SAC International Steel, Inc.

Eastern China’s Ningbo Iron & Steel has decided to idle one of its two blast furnaces from 1 September to the end of December, in a bid to ensure its energy consumption this year is within the Zhejiang provincial government’s annual quota.

Ningbo I&S, a tier-two mill managed by Baosteel, has two 2,690 cubic metre blast furnaces with a combined iron-making capacity of around 4m tonnes/year. The Zhejiang provincial government told Ningbo I&S in early August that one of its furnaces must be idled for the rest of this year to meet its government-assigned energy conservation target, as Steel Business Briefing reported.

Currently, Ningbo I&S is running at full capacity, producing about 330,000 tonnes/month of hot rolled coil as its only finished steel product. Idling one BF from September to December will result in a loss of about 700,000 t of HRC production in total, for which the company will not receive government compensation, SBB learns from the mill.

Ningbo I&S will make technical upgrades on the BF during the period in a bid to make the best use of the stoppage. So far it seems only Zhejiang province has issued such stoppage orders as there are no mills outside of the province which have received such directives.

Ship plate import prices have risen above $700/tonne cfr in Singapore. Ukrainian-origin ship plate was booked last week at around $725/t cfr Singapore. Indonesian ship plate was also booked at around the same time at $710/t cfr, up from the transacted price of $690/t cfr in early August. "The Ukrainian materials are mostly of 8mm and 10mm thickness which fetch a premium price," says a trader.

A Singapore trader cites a position cargo of 6,000-10,000 tonnes of prime Chinese ship plate, for prompt shipment, that was recently cleared and sold at $670/t cfr Singapore. New offers of ship plate from China are at $700/t cfr, up from $680-690 in early August.

Some importers are starting to buy because the market has bottomed out and they are now confident to pay higher steel prices, trading sources tell Steel Business Briefing.

“Demand is generally weak. However, there has not been much buying for almost three months so there is some re-stocking taking place,” a Singapore trader says. However, another tells SBB: “Buying is very slow. Domestic plate prices are weak."

Price expectations of companies globally	©SBB 2010
% of respondents

Higher prices

Unchanged

Lower prices

W/C 16 Aug

51%

15%

34%

W/C 9 Aug

41%

24%

35%

change w/w

+10%

-9%

-1%

The latest carbon steel market survey results from The Steel Index (TSI) show that expectations of higher prices are continuing to rise in Europe, North America and Asia. 51% of companies globally surveyed anticipate that prices will rise in the next three months, up by 10% from last week’s survey. The number of companies expecting firmer demand is similar to last week.

The proportion of companies globally expecting higher prices rose to 51% from 41%, while those foreseeing lower prices slipped to 34% (See table). In the US, expectations of higher prices increased to 68% of companies from 60%, with 23% foreseeing lower prices in the next three months and 9% expecting stable prices. In Europe, 31% of respondents expect prices will increase, up from 24%, but 49% expect prices to fall, up from 46%.

For European companies, 31% predict higher offtake in the next three months, down from 33%, and 51% expect stable demand, while 17% foresee lower demand. 41% of US companies expect higher demand in the next three months, down from 44%, with 41% foreseeing steady demand. 38% of respondents globally expect higher demand and 45% stable demand.

The majority of companies report stable stock levels. However, 11% of respondents globally reported higher steel inventories, down from 21%, and 33% had lower stock levels. An unchanged 14% of North American companies had higher inventories and 33% reported lower levels. 6% of European respondents had higher stocks than, down from 13%, while 33% had lower inventories.

Tokyo Steel Manufacturing has decided to raise list prices across its entire product catalogue by ¥1,000-3,000/tonne ($12-35/t) for September contracts, the company announced on 23 August.

The leading Japanese mini-mill points to higher scrap prices – plus improving market conditions – to explain its decision. It is adding ¥1,000/tonne for bars and wire rods, ¥2,000/t for flat products such as hot rolled coils and ¥3,000/t for sections.

“The rise was smaller than we expected,” a trader tells Steel Business Briefing. “We thought all product prices would be lifted by over ¥3,000/t." Other mini-mills including rebar producers will be disappointed because they would have wanted to follow Tokyo Steel, he added. Rebar makers face difficulties absorbing higher scrap costs by themselves and will have targeted lifting product prices by around ¥3,000/t for September.

Scrap costs are an issue. After keeping buying prices unchanged for over a month, Tokyo Steel has lifted its by ¥2,500-3,000/t since 17 August and many mini-mills have followed, as SBB reported. Rising export demand for scrap will keep prices firm until October when they may drop rapidly on decreased product demand, a senior Tokyo Steel official suggested.

But domestic steel demand seems to have bottomed and demand should improve gradually, the official tells SBB, adding that his company has already started receiving more inquiries.

Across its five works, Tokyo Steel currently produces about 200,000 tonnes/month including 100,000 t/m of HRC, 55,000 t/m of H-beams, and 35,000 t/m of plates. It expects to lift output to 220,000-230,000 t/m in September-October.

Tokyo Steel's September list prices

¥/tonne

$/tonne

¥/t change

H-beams (senior)

¥72,000

$841

+¥3,000

I-beams (200x150mm)

¥75,000

$876

+¥3,000

Channels (100x50mm)

¥71,000

$829

+¥3,000

Sheet piles

¥81,000

$946

+¥3,000

Wire rods (6.4mm)

¥71,000

$829

+¥1,000

Rebars (16-25mm)

¥55,000

$643

+¥1,000

HRC (1.7-22mm

¥64,000

$748

+¥2,000

P&O (1.7-6mm)

¥67,000

$783

+¥2,000

HDG (0.6mm)

¥88,000

$1,028

+¥2,000

Checker plate (9mm)

¥69,000

$806

+¥2,000

Heavy plate (9-40mm)

¥71,000

$829

+¥2,000

US sheet prices have softened in the past week, but rumors of another spot price hike within a few weeks are gaining traction.

"There's enough momentum," one eastern stockist says of a possible second $30-40/short ton price increase since earlier this month. "It's not demand driven. It's how much supply there is and rising raw material costs."

Still, prices have slipped a little. According to The Steel Index, a unit of Steel Business Briefing, the latest prices for sheet products are all down week-on-week.

Hotrolled fell $3 to $585/short ton, while coldrolled fell $7 to $691/s.t and hot-dipped galv slipped $10 to $740/s.t. Those prices are in line with current spot prices. HRC is roughly $580-590/s.t, CRC is about $680-700/s.t and HDG is around $730-780/s.t, sources say.

"The price dip may reflect the continued deterioration of underlying economic and demand fundamentals in the market," a midwestern US buyer says. "Along with falling prices, we also see HR lead times falling. Combined, these are signals that order books perked up briefly, though no significant momentum was created after buyers jumped in for needed purchases."

Lead times for HRC are around mid-September, sources tell SBB. HDG lead times mostly don't extend beyond mid-October.

A midwestern distributor says a short-term softening of prices was inevitable following the hikes mills sought - and were able to partially realize - earlier this month

"I think it was just to stop the slide (in prices seen previously)," he says. "And they accomplished that."

American mills saw upticks in both production and capacity utilization last week, Steel Business Briefing learns.

According to data from the American Iron and Steel Institute, domestic raw steel output was 1.73m short tons, while steelmakers operated at 71.5% of capacity for the week ended August 21 - up from 69.8% capability utilization and roughly 1.69m s.t produced the previous week.

US steelmakers produced about 1.38m s.t during the same week last year, when capability utilization was just 57.7%.

Week-on-week production was up in five of eight US districts AISI tracks. The Indiana/Chicago region saw the biggest increase at 25,000 s.t, while the midwest district registered the biggest w-o-w decrease at 2,000 s.t. The Lake Erie region's production was flat w-o-w at 42,000 s.t.

Adjusted year-to-date production through August 21 was more than 56.9m s.t, while y-t-d capability utilization is 70.7%. Production totaled over 36.4m s.t during the same period last year, when capability utilization was just 46.2%, SBB notes.

Although more respondents to a survey of major North American sheet-buyers are reporting lower shipping levels this month, expectations of increasing orders are growing.

38% of companies responding to the Precision Metalforming Association’s (PMA) monthly survey of business conditions forecast increasing orders in the next three months. This was an increase from 29% last month. 44% expect no change from current order levels (down from 51% last month), but 18% foresee decreasing orders.

The percentage of companies reporting decreased shipping levels rose this month, the PMA report shows. While only 12% said last month that shipping levels were below levels of three months ago, that number jumped to 37% this month. 41% report no change (down from 54% last month) and only 22% of survey respondents said levels are above three months ago (down from 34%).

Anticipations of improving economic activity in the coming months changed very little from last month’s report. 25% see improving economic conditions, 58% anticipate unchanged conditions, and just 17% expect activity to decline.

Cleveland-based PMA samples 130 metalforming companies in the US and Canada for its monthly report, Steel Business Briefing notes.

Though major domestic mills last week raised their ex-works prices by RMB 200-400/t for flat products delivered in September, the Chinese steel market remained hesitant on concerns over demand and over-capacity in the sector.

Spot prices for hot rolled coil began trending downwards last Friday towards RMB 4,180/tonne ($616/t) with 17% VAT, as soaring inventories prompted traders to slash prices. Rebar prices drifted in the range RMB 3,900-3,950/t including VAT. Whilst they are unlikely to fall, there are some doubts in the market over whether demand in September will be as high as anticipated.

Steel contracts on the Shanghai Futures Exchange too had a turbulent week, initially rising on the news of the mills’ price announcements, before slipping again towards the end of the week.

Overseas, the Vietnamese import market is suffering from weak demand and a currency revaluation which has made imports, including those from China, less attractive. In India (another key export market) buyers are shunning higher-priced offers of boron–added HRC from China.

Meanwhile, the China Iron & Steel Association (CISA) has warned that overcapacity and stock overhang will prevent Chinese steel prices rising much further for the rest of this year. As Steel Business Briefing previously reported, daily crude steel output from CISA's 77 member mills was up 5% in the first ten days of August compared with late July.

Import prices for 62% equivalent Fe iron ore slipped by only 0.5% last week to reach $147.50/dmt CFR Tianjin port, China, according to The Steel Index (TSI).

The direction of the northwest European strip market is expected to become clearer in the next two to three weeks, as market participants return from summer holidays.

“The only buying happening now is out of stock in warehouses: it is very quiet,” a Benelux-based trader tells Steel Business Briefing. “The French and Belgians will be back from holiday this week and we hope buying activity will pick up,” he adds. “Because steel purchasers expected prices to come down, in June and July they were buying below their needs so as not to be penalised later for paying higher prices,” he notes.

Domestic mills’ current offers stand at €550-580/tonne ($699-737/t) ex-works for hot rolled coil, although the real price is closer to €550/t, another Benelux trader suggests. Mills are, however, ostensibly not taking a unanimous line when pricing their material. “We have recently been in touch with three major producers,” a Benelux trader says. “One is intending to maintain price levels, while one is looking to increase them and one to decrease them slightly,” he continues. Cold rolled coil in the region is pegged at €640-680/t ex-works.

Import offer prices have risen recently, and the dollar has continued to strengthen against the euro, making third country imports currently unattractive.

Some participants expect still higher raw material costs to push up steel prices during the fourth quarter, but others anticipate increases only in Q1. “My opinion is that prices will be maintained in Q4,” says a Benelux trader. “But this will become clearer in the next 2-3 weeks,” he adds.

Activity in the construction industry across the European Union is continuing to languish, as construction activity remained below year-before levels in the EU as a whole as well as the euro-zone in the second quarter of 2010.

Construction activity in the euro-zone contracted by 2.8% year-on-year in Q2, while activity in the EU as a whole shrank marginally by 0.1% over the same period, according to the latest flash estimate from Eurostat seen by Steel Business Briefing.

The rate of decline was most marked in the civil engineering sector, which recorded a decline in activity of 7.2% in the euro-zone and 1.4% in the EU. By comparison, building activity in the EU recorded a 0.7% rise y-o-y, although house building in the euro-zone continued to decline.

The relatively low rate of decline reflected the fact that two of the EU’s larger economies recorded recoveries in construction output in Q2: Germany by 4.1% y-o-y and the UK by 10.5%. Apart from Sweden and Poland, every other EU country to report quarterly figures for Q2 recorded a contraction.

Looking forward, most countries reported month-on-month increases in construction output in June (only six reported declines), and both the EU and euro-zone m-o-m figures for June were positive. There is hope that construction activity may revive, although much depends on the broader economic outlook for the rest of 2010, SBB notes.

Construction accounts for almost one third of European steel consumption.

Global agricultural and outdoor maintenance equipment manufacturer Toro Co says it is seeing "positive momentum" in the US economy and improving demand from customers.

"Even with concerns expressed by many economists of a slower recovery, we experienced strong end-user demand during our summer selling season," CEO Michael Hoffman said in a statement seen by Steel Business Briefing.

The Minnesota-based company, a large consumer of flatrolled steel, reported earnings of $90m on net sales of almost $1.4bn through July this year. In the same period last year, Toro posted net income of $63.4m on sales of about $1.2bn.

It had earnings of $33.4m for its fiscal third quarter ended July 30. In the same quarter last year, the company reported earnings of $19.8m.

"We are encouraged by the recovery of our markets and the increased demand for our products," Hoffman said.

Some non-prime steel market players in Europe and the US expect improved prices in the coming weeks in the wake of steel mill moves to push up prime material quotations in Q3 and Q4, but others are less optimistic.

Non-prime prices bottomed in past weeks says David Fredriksson, CEO of Sweden-based non-prime specialist firm Norex International, but he expects a small improvement over the next month or two. “We are looking at one or two fairly good months, but it’s anyone’s guess after that.”

And although the success of mill efforts to raise prime flat rolled prices in US is unclear, Jim Barnett, president of the Association of Steel Distributors, tells Steel Business Briefing that if the mills keep output down, eventually the market will tighten. Non-prime will then follow, though with a time lag.

Back in Europe there is a note of caution. Sebastian Gleissner of German secondary and over-rolled steel specialist Sk-Steel, is not optimistic. He believes prices for seconds in Western Europe will “drop drastically” in Q3 because of “low consumption in the Far East, where the main customer base is located.”

Although demand for non-prime is variable, overall this steel continues to be sought after, participants in the trade tell SBB. And although it is extremely difficult to quantify the size of this market, the best available consensus suggests annual tonnage is about 5% of global finished steel sales with flat rolled material more prolific than longs.

Billet import prices to Southeast Asia continue to rise. New offers are prevailing at $585-610/tonne cfr compared to $570-590/t cfr a week ago. Transacted prices have also risen this week to around $580/t cfr from around $567/t cfr last week.

Some 30,000 tonnes of CIS-origin billet was booked into Thailand at $580/t cfr early this week. “The stronger Thai currency against the US dollar has made imports more competitive,” a Thai trader tells Steel Business Briefing. The Thai baht has strengthened by around 2% over the past month.

Russian billet is reported to have been recently booked at $575-580/t cfr in Vietnam. Import buying in Vietnam is described as slow. "They (buyers) rather wait and see," a regional trader tells SBB. Domestic prices are rising in Vietnam and certain mills are selling their billet at around VND 11.6m/t ($607/t), up by VND 200,000-300,000/t ($10-16/t) since early August. "But I doubt this can last, they will surely increase prices soon," a local trader says.

Russian billet was recently booked at $575/t cfr Philippines, compared to around $567/t cfr last week. Limited offers of billet from Russia and Ukraine are heard at $585-590/t cfr SE Asia and Turkish-origin billet is offered at $600-610/t cfr.

Taiwanese billet is offered at around $585/t cfr Philippines. "Demand is not strong yet to support the higher asking prices," a trader in the Philippines says.

Billet from Thailand and Malaysia is offered at $600-610/t cfr Vietnam. A Brazilian mill is offering billet at $600/t cfr Thailand, SBB is told.

Demand expectations of companies globally	©SBB 2010
% of respondents

Higher demand

Unchanged

Lower demand

W/C 9 Aug

39%

43%

18%

W/C 2 Aug

31%

49%

20%

Change w/w

+8%

-6%

-2%

There has been a strong increase in market sentiment about steel demand prospects, according to the latest market survey from The Steel Index, released this week.

39% of companies globally now foresee higher demand, up from 31% last week. 43% expect stable demand, down from 49%, while 18% anticipate lower demand (see table). In the USA, 44% of respondents expect higher demand, up from 35% last week, while 44% forecast stable demand, down from 50%. Expectations of higher demand in Europe rose sharply to 33% of companies from 18%, while 52% foresee stable demand in the next three months and 15% expect lower demand.

41% of companies globally foresee higher prices in the next three months, but this is down from 49% last week. 35% expect lower prices, up from 28%. 60% of North American companies expect higher prices in the next three months, with 24%, up from 15%, expecting lower prices. The number of European companies expecting higher prices fell to 24% from 32%, and an almost unchanged 46% expect lower levels.

14% of US respondents had higher stocks than in the previous week, up from 4%, while 52% had stable inventories, down from 64%. An almost unchanged 13% of European companies had higher inventories than the previous week, and 53% reported stable stock levels. 21% of respondents globally reported higher steel inventories, up from 15%, and 47% had stable stock levels.

More information about The Steel Index - which is majority-owned by Steel Business Briefing - is available on its website www.thesteelindex.com .

US steelmakers saw another decline in both utilization and production last week, Steel Business Briefing learns.

According to data from the American Iron and Steel Institute, domestic raw steel output was almost 1.69m short tons, while steelmakers operated at 69.8% of capacity for the week ended August 14 - down from 70.9% capability utilization and roughly 1.71m s.t produced the previous week.

US steelmakers produced about 1.38m s.t during the same week last year, when capability utilization was just 57.7%.

Week-on-week production was up in five of eight US districts AISI tracks. The southern region saw the biggest increase at 28,000 s.t, while the Detroit district registered the biggest w-o-w decrease at 35,000 s.t.

Adjusted year-to-date production through August 14 was almost 55.2m s.t, while y-t-d capability utilization is 70.7%. Production totaled nearly 35.1m s.t during the same period last year, when capability utilization was just 46.2%, SBB notes.

US flats exports - 2010
Source: US government Tonnes

May

June

Change

Coiled plate

97,720

63,060

-35%

CTL plate

91,870

93,340

+2%

HRC

93,890

97,890

+4%

CRC

46,380

46,280

+0%

HDG

86,740

96,320

+11%

US exports of most major flats products rose from May to June, but a big drop in coiled plate exports helped lead an overall decline.

A total of 950,550 t of steel products were exported from the US in June – down just slightly from the 957,310 t exported in May (see other story for more details).

Coiled plate exports, however, dropped 35% from 97,720 t in May to just 63,060 t in June, as Canada purchased 40,000 less tons in June than in May, Steel Business Briefing observes in the latest export data. Exports of cut length plate rose just slightly from 91,970 t in May to 93,340 t.

While hotrolled sheet exports grew 4% month-on-month to 97,890 t in June, shipments of hot-dipped galv rose 11% to 96,320 t. Canada upped its purchases of HDG by 12% m-o-m to 68,350 t and India bought 3,675 t in June after purchasing none the month before. Coldrolled sheet exports were flat m-o-m at 46,280 t.

Recent bookings of Taiwanese-origin SAE 1006 (re-rolling grade) hot rolled coil in Vietnam took place at $642-645/tonne for 2mm and below. Others early last week were at $638/t cfr for 1.8-2mm thickness, local trading sources tell Steel Business Briefing. The volume of each booking was mostly 1,000 t, though some were 2,000 t, and totalled an estimated 10,000 t in the past week.

Chinese-origin SS400 with boron was booked at $605-610/t cf Vietnam for 3-6mm thickness, up by around $5/t from the previous week. Large importers in the country are still aiming to book at low prices of $595-600/t cfr, SBB is told. 2mm thickness SAE 1006 for pipe-making with B added was booked at $625-630/t cfr Vietnam.

While many traders describe the current market as weak, some noted that the domestic prices of thick-gauge 3-12mm HRC are up by the equivalent of $10/t to around $580/t.

“It is picking up a little. But it is difficult to say where the market is heading, whether up, down or stable,” an importer tells SBB. “Demand may be weak but there are expectations that the market will recover,” a trader says.

While some traders are concerned that the pending arrival of September and October shipment HRC cargoes may dampen the domestic market in Vietnam, others say that the situation may resolve itself. "It will depend on the world market. If prices improve at that time, then it would good for our market," a local trader says.

Despite today’s decline in the number and volume of transactions, stocks outside China are low, and demand is seen as likely to strengthen in the next few months in many parts of the world. In addition, seasonal depressants such as the European summer, Ramadan and the Asian monsoons should be having less impact by September/early October.

However the Beijing government seems determined to bring the domestic property boom under control, and this is likely to depress local steel prices. Indeed, the steel industry may have to undergo stress tests, similar to those faced by some banks. This move seems unlikely to boost Chinese exports, as key VAT rebates have been cut and the RMB is appreciating slightly.

Nevertheless in the expectation of rising sales, restocking by Turkish mills of scrap and by Chinese traders/mills of iron ore pushed up these prices. The spot 62% Fe China price, tracked by The Steel Index rose 6% last week.

Higher raw material costs will encourage mills to raise their prices now for September and Q4 sales. Last week several of the US producers hiked HRC prices by $30-40/s.t perhaps to around $600/s.t ($662/tonne); European mills are expected to follow a bit more cautiously. In East Asia too, there is so far little movement.

On the back of scrap, billet and longs prices seem also to be rising. Prior to Ramadan, Turkish rebar was on offer in the Middle East at about $580/t fob, but could rise to $600/t if scrap continues to increase. Turkish billet is on offer at $530/t fob.

Negotiations over August-September shipments of Japanese hot rolled coil to Korean re-rollers have been concluded at $650-670/tonne fob and down from around $700/t fob for July shipments.

Behind the decline is weaker sentiment in the market for the remainder of third quarter compared with earlier expectations. This led Japanese integrated mills such as Nippon Steel to agree to lower prices than the $700/t fob they had initially demanded.

“The HRC prices for August-September are almost concluded, and we are now in the process of deciding tonnage,” a Korean re-roller source says. “But the tonnage will be smaller than in previous months,” he adds.

Weakened export demand for cold rolled and coated products for August/September shipment, and appropriate HRC stock levels at re-rollers’ yards at present, are leading the Koreans to lower their booking volumes of Japanese materials.

Steadily rising supply availability of HRC from local producers such as Hyundai Steel and Dongbu Steel is also allowing Korean re-rollers to import less HRC – including from China, Steel Business Briefing is told.

The softer HRC demand in Korea can also be seen in the month-on-month fall in export offer prices of CRC and coated coils from Korean re-rollers. For August shipments, the CRC prices were concluded at around $790-810/t fob Asia, but these have fallen to $750-790/t fob or even lower for September delivery depending on producer and tonnage.

The immediate direction of the northwest European strip market is unclear, with some participants expecting still higher raw material costs to translate into steel price increases in the fourth quarter, but others anticipating increases only in Q1.

There is still domestic material available for end-Q3, with one Benelux trader telling Steel Business Briefing that material he ordered last week is expected to arrive by mid-September. “The normal lead-time for hot rolled coil is 5-6 weeks,” he says, adding, “I am getting offers now for end-September.” “A lot of mills are on holiday… but now and then you get an offer from a guy who is actually working or back from holiday,” he notes.

Domestic mills’ current offers stand at €550-580/tonne ($706-744/t) ex-works for HRC, although very few people are buying during the summer lull. The same goes for cold rolled coil, which is now pegged at €640-680/t ex-works.

Eastern European mills working on a month-to-month basis have increased prices in the past month, SBB is told. “The base price of western European mills almost equals the effective price of eastern European mills,” says a German distributor. “This is an indication that the market is coming together,” he adds.

Import offer prices have risen recently, and in the past week the euro has weakened against the dollar, making third country imports currently unattractive.

The outlook for Q4 is uncertain. There is an opportunity for price hikes in October or November, as long as too much production capacity is not restarted after summer, a Benelux trader maintains.

Brazil’s Vale has concluded 2009 iron ore prices with Nippon Steel and Posco agreeing to a 28.2% cut for fine ore and 48.3% for pellets. Nippon Steel is refusing official comment but says Vale will make a formal announcement later today. JFE Steel says it is still negotiating but a deal is expected soon.

Nippon Steel and Posco have been jointly conducting their annual iron ore negotiations with Vale since 2007. Kobe Steel is also believed to have settled for the same reduction.

The cuts take the pellet price down to $1.138/dry metric tonne unit fob Tubarão, Steel Business Briefing calculates from last year’s price of $2.202/dmtu. The Carajás fines price falls to $0.899/dmtu fob on the same calculation.

The fines price cut is regarded as being in line with Rio Tinto’s benchmark price settlement, after clawing back the freight differential that the Australian mines achieved last year.

But the sharply higher percentage cut for pellets reflects reduced demand for this premium grade of iron ore as steel companies scale back their blast furnace productivity rates. The premium they are willing to pay for pellets over sinter fines has been slashed by 75% to only $0.239/dmtu, SBB also calculates.

Vale's concession on pellet prices is seen by one observer as an attempt to get some of its idle pelletizing plants back into operation.

The top ten steel exporters saw their despatches fall to just over 43m tonnes in the first quarter of this year – down by 30% on Q1 2008 and down by 16% on the already depressed Q4 2008. In 2007 and 2008 the top ten accounted for 83% of world trade in steel mill products (semis, long & flat products and tubes).

US raw steel production last week rose 2% for the second week in a row, but the numbers are still low.

Output totaled 1.02m short tons last week, up 1.9% from the previous week, according to American Iron and Steel Institute estimates sent to Steel Business Briefing.

US mills worked at about 43% of their capability last week, up from about 42% the week prior.

In the same week last year, as market demand surged, US mills produced an estimated 2.17m s.t using 91% of their raw steel making capability.

Output of steel products at Taiwan’s China Steel Corp (CSC) fell 12.3% month-on-month to 571,916 tonnes in April on weak steel prices, the company said in a filing to the Taiwan Stock Exchange late last week.

Sales volume dipped 4.4% from March to 610,032 t in while revenue fell 12.7% to TWD 12.11bn ($372m) in April.

CSC recorded its second consecutive quarter of pre-tax losses in January-March on weak steel demand and falling prices, as Steel Business Briefing reported. But it believes losses may shrink in the second quarter as inventory will decrease with the maintenance of its No.3 blast furnace. Also, any easing of the slide in steel prices will reduce the company’s provision for declining steel prices.

CSC recently announced a cut to its domestic steel prices by an average of 9.4% for its list of products including hot and cold rolled coils, electro-galvanised and hot-dip galvanised coils, non grain-oriented silicon coils, bar and wire rods.

CSC officials were unavailable for comment.

Demand to book billet in Southeast Asia has improved but suppliers' asking prices are rising ahead of bidding prices, and this has resulted in few concluded deals recently. Local trading sources in Vietnam tell Steel Business Briefing that buyers are generally bidding at around $415/tonne cfr whereas offer prices are higher.

"Buyers are concerned about the depreciating Vietnam dong against the US dollar and offer prices have risen by $10-15/tonne recently," a Hanoi-based importer tells SBB. To avoid the forex risk, the preference is for domestic billet where ex-mill prices are prevailing at around VND 8.3m/t ($467/t), excluding value-added tax.

Malaysian- and Thai-origin material is offered at $430-440/t cfr Vietnam, up from $415-420/t cfr before the May holidays. Billet from Taiwanese mills is sold out for near-month shipments and current offers at $425-430/t cfr are mostly for July shipments.

Ukrainian and Russian billet is being offered at $420-425/t cfr compared to $405-410/t cfr previously. Asean-origin billet enjoys a preferential import duty of 5% compared to 8% for imports from elsewhere.

Traders are cautiously optimistic about rising billet prices. Domestic rebar prices in the region have risen in recent weeks and generally, the rises are allowing re-rollers to more than offset the higher cost of imported billet, traders tell SBB. However, there are fears that certain billet exporters to the region may enter into the market and undercut billet prices in order to fill up order books.

"It is not easy for billet prices to continue rising. There was an inventory shortfall but fundamentals for longs are still not strong," a regional trader tells SBB.

ArcelorMittal South Africa has announced price rises of 69% for tinplate for food cans and 78% for beverage cans. These take effect from 1 April for one year with the possibility of a review in October 2009.

ArcelorMittal estimates it will produce roughly 12m tonnes less crude steel across its global operations in the first quarter of 2009, compared with the first quarters of 2008, 2007 and 2006, when levels were almost constant.

This is a million or so more tonnes of production cuts than in Q4 2008, and contrasts with last year’s Q2, when output was 30m t, the company adds.

ArcelorMittal’s capacity utilisation will remain between 55-60% during January-March this year, it adds. The company will continue its production cuts until destocking is completed.

"The Q4 production cuts were the largest ever seen in the steel industry, and while they have assisted the required period of destocking, more is required. We therefore intend to main production cuts for the first quarter, which we believe should represent the bottom of the cycle," CEO Lakshmi Mittal tells Steel Business Briefing at the annual results in Luxembourg today.

It is reported that after the Vietnamese government reduced value added tax for steel products from 10% to 5%, its market price of steel dropped.

There is a decline of about VND 500,000 per tonne compared to the price in December 2008. At present, the steel market is stable with a high sales volume.

On February 2nd 2009, China's TISCO’s benchmark steel price declined from VND 11 million per tonne (excluding value-added tax, the same below) to VND 10.6 million per tonne and the price from the other rival is VND 11.2 million per tonne. The average retail price of steel increased by VND 1 million when value added tax is added.

Vietnam Steel Association forecasts the sales of steel in 2009 will be about 9 million tonnes an increase of 2% to 5%. Due to the oversupply of international steel market, there will not be any big price fluctuations.

(Sourced from YIEH.com)

The Mexican Iron and Steel Producers Association has announced that the US will implement a trade protection policy, to prohibit their use of iron and steel materials imported from Mexico in infrastructure construction.

The introduction of this policy means that Mexico's exports of steel products to the United States will be slashed.

Mexican Iron and Steel Producers Association said that the introduction of this policy violates the North American Free Trade Agreement and World Trade Organization’s relevant provisions of free trade, and the Mexican Ministry of Economic Affairs has been requested to intervene in this matter.

(Sourced from YIEH.com)

DIDx has selected SAC International Steel as premier and featured customer. DIDx is a global supplier of DID numbers, and will be featuring SAC Steel a model company in the usage of DIDs for enhanced global presence.

SAC International Steel, Inc. is honored to have been selected as a sponser for the 2008 Thanksgiving Community Outreach Program oraganzied by Force of Hope (http://www.forceofhope.org). During this event held on Thanksgiving day, company staff will be at Steampitters Union Hall Local 250 located at 18355 S. Figueroa St., Gardena, CA 90248 to distribute food and warm clothing to the less fortunate.