonnes of finished steel products, down by 9% year-on-year.

Compatriot steelmaker Novolipetsk Steel (NLMK) saw its semi-finished steel shipments increase by 24% to 6.07 million tonnes,while finished flat steel sales inched down by 2% to 7.70 milliontonnes and finished long steel sales dropped by 11% to 2.09million tonnes.

PricesMeanwhile, prices for all major products exported by Russiansteelmakers dropped last year, according to Steel Firstassessments.

The price of billet averaged $328.40 per tonne fob Black Sea in2015, down by 32% or $154.04 per tonne year-on-year, while theslab price averaged $289.80 per tonne fob Black Sea, down by41% or $198.39 per tonne.

Hot rolled coil (HRC) averaged $344.62 per tonne fob Black Sea,down by 34% or $177.25 per tonne compared with 2014. However,export markets for the product have been restricted.

HRC exports to the USA stopped in late 2014 after the official endto an agreement which suspended anti-dumping duties on hotrolled steel imports from Russia, according to Russtal.

Meanwhile, Turkey, one of the Russian producers’ key outlets,started an anti-dumping investigation into HRC imports fromseven countries, including Russia, in late January last year. Dutiesat rates of 9.41-13.66% have been recently suggested for majorRussian exporters.

And there is a threat of an investigation in the EU, sources said.

ProductionDespite the trend to switch from domestic sales to more exportshipments, and from output and sales of finished steel to moresemi-finished products, amid the tough market environment, totalproduction volumes in Russia did not drop much.

The country’s key steelmakers produced 56.57 million tonnes ofrolled steel in 2015, down by only 0.56% year-on-year, Russtalsaid. The association reflects around 90% of the country’s output,including that from Evraz, Severstal, MMK, NLMK, Metalloinvestand OMK.

Russia’s total steel product output fell by 1.50% year-on-year to60.30 million tonnes last year, according to the federal statisticsservice Rosstat.

Steel First, January 26, 2016

Brazil starts anti-dumping probe into China-origin flat bar

Brazil has launched an anti-dumping investigation into flat barsfrom China, the country’s foreign trade secretariat, Secex, said inlate December.

The probe will examine imports of flat bars classified undertariff code 72283000, with thicknesses between 4.5mm and60mm and in widths from 50mm to 150mm.

The case was opened following a request on October 29, 2015,from Brazilian steel producer Gerdau. ArcelorMittal’s subsidiaryin Brazil supported Gerdau’s petition.

Gerdau and ArcelorMittal combined are responsible for 100% ofthe flat bar production in Brazil.

The investigation will analyse flat bars imported between July2014 and June 2015.

During the period, the South American country had been importingChinese flat bars at an average $687.14 per tonne fob,representing a dumping margin of $457.67 per tonne, or 66.6%,according to Secex.

The date for the conclusion of the probe has yet to be defined.Steel First, January 5, 2016

Brazil motor vehicles sales fall 25.2% in 2015

Brazilian motor vehicle sales in 2015 fell for a third-consecutiveyear, declining 25.2% from 2014 on higher interest rates and thecountry’s worst recession in more than 30 years, said the NationalMotor Vehicle Manufacturers Association, Anfavea.

Total vehicle sales, which include cars, light-commercial vehicles,trucks and buses built in Brazil, tumbled to 2.15 million in 2015from 2.88 million in 2014, Anfavea said. Sales of importedvehicles sank 32.8% to 414,358 units in 2015 from 616,997 units.

Sales are expected to decline for a fourth consecutive year in2016, with Anfavea projecting a 7.5% decrease as Latin America’slargest economy is expected to contract further this year, thetrade group said. Brazil’s auto industry is in the midst of a sharpslump after a decade of uninterrupted growth that attracted manyof the world’s largest automakers and made the country theworld’s third-largest market.

B R A Z I L

10 SEAISI Newsletter, January 2016

Consumers have been sidelined by rising interest rates andgrowing unemployment amid a sharp economic downturn thateconomists think shrunk Brazil’s economy by 3.7% in 2015. Anearly 3% contraction is expected in 2016.

In December, total vehicle sales were 190,472 units, up 14.1%from 166,934 units in November but down 38.1% from 307,873vehicles in December 2014, Anfavea said. Imported vehicle saleswere 37,288 units in December, up 32% from 28,242 vehicles inNovember but down 40% from 62,155 vehicles in December 2014,Anfavea said.

Anfavea expects production to grow 0.5% in 2016 to 2.44 millionvehicles.

Brazilian automakers produced 142,880 vehicles in December,down 18.4% from the 175,114 units produced in November anddown a sharper 30.0% from the 204,029 units in December 2014,Anfavea said.

According to Anfavea, exports of vehicles made in Brazil rose24.8% to 416,955 units in 2015 versus 334,219 units in 2014.Anfavea expects exports to grow an additional 8.1% in 2016, thetrade group said.

December exports were 26.5% higher at 46,215 vehicles comparedwith 23,438 vehicles in November, Anfavea said. December’soverseas tally was also up 97.2% from December 2014, when23,438 vehicles were shipped to international markets.

Platts, January 11, 2016

Brazil’s flat steel product exports zoomed in 2015

As per the statistics released by the Brazilian Ministry ofDevelopment and Trade, the country’s flat steel product exportssurged higher considerably during 2015. The exports jumpedhigher by whopping 84.3% when compared with those during thesame month a year before.

As per data, Brazil’s flat steel product exports during the yeartotaled 2.65 million mt, 84.3% higher when compared with theexports of 1.44 million mt recorded during 2014.

Meantime, the country’s exports of hot-rolled steel goods surgedhigher by 80% year-on-year to 2.04 million mt during the entireyear 2015. The exports had totaled only 1.13 million mt duringthe year before. Also, cold rolled coil exports were up 48.4% at260,772 mt in 2015. This is when compared with the cold-rolledcoil exports of 175,725 mt during 2014. Meantime, hot-dippedgalvanized exports too increased sharply by 171.71% year-on-year to 346,545 mt during the previous year in comparison with127,527 mt in 2014.

The exports during the year 2015 were valued at $1.21 billionFOB. The value of exports has jumped significantly by nearly37% from $881.69 million FOB during 2014. The shipments ofhot-rolled coils were valued at $844.11 million FOB. The valueof cold-rolled coil exports jumped higher to $145.55 millionFOB in 2015. The value of hot-dipped galvanized shipmentsincreased $219.76 million FOB during the month.

Brazil’s exports of hot-rolled steel goods have dropped marginallyby 3% year-on-year to 174,876 mt during Dec ‘15. The exportshad totaled 180,289 mt during the same month a year before.Also, cold rolled coil exports plunged by over 79% at 6,716 mt inDecember last year. This is when compared with the cold-rolledcoil exports of 32,537 mt during Dec ‘14. The hot-dippedgalvanized exports increased sharply by 31% year-on-year to39,201 mt during December 2015.

Scrap Monster, January 18, 2016

Steel Ministry to look into import duty on metal scraps

The Steel Ministry has assured the metal recycling industry tolook into their demand on removal of 5 per cent customs duty onmetal scrap imports.

Steel Secretary Aruna Sundararajan assured the industry thatthe ministry will look into import duty structure on imports ofall types of metal scraps that attract about 5 per cent customsduty, industry body Metal Recycling Association of India (MRAI)said in a statement.

Sundararajan, speaking at an international conference on metalrecycling in India, said that first set of policy measures on thisissue would be taken up shortly.

The association said the customs duty is making imports unviablefor scrap importers.

Accepting the long pending demand of the industry, she said theMinistry will look into framing a national policy on metalRecycling.

Mines Secretary Balvinder Kumar said that at a time when globaleconomy is undergoing a phase of recession and when resourcesglobally are depleting, India needs to focus on recycling toreasonably use the available resources.

On MRAI’s demand on review of foreign trade agreements (FTAs),Kumar said a formal communication has been made to theCommerce Ministry to review the FTAs and the issue will bereviewed with the Finance Ministry too.

He assured the industry that government is serious on ensuringthe ‘ease-of-doing’ business and the Prime Minister has askedthe Group of Secretaries to freeze Action Plans to addressconcerns in each area.

For the metal recycling sector also, the requisite attention willbe paid, he added.

MRAI also urged the government to set up a pre-shipmentinspection infrastructure, mainly scanners at key ports. The needis felt immensely due to the existing standard operating practiceworldwide, where scrap imports are scanned at the port ofdestination for radio activity and identification.

In India, government has installed scanners at few ports in India,but many are not working, forcing importers to pay inspection

I N D I A

SEAISI Newsletter, January 2016 11

charges from their pockets, which are to the tune of Rs 1,100crore.

The Economic Times, January 22, 2016

Chinese steel sector could lose 600,000 jobs in 2016

China’s iron and steel sector could see the elimination of 600,000jobs in 2016, amid greater pressure to shut excess capacity andweakening industry profits, researcher Gavekal said Wednesday.

The figure was based on the assumption that job losses in thesector mirrored that of the coal sector, which is seeingemployment back at 2007 levels after shedding 890,000 jobssince 2013, the researcher said in a note. Steel employment hasbeen shaved to 2012 levels and is continuing to decline, amidincidences of “hidden unemployment,” where formal layoffs areavoided to maintain social stability, it said.

Central China-based Wuhan Iron & Steel Co. has recently comeunder media attention for being the first major stateowned millto have gone public with job reductions, which it has refused toterm “layoffs” because employees continue to receive socialsecurity and provident fund contributions.

Gavekal also sees industrial sales volume growth in the nextyear to be about 5% on a year-on-year basis, on the premise thatdemand for coal, steel, cement and heavy machinery will stayweak. Its forecast assumes a 5-10% decline in oil, coal and ironore prices.

“Residential construction activity looks set to remain very weakwhile infrastructure investment cannot plausibly acceleratemuch more to compensate,” it said. Housing sales volume growthwould decline moderately in 2016 at less than 5%, Gavekal said,although a sharp fall is unlikely thanks to China’s sustainedeasing of its monetary policy.

Platts, January 7, 2016

Chinese government working on ‘de-capacity’ guidelines: CISA

China’s central government is working on detailed guidelines tohelp the “de-capacity” goals of the nation’s steel industry,according to Zhang Guangning, ex-chairman of the China Iron &Steel Association (CISA). “The central government has prioritized‘de-capacity’ in its overall economic restructuring efforts starting2016 (and is) trying to achieve this while maintaining socialstability,” Zhang told a meeting of CISA members in Beijing onJanuary 11.

Zhang elaborated that “de-capacity” refers to cutting both steelcapacity and the number of producers in China, to be achievedvia mergers and acquisitions or closures. However, China hasyet to establish a comprehensive system with related policies tofacilitate such closures, he noted.

Chinese market sources agreed, adding that re-employment ofstaff made redundant through such measures, plus the settlementof existing debt and the provision of subsidies to mill owners,are among the major obstacles presently inhibiting the paring ofcapacity.

C H I N A

“Many small-sized steelmakers are considering quitting theindustry, but local authorities are blocking them as such millsare key taxpayers and major local employers,” an official from aprivately-owned steel mill in north China’s Hebei said. “This hasprevented such mills from acting on their own will.”

Despite the struggles and losses the Chinese steelmakers haveendured since 2012, very few mills have been closed permanently,industry watchers note. For example, in late December ShanxiHaixin Steel, a 3.5 million metric tons/year steelmaker in northChina’s Shanxi province, was taken over by Jianlong Group andthe speculation is Haixin will resume operations in March, aBeijing-based iron ore trader said.

Nevertheless, slashing capacity is definitely paramount now,Zhang emphasized, with China’s steel consumption officiallyviewed as having peaked last year. China’s steel apparentconsumption reached 645 million mt during January-Novemberlast year, down 5.5% on year, CISA data shows. The decline wassteeper than 2014’s 3.3% and in sharp contrast to 2013’s 7.1%annual increase. China’s overall crude steel capacity, in contrast,appears alarmingly high at 1.2 billion mt/year.

Platts, January 14, 2016

China 2015 power, steel output drop for first time in decades

China’s output of electric power and steel fell for the first time indecades in 2015, while coal production dropped for a secondyear in row, illustrating how a slowing economy and shift toconsumer-led growth is hurting industrial consumers.

China’s economy grew at its weakest pace in a quarter of a centuryin 2015 and efforts to restructure have not only slashed demandbut also exposed massive overcapacity in industrial sectors suchas coal, steel and power.

Only crude oil escaped the downturn, with refinery throughputhitting a new record in December and rising 3.8 percent to 10.44million barrels per day in the year, data from the National Bureauof Statistics showed on Tuesday.

“Because steel mills are cutting production, it cuts demand forcoal and power, and coal is also hit by falling power and cementdemand. It is going to be really bad for the next five years,” saidXu Zhongbo, a steel industry consultant.

China generated 5.618 trillion kilowatt-hours (kWh) of power in2015, down 0.2 percent from the previous year, the data showed,the first annual decline since 1968, when the country’s economywas rocked by the turmoil of the Cultural Revolution.

“China’s economic growth has decoupled from coal-fired powergeneration, and the increase in the service industry as a share ofChina’s GDP has also slowed demand,” said Yang Fuqiang, a seniorresearcher at the Natural Resources Defense Council.

Yang said he expected the sector to grow at a much slower paceuntil 2050 as China embarks on “energy transition”, and with athermal power capacity surplus already estimated at around200 gigawatts, China needed to stop approving new plants.

“TOO MANY APARTMENTS”

12 SEAISI Newsletter, January 2016

Crude steel production dropped 2.3 percent to 803.8 milliontonnes, the first yearly fall since 1981, with the entire sectorsapped by weak demand and a colossal supply glut.

Around half of China’s steel mills are making losses and manyare struggling to exit from a sector with a capacity surplus ofaround 400 million tonnes a year, half of total production.

A slowdown in construction also hurt the energy intensive cementindustry, slashing output by 4.9 percent in 2015 and creatingfurther knock-on effects for coal and power.

“Steel production will continue decreasing this year, especiallyconstruction steel - there are just too many apartments and manycities just don’t need to build anymore,” said Xu.

With coal output declining 3.5 percent in 2015, the second annualfall in a row, pressure on the sector is expected to persist into2016, also hit by Beijing’s efforts to encourage cleaner forms ofenergy. China is also struggling to tackle a capacity surplusamounting to around 2 billion tonnes a year.

As China fights pollution, coal-fired power sources have beenaffected disproportionately by the slowdown, with a huge powercapacity surplus allowing grids to give priority to cleaner sourcesof energy, including hydropower.

Total thermal power generation in 2015 fell 2.8 percent to 4.21trillion kWh, while hydropower rose 4.2 percent to 996 billionkWh in 2015. Utilisation rates at thermal power plants stood ata record low in 2015 and estimates suggest that there was acapacity surplus of as much as 200 gigawatts (GW).

Official energy administration data showed on Friday that China’stotal installed power generation capacity rose 10.4 percent in2015 to 1,506.7 GW. Thermal power capacity rose 7.8 percent to990.2 GW over the period, amounting to 65.7 percent of the total.

Reuters, January 19, 2016

China’s daily crude steel output rebounds in early January

China’s daily crude steel output rebounded in the first ten daysof this month, reversing the downward trend seen since late-October.

Member mills of the China Iron & Steel Assn (Cisa) producedcrude steel at an average rate of 1.6 million tpd in early January,up 3.5% from the previous period, according to estimates fromthe industry body reported on Wednesday January 20.

Cisa member mills, which are mainly medium-sized and largesteelmakers, account for roughly 80% of the country’s total steeloutput.

The country’s daily crude steel output has continued to fall sincelate October of last year, amid a gloomy outlook for the country’soversupplied steel sector.

Steel prices for major products slid to record lows in mid-December, before recovering some ground in the latter half of themonth.

Eastern Chinese rebar prices fell to 1,670-1,710 yuan ($254-260) per tonne on December 14, down from 1,900-1,940 yuan($289-295) per tonne on October 20 and the lowest since SteelFirst started assessing the product in August 2004. Prices thenregained some upward momentum from December 16, reachinga 2016-peak of 1,910-1,960 yuan ($290-298) per tonne on January5, according to Steel First price archives. “

The price recovery over the past few weeks might haveencouraged some mills to regain some interest in production onimproved profit,” a Shanghai-based trading source told Steel First.

However, output is unlikely to rise over the next couple of weeks,as demand is likely to shrink with the approaching Chinese NewYear holiday (February 7-13).

As at January 10, combined finished steel inventory at Cisamember mills totalled 12.4 million tonnes, almost flat with levelson December 31, according to data from the association.

Steel First, January 20, 2016

Glory days of Chinese steel leave behind abandoned mills andbroken lives

A billboard on the motorway into China’s steel capital evokesthe golden era of the country’s blistering economic rise.

“Gathering great wealth!” it boasts. “Business wins the future!”But at the Fufeng steel plant on the outskirts of Tangshan, a oncebooming industrial hub about 200km south-east of Beijing, thereis scant sign of those glory days.

Since Fufeng’s owners declared bankruptcy early last year –layingoff about 2,000 workers and sparking protests in the process –weeds and rust have begun to consume the steel mill’s industrialruins.

“There’s nobody here –just us,” said one of three security guardsbraving snow and sub-zero temperatures to watch over thedilapidated facility, which, like many others in the region, hasbeen forced out of business by massive over-capacity andplummeting demand.

Tangshan, a city of about seven million inhabitants in Hebei,China’s steel-making heartlands, was levelled by a devastating1976 earthquake that is said to have claimed 250,000 lives.

But it rose from the ashes to become a heavy-industrypowerhouse, propping up a massive Chinese construction boomand churning out more steel in 2014 than the United States.

Those days now appear over, as concerns mount over the healthof China’s economy and its possible impact on the rest of theworld, and Beijing fights to reinvent the world’s second-largesteconomy and clear its smog-choked skies, in turn piling thepressure on heavily polluting steel plants.

Since China began ramping up efforts to slash steel over-capacityand transition to a more sustainable, consumption-led economicmodel, some corners of Tangshan’s once bustling industrialsprawl have taken on the appearance of ghost towns.

SEAISI Newsletter, January 2016 13

Near the Fufeng plant, homes vacated by laid-off workers havebeen sealed up with metal sheets, snowflakes fall on eerilydeserted streets, and those steelworkers who still have jobscomplain their salaries have been cut as steel prices fall,government support is withdrawn, and their employers struggleto stay afloat.

A few hundred metres beyond the shuttered Fufeng complex, thepremises of another company, China Metallurgical Hengtong ColdRolled Technology, also lies abandoned, electricity cablesdrooping on to a corrugated iron fence blocking its unusedentrance.

A man walks past shuttered businesses near the abandonedFufeng steel plant in Tangshan which closed last year leaving2,000 people out of work. “Things are bleak,” said one retiredmill worker who lives in Kua Number One village, just besideFufeng.

Another man, who works at the nearby Guofeng mill, which isstill operating, but only just, claimed his monthly pay had beencut by 25%. “Life is really hard right now,” he complained.

“Everything here is about steel. If it shuts down, it’s over. If ourmill closes, we will have no land, no money and no work,” saidthe 52-year-old father of one, who declined to give his name.

This week, China announced that its economy last year grew atits slowest rate in 25 years, contributing to fears of anaccelerated slowdown that could affect financial markets acrossthe world.

On Thursday, Fang Xinghai, a Stanford-educated top economicadviser to president Xi Jinping, attempted to reassure the worldover his country’s ability to avoid a hard landing that wouldhave severe consequences for the global economy.

“China is blessed with the strong and long-term focusedleadership of President Xi Jinping, the best leader in the world,”Fang, the former deputy head of the Shanghai Stock Exchange,told the Wall Street Journal.

“With his leadership, we can deal with the inevitable risks andvolatilities arising out of the transition.” He added: “The transitionspeed is perhaps not fast enough for some people, but quite fastindeed for a country the size of China, and this process oftransition will continue.”

But in the wake of last year’s stock market debacle and anotherrecent bout of jitters, which experts blamed on the government’sconfused policies, there is increasing scepticism over the abilityof President Xi and prime minister Li Keqiang to handle theeconomic challenges ahead.

Patrick Chovanec, a China expert and chief strategist at NewYork’s Silvercrest Asset Management, said: “When you see thingsthat make them look like their policy footing is uncertain, peoplewho are betting on the government to determine the outcome getnervous [and think], ‘Well, if their policy footing is uncertainabout the exchange rate, maybe it is uncertain about the stockmarket or about the property market or about other things.’ Itmakes you wonder.”

Chovanec said one major concern was the apparent sideliningof Li Keqiang, who was supposedly in charge of China’s economicre-balancing.

“The impression that a lot of people have is that Li isn’t really thedecision maker, and hasn’t been for quite some time, and thateverything has been centred on Xi,” he said. “All the reins havebeen held in one hand which –even if it was a very competenthand –would be potentially problematic given the full plate ofchallenges that they face and the full plate of reforms that theysay they are interested in implementing.”

While China’s leaders struggle to control their country’s economictransition, Tangshan’s residents are left to reminisce about thegolden era of double-digit growth.

Fan Jiangqiang, 47, a local entrepreneur, said the region’s halcyondays had come in 2008 and 2009 when China’s galloping economysaw steel consumption soar and the acrid smoke above his homesignalled that business wasbooming.

“The supermarkets were always full of people. Many businessesopened up. People would go out to karaoke and for drinks.

People consumed a lot,” Fan recalled. “[But] right now, thingsjust keep going down. More and more companies are goingbankrupt,” he said. Cui Jianjun, a 46-year-old chicken salesmanwho works in the shadow of the once bustling Fufeng plant, said:“When the mills were operating properly lots of migrants wouldcome here to work. Now the mills have closed, they’ve gone home.My business has suffered.”

China’s flagging economy is already taking a punishing toll onthe country’s workforce. China Labour Bulletin (CLB), a Hong Kong-based campaigning group which monitors such unrest, recordeda dramatic escalation in strikes and worker protests towardsthe end of last year. Across China there were 2,774 incidents in2015, double the previous year’s figure of 1,379 incidents.

“All sectors of the economy are clearly experiencing problems,”said CLB’s Geoff Crothall. “And the reason the workers are goingout on strike and staging protests is simply that they have noother option.”

Crothall said that of the 51 “incidents” in Hebei province lastyear, 15 had been related to the depressed steel industry, with avery clear upsurge in the last quarter of 2015.

One of those protests took place outside the gates of the Fufengsteel mill, where disgruntled former workers gathered to demandunpaid wages.

As world leaders and the global business elite gathered at theWorld Economic Forum in Davos on Thursday, a group of steelworkers huddled inside a small supermarket-cum-gambling dennot far from Fufeng to smoke cigarettes and ponder their fates.

“It all depends on the government. If the government wants us tosurvive, we will live on,” said the 52-year-old worker. “If thegovernment says no, we will close.” Another man attempted tolighten the mood with a joke. There was one major upside to allthe economic gloom, he pointed out, letting out a loud guffaw.“The air is much better these days.”

The Guardian, January 22, 2016

14 SEAISI Newsletter, January 2016

China to spend big on cutting coal and steel overcapacity

The central government will spend 100 billion yuan (15.25 billionU.S. dollars) every year for up to five years to address overcapacityin sectors such as steel and coal, according to a report inEconomic Information Daily on Friday.

The budget will mainly be used to relocate employees, the reportsaid, citing sources from petrochemical market informationprovider ICIS and industry insiders.

The sources said there will no minimum financial allocation forthe coal industry, which had been a topic of speculationpreviously.

Steel and coal have the largest inventories in China, to addressthis no new projects are being given the go ahead, outdatedproduction facilities are being shut down, and “zombie”companies are being forced to shut.

“The steel and coal sectors should take the lead in cuttingovercapacity, reducing costs and improving efficiency,” PremierLi Keqiang said at a State Council symposium on Wednesday.

Including local governments financial share, around 200 billionyuan will be allocated every year to cut excess capacity in thetwo industries, Shenwan Hongyuan Securities estimates.

The coal industry alone will get around 140 billion. 1.8 millionemployees in the sector will be relocated while 360 milliontonnes of outdated production capacity will be removed.

Shanghai Daily, January 22, 2016

List of largest steel producing nations during 2015

According to latest statistics published by the World SteelAssociation, the world crude steel output by 66 countriesreporting to the Association totaled 126.724 Million tonnesduring December 2015. The monthly output declined by 5.7%when compared with December 2014. These 66 countriesaccounted for approximately 99% of the total world crude steelproduction in 2014.

The following table lists world’s top ten nations with regards tototal crude steel output during December ‘15.

Also, the table given lists world’s top ten nations with regards tocumulative crude steel output during the entire year 2015.

W O R L D

Note: The above outputs are in thousand tonnes.

Scrap Monster, January 26, 206

World’s biggest steel industry shrinks for first time since 1991

Steel output in the world’s largest producer posted the first annualcontraction in a quarter century.

Mills in China, which make half of global supply, churned outless steel last year for the first time since at least 1991 as localdemand dropped, prices sank and producers struggled withovercapacity. Crude steel production shrank 2.3 percent to 803.83million metric tons, the statistics bureau said Tuesday. Decemberoutput fell 5.2 percent to 64.37 million tons from a year earlier.

Demand is weakening as policy makers seek to steer the economyaway from investment and toward consumption-led growth. Theeconomy expanded 6.9 percent last year, the weakest full-yearpace since 1990, data showed. Steel output will probably drop2.6 percent this year, weakening the outlook for iron ore as globalminers increase shipments, Citigroup Inc. has estimated.

“This marks the start of declining steel output in China as theeconomy slows,” Xu Huimin, an analyst at Huatai Great WallFutures Co. in Shanghai, said by phone. “We’re likely to see moreoutput cuts this year, though the magnitude of declines will bequite similar to 2015. Supply cuts in a glut are a long-drawnprocess as mills seek to maintain market share.”

Chinese steel demand is also dropping for the first time in ageneration, prompting mills to export record amounts of the metal.Shipments jumped 20 percent last year to 112.4 million tons, anall-time high. Excess supply particularly from China has spurredgovernments across the globe to take steps to protect their homemarkets.

Bloomberg, January 19, 2016

Global steel output registers first annual decline since 2009

Global crude steel production fell by 2.8 percent last year,marking the first annual decline since 2009, as producerssuccumbed to pressure from waning demand and tumbling prices.

The sector viewed as a barometer of global economic health hashad to contend with a supply glut that sent prices to their lowestsince 2003 last year, with bankruptcies and capacity closurespicking up pace the world over.

Rank Nation Output

1 China 64,370

2 Japan 8,591

3 India 7,286

4 United States 6,035

5 Russia 5,950

6 South Korea 5,900

7 Germany 2,987

8 Turkey 2,671

9 Brazil 2,462

10 Ukraine 1,900

Rank Nation Output

1 China 803,830

2 Japan 105,152

3 India 89,582

4 United States 78,916

5 Russia 71,114

6 South Korea 69,673

7 Germany 42,678

8 Brazil 33,245

9 Turkey 31,517

10 Ukraine 22,933

SEAISI Newsletter, January 2016 15

Figures from the World Steel Association on Monday showedthat global steel output fell to 1.623 billion tonnes in 2015, withoutput in China — the metal’s top producer and consumer —registering its first drop in three decades, falling 2.3 percent to803.8 million tonnes.

China’s government is pushing to erode massive overcapacity inthe sector as economic growth weakens. That combined withcuts and closures worldwide has helped to lift prices slightly inJanuary.

“Many mills including (in) China are pulling production offlinein an attempt to support prices — and it is working,” said ChrisHoulden, research manager at consultancy CRU.

“However, any reversal of production cutbacks in response toprice rises will again place steel producers’ margins underextreme pressure.”

Spare capacity expanded last year, with mills utilizing only 69.7percent of capacity on average, versus 73.4 percent in 2014, thedata showed.

Utilization of at least 80 percent is deemed necessary for millsto have pricing power. Rates below that level signal to buyersthat mills can and will raise output in response to any demandincrease.

China’s massive steel sector is said to have spare capacity of300-400 million tonnes, roughly half of global spare capacity ofabout 700 million tonnes.

With domestic steel demand shrinking, China exported a record112.4 million tonnes of cheap steel last year, forcing other millsto crimp output as they struggled to compete.

Steel output in the European Union fell 1.8 percent to 166.2million tonnes last year, the data showed, while output in NorthAmerica was 110.7 million tonnes, down 8.6 percent.The decline in global steel output accelerated toward the end ofthe year, falling 5.7 percent in December to 126.7 million tonnes,while China’s output dropped by 5.2 percent to 64.4 million ton.

Reuters, January 25, 2016

Steel applications in construction sector

Construction sector is the largest steel consuming sector in ASEAN-6 countries, accounting for more than 70% of total steel usage inthe region. Construction technology has been developed for fastertechnique, stronger and safer building and for better costeffectiveness.

Construction in ASEAN is still a labor-intensive industry thatrelies heavily on human work, especially in cheap-labor costcountries such as Indonesia, Thailand and Vietnam. However,some countries in the region have adopted smarter constructionmethods such as industrial building system, steel structurebuilding design, pre-engineering building system etc.Reinforced concrete is one of the most common building materialsfor many construction projects in ASEAN, such as residentialhouses, high-rise condominiums, commercial buildings,

H E A D L I N E S

industrial structures and infrastructures. With this constructionmethod, reinforcing steel bar and wire mesh are mostly used formain structure components. Although demand for these steelproducts continues to surge in line with the increase ofconstruction activities in the region, local steel producers havelost their market share to cheap imports from other countries.Nevertheless, steel companies continue to develop their productsto provide better solutions for the construction sector. Highstrength steel is one of the value add steel applications whichbenefits the construction sector. High strength steel reinforcementgrade 600, for example, helps the contractors to reduce totalsteel usage in tonnage by up to 25%, compared to the commonlyused grade 460 reinforcing steel.

The adoption of high strength steel in construction helps toincrease room space in the building since structural componentsize is smaller. This also helps to improve constructionproductivity and cost effectiveness as it requires less formwork,less manpower and is less time consuming. Apart from this, italso helps to reduce carbon footprint and promote sustainabilityof the building.

Some countries in ASEAN have also developed steel structuralsystem in the construction sector, such as manufacturingbuildings, warehouses, flex buildings (combination ofmanufacturing and warehouses). Steel structure has specialcharacteristics, which benefits many aspects of construction.Due to its high ductility and toughness, it helps to ease andincrease flexibility of structure designs, is adaptable for buildingmodification, enhances speed of construction, is environmentalfriendly, has consistency in quality and, moreover, is availablein the market.

Similar to Grade 600 used in reinforced concrete, the applicationof high strength ASTM A572 steels in the steel structural systemwould reduce total steel weight in construction, produce lessCO

2 emissions and improve workplace safety. This is because of

its lighter structure/steel frames.

The development of steel applications in construction sector inTaiwan is a good example. Taiwan has created a special standardrequirement for steel used in high-rise building at earthquakearea, for example, SN400YB/YC, SN490YB/YC, SM570M-CHW,SM570-B, HT690 and so on.

China Steel Corporation has developed SM570M-CHW whichcomplies to seismic resistant requirements, for example, higheryield strength, low yield ratio (< 0.80) and high value of thereduction of area in z-direction. For steel structure buildingconstruction, normally box section is used as the column toresist biaxial force while H section is used as the beam. The mostcommon connection system in Special Moment Resisting Framein Taiwan is Reduced Beam Section (RBS) and the combination ofSpecial Moment Resisting Frame (SMRF) system and BucklingRestrained Brace (BRB) system is getting popular for high-risebuildings construction.

Not only for building construction, steel is also a popularconstruction material for infrastructure like bridges. Steel bridgeis adopted due to faster construction period and the lighter weightof the structure. It can apply to different types of bridges likecurved bridge, long span bridge, cable-stayed bridge, arch bridge,long span box girder bridge, rigid frame and truss bridge.

SEAISI, January 2016

2016 SEAISI Conference & Exhibition

CALL FOR PAPERS

Suggested topics:

1. Steel Market Developments and Outlook2. Steel Price Trends and Outlook3. Competitiveness and Sustainability for Steel Industry in ASEAN4. Trends of Investment and Problem of Over Capacity In the Steel Industry 5. Analysis on Steel Trade and the Impact on ASEAN Iron and Steel Industry6. Raw Materials7. New Product Developments8. New Technologies9. Process Improvement10. Quality Improvement11. Development for Steel Applications12. Plant Management13. Environmental Management14. Cost & Energy Savings15. Health and Safety Improvement

Theme: Innovating and Sustaining Competitiveness in ASEAN Steel Industry

For more information and to register please contact

Paper Presentation: Ms. Pichsini Tepa-Apirak, pichsini@seaisi.org

Exhibition, Advertising & Sponsorship: Mr. Eric Lee, ericlee@seaisi.org

Deadline for paper synopsis submission: 9 March 2016Deadline for full paper submission: 20 April 2016

I will present a paper, please send “Guide to Authors”

I will attend the Conference, please send “Registration form”

I need further information on advertising, exhibition and sponsorship

Please fill in your details clearly for us to contact you.

Name (Dr/ Mr/ Mrs/ Ms)

Company:

Address:

Phone: +

Email:

Country:

*Acceptance of papers will be on a first-come, first-served basis. Please note that to achieve a balanced programme, SEAISI reserves the right to accept or reject papers. Presenters will be charged registration fee and the papers must be presented in English.

Conference Registration: Ms. Josephine Fong, ylfong@seaisi.org

JW Marriott Hanoi, Vietnam I 30 May 2016 – 2 June 2016

South East Asia Iron and Steel Institute

No. 2E, 5th Floor, Block 2Worldwide Business ParkJalan Tinju 13/5040675 Shah AlamSelangor, MalaysiaTel: +60 3 5519 1102 Fax: +60 3 5519 1159