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Issue 227 (1481), Wednesday, November 25, 2015

Editorial• Chinese government no longer supports troubled private mills ........................ 2

Interview• Newell Recycling Equipment: “Shredders will process about

40% of all scrap consumed in North America” ................................................ 18

Latest contracts ............................................................................................ 3

MENA• Turkey sees domestic rebar prices weaken again ........................................... 4

• Scrap price unchanged for 10 days contrary to expectations of Turkish mills ....... 4

• Scrap domestic quotes decrease in Turkey on currency fluctuations ............... 4

• Successful sales help Iranian billet exporters hold back price decline ............. 5

• Downward trend in segment of merchant bars and sections continues in UAE .... 6

Asia• Iron ore falls to 10-year low, to deteriorate further ............................................ 7

• Chinese HDG export quotes lose another $15-20/t in November .................... 7

• Price stable in scrap deals from Japan to South Korea .................................... 8

• Fitch Ratings downgrades Indian JSW Steel’s outlook to negative .................. 8

• Malaysia’s Lion Group posts 2-fold increase in net losses in July-September ...... 9

• Australian coking coal stable despite high stocks of unsold material ............... 9

CIS• Financial results of TMK’s Russian division decline on weaker rouble ............ 11

• Ukrainian plate exports affected by weak fundamentals ................................. 11

• Russia’s industrial production falls 3% ........................................................... 12

Europe• German plate becomes cheaper again .......................................................... 13

• Short-term stoppage of ThyssenKrupp’s Hoesch Hohenlimburgto leave market without change ...................................................................... 14

• Good start for Caparo units sale .................................................................... 14

Americas• U.S. Steel decides on future of Granite City Works ........................................ 15

• TMK expects North American pipe market recovery in H2 2016 at earliest ...... 15

• US crude steel production hits abysmal low ................................................... 16

• Latin America’s steel sector trade deficit lower ............................................... 16

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Chinese government no longer supports troubled private millsChina / Billet

A continuous decline in steel prices in China has already resulted in massive shutdowns. Moreover, market playerspoint out that the government is more restrained in supporting private steelmakers this year, which may speed up theprocess of cutting excess capacity in China in the near future.

Since the beginning of 2015 twenty three steelmaking companies have suspended 40 million tpy of BF operations.Most of stoppages took place in the second half of the year, when mills’ losses reached critical levels. “According toestimates, billet producers have been losing RMB 200-300/t or about $40/t, they simply couldn’t survive without helpfrom the state,” a large Chinese trader has told Metal Expert. Most steelmakers gone bankrupt were private steelplants producing mainly square billet. In the previous years Chinese government subsidized mills that were on theverge of bankruptcy even if they were privately-ownedin order to save jobs. However, “it seems that none ofprivate steel mills get subsidies now,” another industrysource has commented. Tangshan Songting Iron &Steel, the largest among companies that wentbankrupt (5 million tpy), shut down the last two BFs inmid-November. Operations at the first four BFs hadbeen suspended back in early August. As a result,about 8,000 sacked employees are trying to get theirpay checks for the last 5-6 months. Still, localauthorities have not offered the company a helpinghand. “The mill was closed mainly because of a$15 million power debt. Knowing how much it coststo renew BF operations, they are unlikely to return tothe market,” a large Chinese trader in Tangshanreported.

Most market players believe the capacity cuts are notenough to support prices. Yet, many of them are surethat the new policy of the Chinese government willresult in far more businesses being closed next year.“The shutdowns can in no way help restore marketbalance and buoy prices, they had no impact onexports at all, but I believe next year small producerswill be squeezed out of the market even more often,”another Chinese billet seller has told Metal Expert.

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Editorial

China: BF shutdowns in 2015Region Steel mill Capacity, million tNorth Tangshan Jiaxin Steel 0.72

Chenglian Steel 0.5

Tangshan Jianyuan Steel Co. 0.3

Tangshan Qingquan Iron & Steel Group 1.5

Tangshan Fufeng Steel Co. 0.6

Tangshan Yuefeng Steel Co. 1

Tangshan Antai Steel Co. 2

Tangshan Xinglong Iron & Steel 2

Tangshan Yutian Jianbang 1.35

Tangshan Songting Iron & Steel 5

Shanxi Wenshui Haiwei Iron & Steel Co 3

Shougang changzhi iron and steel 1.2

Shanxi Chanping Group Industry 1.1

Shanxi Zhongsheng Steel 1.5

North-west Nanjiang Steel Baicheng 3

Bayi Iron & Steel 2.2

Shangang Kashen Steel 1.2

Kunyu Iron & Steel 1.5

JISCO (Jiuquan) Yuzhong 2.2

North-east Sipin Xiandai Steel 1

Jilin Xinda Steel 2

Silin Iron & Steel 2.8

South-west Shougang Shuicheng Steel 2

Total: - 39.67


Latest contracts

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Daily price assessments for steel products and raw materialsCommodity Country Currency, 24 Nov. Daily

delivery term 2015 change

Iron ore China $/t, CFR ex-Australia 43.75 -1

Coking coal Australia $/t, FOB 76.5 +0.5

Ferrous scrap Turkey $/t, CFR ex-USA 200 0

Ferrous scrap Japan JPY/t, FOB 14,100 -150

Square billet China $/t, FOB 240 0

Square billet, 125-150 mm Ukraine $/t, FOB 270 0

Square billet, 125-150 mm Turkey $/t, CFR 285 -3

Rebar, 12 mm Turkey $/t, EXW 354 -1

Rebar, 8-32 mm Turkey $/t, FOB 348 0

Rebar, 12, 32 mm Germany EUR/t, CPT 370 0

Rebar, 16 mm USA $/t, EXW TW 585 0

Wire rod, 6.5 mm China $/t, FOB 267 0

HRC, 3-12 mm China $/t, FOB 265 0

HRC, base Germany EUR/t, EXW 330 0

HRC, 2-8 mm USA $/t, EXW 414 0

MethodologyMetal Expert publishes thefollowing types of prices:

offer price – an offer from asupplier that was not confirmedby buyers as of the time ofpublication;

contract price – a transactionprice confirmed on both seller’sand buyer’s side;

price assessment – MetalExpert’s estimate of a fair pricelevel for a possible transactionin current market conditions.

Latest contracts for steel products and raw materialsCommodity/ Origin/ Consumer Volume, t Price & delivery terms DetailsSpecifications SupplierScrap

HMS 2 Japan South Korea up to 10,000 JPY 13,700/t FOB January-February shipment

Iron ore

Pilbara fines 62% Fe Australia, Rio Tinto China 170,000 $43.33/t CFR December 12-21 laycan

Pilbara fines 61% Fe + lumps 62% Fe Australia China 100,000+70,000 non-fixed December 1-10 laycan

MNP fines 62% Fe Australia China 90,000 non-fixed January delivery

Carajas fines 65.99% Fe Brazil China 176,389 non-fixed December delivery

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MENA

Turkey sees domestic rebar prices weaken againTurkey / Long products

The domestic rebar market in Turkey has continued to weaken despite some suppliers being optimistic. The mainreason is the negative sentiments among the customers, who expect lower prices for longs in the near future. Inaddition nowadays there is no urgent need to restock.

Turkish rebar producers have chosen to decrease local prices amid weaker sales, to $341-367/t (TRY 1,150-1,240/t) EXW vs. $345-375/t (TRY 1,150-1,250/t) EXW a week earlier. Lira prices include 18% VAT, dollar ones donot. The exchange rate is $1 = TRY 2.86. Market players believe that Turkey’s domestic customers postpone bookings,aiming to get more attractive prices for rebar soon due to some downward expectations in the scrap segment. Anotherfactor is that “billet deals from China and Iran were concluded at lower levels and might weaken mills’ positions.” Thecountry’s construction activity is rather satisfactory, with some projects being slowed down due to the political uncertaintyin the region.

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Scrap price unchanged for 10 days contrary to expectations of Turkish millsTurkey / Scrap

Turkish scrap market remains silent. There are no deals; prices remain steady. In particular, the price for Americanscrap has been flat for around 10 days.

Turkish mills are showing minimal interest in scrap imports now as they booked significant tonnages in the first half ofthis month and started to put the price pressure on sellers. Turkish companies wanted lower prices to resume purchases,and are not going to change their tactics. Besides, local rebar market softened recently, as Metal Expert observed.

Nevertheless, none of the scrap exporters have given any discounts so far, preferring to wait. They are holding theirpositions as the winter season is approaching. Some scrap collectors managed to sell all available tonnages. “I don’thave material to offer,” one supplier from the Baltic region commented.

Scrap prices are stable. Nominal quotes for US HMS 1&2 (80:20) are at $200/t CFR Turkey.Back to top

Scrap domestic quotes decrease in Turkey on currency fluctuationsTurkey / Scrap

Turkey has seen a drop in scrap domestic quotes amid revaluation of the national currency against the US dollar.

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MENA

Since the end of last week, many Turkish companies have reduced purchase prices for local material by TRY 20-30/t ($7-11/t at the current exchange rate) due to currency fluctuations. Meanwhile, buying activity has stayedunchanged. “Scrap demand remains the same as before,” a representative of a Marmara-based mill commented toMetal Expert.

By now, the only integrated mill to have refrained from revising prices is Kardemir, keeping them unmoved sinceNovember 10.

Turkey’s domestic prices for scrap are predicted to remain stable in the near future. “Considerable price changes arestill unreasonable,” the respondent added.

Turkey: mills’ purchase prices for scrap(delivered, $1 = TRY 2.84; excl. 18% VAT)Company Grade 21-24.11.2015 Change

$/t TRY/t $/t TRY/t

Colakoglu bonus grade 169 480 -7 -20

extra grade 167 475 -7 -20

Icdas extra grade 162 460 -11 -30

Asil Celik bonus grade 185 525 -9 -25

extra grade 181 515 -9 -25

Cemtas bonus grade 162 460 -7 -20

extra grade 151 430 -7 -20

Yesilyurt Demir Celik extra grade 158 450 -7 -20

Erdemir bonus grade 194 550 -11 -30

extra grade 202 575 -11 -30

Kardemir bonus grade 225 640 0 0

extra grade 222 630 0 0

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Successful sales help Iranian billet exporters hold back price declineMiddle East / Steel Semis

Considering successful sales this month, Iranian billet exporters have left offer prices largely unchanged. This is allamid generally low demand for semis in the region and expectations of price decline for CIS material.

Some tonnages have been booked in the traditional destinations such as the UAE and Eastern Africa at $260/t FOBand under.

http://www.emekboru.com.tr


MENA

What is more, a lot of 20,000 t has been sold to Turkey, which is a relatively new market for Iran, at $260/t FOB($278-282/t CFR), Metal Expert reported earlier.

In these conditions Iranian billet suppliers have maintained January shipment prices mainly unchanged. “We are fullybooked for December shipment now and started negotiations for January,” a major exporter told Metal Expert. Currently130-150 mm 3-5 sp billet is available for Middle East and African customers at $260/t FOB southern ports. Thesuppliers have reduced the upper end price, which was $263/t FOB in early November.

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Downward trend in segment of merchant bars and sections continues in UAEMiddle East / Long products

Downward trend in the segment of merchant bars and sections continues in the UAE. The reason behind that isinsufficient demand and ample supply.

Import prices have decreased by $5-30/t, while those from local and regional manufacturers have lost $20-45/t overthe previous month. Deals are happening but mostly for small quantities of the material. Hyundai Steel has managedto sell 8,000-9,000 t almost entirely for South Korean EPC-contracts in the UAE this month. Al Jazeera Steel hasconcluded deals for approximately 8,000 t in November.

Market players report additional pressure on traditional suppliers is coming from Evraz which is quoting 200-400 mmbeams at $430/t CFR. “We have not managed to sell much to the UAE this month. People are waiting and watchingand when somebody offers such a low price, it is difficult to match,” one of the suppliers told Metal Expert.

UAE: prices for merchant bars and sections, $/t (AED/t)(theoretical weight, $1 = AED 3.673)Origin/supplier Product/size Steel grade Delivery terms Offer M-o-m

Domestic mills’ market

Emirates Steel Industries HEA/HEB, over 200 mm; UB, over 254 mm S275JR delivered 480-490 -20

Imports

Bahrain (United Steel Company (SULB)) HEA/HEB, IPE, over 200 mm S275JR CPT 490-500 -20

Oman (Al Jazeera Steel) equal angle, 40-100 mm; UPN, 75-100 mm S235JR CPT 410-420 -45

Oman (Al Jazeera Steel) square bar, 12-50 mm; round bar, 16-50 mm S235JR CPT 410-420 -45

China* HEA/HEB, 100-300 mm SS400B CFR 310-330 -5-15

South Korea (Hyundai Steel) IPE, HEA/HEB, 100-600 mm S235JR/S275JR CFR 470-490 -30

* – weight tolerance is 5%.

Note: the material of non-GCC origin is subject to 5% import duty in the country.

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Asia

Iron ore falls to 10-year low, to deteriorate furtherChina / Iron Ore

Iron ore prices fell to new record low in at least ten years, as buying continued to ebb in China. With no signs ofimprovement seen during the lean winter season, prices are expected to continue falling in the near future.

Australian iron ore fines 62% Fe lost $1/t over a day, coming to CFR 43.75/t CFR on Tuesday. “Outlook is very bad, asthere have not been many trades recently. Mills prefer buying under month’s average to mitigate losses,” a trader toldMetal Expert.

The number of transactions being low in platforms for quite a while already, has deteriorated at ports as well. “Heavysnow in the north of China and higher truck expenses as a result, deterred many mills from buying spot iron ore,” atrader said. In November port inventories have gained around 3.5 million t so far as compared to the previous month.

Slowdown of China’s economy since last year has resulted into lower steel consumption and dramatic state of steelindustry, with many firms forced to readjust production plans and a number announced bankrupt this year. Crudesteel output in China fell by 2.2% in January-October on annual basis, but deeper reduction will be observed inmonths to come amid heavy losses.

“I really do think the steel market will remain weak for at least the coming year. I think the iron ore price will remain inthe low $40/t CFR range for that amount of time – and possibly longer,” said Li Xinchuang, executive vice secretary-general of China Iron & Steel Association (CISA). The forecast is fully in line with market expectations, with manytraders and mills see iron ore bottoming at $40/t CFR this year.

China: deal prices for iron ore, $/tProduct Fe, % Sales mode Volume, t Laycan Price, CFR Qingdao Price, FOB

Pilbara fines, Australia 61 tender, Rio Tinto 170,000 December 12-21 43.33 38

Pilbara fines + lumps, Australia 61+62 COREX 100,000+70,000 December 1-10 non-fixed -

MNP fines, Australia 62 globalORE 90,000 January* non-fixed -

Carajas fines, Brazil 65 globalORE 176,389 December* non-fixed -

* - delivery.

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Chinese HDG export quotes lose another $15-20/t in NovemberChina / Flat Products

Chinese HDG export prices have dropped again on low bids from buyers in the main sales markets. However, Chinesesellers have noted some improvements in demand during last weeks.

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Asia

Chinese large mills are offering HDG (1 mm Z120) mostly at $350-365/t FOB now, which is $15-20/t lower thanthree weeks ago. Traders are selling HDG coils at almost the same level, as mills, but “...it’s too hard to achieve dealsat our price now,” one Shanghai-based re-seller told Metal Expert. He also noted that European buyers are insistingon $20/t discounts as minimum. Some contracts have been signed at $350/t FOB with Asian buyers.

However, some sellers have informed Metal Expert about better demand over a couple of last weeks after pricesfell again. Some mills (Benxi Iron & Steel and Handan Steel) have already started offering HDG for Februaryshipment, closing order books for January last week. As a result their offers are at the upper end of the generalrange at the moment.

Local market has also continued to weaken over the corresponding period. Domestic quotes have lost another $16-19/t (RMB 80-100/t) over three weeks.

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Price stable in scrap deals from Japan to South KoreaFar East / Scrap

A mill from South Korea bought scrap from Japan at the price unchanged from the latest deals, but below the currentoffers. This, however, did not drag the whole market down, and prices remained above the level desired by buyers.

South Korea’s Hyundai Steel booked around 10,000 t of HMS 2 from Japan at JPY 13,700/t FOB ($112/t,$1 = JPY 125.59) FOB, late January shipment, JPY 300-800/t ($2-7/t) below the levels offered since the middle ofNovember. The discount was provided due to deterioration of the alternative markets in the rest of SE Asia. Demand inVietnam and Taiwan is weakening day by day and there are no signs of improvement in the local market of Japan. This,however, did not impede other suppliers from Japan to maintain FOB offers at JPY 14,000-14,500/t ($114-118/t).

Deals with the US scrap collectors working in the region have been absent for quite a while. Exporters continue tooffer HMS 1&2 (80:20) to Taiwan at $160-164/t CFR, but buyers are all bidding below $150/t CFR. HMS 1 is nominallypriced at $175/t CFR South Korea.

Russian A3 price is also staying at $168-170/t CFR, without any particular demand in South Korea.Back to top

Fitch Ratings downgrades Indian JSW Steel’s outlook to negativeIndia / Flat Products

International rating agency Fitch Ratings has reduced the financial forecast of India’s JSW Steel due to drastic decreasein its financial results coupled with significant debts generated for the implementation of the production extensionprogram in 2015-2017.

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Asia

Financial forecast for JSW Steel has been changed from stable to negative, while general company’s ratingremains BB+. Fitch Ratings explains the decision by lower financial results of the company. Net profit of JSW Steel inQ2 of 2015-2016 fiscal year (July-September) fell by 85% year-on-year to INR 1.17 billion ($18 million), as MetalExpert reported earlier. Additionally, the company has a large debt of INR 308 billion ($4.6 billion), which, according tothe report of the rating agency, will not be easy to pay off due to persistently falling prices for steel products in theglobal market.

Fitch Ratings reports that “financial profile is to improve significantly in fiscal 2017-2018 with the benefits from capexdriving higher sales volume and improvement in profitability.” Currently, JSW Steel intends to expand Dolvi plant’scapacity to 4 million t from 1 million t of flats. Additionally, the company plans to build Salboni and Jharkhand integratedplants, each with capacity of 10 million tpy.

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Australian coking coal stable despite high stocks of unsold materialAustralia / Coal

The lull continued in the Australian coking coal market this week. Suppliers were struggling to sell out the stockpiledmaterial ahead of the year end.

Malaysia’s Lion Group posts 2-fold increase in net losses in July-SeptemberSouth East Asia / Flat Products

Financial results of Lion Group dropped in the third quarter of 2015 (July-September) because of a price decrease inview of high competition from cheap imports and weaker national currency.

The company’s revenue fell 44% to MYR 340 million ($81 million) over the period under review. Net losses increasedmore than 2 times to MYR 176 million ($42 million). The main reasons behind the worsening were increased importsof cheap products in Malaysia and losses from currency transactions of MYR 74 million ($17.6 million) amid weakernational currency. Malaysia’s national currency depreciated by more than 10% over the period. “The weakening ofringgit resulted in a default of the partial redemption of the bonds denominated in US dollars,” the Star news agencyreports, citing the company’s management. As a result, several subsidiaries of Lion Group have been forced toannounce cross default for a total of MYR 117 million ($27.8 million).

Besides, a 15-20% rise in imports of steel products in July-September (according to the Ministry of International Tradeand Industry, MITI) remains a major problem for the company. In September, Lion Group’s subsidiary Megasteel SdnBhd filed a petition to increase the duty on HRC imports, which at the time was 17.4%. Lion Group’s total rollingcapacity is about 7 million t, 3.2 million t being the capacity for HRC.

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But with prices being already very low, sellers at the same time were unwilling to back down. High-quality cokingcoal was available at $75-78/t FOB.

Offers to China somewhat increased, albeit just nominally. Premium-quality coal was quoted at $81-83/t CFR, thelower end of the range gaining $1/t over a day. Second-tier coal prices remained on downward track though. Early thismonth, the gap between premium and second-tier material started shrinking, but now they are returning to balance –the latter is priced at $75-77/t CFR.

Chinese buyers still need little to no additional volumes of import coking coal since local coke plants are running under70% of capacity, which is unlikely to improve, Metal Expert estimates. This fact weighs on the coal segment as well.

Offer prices for coking coal, $/tProduct Ash, % Volatiles, % Sulphur, % Origin Delivery terms Price D-o-d

Hard 8-10 19-24 0.5 Australia FOB Hay Point 75-78 +0.5

Semi-soft 9 30-36 0.5-0.6 Australia FOB Gladstone 60-62 0

Low-vol PCI 8-9 9-12 0.6 Australia FOB Dalrymple Bay 64-66 0

Hard 8-10 19-24 0.5 Australia CFR Jingtang 81-83 +0.5

Hard 9-10 20-25 0.7 China CFR (with 17% VAT) 82-87* 0

* – contract price.

Note: more coal prices are available in World Coal News.

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Asia


CISFinancial results of TMK’s Russian division decline on weaker roubleCIS / Tubes & Pipes

TMK’s Russian division reported lower financial results for nine months of 2015 due to the weaker rouble. A year-on-year rise in pipe products sales of 7% failed to improve the overall financial performance.

In January-September, the company revenue lost 20%. However, without the exchange losses, “revenue would haveincreased by $996 million,” the company press release states. Gross profit went down by 8%. Adjusted EBITDAslightly increased (+1% y-o-y) thanks to lower selling and administrative expenses.

According to Metal Expert’s data, TMK’s EBIT/t rosefrom $128/t in nine months of 2014 up to $139/t in2015.

In Q4 2015, TMK expects that better demand forOCTG pipes will help the company improve itsfinancial results.

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Key financial results of TMK’s Russian division, $ million9 months ’15 9 months ’14 Y-o-y

Shipments, ’000 t 2,440 2,286 +7%

Revenue 2,428 3,025 -20%

Gross profit 613 667 -8%

Adjusted EBITDA 457 451 +1%

EBIT/t ($/t) 139 128 +8%

Ukrainian plate exports affected by weak fundamentalsCIS / Flat Products

Ukrainian plate exporters are depressed by dull fundamentals in the overseas markets. Lack of demand is forcingthem to follow the downward trend, as well as to cut or even stop plate operations (at some mills). Moreover, thesituation is unlikely to improve in the short term.

Ukrainian plate price dipped by $10/t since the middle of November and will sink further, market insiders think.“Requests are scarce, that is the main problem,” a source told Metal Expert. In the Middle East, December plates arebeing offered at $295/t FOB Black/Azov Sea for base. In the UAE, in particular, plates (S275JR) are being quoted at$325/t CFR, with no buying interest though. Customers have been shunning new deals for quite a while, regardlessof the product origin. There were no bookings recently heard in Turkey as well, where prices are standing at $345-350/t CFR (gr.A).

In Europe, the situation is also far from being optimistic. “Many customers have already bought needed volumes(including ex-China) for the end of this – beginning of next year. I don’t think demand will revive any time soon,” aninternational trader commented. Prices in the range of EUR 320-325/t DAP reflect the offered level rather than theworkable one.

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CIS

Russia’s industrial production falls 3%CIS / Flat Products

Russia’s industrial production dropped 3.3% year-on-year in January-October.

According to the Federal State Statistics Service of Russian Federation, the biggest reduction was registered inmachine building. In particular, production of freight cars slumped 53.4%. Output of motor cars declined by 23.2%,buses by 16.6%, trucks by 18.3%.

Industrial production in Russia showed a 5.2% month-on-month rise in October, but decreased 3.6% y-o-y. The increasewas attributed to rising mining sector and machine building. Freight cars output rose by 0.7%, trucks by 4.8%.

Apparent consumption of uncoated flat products amounted to 14.2 million t in January-October, down 2% y-o-y, thatof coated products totalled 4.44 million t (-10.8%), Metal Expert estimates.

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Europe

German plate becomes cheaper againWestern Europe / Flat Products

Further price slump has been registered in the plate market in Germany. Sanguine insiders believe that plate quoteshave hit the bottom; others are not excluding downticks in December.

Traditional destocking amid accounting period approach, bleak demand and oversupply have resulted in anotherprice drop both for domestic and European plates in Germany. Since early November plates of local production withdelivery in January-February have lost EUR 20/t, dropping to the level of EUR 380-390/t EXW (without 19% VAT).Even a big order of 170,000 t of material supplied by Salzgitter and Dillinger to EUROPIPE for the TAP project has notprevented price cuts. “Supply for the TAP project may only lower dependence of German mills on unprofitable commoditygrade segment,” an EU plate market analyst told Metal Expert.

Strong competition has pushed prices for European plate to Germany down as well. Reportedly, it is possible to buymaterial of Czech and Poland suppliers EUR 20-25/t cheaper that three weeks ago, at EUR 380-385/t CPT east.Italian plate has lost EUR 10-15/t due to slab prices softening and remains the most competitive being offered atEUR 355-360/t CPT south of Germany.

There is no appetite for Chinese plate while its prices denominatedin Euro are stable because of currency fluctuations. “Lots of materialfrom China is on the way and will arrive in February-March 2016,demand for Chinese material is not strong in Antwerp now,” aGerman trader said.

The situation will remain stagnant. The only way to support platemarket is hurrying up with anti-dumping investigation, insidersbelieve.

Germany: prices for S235JR plate, below 40 mm, January-February delivery EUR/t(without 19% VAT, EUR 1 = $1.064)Market segment/supplier Delivery terms Price 3-week changeDomestic marketThyssenKrupp, Salzgitter Ilsenburger EXW 380-390 -20ImportCzech Republic (Vitkovice Steel) CPT east of Germany (EXW) 380-385 (340-345) -20-25Poland (ISD Huta Czestohowa) CPT east of Germany (EXW) 380-385 (340-345) -20-25Italy (re-rollers) CPT south of Germany (EXW) 355-360 (320-325) -10-15China CFR Antwerp 282-296 ($300-315) -1/0 (-10)

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Germany: plate prices, EUR/t

270

290310

330350

370390

410430

450470

490

04.09 18.09 02.10 16.10 30.10 13.11 27.11

Domestic prices, EXW, excl. VATImport f rom third countries, CFR Import f rom EU, CPT

https://www.steelexplorer.com


Europe

Short-term stoppage of ThyssenKrupp’s Hoesch Hohenlimburg to leave market without changeWestern Europe / Flat Products

German hot rolled steel strip and special profiles producer, ThyssenKrupp’s asset, Hoesch Hohenlimburg, situated inHagen intends to suspend production for a while to modernize equipment. Upgrading will not influence the market.

In the last two weeks of the year the company is going to stop production to provide modernization of its laser weldingmachine at the pickling line. Meanwhile, there will be no gap in supply as Hoesch Hohenlimburg has enough materialin stock. “As a result of investments in a laser welding machine in the pickling line, Hoesch Hohenlimburg will have anintermit at the site – only from December 14 to January 2. To fully ensure customer supply during this period we haveproduced material in advance,” a representative of ThyssenKrupp commented for Metal Expert.

Hoesch Hohenlimburg has hot strip mill capable of producing 1.7 million tpy of hot rolled narrow strip for cold rollers,automotive manufacturers and ancillary industries, according to Metal Expert data. Domestic shipments account for80% of the company’s sales. Around 20% of produced material Hoesch Hohenlimburg is exporting to Italy, Switzerland,Spain, Austria, France, USA, Brazil, Sweden, Poland, Czech Republic, Belgium, Sweden, and China.

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Good start for Caparo units saleNorth Europe / Long products, Flat Products

One of the victims of the UK steel sector crisis, Caparo Steel Industries, has already managed to sell 2 of its 16 unitsput on sale, just one month after getting into administration. The search for buyers for its other units is going on.

The first saved company’s unit Caparo Wire in Wrexham, North Wales, specializing in the manufacture of high-qualitygalvanized and engineering steel wire, has been sold to the UK private investor Rcapital, local sources report. Anotherpart of Caparo, Testing Technologies, became a property of testing, inspection and certification company Applus+,administrators PwC confirmed. These deals resulted in 155 saved jobs in the West Midlands. The details of the dealshave not been revealed.

Caparo Steel Industries operating 20 production sites in the UK (tube and strip plants), US and India was not able tocope with heavy losses and failed for administration on October 18, Metal Expert earlier reported. Since that time thecompany has been looking for buyers for its 16 businesses.

Caparo Industries fell another victim to cheap Chinese imports, high electricity tariffs and falling steel prices, asMetal Expert understood from the local sources. Caparo Industries slipped into red in 2014, generatingGBP 700,000 operating loss in the contrast with GBP 3.1 million profit in 2013. The company’s UK operations reporteda GBP 2.5. million operating loss in 2014, down from GBP 1.7 million profit in 2013.

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Americas

U.S. Steel decides on future of Granite City WorksUSA / Flat Products

U.S. Steel, a major US steelmaker, finally decided to idle steelmaking and finishing operations at Granite City Works,Illinois, the primary flat-roll supplier for the oil and gas industry. The company stressed that the idling is a part of theconsolidation process of its North-American flat-rolling operations.

U.S. Steel has not determined when it will shut down the asset, but that could happen in early December, taking intoaccount a 60-day layoff warning notice to workers (a legal requirement when mass layoffs are contemplated), whichwas issued by the company in early October. There is also no exact information regarding the idling period, which willdepend on the market conditions.

The decision to idle Granite City Works “is a result of continued challenging global market conditions including fluctuatingoil prices, reduced rig counts and associated inventory overhang, depressed steel prices and unfairly traded imports,which continue to have a significant impact on the business,” Metal Expert learnt from the press release.

Specifically, WTI oil price has dropped 20.4% since the start of the year and 44.7% year-over-year, coming to$41.92/bbl, according to the Bloomberg agency. Besides, rig count in the USA has plunged 58.2% to 757 unitsthis year, according to the latest data compiled by the Baker Hughes Inc. “The count is now at its lowest level sinceApril 19, 2002, and down 1,172 units year-over-year,” BHI said.

As Metal Expert reported earlier, back in the second half of March, the steelmaker was talking about a temporarystoppage of Granite City Works “on May 28 at the earliest,” citing unfavourable market conditions. In end-May, however,it backed down on the idea, announcing that the facility will keep running, albeit with only one BF on stream.

Granite City Works is the main supplier of flats for Lone Star Tubular Operations, the holding’s asset in Texas, whereproduction was indefinitely suspended back in end-January as the energy sector, which consumes the bulk of theplant’s output, was depressed at the time.

Granite City Works is designed to produce 2.8 million short tons (2.5 million t) of steel annually.Back to top

TMK expects North American pipe market recovery in H2 2016 at earliestUSA / Tubes & Pipes

The North American division of Russia’s TMK reported weaker financial results for nine months of 2015 due to asignificant decrease in both seamless and welded pipe shipments and the unfavourable pricing environment.

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Americas

The company management mentioned that till the end of 2015 demand for OCTG will be low amid a decline indrilling volumes, while a gradual recovery in the segment “is not expected until the second half of 2016.”

The key elements for Northern American pipe market recovery are “oil price growth, an increase in drilling volumesand stable or improved monthly inventory reduction,” the company stressed. However, it is too early to say about suchchanges in the segment.

Specifically, during Q3, rig count fell about 5% compared to Q2, following a continued decline in oil prices. “Pipe Logixdata shows that in Q3 2015 the average composite OCTG seamless and welded prices decreased by 9% and 8%respectively, compared to Q2 2015,” Metal Expert learnt from the press release.

Financial performance of TMK’s North American division, $ million*Indicator Q3 ’15 Q2 ’15 Q-o-q Q1-Q3 ’15 Q1-Q3 ’14 Y-o-y

Shipments, ’000 t 98 83 +19% 365 742 -51%

Revenue 152 150 +2% 629 1,274 -51%

Gross profit -10 -8 +37% 23 149 -85%

EBIT/t, $/t - - - -160.8 51.4 -412.8%

* – according to TMK.

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US crude steel production hits abysmal lowUSA / Long products, Flat Products

The US steel market has been seeing a galloping reduction of the production rates for the eighth consequent weekamid the adverse market conditions. Last week, production dropped to the lowest level since the first week of January2010. A steep fall has been registered in almost all regions.

Last week, mills reduced crude steel production by 2.4% to1.562 million st, according to the data compiled by the AmericanIron and Steel Institute (AISI), which is 15.8% below the previousyear number. Capacity utilization rates dipped 1.7 p.p. to 65.3%.

Crude steel production in the Great Lakes and in the Midwest fellby 4.5% to 555,000 st and by 4.2% to 205,000 st respectively.Mills in the southern part of the US cut production rates by 1.5% to523,000 st, in the Northeast by 0.5% to 194,000 st.

Meanwhile, steelmakers in the West Coast increased productionby 6.3% to 85,000 st.

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Production and capacity utilization ratio of US mills

1,55

1,60

1,65

1,70

1,75

29.08 19.09 10.10 31.10 21.1164

65

66

67

68

69

70

71

72

73

74

Production, mln net tonsCapacity util ization rate, %

Source: Metal Expert, AISI

Latin America’s steel sector trade deficit lowerSouth America / Long products, Flat Products

The steel sector of Latin America is still suffering from huge volumes of imports, which occupy 35% of the regionalconsumption of finished steel, bringing “disincentives for the local producers.” In these conditions, steelmakers of theregion have to follow the only available policy of moving tonnages out to foreign markets.


Latin America: finished steel sales, ’000 t*Export Import Trade balance

January-September 2015 6,730 18,482 -11,751- January 695 2,442 -1,747

- February 544 2,019 -1,475

- March 775 2,083 -1,308

- April 523 2,094 -1,571

- May 755 1,995 -1,239

- June 796 1,920 -1,124

- July 921 2,061 -1,140

- August 854 1,874 -1,021

- September 867 1,994 -1,127

January-September 2014 6,073 17,987 -11,914* – according to Alacero.

Over the nine months, exports added 11% in comparison with the same period of 2014, reaching 6.7 million t.Imports however also increased, coming up by 3% to 18.5 million t during the same period, Metal Expert learnt.

Import pressure is forcing local producers to cut production rates. Crude steel production dropped by 2% on anannualized basis, coming to 48.3 million t, with Brazil accounting for 52% of this volume. Production of finished steelin Latin America totalled 40.3 million t, 4% less than inthe same period of 2014.

Nine-month regional steel consumption reached52.2 million t, losing 2% y-o-y.

As a result, the regional trade balance remainsnegative, although the deficit in tonnes in January-September was 1.4% lower in comparison with thesame period in 2014, reaching 11.7 million t. Brazilwas the only country in the region, which registered asurplus in the finished steel market (+1 million t), whileMexico reported the largest deficit (-5.2 million t) duringthe period.

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Americas


Interview

Newell Recycling Equipment: “Shredders will process about 40% of all scrap consumedin North America”USA / Scrap

Olga Yakymchuk, Metal Expert

Large-scale investment in ferrous scrap processing facilities made byrecycling companies during the last few years resulted in overcapacity, whichis putting pressure on the scrap industry. Despite this, Scott Newell, theChairman of Newell Recycling Equipment (USA), whose family was one ofthe originators of modern shredders, is confident that producers of scrapprocessing equipment do have a future. Metal Expert met Mr. Newell at BIRWorld Recycling Convention (Round-Table Sessions), held in the CzechRepublic on October 25-27 and covered the most significant issues relevantfor the scrap market. He agreed to discuss the recent trends in the steelscrap segment, shredded in particular, role of equipment suppliers andadvantages of new technologies

Newell Recycling Equipment was a pioneer in such technology of scrapprocessing as shredding. How has the scrap market changed fromthat time and what changes do you see in processing equipment?

The Newell family has been involved in shredding since my father inventedthe modern shredder in 1960. During that time we have seen a long evolutionfrom a simple shredder that could only shred 10 t per hour of very light ferrous scrap, to giant machines with 10,000HP that can produce 400 t per hour. The original machines were manually controlled and it took about 1 man hour toprepare each tonne of scrap. Today’s machines are computer controlled, shred heavy scrap and do it safely and withvery efficient environmental controls, while using about 1/10 of a man hour per ton produced.

In 1960, the first shredders were installed and operated. By 1980, there were around 200 shredding plants in theworld, by 2000 there were around 600 and by 2015 there are around 900 shredders operating. These machines willprocess about 40% of all scrap consumed in North America.

During the 1990’s the American Society of Mechanical Engineers awarded the Newell Shredder the designation as aNational Engineering Landmark because it was a machine that changed the way that an entire industry operates.

What are the advantages of shredded scrap use?

Shredded steel scrap has several advantages over other types of scrap particularly when used in an electric furnace.I will mention just some of them. There is a high yield of hot metal. The chemistry of the crude steel is more uniformheat after heat, hot metal contains less sulphur and phosphorus. Shredded scrap has good density, which means lessback charges in order to reach furnace capacity. When shredded scrap is mixed with other feedstock it fills the voidsproviding a more dense mix. Moreover, there are less electrode breakage, longer furnace lining life, less electricconsumption and air pollution.

Is the scrap recycling sector really affected by the overcapacity problems? What is the current utilization rateof scrap processing facilities?

There is definitely more scrap processing capacity in the industry than the market justifies and this will result in theleast efficient producers being punished.

Scott Newell, Chairman,Newell Recycling Equipment


Interview

We say that in a free market the margin available for processing will always shrink to the breakeven point for theleast efficient producer. The trick is to not be such a company. Therefore progressive scrap processors always areimproving their shredding equipment by investing in the latest technology. In today’s world that means not only investingin better shredding plants but also investing in more efficient and more cost effective plants for recovering valuablenonferrous metals and other valuable items such as plastic, from the ASR (auto shredder residue).

It is our estimate that the utilization rate of scrap processing facilities that are operating are about 50% of capacity anda number of shredding plants have been closed and some of those plants are being dismantled so it is difficult to saywhat the overall utilization rate might be at the moment.

In 2015, global crude steel production is reducing from month to month creating the preconditions for adecrease in scrap consumption, and shredded scrap in particular. How does that impact demand for scrapprocessing equipment?

Global steel production is falling and that does decrease the market for scrap tonnages. It is our belief however thatas scrap is not manufactured, we say, “Scrap happens,” therefore what scrap is there will always be priced for lowercosts than utilizing raw materials like iron ore, and the coal that is required to smelt the ore to make iron and then theenergy that is required to make steel. We believe that the market will eventually utilize all scrap because it will alwayscost less to make it into new steel and it will do so with processes that are much more energy efficient and that aremore friendly to the environment. The price decreases are painful but as mentioned above, the market will reward themost efficient producers and will punish the least efficient producers.

This does impact equipment suppliers in the same way that it affects the scrap processors. The makers of the mostefficient and cost effective equipment will survive and be rewarded and the makers of less effective equipment will beousted by the market.

Currently, many steel producers in different parts of the world feel strong pressure from China. Do you feelthe influence of this factor in the segment of equipment?

Countries that try to protect domestic industries rather than adapt to the market conditions of the world will eventuallynot produce the best standard of living for their citizens. We believe that the free market will eventually win all ofthese battles.

China at this time, and for domestic political reasons such as employment of Chinese citizens, continues to manufacturenew steel at around 700 million t which is more than 50% of the world’s production. As China does not now consumeanywhere near this much steel domestically, Chinese steel is being exported to the rest of the world at costs that arebelow manufacturing costs in many parts of the world. This will result in a reduction of tonnes produced in those parts ofthe world and it will push for technological improvements in efficiency. The market works slowly, but it always is trying tofind the balance between supply and demand. We do not doubt that this will happen in the world steel industry also.

What are your estimations regarding perspectives of shredders and other scrap processing equipment againstthe background of the steady downward trend in raw material segment?

We do think that the reduction in demand for scrap processing equipment will impact outsiders and it will reward thosecompanies which make the best machinery. We think that the same principles apply to the scrap processors. The bestprocessors will prosper the others will be punished. This system works to continually produce better results. It can bepainful for those being punished but in the long run the world will benefit.

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