Steel News from YK-8.9

Steel export from China 15% down in July

China / Flat Products, Long products

China’s steel export volumes went down in July amid strong local demand and prices, as well as somewhat limited

supply in the country.

In July, Chinese suppliers exported 5.9 million t of finished products, which is 15.2% down month-on-month and 15.4%

down year-on-year, the General Administration of Customs reported on August 8. Producers and traders turned more

to the local market as it is more profitable. Local demand is high enough, especially from the construction sector in

May – June which is traditionally the period when demand starts to fall seasonally due to heavy rains and high temperatures.

Therefore, suppliers enlarged sales in the domestic market with high margins.

Iron ore slightly down, expectations positive

China / Iron Ore

Iron ore inched down Wednesday in line with expectations of some insiders following the decline in futures and weakening

demand. Sentiments remained positive though only on well-balanced Chinese steel market.

Australian iron ore fines 62% Fe went down by $0.5/t to $69.5/t CFR since Tuesday after a drop of RMB 6/t ($0.9/t) in

January contracts on the Dalian Commodity Exchange. “Steel price increase was justified by lower supply and strong

demand, but the jump in iron ore, where the situation is the opposite, was mostly speculative, so the price needed a

correction,” a Chinese analyst told Metal Expert.

The demand for the raw material in the seaborne material market stayed sluggish on continuous output cuts and high

level of offers. At ports, Brazilian fines were enjoying the highest buying interest, insiders say.

Nevertheless, the official statistics data showed a 1.4% y-o-y improvement in China’s iron ore imports in July to

89.96 million t, which were mostly attributed to the first half of the month when less production curbs were announced.

Besides, “uncertainties from the external trade situation, especially changes in currency exchange rates amid the trade

row between Beijing and Washington, may stimulate demand to replenish supplies before the yuan devalues further,”

Reuters cited Cao Ying, chief steel analyst at SDIC Essence Futures.

Meanwhile, expectations for the near future remained positive on strong fundamentals of the finished products market.

Despite aggravating trade conflict with the US, Tangshan billet price and rebar futures posted almost no changes during

the day. “Fluctuations in iron ore will be minimal due to costly steel,” a trading source commented.

Chinese plate drops on weaker yuan, sluggish demand abroad

China / Flat Products

Export price for Chinese plate came down amid low demand abroad and the yuan depreciation. However, the quotes

are not expected to slide further on strengthening domestic market.

Offers for Chinese plate are heard on exports at $605‑615/t FOB for October shipment, which is $5/t and $15‑20/t

below the last week and a month ago level respectively. “Most leading mills are setting the price at $610/t FOB,” a

Chinese trader told Metal Expert.

The drop was attributed to the sharp devaluation of Chinese national currency and languid export trading. Small

volumes of the product were booked by SE Asian and ME customers during the last month, insiders say. “Demand is

still slow due to high prices ex-China and uncertainties connected with weaker currency,” another trader commented.

At the same time, the decrease is not forecast to continue due to improving local market. Consuming industries are

showing high activity, in particular, the country’s excavator sales jumped by 45% to 11,123 units y-o-y in July, according

to the China Construction Machinery Association (CCMA) data. Shipbuilding industry is posting strong performance

as well, extending the gains of H1, when new ship orders surged by 97.2% y-o-y.

In addition, the effect of robust demand for plate in mid-term will be enhanced by shrinking supply as winter output

curbs will start from October 1. In key cities, including Handan, China’s major plate-making center, BF operations will

be cut by 50%, according to the preliminary plan released by the authorities. “We may face plate supply shortage later

this year, so end-users are buying beforehand,” a marker source said.

Philippines government to assist Panhua Group steel project

South East Asia / Flat Products, Long products

The government of the Philippines intends to provide special incentives to Chinese re-roller Panhua Group which plans

the construction of a $3.5 billion integrated steel plant in Misamis Oriental province. With this assistance, the Chinese

investor is likely to receive better lease and power rates.

The Philippine Department of Trade and Industry (DTI) announced its plans to assist Panhua Group, providing a maximum

of 8-year income tax holiday and a 5% tax on gross income earned after the ITH. According to DTI Secretary

Ramon Lopez, such support is aimed “to make it easy for Panhua to locate and to make this investment happen.”

Panhua Group has not announced the detailed information about the production portfolio, but the mill will be able to

produce 10 types of products.

Although Panhua Group has not specified which products the asset will make, the local market sources believe it will

manufacture flat steel products which are not produced in the Philippines, thus minimizing imports of which 70% comes

from China. In particular, the Philippines’ flat product imports totalled 2.7 million in 2017 with a coated steel share of

about 40%, as Metal Expert reported earlier.

This is not the first time the company plans to establish presence in the Philippines. In 2013, the producer had decided

to build a color-coating plant (600,000 t) in the Philippines’ Subic Bay Freeport, but the project had been cancelled

due to “bureaucratic issues with the local government which lasted for six months,” as Metal Expert reported earlier.

New infrastructure projects in Philippines to support steel demand next year

South East Asia / Flat Products, Long products

The Philippines government is going to support the development of infrastructure projects in the country, allocating revenues

from the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) Act. The new investments will

provide appropriate funding for at least five infrastructure projects, which in turn will support steel consumption growth.

The Department of Budget and Management (DBM) announced five flagship projects which the government plans to

implement next year, according to the local media. In particular, the government plans to use proceeds from TRAIN

for the projects realization. Among the projects are PHP 9.5 billion ($179 million) sports facilities in the National Government

Administrative Center, about a PHP 2.9 billion ($54.7million) Subic-Clark Railway Project. Besides, DMB

also mentioned rivers flood control projects which have a combined funding of PHP 2.6 billion ($49 million) as well as

construction of new container ports and bridges worth around $15 million.

The Philippines posted a 2% rise in consumption in 2017, reaching around 9.8 million, according to SEAISI. Besides,

this year the country is expected to see a sustainable growth owing to robust performance of infrastructure and construction

sector. In particular, according to the Philippine Iron and Steel Institute, the construction projects account

for about 81% in the total steel demand in the Philippines. The new investments will favour the local Philippines’ steel

industry, both in longs and flats segments, Metal Expert estimates.

Ardent Steel to set up integrated steel mill in India

India / Long products

Another Indian steel company is going to enter the steel market seeing strong demand in the local market. Ardent Steel

is going to set up an integrated steel plant by the end of next year to benefit from favourable market conditions in India.

Indian pellets producer Ardent Steel is planning to build a new integrated steel plant with an annual capacity of 1.2 million

t in Odisha. The project value is estimated at INR 40.1 billion ($584.4 million). The start-up is scheduled for September

2019. The company is going to produce long steel products at the new facility, a company representative told

Metal Expert. The project includes also construction of a BF and a DRI module with 0.6 million tpy of capacity each.

Besides, Ardent Steel will expand the capacity of the existing pelletizing plant from 600,000 tpy to 690,000 tpy. After

operations start at the steelmaking plant, the producer will be forces to lower sales of pellets, which it sells to China

and in the local market now owing to high demand for high-grade iron ore.

Entering the market of finished steel products in India will help Ardent Steel benefit from rising demand in the country.

In April-June, steel consumption in India increased by 8.4% to 23.4 million t. The demand was forecasted to reach a

5.5% growth this financial year and 6% next year, as Metal Expert reported earlier.

In brief: METI improves forecast for steel production in July-September

Far East / Flat Products, Long products

Japanese Ministry of Economy, Trade and Industry (METI) upgraded forecast for crude steel production in July-September

amid strong demand in both domestic and export markets. The output in expected to reach 27.07 million t in

Q2 of FY 2019, up by 4.3% year-on-year and by about 2% compared with the previous outlook, Metal Expert learnt.

Trade restrictions in the global market, particularly, in the USA, are still not reflected in the forecast as their impact is

questionable. Steel consumption in the country is expected to rise by 0.7% to 23.7 million t y-o-y, while exports are

forecast at 7.8 million t, up by 1.1% y-o-y, as Metal Expert reported earlier.

Turkish rebar prices slide in deals to Asia

Turkey / Long products

Export rebar offers from Turkey indicated a decline over the week following weaker scrap, slow foreign demand and

insufficient domestic sales. The discounts were fixed in sizeable lots booked to Asia; now other buyers believe similar

or even lower levels are possible for other markets as well.

Most Turkish rebar exporters were officially offering at $540‑545/t FOB (–$5/t) for September-October shipments this

week; some are ready to deal at $535/t FOB. The demand overall remains limited, though some markets resumed

negotiations, Asia in particular. As a result, around 50,000 t of Turkish rebar was sold to Singapore at around $528/t

FOB AW, but for shipments in end-November, Metal Expert learnt. According to the market sources, an Izmir steel

producer sold another 50,000 t to the destination at $525/t FOB AW and even slightly below. Overall, the mentioned

deals were closed within $535‑543/t CFR TW, market sources estimate.

In addition, up to 10,000 t of rebar (September shipment) were closed to Lebanon this week at $550/t CFR ($540/t

FOB). Israel has been also asking, the offer price was set within $570‑575/t CFR ($545‑550/t FOB), Metal Expert

learnt. Negotiations with the European buyers also continue, while the US remains quiet, producers say.

Currently, most foreign buyers and traders believe $530‑535/t FOB could be achievable from Turkey, some target to

deal at $525/t FOB and below, taking into account sales to Asia. “Seems that $523‑525/t FOB is also there, it’s kind of

a currency game,” a source opined. Such sentiment is based on another recent drop of scrap tags as well as on still

insufficient domestic rebar demand. Although local sales continue within $540‑550/t EXW, their volume is not enough for

the producers to strengthen their positions. In addition, the continuing drop of the lira rate affects domestic and import

business activities, but could boost export sales in the short-run, Metal Expert understands. Turkish exporters, especially

the ones not under pressure to sell immediately, are targeting to avoid sizeable discounts from the current levels.

In the wire rod segment, most offers are kept within $575‑580/t FOB on still sufficient demand coming from the EU

and Africa. Mills report some lots were recently sold within the range to Romania, Bulgaria.

Baltic scrap tumbles in Turkey

Turkey / Scrap

A decreasing trend is gaining pace in the Turkish ferrous scrap market. A Baltic supplier made significant discounts.

After the talks, a Marmara-based company purchased HMS 1&2 (80:20) at $322/t CFR, shredded scrap at $327/t CFR

and bonus material at $332/t CFR from Denmark on August 7. The price for Baltic HMS 1&2 (80:20) dropped by $9/t

as late last week another Baltic exporter closed a deal at $331/t CFR for the same material.

The price assessment for American HMS 1&2 (80:20) moved to the range of $322‑325/t CFR Turkey versus $328/t

CFR earlier.

Market sentiment remains negative in Turkey. “Now, after the sale from Denmark, I do not think any buyer will be willing

to pay more,” a trader told Metal Expert. Scrap collectors are becoming pessimistic. “Impossible to get higher price

these days,” a supplier commented. Turkish producers insist on discounts due to sharp lira devaluation against US

dollar. Besides, export prices for rebar decreased.

Pig iron imports soar in Turkey in H1

Turkey / Pig Iron

Turkish steelmakers increased pig iron imports significantly in the first half of 2018. Higher requirements were driven

mainly by positive flat steel market conditions as well as favourable prices for the raw material in certain periods of time.

Turkey ramped up pig iron imports by 83% to 708,000 t year-on-year in January-June 2018, according to SteelData

statistics source. Positive dynamics of crude steel output, in particular slabs, became the main reason for the upturn

in foreign raw material purchases because Turkish mills increased finished steel production being supported by rather

healthy flat sales. “Slabs output totalled 6 million t, 6% up year-on-year,” a source told Metal Expert. Moreover, stronger

fundamentals in the wire rod segment also contributed to higher requirements of pig iron.

Turkey’s steel exports slightly higher in January-July

Turkey / Flat Products, Long products

Turkey’s steel exports indicated a slight upturn over the seven months of the year despite challenging business conditions

on most key consuming destinations. The uptrend was strongly supported by remarkable performance of the

mills in July.

Turkey exported a total of 11.094 million t of steel products in January-July, up by 2.4% year-on-year, Turkish Steel

Exporters’ Association (CIB) reports. The country’s overseas performance was mostly supported by July figures which

added 45.1% to 1.687 million t y-o-y. According to the market players, the growth was partly attributed to generally slack

rebar sales domestically which urged mills to expand shipments abroad. In addition, flats sales, especially HRC, but

also CRC and coated steel, significantly contributed to the development, Metal Expert understands.

In particular, Turkey exported 2.164 million t of HRC over the seven months, a 36% rise y-o-y. Main support came from

the EU, which was restocking ahead of the safeguard decisions, as well as by restarted sales to the US, Metal Expert

understands. In the rebar segment, on the contrary, sales contracted by a total of 11.4% in January-July, coming to

3.141 million t, CIB reports. The three markets, which decreased cooperation with Turkey the most over the mentioned

period were the US (–45% to 765,000 t), Iraq (–36% to 324,000 t) and Singapore (–86% to 44,000 t), Metal Expert learnt.

For the rest of the year, Turkey is expected to largely concentrate on sales to the EU (flats especially), aiming to cover

a good chunk of the volume quota. In addition, mills are expected to keep up cooperation with the US on favourable

conditions and Asia once prices are acceptable, Metal Expert understands.

Iranian steelmakers need India’s ferroalloys during sanctions

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