SAC International Steel, Inc.

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.

After weeks of rumours that China will put tax rebates on exports of hot rolled coil and plate in a bid to revive the frozen export market, the ministry of finance finally announced today that it will increase the export tax rebate on HRC, plate, sections and some stainless and alloy steel products from zero to 9%. Exporters are typically reimbursed the rebate from the 17% VAT included in the price of the exported goods by Chinese authorities after the sale has been concluded.

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.