sbb briefing 5 jun 12

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Tuesday, 5 Jun 12

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Exchange rates5 Jun 2012currency rate +/-GBP/USD 1.538 +0.008EUR/USD 1.244 +0.012EUR/GBP 0.808 +0.003EUR/JPY 97.16 +0.910GBP/JPY 120.2 +0.616USD/JPY 78.12 +0.009USD/RMB 6.364 -0.006

Platts SBB Prices& IndexesWorld price +/-World HRC $/t 664 -15World Rebar $/t 668 -17IndexesSBB World 236 -7Europe Flat 169 -4Europe Long 219 -2Asia Flat 207 -3Asia Long 314 -6N.America Flat 202 -4N.America Long 243 -3

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TODAY'S TOP PLATTS SBB HEADLINES Display by region

Russian rebar market moves up, propped by speculative buying $ Posco considers lower CRC export prices to China $ Billet, long products prices head south in SE Asia $ US shredded scrap looking tradeable below $400/lt $ Hot rolled coil price continues to weaken in Poland $ Sidor’s rebar output jumps 123% m-o-m in May

CIS Long Products Special Report: Russian railways need more long rails

Asia Flat Products Chinese HRC prices continue downwards $ Long Products N.China's billet prices steady; direction unclear $ Taiwan rebar makers hold prices after strong bookings $ N. China's rebar prices soften; futures s lump $ Hyundai raises domestic rebar prices for June $ Stainless & Specialty Steels Japan to raise stainless AD issue in steel talks with China Raw Materials & Scrap India's RINL close to securing first captive iron ore mine Corporate & Industry China's steel industry PMI plunges in May

Europe Flat Products Sheet market in Turkey fears economic fragility, trade s low $ France launches ‘expert’ study of Florange’s prospects Turkish sheet imports down 17% in April, may pick up in Aug Long Products Izdemir foresees increased sales to MENA, hikes output in Q1 Tubes & Pipes S. European welded tube down by €50-60/t s ince mid-April $ CMC sells Croatian pipe mill Stainless & Specialty Steels Voestalpine optimistic for special steel divis ion Raw Materials & Scrap Turkish scrap imports up 41% in April on higher steel output

North America Long Products American MBQ prices still holding as buyers watch scrap $ SBQ price to hold steady in the US this summer $ Raw Materials & Scrap Special Report: US scrap dock price fall mirrors home market $ Corporate & Industry US buyers see s lump in business, plan to stay close to home US crude steel output continues three-week decline Canadian PMI reports strongest growth in eight months

South America Flat Products Brazilian flats, semi-finished exports rise in May Tubes & Pipes Argentina's tubes market s lows down in 2012 Corporate & Industry Outotec completes acquis ition of Brazil's Demil

Middle East Tubes & Pipes India's Jindal SAW targets end-2013 for Iraq pipe mill start Corporate & Industry Arab Iron & Steel Union appoints new chairman

World

Tuesday, 5 Jun 12 © Steel Business Briefing 2012 1/14

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Corporate & Industry China to adopt WTO raw materials recomendations by year-end $ = Steel Price Story

Russian rebar market moves up, propped by speculative buyingThe Russian rebar market is seeing a selective 2% month-on-month price uptick in June. Some distributorsbelieve most mills will attempt a further comparable increase in July, but others are more cautious. TheJune increase – driven by currency movements and growth in speculative rather than real demand – isunlikely to repeat in July, several stockholders across the country told Platts Steel Business Briefing.

“Severstal, MMK and BMZ have kept their May prices unchanged for this month, but Evraz and NLMKraised offers by 2-2.5% to 25,700-26,000 roubles/tonne ($759-768/t) for 12mm diameter materialdelivered in Moscow, including 18% tax. Cheaper material is available at 25,100-25,300 roubles/t,” aMoscow-based stockist said. He believes the other mills will catch up in July and there will no such gulfbetween higher and lower prices next month.

Another Moscow distributor reported transaction prices of 25,450-25,150 roubles/t delivered with VAT for12-14mm rebar. In Yekaterinburg, distributors can get this for 22,600 roubles/t on the same terms. Rebarprices in the Urals and more so in Siberia are consistently lower than in central Russia owing to theproximity of some major producers.

The ex-stock market will try to take advantage of the slightly improved sentiment even before July. Anumber of distributors are looking to raise their prices by 200-300 roubles/t already this week, and will tryto add another 100-200 roubles/t in the remainder of June. The outsell price for 12-14mm rebar in Moscownow totals 25,800-26,200 roubles/t.

However, it is traders who account for most of the increase in buying activity, one distributor noted,pointing to accelerated deals between distributors on limited readily available material at mills. “Realdemand from end-users has been growing very slowing since April-May and so far is yet hardly sufficient tojustify further increases”, said another trader.

“Evraz has said it’s going to decrease long product exports shortly, so we expect somewhat excessiverebar inflow to the domestic market. At the same time, Russia’s Central Bank is taking measures to stopthe rouble’s fall, so factors that favoured a price increase this month may well be exhausted by July”, thetrader added.

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Today's issue is sponsored by Salzgitter Mannesmann International

Posco considers lower CRC export prices to ChinaKorea’s exports of cold rolled coil to China have stayed dull due to weak demand and low bids from Chinesebuyers. Posco, Korea's largest CRC exporter, had initially tabled its export prices recently for July shipmentsof commercial grade 1mm thick CRC at $765/tonne cfr Hong Kong, equivalent to $730/t fob, but retreatedin the face of resistance from Chinese buyers.

“Buyers feel this price is too high to accept. We’re now waiting for new offers from Posco,” a Korean tradersaid. Posco also offered $730/t fob for June shipments, as reported.

“Market sentiment for CRC in China has worsened compared with the previous month,” a Posco source toldPlatts Steel Business Briefing. Overall demand from most steel-consuming sectors, such as construction,automotive and home appliances, is in really bad shape and both China's domestic and export marketsare struggling with seriously poor demand, he added.

The source refused to disclose the ongoing CRC export prices but said; “We’re doing our best to maintainthe current export prices but may have to lower them by $10-20/t to close deals later.”

China is expected to launch new stimulus schemes to boost ailing manufacturing sectors such asautomotive and home appliances, while subsiding growth in rural areas, as reported. “The new policy willonly be effective in stimulating the economy in the short-term,” another trader said.

“It will be unable to radically change the current economic depression,” the Posco source told Platts SBB.



Billet, long products prices head south in SE AsiaBillet import offer prices fell to $630-640/tonne cfr Southeast Asia at the end of last week, regional tradingsources told Platts Steel Business Briefing. This was $10/t below from the previous week.

Importers continued to stay away, anticipating that prices will continue falling. A regional trader, who hadheard of an offer for Russian billet at $620/t cfr late last week, blamed the weakened equity and currencymarkets for poor sentiment for steel.


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Offers for Korean-origin billet last week at $640/t cfr Philippines attracted few takers. In Indonesia,importers' bids were at $620-625/t cfr. Russian-origin billet concluded at $630/t cfr Indonesia two weeksago, a trader reported.

Meanwhile, offer prices for 6.5mm and 8mm diameter mesh-grade boron-added wire rod from China arenow around $620/t cfr in Vietnam and Philippines, compared with $640/t cfr two weeks ago. Offer prices forChinese theoretical-weight 16mm and up boron-added rebar are prevailing at $610-620/t cfr Singapore,down by $15-20/t from two weeks ago. Some buying took place at around $615/t cfr Singapore. Tradingsources told Platts SBB that certain market players are inducing bids from importers in order to makedeals in an inactive market. "These are not genuine offers but (are just) some traders fishing for workableprices," a Singapore trader said. Some “reliable mills" are still offering rebar at $650/t cfr and wire rod,$670-680/t cfr, he said, adding that these offers are negotiable.

A Thai trader said the heard of induced bids at $630/t cfr Thailand and believed that they were "fishing andtesting the water." While there are firm offers at $640/t cfr, Thai importers are bidding at $610/t cfr becauseof the weak baht, he added.



US shredded scrap looking tradeable below $400/ltUS shredded scrap prices in June are poised to sink below $400/long ton for the first time since December2010, with anticipated lower-than-average buying programs from domestic steel mills.

A few early deals consummated prior to this week have been reported into Ohio mills at $395-405/l.tdelivered although the $405/l.t price is considered no longer attainable this week. Many considered marketchatter Monday from both mills making deals and scrap dealers making firm offers to be quiet. Questionsnow remain on how much tonnage scrap dealers will sell into this market and what mill consumption willultimately look like.

The latest developments move the Platts daily assessment for shredded scrap delivered midwest mill to atradable value of $395-400/l.t, around $35-40/l.t lower than the level at which most May deals wereconcluded.

"The mills have the hammer and they are going to nail it pretty good," one midwest scrap dealer said. "Themills are going to jump on it. You are not going to stop this, if (moving down) $40-50 helps us get to thebottom, let's get to the bottom."

One deal was heard for a prime grade of scrap into the south at $405/l.t, but there is uncertainty in themarket where other non-shredded grades of scrap will settle for this month, with the most pricing pressureexpected to be put on prime grades due to elevated supply.

"There will be reduced (purchasing) programs," one northeast scrap yard source said. "I think considerablyless but not devastating."

A northeast mill who routinely purchases 10,000 t of shredded scrap is only taking 5,000 t this month, "asign of the times" according to a scrap trader at the yard selling to the mill.

Another midwest scrap dealer said the sharp price drop was caused by a "convergence of a number ofevents. Prices continue to deteriorate and people are holding their breath."



Hot rolled coil price continues to weaken in PolandThe prices of hot rolled coil offered to Polish distributors for June deliveries softened again in the secondhalf of May, market participants told Platts Steel Business Briefing last week.

Even though the recent €10-15/tonne price correction is seen as “meager,” it was yet another one in thelast month and further slip of this size is expected in June contracts, traders concurred. Meanwhile, thezloty has been depreciating against the euro, offsetting the price slip.

A Central European mill believes the prices will bottom in the next couple of months to rebound inSeptember. “There will be more small price cuts but they can’t go for ever – it’s bad for producers anddistributors”, a trader commented.

The restocking cost paid by local distributors and processors for HRC from ArcelorMittal plants in Polandand the Czech Republic, and from US Steel Kosice in Slovakia, is currently pegged at €520-530/t ($645-657/t) effective delivered, for S235 grade material.

Hungary’s Dunaferr was heard to have achieved €510-515/t CPT with its Polish buyers. Germany’sSaltzgitter was heard to come forward with €500-510/t ex-works. “It must be tough in Germany if theirprices are nearing our mills’,” a Polish merchant noted. Quotations below €500/t were heard only fromUkrainian mills.












The market sentiment ranges from stagnant to negative and the general feeling of unpredictability isoverwhelming, Platts SBB heard. Overall, the first half of the year has been strongly disappointing fordistributors, many of whom posted losses or lower profits in Q1 and continuously squeezed margins do notbode well for Q2 results.



Sidor’s rebar output jumps 123% m-o-m in MayVenezuelan long steel producer Siderúrgica del Orinoco Alfredo Maneiro (Sidor) said its rebar production inMay reached 35,747 tonnes, up 123% from 16,000 t in April and 40% when compared to May 2011production of 25,535 t.

The May output figure was 7% above Sidor's expected figure of 33,384 t.

According to the company, it was the third highest production in a single month in Sidor's history.

The steelmaker said it reached this figure “through the efforts of good operations, maintenance, services,processes, quality and logistics."

The rebar produced by the Venezuelan company was destined for the government housing program GranMisión Vivienda and to the general construction and infrastructure industries.

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Special Report: Russian railways need more long railsRussian miner and steelmaker Evraz and Russian Railways (RZhD) signed a memorandum ofunderstanding that outlines a five-year contract whereby Evraz will supply rails, including 100 metre longrails, worth 90bn roubles ($2.66bn). The contract may come into effect in 2013 and be valid through 2017,Platts Steel Business Briefing learnt from Evraz.

RZhD estimates its need for 100m long rails for this year at 654,000 tonnes or 70% of its entire 910,000trequirement. But because neither Evraz nor Mechel have started to produce 100m rails, the company willcontinue buying in small quantities of long rails – up to 100,000t – from Nippon Steel of Japan and Austria’sVoestalpine, it told Platts SBB.

RZhD uses 100m rails to upgrade particularly heavy-duty track sections, but the company’s strategyprovides for a large-scale shift from regular 25m rails to 100m material as only the latter allows the use ofthe Siemens-designed Russian high-speed train Sapsan. The 250 km/h (155 mph) train operates on theMoscow-St-Petersburg and Moscow-Nizhny Novgorod lines commissioned in 2009 and 2010 and almostentirely built of 100m rails.

In 2013, RZhD will need 660,000t of 100m rails out of the 922,000t total. The high cost of imported railsand shipping difficulties – rails from Japan have to be shipped via Saint-Petersburg port – mean RZhD isdepending on the development of 100m rail production in its home country. The company has got aconfirmation for the delivery of 280,000t of 100m rails in 2013 from Evraz and Mechel together, it said.

Mechel secured an umbrella agreement with RZhD back in 2008 to supply the company with at least400,000 t/y of rails up to 100m long from the new mill it will commission at its Chelyabinsk works by end-2012. Evraz is completing the construction of its new universal mill for rails and sections in H2 2012 too.



Chinese HRC prices continue downwardsChinese domestic hot rolled coil prices continued falling on Monday on falling screen trading prices andpoor levels of business. Traders contacted by Platts Steel Business Briefing expect the market in June todeteriorate as very few mills have plans to reduce HRC output to combat oversupply.

On Monday, spot Q235 5.5mm HRC prices decreased by around RMB 20/t in Shanghai to RMB 4,130-4,140/t ($652-653/t) with 17% VAT, while similar material was offered in Guangdong's Lecong steel marketat RMB 4,240-4,250/t with VAT.

These prices have decreased RMB 150-180/t since early May. Most traders believe prices haven't yet hitbottom, and are unwilling to book large volumes of new material from mills. In a bid to solicit buyers, steelmills have offered extra discounts or compensations, but largely in vain. Eastern China's Shagang hasdecided to compensate RMB 130/t for its May delivered HRC to traders besides cutting its June's HRC pricesby RMB 180/t.

A Lecong-based trader says although bookings have shrunk from traders, market inventories have due toslow transactions. He says Lecong's HRC inventory rose by more than 20,000 t over last week to 760,000 t,adding that steelmakers should slow down production to ease supply pressure.















Shougang has planned maintainance works on its hot strip mill in June, causing the loss of around 100,000-110,000 t of HRC, but this remains too little to support the poor market, Platts SBB is told.



N.China's billet prices steady; direction unclearBillet prices in northern China started to fall from last Friday after a brief rally, but steadied again onMonday as market sources claimed that market supply was slightly tight. However, the future marketdirection remains unclear in light of weak futures prices and loosening steel prices.

In Hebei province’s Tangshan city, ex-works prices for 150x150mm Q235 billet from major local mills haveremained stable at about RMB 3,520/t ($553/t), with 17% VAT and on a cash-payment basis. Over lastFriday and Saturday, prices dropped by RMB 20/t in total after an accumulated increase of RMB 50/t earlierin the week.

A trader source said that it’s not easy to locate material in the spot market. Inventories in localwarehouses were purchased before prices slumped by a total of about RMB 200/t in May and no one wantsto offer this on the spot market and realise that loss in value. This has also meant that some re-rollers arebuying direct from mills, further limiting availability on the spot market. Platts Steel Business Briefing notesthat market prices for carbon square billet were around RMB 40/t higher than mills’ delivery price.

“Futures prices have slumped and it’s really hard to tell where the market will go,” the source said.

A second trader source thought the corrections were quite small so far and noted that key economicfigures to be announced at end of the week could give some hint of the future market direction.

China's 150x150mm Q235 billet price©SBB 2012RMB/tonne Incl. 17% VAT Excl. 17% VATTangshan 3,520 3,009



Taiwan rebar makers hold prices after strong bookingsTwo of Taiwan’s leading rebar producers, Feng Hsin Iron & Steel and Hai Kwang Enterprise Corp, have kepttheir prices unchanged this week after strong bookings last week.

Feng Hsin’s list price for base-sized rebars hence stays at TWD 20,300/t ($667/t) ex-works from its Taichungplant in Taiwan’s central-west region, and Hai Kwang’s selling price remains at TWD 19,800/t ex-workssouthern Kaohsiung this week.

“Rebar prices have fallen to their lowest level this year. On seeing the low prices, customers have enteredthe market to replenish stocks,” said Feng Hsin’s spokesman.

The official also noted that his company is keeping prices unchanged while it further monitors global scrapprices - which have eased slightly over the past week – and the Taiwanese dollar’s depreciation against theUS dollar.

Hai Kwang’s spokeswoman said buyers’ low stock levels had forced them to make bookings last week.“Prices have dropped to a level customers can accept,” she said.

Both companies had each previously cut their prices by TWD 700/t over the previous two consecutiveweeks due to weaker scrap prices and slow demand, as Platts Steel Business Briefing reported.



N. China's rebar prices soften; futures slumpIncreases in northern China’s rebar prices since 29 May have proved short-lived as market dealers begancutting back prices as buying remained slow. Futures prices also dropped significantly due to concerns overthe global economy, further denting market confidence.

On Beijing’s spot market on 4 June, offers for 18-25mm diameter HRB400 rebar sourced from Hebei Iron &Steel (Hegang) were approximately RMB 4,200/tonne ($660/t), down by about RMB 10/t from last Friday.Hegang-sourced 18-25mm diameter HRB335 rebar dipped by some RMB 10/t to a prevailing RMB 4,150/t.Both prices include 17% VAT.

Meanwhile, the widely traded October rebar contract on the Shanghai Futures Exchange (SHFE) slumpedby 1.51% to RMB 4,033/t, as concerns over the global economy mounted after a string of data, includingChina’s retreating official PMI for both the manufacturing and non-manufacturing sectors in May and therising United States’ unemployment rate, suggested weak growth.

















A Beijing trader said that rebar prices started to inch up after Hegang retained its contract price for May atlevels close to spot prices. But transactions did not improve much in wake of the price uptick and thispressured the market to correct downwards. He added that people did not hold positive views for thegeneral market trend, but the prices had dropped to a relatively low level and would not be likely to fallagain a lot in short term.

China's 18-25mm HRB400 rebar price©SBB 2012RMB/tonne Incl. 17% VAT Excl. 17% VATBeijing 4,200 3,590



Hyundai raises domestic rebar prices for JuneKorea’s leading rebar producer Hyundai Steel has lifted its domestic list prices for rebar by KRW25,000/tonne ($21/t) for June deliveries from the previous month. This brings the new price for SD400grade 10mm diameter rebar to KRW 850,000/t ($714/t).

“We are consuming more imported scrap nowadays because local scrap deliveries are slower than before,"a Hyundai official told Platts Steel Business Briefing on Monday, adding that the stronger US dollar versusthe Korean won had increased input costs.

From Monday, spot prices for SD 400 grade 10mm diameter rebar produced by domestic steelmakerswere around KRW 800,000-810,000/t ($672-680/t), up by KRW 10,000-20,000/t ($8.4-16.8/t) compared withabout ten days ago. Rebar retail prices looked set to increase further after Hyundai’s price hike for Junedespite the stagnant local construction market, industry sources noted.

“I don’t think demand from the construction sector has improved much,” a sales person at a local dealerin Seoul said. She added that tight supply from mills was the key reason for the price hike by local retailersin late May. “There is a shortage of some sizes at our yards since steelmakers started curbing deliverieslast month.”

Meanwhile, negotiations between rebar producers and construction companies over May rebar deliveryprices concluded at KRW 825,000/t for SD400 grade 10mm diameter last week, down by KRW 10,000/t fromApril. “This result is unlikely to prevent local rebar prices from rising further because mills already gavethem discounts,” another sales person said.



Japan to raise stainless AD issue in steel talks with ChinaJapanese steel officials will table their opposition to Chinese anti-dumping penalties when dignitaries fromboth countries meet in the eastern Chinese city of Hangzhou on 12 June. In the 19th steel dialoguebetween the two Asian heavyweights, officials will generally discuss the state of the markets and tradingconditions.

However, a spokesman for Japan’s Ministry of Economy, Trade & Industry (Meti) told Platts Steel BusinessBriefing that Japan would again express its "opposition to provisional AD penalties for stainless seamlesspipes”. "We will mention this as it's the trade issue we're most concerned about,” he said.

China’s Ministry of Commerce (Mofcom) applied for provisional AD duties to be applied on certain stainlesssteel seamless pipes from Japan on 9 May and will hold hearings on the issue on 7 June.

The Japanese delegation will be led by Koichi Shioda, who is the head of Meti's steel division, and will includethe Japan Iron & Steel Federation and directors from blast furnace and stainless producers. Mofcom, theChina Iron & Steel Association, and officials from large steel mills will represent China.

Following the talks with China, Japan will meet with Taiwan around 5 July. “We believe there is no trade issuewith Taiwan since Taiwan’s China Steel Corp (CSC) withdrew its complaint against imports of Japanese non-grain oriented silicon sheets,” the Meti spokesman said.

CSC lodged an AD complaint against Japanese NGO sheets last November but withdrew the complaint inApril.



India's RINL close to securing first captive iron ore mineIndian state-owned steelmaker Rashtriya Ispat Nigam Ltd (RINL) – operator of the Vizag steel plant –expects to receive final government orders in the next few days granting it access to a captive iron oremine in the northwestern state of Rajasthan, a company spokesman told Platts Steel Business Briefing.
















The final order would be issued by the Rajasthan state government, following approvals from the centralmines ministry. The mine, holding some 300-350m tonnes of magnetite ore with 45-55% Fe content, wouldbe the steelmaker’s first captive iron ore asset.

But transporting ore from Rajasthan to feed its steelworks about 1,650 kilometres away, atVishakhapatnam in the southern state of Andhra Pradesh, may not be very economical, the officialconceded. RINL is therefore exploring options such as supplying ore from the mine to nearby steelworksincluding those of state-owned Steel Authority of India Ltd. Sail could in turn ship ore from any of itsexisting captive mines in eastern India that are located closer to RINL’s steelworks.

“But these are all just ideas being discussed at this stage,” the RINL spokesman added. “All plans will bemade and finalized only after we have received the final government order (for mine allocation).”

RINL has just completed expansion at the Vizag steelworks to 6.3m tonnes/year of crude steelmakingcapacity from about 3m t/y previously, having commissioned almost all the major equipment, Platts SBB istold. In mid-May, the firm completed trial runs on a 1m t/y continuous caster to produce 150x150mm and200x200mm billets. “The new products will hit the market in two months or so,” the spokesman said.



China's steel industry PMI plunges in MayChina’s purchasing managers’ index (PMI) for the country’s steel industry contracted again in May,plunging 6.9 points from April to reach 48.8, reported the China Steel Logistics Professional Committee onMonday. The CSLPC, the steel industry PMI provider affiliated to the Federation of Logistics and Purchasing,noted in its report that the steel market remains sluggish, with prices likely to stay low with minimalvolatility this month.

Within May's figure, the sub-index for new orders dropped by a remarkable 17.7 from April to 41.5, whilethe export order index fell 6.8 to 43.7. According to China Iron & Steel Association (CISA) data, the dailysales volume of its 78 member mills over the second ten days of May averaged 1.22m tonnes, down 4.8%from the same period in April.

As a consequence of the high production rates currently and shrinking steel orders, the sub-index offinished steel inventories rose sharply by 10.8 from April to May's 61.6. Market participants told Platts SteelBusiness Briefing that because the volume of orders received by steel mills is insufficient, producers havebeen watching finished steel inventories rise since early May.

CISA's data show that the combined finished steel stocks held by its members increased by 10% over thefirst twenty days of May to about 12.1m t.

A Shanghai-based analyst said market sentiment is quite poor as steel prices continue downwards but nomills are heard planning to cut production. Everyone is looking forward to new stimulus policies to boostconstruction and the manufacturing sector, he said, but how exactly the government is going to boost theeconomy remains unclear. Thus the steel industry faces much uncertainty.



Sheet market in Turkey fears economic fragility, trade slowTrade in Turkey’s sheet market is so slow that some participants fear negative quarterly economic growthcould be around the corner, for the first time since 2009 - recent weeks are said to have resembled the“calm before the storm”. A crucial factor in this development is the economic fragility of Europe, which isTurkey’s main export market. Sheet trade is in danger of becoming purely a spot market, as buyers areunwilling to hold stock, local sources told Platts Steel Business Briefing.

Steel stock levels in Turkey are very low and bookings are few and far between, despite local hot rolled coilbeing offered at $650-660/t ex-works, about $50/t down on last month, sources said. Numerous traderswould not consider buying product even if it fell to $600/t because of global economic uncertainty, theysaid.

Some HRC was recently booked from Ukraine’s Ilyich at $580/t cfr, while Zaporistal is offering HRC at$690/t. However, demand for imported steel is also low, Platts SBB was told.



France launches ‘expert’ study of Florange’s prospectsThe French government is to appoint an “expert mission” to investigate the prospects for the Florangesteelworks in eastern France, where ArcelorMittal said last week it will not resume crude steel production forthe rest of this year.

Arnaud Montebourg, minister for “productive recovery” in the government of recently elected president















Arnaud Montebourg, minister for “productive recovery” in the government of recently elected presidentFrançois Hollande, said yesterday: “we are asking ArcelorMittal not to take any decision that would imperilthe viability of the works, so that the government can appoint an independent expert mission (to study)the plant’s future,” according to the AFP news agency.

He was speaking after Hollande held a meeting with representatives of trade unions who have called onArcelorMittal to restart the hot end of the Florange works. The French government is also making contactwith its counterparts in Belgium, Spain, Germany and Luxembourg to “conduct common action towardsthe ArcelorMittal group,” a government statement said.

Montebourg wants the Florange mission to report by end-July. It will examine the European and globalmarkets for Florange’s products, after the company said demand is not showing any improvement. It willalso look at a range of business prospects for the site including the Ulcos project that would be the world’sfirst carbon capture and storage system for blast furnace gases. Ulcos (ultra-low carbon dioxidesteelmaking) is funded by a group that includes the European Union, national governments and steelcompanies.



Turkish sheet imports down 17% in April, may pick up in Aug

Turkish flats importsTonnes. Source: TUIK Apr 11 Apr 12 % changeHot rolled 304,676 238,191 -21.8Cold rolled 44,393 52,632 +18.5Coated 69,779 57,578 -17Narrow strip 29,954 24,847 -17Total 448,802 373,248 -17

Turkey imported 373,248 tonnes of flat rolled steel in April, 17% down year-on-year, according to TurkishStatistical Institute (TUIK) data. Hot rolled flats recorded the steepest decline of 21.8% y-o-y that month,totaling 238,191t. Sources told Platts Steel Business Briefing import tonnages may increase if Turkishproducers insist on higher prices, as imported offers are reported to be cheap, mainly from the CIS.

Turkey’s biggest hot rolled flats source in April was Ukraine which supplied 89,387t, followed by Romania(51,795t). Ukraine is expected to retain its position as main supplier in the coming months due to itscompetitive prices.

As Turkey’s cold rolled flats capacity is insufficient to meet demand, only imports of this product categoryrecorded an increase in April. The main product supplier was Russia (30,842t), followed by Romania(9,876t). Belgium shipped 8,851t of coated flat steel that month, while 8,328t came from Holland.

Bookings of flat rolled steel were very few in March-April, but these increased in May, Turkish sources said.Tonnages arriving in June-July will be small therefore, but should rise in August and September. The futuredirection of the market is impossible to predict because of global and local economic uncertainty, sourcesadded.



Izdemir foresees increased sales to MENA, hikes output in Q1Turkish long steelmaker Izmir Demir Celik (Izdemir) posted a 32% year-on-year decrease in net profit to TRY15.4m ($8.3m) in the first quarter. Billet production reached 361,778 tonnes in this period, while rebaroutput was 234,668t, 14.4% and 9.4% up y-o-y respectively. The firm’s crude steel production capacity is1.32 million t/year, with rebar capacity amounting to 900,000t/y.

The steelmaker sold 374,163t of rebar in Q1, with exports totaling 265,748t, up 6% and 5% respectively onthe corresponding period last year.

Izdemir believes the market share of Turkish steelmakers in the Middle East and North Africa will soonincrease as the political situation in these regions is stabilising. Demand in Turkey’s domestic market isalso expected to pick up following the end of harsh winter weather conditions in Q1, Platts Steel BusinessBriefing learnt from the company.



S. European welded tube down by €50-60/t since mid-AprilSouthern European welded tube prices have fallen by €50-60/tonne since mid-April, in response to very lowlevels of demand, squeezing producers’ margins, Platts Steel Business Briefing learned from marketparticipants. The price in southern Europe for S235 (50-170mm dia) is around €600/t ex-works. This is














participants. The price in southern Europe for S235 (50-170mm dia) is around €600/t ex-works. This isaround €70/t cheaper than tube prices in northern Europe.

“In southern Europe we are selling at 53 points discount… to make margins we have to sell at 45 pointsdiscount, or raw materials have to drop consistently”, a south European producers said. “With coils insouthern Europe at €520/t ex works and our average prices at €600/t, it is clear that we are not makingmoney. Usually we need a spread of at least €120/t”, another producer says.

Large South European tube producers, due to the situation in their domestic market, are selling mainlyabroad (on average 70% of their turnover is made outside their domestic market) or in northern Europe(especially Germany) or North Africa, South America and Middle East. It is understood that a large SouthEuropean tube maker recently secured an important deal to Iraq.

According to market sources in southern Europe, the greatest difficulties are being seen in Spain andGreece; here some mills have closed and others might close in the coming months. As already reported,the Spanish-based producer Condesa ceased production at its Tubos de Celra site in Catalunya, while theGreece based Sidenor recently announced that it is shuttering the tube plant of its subsidiary companyVET SA in Glyfa.

In Greece a lot of pipe makers are not buying coils due to the lack of demand and the upcoming elections,scheduled for 17 June. Greek buyers are mainly focused on exporting to Albania, Bulgaria and Kosovo, butthere they have to fight against Turkish materials. According to traders in the EU, Turkish tubes are themost competitive. S235 is quoted at $730/t FOB Iskenderun, or $750/t CIF Antwerp.



CMC sells Croatian pipe millIrving, Texas-based diversified metals firm Commercial Metals Co has completed the sale of its Croatianpipe mill for $30.4m to the Danieli Group.

CMC has indicated that it will divest CMC Sisak by allowing Danieli to purchase all outstanding shares of thesubsidiary, though CMC will retain certain unspecified assets of the company.

CMC Sisak’s mill has a total annual capacity of 120,000 short tons and produced both seamless andwelded pipes.



Voestalpine optimistic for special steel divisionThe world’s largest producer of tool steel, Austrian steelmaker Voestalpine, expects solid demand tocontinue for its processing divisions, which includes the special steel division, Platts Steel Business Briefinglearned from the company. Capacity in this division was fully utilised, with exceptions in the third quarter ofVoestalpine’s 2011/2012 business year.

From a regional perspective, demand from Asia was unexpectedly restrained while in the US, demandexceeded initial anticipation with ‘dynamic order patterns’, the company said in its management report. InGermany, demand was ‘robust’ and demand was consistent in other core markets.

Typical markets for special steels are automotive, consumer goods, power generation, and oil and gasindustries. Looking at individual product segments within the division, anti-magnetic drill collars for oil andgas exploration made the most significant gains, along with special alloys, valve steel, and specialstructural steel, Voestalpine noted.



Turkish scrap imports up 41% in April on higher steel outputTurkish scrap imports continued their year-on-year growth in April on the back of stronger crude steelproduction; however, this trend may slow in the summer period, Platts Steel Business Briefing learned frommarket participants.

According to Turkish Statistical Institute (TUIK) data, scrap imports totalled 2.06 million tonnes in April, 41%higher than the same month of last year, and 23% up on March.

In January-April, scrap imports amounted to 7.4mt, 19% up on the corresponding period of last year. Crudesteel production in that period increased 11.4% y-o-y to 11.9mt.

USA retained its position as largest scrap supplier to Turkey in April by providing 643,881t, followed byUnited Kingdom (182,751t). 175,835t were shipped from Belgium.

Turkish scrap importsTonnes. Source: TUIK















2011 2012 % changeApril 1,459,914 2,062,366 +41.4Jan-Apr 6,231,306 7,399,874 +18.8



American MBQ prices still holding as buyers watch scrapEven as scrap prices seem to be trending down, buyers of light structurals have enjoyed a level of pricestability in the US market this month. Buyers report they have not been able to hold off on their purchasesas they wait to see how far the industry scrap benchmark for surcharges will fall this month.

“It’s slowed down actually over the last 4-5 weeks – pretty considerably,” one northern stockist said. “Wecan’t hold off for a month to save a buck a hundredweight ($20 a short ton). We’re thinking June might bethe trough but we’re not going to buy heavily just because of that.”

He expects to keep his inventory to about 70 days but would maybe bring in an extra 100 tons this monthto save $20/s.t.

“Our inventory was pretty lean as it was,” one southern structurals buyer said. “Our margins are not goodbut shipments are.” He expects shredded scrap prices to fall $20-30/long ton and for spot MBQ prices tofollow.

An eastern buyer is buying closer to the bottom of the Platts SBB assessment of $890-920/s.t, fob mill for2x2x1/4-inch angles. He said he could buy merchant bar in the “low 40s ($800s)” fob at the pier, citing twoimport offers on his desk. He’s not acting on those offers but he lets the mills know where they stand. “Webeg, and we try to get the mills to work with us,” he said.

Two buyers said they purchased merchant bars at list price: $920/s.t.



SBQ price to hold steady in the US this summerAbsent some significant boost in scrap prices or demand, US SBQ bar pricing should remain relativelystable until at least September.

A midwestern region service center executive said it is unlikely that mills will allow their spot pricing to fallduring the traditionally slow summer months, as demand from Tier 1 and Tier 2 automotive business is stillrobust.

“Some mills may discount to chase orders, but that is the old mill thinking,” he said. “Now, (they) let theprice remain until scrap increases or demand increases significantly.”

Likewise, it is unlikely that mills will be able to push through any significant price increases while scrap istrending downwards, he said.

In the past, mills have announced base price increases to make up for scrap surcharge shortfalls. However,in the current demand environment, pricing can remain up without raw material justification, he said.

10XX bars are currently holding just over $950/short ton fob Chicago, while 41XX bars are just shy of$1,100/s.t fob Chicago.



Special Report: US scrap dock price fall mirrors home marketUS east coast (USEC) dockside scrap prices will slide further this week as a strong US dollar and softeningdomestic market have exporters reducing purchasing prices by as much as $70 a long ton compared toearly May prices.

One major USEC exporter offered $340/l.t to local peddlers and $350/l.t to larger inland scrap dealers forNo 1 heavy melting scrap last week and on Monday with the exporter announcing that those prices willdrop to $330/l.t and $340/l.t, respectively, on Tuesday. Those prices would be off $30-35/l.t from the priorweek and $65-70/l.t from the first week of May.

The latest price adjustments on the docks moves the Platts SBB daily assessment for east coast delivereddock prices to $340-350/l.t for heavy melting scrap and $360-370/l.t for shredded scrap.

One USEC exporter is not offering higher prices for extra material from one major northeast shredder, “abearish” sign according to the scrap dealer.

Two cargoes were heard sold late last week from the USEC to Turkey for 72,000 t of HMS 80/20 at$400/tonne CFR and 18,000 t of shredded scrap at $405/t CFR.
















“What is going on, they can’t sell finished product,” one major North American exporter said of Turkishsteel mills. “They are buying hand-to-mouth based on their orders and their orders (are not good).”

Some Turkish mills who rely on US scrap could be left with the option to return to the US market andpurchase reduced tonnage or potentially take outages.

“They will buy but won’t buy as much as before,” one Turkey-based steel mill source said.

The softness in the USEC market has been one of the biggest factors driving down the value of USshredded scrap domestically (see other story).

“This sort of drives home the point that export makes up a significant part of the scrap market,” onemidwest scrap trader said. “Clearly the export market is the largest consumer of ferrous scrap in thecountry today, with those prices softening, the rest of the market will adjust accordingly.”



US buyers see slump in business, plan to stay close to homeAmerican steel buyers are somewhat less dependent on imports, according to the Institute for SupplyManagement’s steel buyer’s forum.

In May, 90% of steel buyers surveyed reported that their dependence on off-shore sources will be the samefor the next six months, compared to past practice (compared to 100% in April). The remaining 10% saidtheir dependence will be less.

Fewer buyers (15.4%) report foreign mill offers are below US mill prices, compared to 25% in April. Thesurvey found 84.6% said there was no significant difference in prices in May (75% in April). Meanwhile,72.7% of buyers said mills are equally as active in seeking US business as they were three months ago,down from 90.9% the month before, and 27.3% (up from 9.1%) believe it foreign mills are “less” active.

Steel buyers expect business to slow in the next three months. While no survey respondents in Aprilexpected incoming orders for the next three months to go down, 15.4% believe that will be the trend now.The survey showed 61.5% (75% in April) expect business to stay the same, and 23.1% think orders willincrease (25% in April).

Compared to three months ago, 15.4% of buyers (8.3% in April) reported shipping levels are up, 46.2%(75% in April) said they are the same, and 38.5% (16.7% in April) said shipping levels are down. Most(53.8%) report shipping levels are higher than levels from the same time last year.



US crude steel output continues three-week declineUS weekly raw steel production reached its lowest yield and utilization rate since the week ended March 31.

The American Iron and Steel Institute reported that mills produced 1.92m short tons of raw steel in theweek ended June 2, down from 1.96m s.t the week before. Capability utilization fell for the third consecutiveweek to 77.7%, down from 79.4% the week before. Production is still up 6.5% from the same week of 2011,when mills produced 1.8m s.t of steel and the utilization rate was 73.7%.

A nearly 15% tumble in production in the northeast is behind the week-on-week drop. Northeastern millsmade 223,000 s.t of steel last week, compared to 262,000 s.t the week before. The Great Lakes region’sproduction also declined by 1.3% w-o-w to 667,000 s.t.

The southern district boosted production by about 7,000 s.t, reaching 672,000 s.t to make it the largestproduction district.

Crude steel output in the midwest grew by 1,000 s.t w-o-w, reaching 269,000 s.t, but this was canceled outby a 1,000 decline in western district production, which was 89,000 s.t last week.

Year-to-date production totaled 42.7m s.t at an average utilization rate of 78.6%. This is 7.9% more thanthe 22nd week of 2011, when y-t-d output was 39.6m s.t with a utilization rate of 74.1%.

AISI determines the weekly raw steel production using data provided by 50% of the domestic industry andestimating the remainder with monthly figures.



Canadian PMI reports strongest growth in eight monthsIn May, the Canadian manufacturing sector experienced the fastest growth seen since September,according to the Royal Bank of Canada’s purchasing manager’s index.















At 54.7, the PMI grew 1.4 points from April’s rating of 53.3. Values above 50 indicate expansion; below showcontraction.

The report said manufacturers are seeing greater demand, significant growth in output and new orders inMay, warranting a fourth month of increased manufacturing employment. About 37% of companiesreported gains in incoming work, compared with April. Much of the demand rise comes from abroad, asfirms report export orders increasing from the US and Asia.

Inventories of finished goods slid to fulfill new order requirements, while backlogs increased marginally inMay.

The manufacturing sector had improving business conditions in all four Canadian regions, but Quebeccontinues to post the strongest growth, particularly in new order growth.

“The Canadian manufacturing sector has proven to be quite resilient over the past several months againsta backdrop of market uncertainty and softening conditions in many other parts of the world,” Craig Wright,senior vp and chief economist for the RBC, said in a statement. “Manufacturing plays an important role inthe country’s economic growth, and we expect Canada’s GDP to grow by 2.6% in 2012.”

Companies reported higher raw materials costs and unfavorable exchange rates created heavier costburdens last month, but panelists were successful in passing along price increases.



Brazilian flats, semi-finished exports rise in MayBrazilian flats exports increased 111% in May versus April, while exports of semi-finished productsincreased 8% month-on-month, according to foreign trade bureau Secex.

Agency statistics show 236,800 tonnes of flat products were exported last month, up from 112,400 t inApril. Sales in May totaled 80.9% more than the previous month, reaching R$204.7m (US$100.4m).

Semis exports reached 656,300 t, 9% higher than the month prior and stable on a yearly basiscomparison. In sales terms, May overseas shipments were 8% higher than April, totaling US$396.7m.



Argentina's tubes market slows down in 2012The Argentinian tubulars market may finish 2012 with half as much growth than it experienced in 2011, anexecutive from tube maker Tubos Argentinos (TA) told Platts SBB.

Marcelo Ferrando, TA's general manager, said that the tube market in Argentina is seeing a slowdown thisyear. He explained that in 2010 and 2011 the local tube market grew 20% year-on-year, "but 2012 won'tsurpass 10% growth."

The executive said that from November 2011 to February 2012, welded tube transactions decreased."These sales fell 15% year-on-year in the first quarter," he noted.

However, Ferrando added that March sales have shown a slight recovery, "which may continue for thefollowing two months."



Outotec completes acquisition of Brazil's DemilFinnish mining and metal manufacturing equipment provider Outotec has successfully completed theacquisition of all shares of Brazilian pellet service provider Demil Manutenção Industrial.

Located in Guarapari, at southeast Espírito Santo state, Demil provides industrial maintenance services foriron ore pelletizing plants.

The parties have agreed not to disclose the acquisition price.

"The acquisition provides a platform for further developing Outotec's service business, such as operationand maintenance services and capabilities in Brazil," said Outotec in a statement.

As previously reported, Demil's services can be offered to Outotec's Brazilian customers, pelletizingtechnology users in particular.



India's Jindal SAW targets end-2013 for Iraq pipe mill startTuesday, 5 Jun 12 © Steel Business Briefing 2012 12/14

















Indian pipe producer Jindal SAW is targeting the end of 2013 for commissioning of its new Iraqi welded pipemill, after receiving an investment licence for the project from the Basra Investment Commission a fewweeks ago. An anti-corrosion coating line will be launched at the site in Q2 next year, some six monthsbefore pipe output begins.

The $200m project will operate as a separate company, whose name Jindal SAW is now in the process ofregistering with Iraqi authorities; it will be 100% owned by the Indian firm. Power and water supply for thenew plant, located in a new industrial city outside the southern city of Basra, are currently being set up.

Production capability will amount to 300,000-350,000 tonnes/year of longitudinal submerged arc welded(LSAW) pipe, 16-65 inches in diameter and wall thickness up to 1 inch. Anti-corrosion coating output will be3.5m square metres/year.

A company official declined to specify the source of feedstock, saying instead that it will come fromexisting Jindal SAW suppliers and will have to conform to Iraqi government specifications. Product will besold for oil and gas transmission purposes in Iraq, where oil production is forecast to more than triple in thenext ten years.

In a second expansion phase, scheduled for six months after the beginning of pipe output, the facility willbegin hot induction bending. Spiral welded pipe production will also be added at a later stage, for which adate has not yet been established. Capacities for both expansions have not been determined.



Arab Iron & Steel Union appoints new chairmanVice chairman and managing director of Kuwaiti steel holding Foulath, Khalid Al-Qadeeri, has beenappointed chairman of the Arab Iron & Steel Union (AISU), replacing Hilal Al Tuwairqi.

“We are delighted to announce the appointment of Mr. Khalid Al-Qadeeri as chairman of the Arab Iron &Steel Union for the forthcoming term", said Mohamed Laid Lachgar, secretary general of the Algiers-basedindustry group. "Mr. Al-Qadeeri’s contributions to the industry over the past three decades will bringconsiderable benefits to the Union and our members as we work to meet the opportunities and challengesahead of us.” Foulath is 50% owned by the six governments of the Gulf Cooperation Council, with QatarSteel, Mohammed Abdulmohsin Al-Kharafi & Sons Company, National Industries Holding Group and KuwaitFoundry Company holding the balance. It owns Bahrain’s integrated SULB steelworks and adjacent iron orepelletizing plant Gulf Industrial Investment Co.



China to adopt WTO raw materials recomendations by year-endChina intends to bring itself into WTO compliance by December 31 in regard to its restraints on rawmaterial exports.

Among the restraints challenged in the 2009 WTO dispute brought by the US, Mexico and the EU wereChina's use of raw material export duties and quotas as well as minimum export pricing and licensing. Rawmaterials impacted include coke, manganese and zinc, among others used by the steel, aluminum andchemical industries.

A Chinese delegation signed three separate agreements with delegations from the plaintiffs late lastmonth saying the country would implement the recommendations of the WTO dispute settlement body byyear-end. The pacts follow a mid-February ruling by the WTO Appellate Body that the country's exportrestraints on industrial raw materials are inconsistent with its WTO obligations. The WTO Appellate Bodydecision upheld a July 2011 finding by the dispute settlement panel.

China had held that its export restraints were efforts to conserve the materials or for environmentalprotection, as reported.



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sbb briefing 5 jun 12

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