sbb briefing 2 feb 12

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Thursday, 2 Feb 12

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Exchange rates2 Feb 2012currency rate +/-GBP/USD 1.585 +0.007EUR/USD 1.318 -0.000EUR/GBP 0.831 -0.004EUR/JPY 100.3 -0.340GBP/JPY 120.7 +0.156USD/JPY 76.12 -0.252USD/RMB 6.306 -0.002

SBB Prices &IndexesWorld price +/-World HRC $/t 708+11World Rebar $/t 717 +8IndexesSBB World 251 +6Europe Flat 174 +6Europe Long 235 +2Asia Flat 206 +1Asia Long 321 +1

N.America Flat 225 0N.America Long 260 +6

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TODAY'S TOP SBB HEADLINES Display by region

HRC import prices rising in SE Asia, albeit slowly $S.Europe scrap softens, sources see more price falls ahead $Japanese scrap export prices weaken further $Brazil's CSN buys German section mill for 482.5m

US longs price increases face falling scrap price pressure $

Asia

Flat Products Chinese mills expected to increase HRC offers to Korea $

Market cool on Shagang's HRC price increase $Pakistan flats prices increase on weakening rupee $

Long Products North China billet prices continue to dip $

Chinese mills keep early-February rebar/rod prices stable $

Tubes & Pipes China sees seamless exports up 28% in 2011

Stainless & Specialty Steels China's stainless flat product exports fall 21% in DecemberRaw Materials & Scrap

Indian IO scandal: Karnataka miners braced for output drop Chinas iron ore imports from India slump 25% in 2011 China's scrap imports grew 16% in 2011 China opting for chrome ore over FeCr: Macquarie Vale to commission Subic Bay floating terminal in February?

Corporate & Industry Japan eyes Jan-Mar steel output rise, fears higher stocks Chinas Jan PMI recovers but steel industry unmovedJapanese mills bemoan surge in steel imports in 2011 India's JSPL eyes s take in Odisha's Gopalpur port

Europe

Flat Products Turkish sheet prices flat, trade weak $US S teel Kosice targets 4 million short tonnes in 2012

Ruukki aims at improving profitability at 80% capacity UK Mir Steel faces court case over hot strip mill ownership Serbian state keeps Smederevo open, looks for investors

Long Products Turkish mills open March offers, some Feb still available $

Stainless & Specialty Steels European stainless bar market enjoys renewed energy $

Outokumpu/Inoxum tie-up to create largest stainless producer Outokumpu to cut 1,000 jobs as ceo seeks to stem losses Sandvik Q4 profit disappoints market, lowers growth

Raw Materials & Scrap Black Sea scrap vessel sinks en route to Izmir, reports Outokumpu to double ferrochrome capacity by 2015

Corporate & Industry French output up by 2.4% in 2011, not far from expectation Italian third country imports up 12.8% in 2011

CIS

Stainless & Specialty Steels Special steel maker Zlatoust restores production

Raw Materials & Scrap ENRC produces less ferro-alloys ENRC mines, sells less iron ore due to end-year repairs

Corporate & Industry UGMK sees solid distribution growth in Ukraine in 2012

North America

Flat Products South African plate offers to the US creating interest $

US CRC lead times move toward 8 weeks, others mostly static Goldman Sachs raises NA auto output estimate

Corporate & Industry US manufacturing index, new orders climb in January Canadian manufacturing index momentum slows

Thursday, 2 Feb 12 Steel Business Briefing 2012 1/21
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South America

Long Products Siemens to modernize two bar mills for Gerdau in Colombia Grupo Aon seeks R$100m credit deal for Brazilian mill

Raw Materials & Scrap Centaurus Metals strengthens Brazil management team

Africa

Raw Materials & Scrap Weaker market reduces Merafes ferro-chrome output

Australasia

Raw Materials & Scrap Flat output, higher prices for Xstrata's Australian met coal $

Indo Mines gets environmental approval for Java iron project IMX magnetite jv with Taifeng could be salvaged

World

Raw Materials & Scrap Capesize freight rates scraping bottom amid cargo lull

$ = Steel Price Story

HRC import prices rising in SE Asia, albeit slowly

Chinese mill offers of 3mm thick commercial quality SS400B hot rolled coil to Southeast Asia are at $620-630/tonne fob ($640-660/t cfr) this week, but there are no takers yet, Chinese trading sources tell SteelBusiness Briefing.

"The market just opened this week (after the holidays). Buyers want to observe the market carefully," aChinese trader says.

"Prices are going up. But they will be slower than mills expect," another adds. He believes buyers aremonitoring sentiment for their downstream steel products. "It will be clearer next week when the marketsreturn to normal activity.

Bookings in Southeast Asia, particularly Indonesia and Thailand, have recently taken place for smallquantities at $670-680/t cfr for thin guage re-rolling grade HRC from Korea and Japan, up by $20-30/t fromprevious bookings.

Many regional importers continue to be in wait-and-see mode, trading sources suggest. "Buyers are notwholly accepting higher prices. However, prices will not go down further because the mills cannot afford tosell at lower levels," a Taiwanese trader says.

"Booking prices for flat steel products are improving while those for long products are still under somepressure," a Hong Kong trader says. "HRC prices have stabilized but we have to wait to see if there is apick-up," another regional trader adds.

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S.Europe scrap softens, sources see more price falls ahead

Southern European scrap prices went down by 10/tonne following the international downturn and weakdomestic fundamentals, with sentiment for prices to soften further over the coming weeks, Steel

Business Briefing learns from market sources.

Current transaction prices in Italy for grade E3 (heavy melting) scrap are reported to be 320/t ($422/t), forE8 (new arising) around 350/t, and for E40 (shredded) 330-340/t.

In Spain, transaction prices are reported to be a little lower than Italian prices. For E8, prices are at 320-325/t, while E40 is available at 305-310/t and E1 (the equivalent in Spain of E3) at 300/t. All delivered tomill.

In Turkey, scrap prices went down a lot because demand for semi-finished products is still weak. SomeItalian domestic buyers will not mind to push raw materials prices down to the level of settlements at thebeginning of December, an Italian trader says. However, the current wintry conditions could disruptdeliveries and support prices if they continue, he adds.

We expect another decrease of 10/t. But lets see because winter is stronger and collection is harder

than before. I think that we will see an inversion of trend with prices that will increase again in March whenmills will re-start to produce more following the need of the constructor sector that is usually better inspring, a Spanish dealer says. Scrap availability in the domestic market is limited at the moment, butSpanish mills demand is also low.


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Japanese scrap export prices weaken further

Japanese scrap export prices to Korea continue to fall, but traders believe the market could turn soon, theytell Steel Business Briefing.

The most recent bookings took place at around 30,500-31,000/tonne ($399-405/t) fob for Japanese gradeH2 scrap for March shipment, down 500-1,000/t ($6.5-13/t) from two weeks ago, a mini-mill source inSeoul says. Hyundai Steels bidding prices for H2 late last week were 30,000/t fob.

However, traders are reluctant to make new offers to Korean mini-mills as they feel prices could recoversoon, one source says. They expect strong demand from local mini-mills ahead of 1 April when Tokyo

Electric Power Company will raise its charges for heavy power consumers. Moreover, export restrictions onscrap from far east Russia, which take effect 13 February, will cause Koreans to increase their purchases ofJapanese scrap, SBB's sources suggest.

Japanese scrap export prices may strengthen in the short-term but increments in prices will be limited,another Korean source says. US scrap export prices are weakening and Korean domestic scrap buyingprices remain soft for the time being, he adds.

Korean steelmaker SeAH Besteel will cut its scrap buying prices by KRW 10,000-15,000/t ($8.5-13/t) from 4February. More mini-mills led by Hyundai plan to slash their scrap buying prices by similar margins fromnext week onwards, SBB hears.


Brazil's CSN buys German section mill for 482.5m

Brazilian steelmaker CSN has bought the German structurals mill Stahlwerk Thringen (SWT) from Spain'sAlfonso Gallardo group in a 482.5m ($632m) deal, CSN tells Steel Business Briefing.

The sale includes the 1.1m tonnes/year Unterwellenborn-based steelworks and its sales and distributionarm Gallardo Sections. The deal would reduce company debt by 485m and secure the future of thegroup, Gallardo said.

CSN was formerly involved in buyout talks for the assets with Gallardo and agreed to buy the German millplus other assets in Spain, before withdrawing from the 970m deal last year. CSNs only European steeloperations at present are a cold rolling and coil-coating business in Portugal.

Gallardo will continue producing sections at its Jerez de Los Caballeros mill, a company spokeswoman says.Gallardos flats re-rolling mill, Galvacolor, valued at 125m earlier last year, is still for sale.

"We got the jewel in the crown," says Juarez Saliba, executive director of new business mergers andacquisitions at CSN. He explained that negotiations with Gallardo were resumed in late October andfocused specifically on the two German assets.

According to Saliba, the SWT is focused on Germany and Eastern Europe, which are in a better situationbecause of the crisis in the Eurozone. "The plant is running at 80% of installed capacity," he added.

According to the CSN, the asset has a greater diversification of business that the competition, serving notonly non-residential construction, but also focused in the areas of industrial equipment, engineering andtransportation.

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US longs price increases face falling scrap price pressure

US longs mills began announcing price increases for February deliveries a few weeks ago, but scrap priceshave softened since then, calling the mill increases into question.

Many market players have aknowledged $30/short ton price increases on structurals and wire rod and a$15 increase on rebar, but some are unsure the price hikes will stick, particularly for wide flange beams.

They got the increase of $30 through weeks ago, but that number is a joke, nobody is paying that($870/s.t), one service center source says about WF beams. We are paying under $800 a ton."

A trader tells Steel Business Briefing that beam mills arent adhering to list prices, and hes sure pricesdid not go up the full amount that was announced.

Two wire rod buyers say theyre paying the $30 increase for February shipments. One said hes paying alittle under $800/s.t for mesh quality rod, while the other said hes paying a price within the range of $790-

810/s.t for the same material.

A wire rod trader, however, believes falling scrap prices and arriving imports flattened February wire rodprices.

Meanwhile, two service center sources and a mill source said the $30 merchant bar has gone on thebooks. One of the distributors sa s hes bu in MBQ for close to the new list rice with a little discountin -

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maybe $10-20 off.

Rebar seems to be holding its more modest $15/s.t increase.


Chinese mills expected to increase HRC offers to Korea

Chinese steelmakers are likely to increase their new hot rolled coil export offer prices for April shipments,up by a minimum of $5-10/tonne from the previous month. Most mills have resumed work this week butnew offers are limited because they are closely monitoring the market trend before deciding on new offer

prices.

Chinas Benxi Iron & Steel has quoted its export offers at $625-630/t fob for commodity grade HRC for Aprildelivery, about $5/t higher than prices tabled before the Chinese New Year holiday, a Shanghai-basedtrader tells Steel Business Briefing. Other than Benxi's offer, we havent heard from the other Chinesemills this week. We believe the other mills will actively place their new offers from next week.

While Chinese mills will try to lift export prices by $5-10/t for April/May shipments on strengtheningdomestic prices, it is doubtful foreign buyers will accept higher prices, another Chinese trader believes.Demand in downstream steel industries is still sluggish, he explains.

Given the regional market was about to close for lunar new year, Chinese mills quickly concluded theirMarch shipment deals ahead of the holiday and contract prices were heard at around $630-640/t cfr Koreafor commodity grade HRC. Some bookings were done slightly lower than these levels to Korea, anothertrader tells SBB.


Market cool on Shagang's HRC price increase

Eastern Chinese steel producer Shagang released its February flat product list prices yesterday, increasingits hot rolled coil prices RMB 40/tonne ($6.30/t) and rolling over plate prices from January.

After the adjustment, its Q235 5.5mm HRC price is tabled at RMB 4,300/t ($682/t) and its Q235 14-20mmcommercial plate price remains unchanged at RMB 4,270/t. Both prices include 17% VAT.

Although traders were hoping higher mill list prices could help drive up spot prices, sluggish buyingcontinues to hinder any strong price rebound.

Offers of Q235 5.5mm HRC and Q235 14-20mm plate in Shanghai, the nearest major steel market toShagang, are around RMB 4,250-4,270/t and RMB 4,250-4,280/t with VAT. These prices are about RMB 10-20/t higher than before the holidays but unchanged since Tuesday due to lack of buying interest.

Traders expect that higher March list prices from major mills will serve as some encouragement for thespot market, but again may not be enough to ensure a strong increase. They are worried demand fromthe manufacturing sector will remain poor at least for the first quarter: a recovery in the sector depends onmore monetary loosening measures, which did not materialise as expected last month.

Most traders contacted by Steel Business Briefing believe spot HRC and plate prices will stay firm thisweek, and possibly next, because inventories are still low. However, they say that it is difficult to predict themarket trend beyond that once people have replenished as nobody is sure when end user demand willreturn.

The Chinese domestic HRC/plate pricesRMB/tonne

Incl. 17% VAT Excl. 17% VAT

Shagang HRC 4,300 3,675

Shagang plate 4,270 3,650

Shanghai HRC 4,250-4,270 3,632-3,650

Shanghai plate 4,250-4,280 3,632-3,658


Pakistan flats prices increase on weakening rupee

Pakistans sole private sector flats producer International Steel Limited (ISL) has increased its cold rolledcoil and hot dip galvanized coil prices by $10/tonne. Local demand is not particularly strong, but the

market has accepted the hike nonetheless, as the producers input costs have increased. Meanwhile,state-owned Pakistan Steel is working at below 30% capacity.

ISL is now selling 1mm thick HDG with 100-120gr coating at $1,110/t, including 19.5% sales tax. Thecompanys 1mm thick CRC is sold at $870-890/t before tax, similar to Pakistan Steels price levels. An ISLexecutive notes that prime material hot rolled coil import prices are now no less than $775-800/t cfr,including tax, making CRC and HDG price hikes inevitable.

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Demand in Pakistan is weak; however, as economic activity is slow and the rupee is losing value againstthe dollar, sources tell Steel Business Briefing. The rupee has fallen to 90 per US dollar from 84 inNovember 2011. This situation is unlikely to change before April, by which point stock levels will havedepleted following negligible buying activity throughout February and March, sources add.


North China billet prices continue to dip

Billet prices in north China remain soft and transactions slow following the long Chinese New Year holiday

break, mill sources in the region say. But enquiries are growing and some producers are predicting a priceincrease later this week, Steel Business Briefing hears.

In Hebei provinces Tangshan city, ex-works prices for 150x150mm Q235 billet from major mills dippedfurther by RMB 10/tonne on Tuesday evening and finally settled at RMB 3,660/t ($580/t). Prices continuedto weaken by the same margin on Wednesday morning, reaching RMB 3,650/t ($579/t) on a cash-paymentbasis with 17% VAT.

Billet prices lack [sufficient] support to hold steady on thin trading, a billet maker in Tangshan explains.Besides, the continuous decline in futures prices has also affected market sentiment. The May rebarcontract on the Shanghai Futures Exchange closed at RMB 4,285/t ($679/t) on Wednesday, down nearly0.3% from the previous days close.

Meanwhile, some billet makers report an increase in numbers of enquiries from buyers. There could be apick-up in prices at the end of this week as more customers return to the market, another local billet

maker predicts.

However, a Tianjin-based market observer argues that prices are more likely to remain weak in the short-term since most traders and end-users are still adopting a wait-and-see attitude.

N.China 150x150mm Q235 billet pricesSBB 2012

RMB/tonne

17% VAT incl. 17% VAT excl.

Tangshan 3,650 3,120


Chinese mills keep early-February rebar/rod prices stable

Faced with slow post-holiday market activity after the week-long Chinese New Year break, leading Chinesesteelmakers Shagang Group and Hebei Iron and Steel (Hegang) yesterday announced they would retainrebar and wire rod prices for early-February delivery.

Eastern Chinas Shagang Group is keeping its 16-25mm HRB335 rebar price unchanged at RMB4,380/tonne ($695/t) with 17% VAT. The steelmaker is also keeping its 6.5mm Q235 wire rod priceunchanged at RMB 4,400/t ($698/t) with VAT.

Other major longs producers in Shagangs eastern region, such as Zhongtian Iron & Steel and YonggangGroup, also chose to leave most of their prices unchanged.

Meanwhile, Hegang a leader in the northern Chinese construction steel market also kept its latest listprices unchanged at RMB 4,030/t with VAT for 18-25mm HRB335 rebar and RMB 4,120/t ($653/t) with VATfor 6.5mm Q235 wire rod.

Though spot market directions remain unclear amid a lack of end-user demand, some participantstentatively lifted offer prices yesterday to test sentiment. In Beijing, offers of 18-25mm diameter HRB335rebar sourced from Hegang rose to RMB 4,090-4,110/tonne ($649-652/t) with 17% VAT, up by RMB 10-20/t($3-5/t) from Mondays levels.

Its usual to see an upward movement of steel prices in the short-term after the Chinese Spring Festival,a market source tells Steel Business Briefing. However, it remains unclear whether the trend couldcontinue next week in light of thin trading amid slow winter demand, he adds.

Chinese 18-25mm HRB335 rebar pricesSBB 2012

RMB/tonne

Incl. 17% VAT Excl. 17% VAT

Shagang ex-works 4,380 3,744

Hegang ex-works 4,030 3,444Zhongtian ex-works 4,260 3,641

Yonggang ex-works 4,300 3,675

Beijing spot market 4,090-4,110 3,496-3,513


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China sees seamless exports up 28% in 2011

Chinas seamless pipe export shipments last year rose at their fastest rate in three years. Exports jumpedby 28% year-on-year to reach 4.87m tonnes during 2011, according to latest Chinese customs data.

The sharp increase is mainly attributed to rising demand from the buoyant oil and gas sectors and Chinesemills continuing efforts to expand their export markets because there is excess supply in the domesticmarket.

Seamless pipe exports were at their the highest level in the past three years. However, the 4.87mt total islower than the over 6m t seen in the boom year of 2008 which is prior to the trade action in the United

States and Europe against Chinese exports, which has effectively blocked out the majority of Chinasseamless products.

Among all pipe products, the export of seamless pipes for usage in the energy sector was particularlystrong due to the robust oil and gas industry. Exports for oil and gas transportation pipes (line pipes) saw a36% y-o-y increase to 1.96mt in 2011. Oil country tubular goods (OCTG) exports rose by 13% y-o-y to1.71m t during the same period. Shipments of line pipes and OCTG accounted for 75% of total seamlesspipe exports last year, Steel Business Briefing notes.

Market insiders believe Chinas seamless pipe exports are likely to see modest growth this year, comparedwith the relatively high level in 2011. Leading indicators have reduced their growth forecasts for globaleconomic growth this year. As such, overseas demand for seamless pipes is likely to slow down this year,an industry analyst tells SBB.

China's seamless pipe trade SBB 2012In tonnes. Source: China Customs

Exports Y-o-y chge Imports Y-o-y chge

December 504,556 42% 19,204 -16%

2011 4.87m 28% 257,324 2%


China's stainless flat product exports fall 21% in December

Chinas exports of stainless steel flat rolled products dropped 21% month-on-month to 94,510 tonnes inDecember, according to data from the Chinese General Administration of Customs. The countrys importsof the same products also fell 18% m-o-m to 51,385 t in the month.

Other than Korea, which registered m-o-m growth of 5%, exports to other main destinations like Taiwan,Vietnam and India all fell in the month. Imports from three of Chinas main import sources Korea, Japanand Taiwan all dropped in December.

Asian stainless exporters had told Steel Business Briefing in November and December that exportdemand was poor due to uncertain global economic conditions and weak nickel prices which resulted inbuyers staying away from the market. Exports may pick up January and February, however, as Chinesesellers reported renewed buying interest last month after nickel prices surged around $3,000/tonne inJanuary.

For the whole of 2011, China's exports rose 13% to 1.67m tonnes, while total imports fell 15% to 716,005 t.

China's stainless flats exports & imports in DecemberUnit: Tonnes. Source: Chinese customs

December % m-o-mExports 94,510 -21

of which to:

Korea 21,083 5

Taiwan 18,225 -46

Vietnam 7,463 -19

India 5,759 -29

Imports 51,385 -18

of which from:

Japan 16,689 -23

Korea 10,874 -40

Taiwan 8,834 -2


Indian IO scandal: Karnataka miners braced for output drop

Should Indias Supreme Court permit a partial restart of iron ore mining operations in Karnataka, thestate's ore output is unlikely to exceed 10-15 million tonnes in the first year of production following thelifting of the mining ban, according to sources surveyed by Steel Business Briefing. This would

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represent a drop of as much as 75% from Karnataka's earlier ore production average of 40m t/y.

It is widely expected that the court, in its next hearing into alleged illegal mining, will permit production toresume at some mines that the central empowered committee has deemed as operating legally.Production could then resume at more mines after the owners pay any penalties imposed forinfringements considered minor. Mines that were being operated illegally are unlikely to be reopened, SBBlearns.

All the investigating authorities appear to be more reasonable now than earlier, a Bangalore-based minerexplains. We think the court will allow some mines to resume production but output will definitely becurtailed, he expects.

A Hospet-based miner agrees, but cautions that, even were the court to rule in favour of miners, moretime would be needed before ore production resumes. A decision to restart mines is one thing. But afterthat, the court will also set guidelines for operations and all this would take time, he says.

A court hearing into the matter did not take place as scheduled on 20 January. The court is expected toconvene this Friday (3 February), failing which it would hear into the matter only on 10 February, SBB istold.

Iron ore production in Karnataka (fiscal year base)Source: Indian Planning Commis ion reportUnit: Million Tonnes

Lumps Fines Concentrates Total

2005-06 14.006 22.909 4.35 39.843

2006-07 18.946 21.773 2.928 40.719

2007-08 21.532 27.458 - 48.99

2008-09 18.661 28.31 - 46.971

2009-10 16 27.016 - 43.016

2010-11 13.655 24 0.005 37.66


Chinas iron ore imports from India slump 25% in 2011

Chinas iron ore imports from India plunged by 24.5% last year from 2010, reflecting New Delhis impositionof higher export duties on iron ore exports and increased supplies from other countries including Australiaand Brazil, Steel Business Briefing notes from the latest customs bureau data.

In 2011, China imported 73.1m tonnes of iron ore from India, making it Chinas third-largest supply source,even though volume was down 23.7mt from the previous year.

Indias ore has been losing its market share in China to other sources after the Indian government liftedthe export tax to 20% effective 1 March 2011 up from 15% for lumps and 5% for fines previously. Indian orehas since been losing price competitiveness against Australian ore, especially during last years secondhalf, as reported. India subsequently lifted ore export tariffs to 30% effective 30 December.

In December, China bought 4.75mt from India almost unchanged from November.

Meanwhile Chinas iron ore purchases from Australia, its largest supplier, rose 11.75% or by 31.2mt y-o-yto reach 296.7mt last year, even though the December volume dipped by 2.7% m-o-m to 29.29mt.

From Brazil, China imported 142.73mt of iron ore last year to make for an increase of 9% or 11.81mt. TheDecember import volume reached 13.72mt, some 7.8% more than in November.

The top three supply countries, nonetheless, lost some of their share of Chinas iron ore market share tonew supply sources such as South Africa, Iran, and Ukraine in 2011. Australia, Brazil and India accountedfor 74.7% of Chinas total 686.06mt of iron ore imports last year, down from around 80% in 2010, SBBcalculates.

China's top three iron ore sourcesSBB 2012

Source: China Customs

Dec (in mill t) m-o-m change Jan-Dec Share

Australia 29.29 -2.7% 296.68 43.24%

Brazil 13.72 7.8% 142.73 20.8%

India 4.75 0.2% 73.06 10.65%


China's scrap imports grew 16% in 2011

Chinas ferrous scrap imports reached 6.77m tonnes last year, representing a year-on-year increase of15.7%, according to China Customs data. The increase in the volume of scrap imports was a result of thenarrowed price gap between domestic and imported scrap.



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Imports for this year could remain strong, industry sources predict. The countrys growing crude steeloutput has also led to a larger demand for raw materials including scrap, Steel Business Briefing is told.

Market sources generally believe that Chinas scrap importing is likely to maintain a growing trend in thenext few years. Chinese mills are paying more attention to the international scrap market and areexpanding their overseas supply channels. This will help the countrys scrap import volume to enjoy asteady increase, a scrap trader in east Chinas Jiangsu province says.

The China Association of Metalscrap Utilization (CAMU) predicted at the beginning of last year that Chinawill need to import more than 11m t of scrap in 2011 to make up for a shortfall in the domestic availability.But actual import volume is usually less than estimated due to the uncertainties in international trading,

a CAMU source explains.

Chinas scrap imports peaked 13.69m t in 2009 but plunged by 57% in 2010 to reach only 5.25m t mainlydue to unfavorable prices of imported scrap that year, SBB notes.

China's ferrous scrap importsSBB 2012

Source: China Customs

2011 2010

S crap import volume 6.77m t 5.25m t

Y-o-Y change 16% -57%


China opting for chrome ore over FeCr: Macquarie

China is choosing to satisfy more of its increasing demand for chrome units from overseas ore to producechrome alloys domestically as its stainless production continues to increase, said Macquarie commoditiesresearch in a 30 January report seen by Steel Business Briefing.

Chinas chrome ore imports increased 9% to a new record of 9.4m tonnes in 2011, while ferro-chromeimports fell by 1% to 1.8m t, which is also 17% below its peak in 2009, Macquarie noted. The increase wasdriven almost entirely by South Africa where imports rose 51% to 4.7m t last year, accounting for almost50% of the total imports. This compares to a market share of 36% in 2010.

At the same time, South African FeCr producers are struggling to control production costs, particularlypower prices, which are rising steeply, while their main export market is stagnant as China switches fromimporting FeCr to importing chrome ore, it said.

While the South African FeCr industry has called for restrictions on the export of chrome ore, Macquariebelieves these are unlikely to be imposed and would be self-defeating as exporting chrome ore remainsmore profitable than FeCr.

As such we expect China to continue sourcing proportionally more of its increasing import demand forchrome units from ore ahead of alloys, said Macquarie. This has important implications, of course, forthe FeCr industry, especially in South Africa.


Vale to commission Subic Bay floating terminal in February?

There may be a delay for iron ore giant Vale to commission its floating transshipment terminal at SubicBay in the Philippines in February, Steel Business Briefing learned from an industry source that is closeto the Subic Bay Metropolitan Authority (SBMA).

Vale and SBMA officials held a discussion yesterday (31 January), and Vale officials did an inspection onthe facilities: I heard that there may be a delay for the commissioning of the floating terminal, but no ideawhy or till when, the source told SBB. He confirmed to SBB, however, that all the facilities at the floatingterminal have completed installation and are ready for operations.

Vale has been declining comment on the issues relating to such centres, just mentioning the Subic Bayterminal commissioning date as in February in a press release on 31 January. It has been seeking toestablish iron ore transshipment and distribution centres in Asia with the strong resistance it has beenfacing from the Chinese authorities and shipping industry to unloading its very large ore carriers (VLOCs)at Chinese ports, as originally planned.

Among the back-ups are the distribution centre in Malaysia to be commissioned in 2014 and the Subic Baytransshipment terminal, as SBB reported.

Back-up plans are necessary after Chinas Ministry of Transport issued a notice on 31 January, banning anyodd-sized vessels from docking at Chinese ports on safety concerns, which was interpreted by aHongkong-based shipping service provider as a reiteration from Beijing to ban VLOCs from arriving inChina.


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Japan eyes Jan-Mar steel output rise, fears higher stocks

Japans steelmakers plan to produce 26.65m tonnes of crude steel during the current quarter, 2.5% morethan a government prediction in late December and leading to fears of a rise in domestic stocks.

The production forecast by the ministry of economy trade & industry (Meti) is 0.3% higher than actualOctober-December output, and seems to reflect expectations among steelmakers of a rise in demand asThailand recovers from last years floods, a Meti spokesman tells Steel Business Briefing.

The plan for finished product output is also 6.6% higher than October-Decembers 22.57mt at 24.07mt, amuch steeper increase than for raw steel. Meti suggests the mills continued to produce and stockpile

semis last quarter while the finished product market was unstable, and now they aim to draw down theirsemis stocks.

Overall, the mills production plans for this quarter seem excessive for current market conditions andproducers may be anticipating improved global steel demand, Metis spokesman says. But the yencontinues to strengthen and boosting steel exports significantly may be difficult.

We also worry about rising domestic stocks, and monitoring actual demand is very important todetermine production volume, he added.

Japans ordinary steel stocks for domestic sales at producers and distributors at end-December edged upby 67,000t or 1.2% from end-November to reach 5.58mt, Japan Iron & Steel Federation data show.

Meti has yet to prepare its production forecast for April-June, but the ministry spokesman said demandfrom post-quake reconstruction and firm demand from the auto sector will support basic demand. But the

yen-dollar exchange and the eurozone crisis make predictions about the market difficult, he added.

Japan's Jan-Mar steel production planSource: Meti

Total (ordinary) (special)

Crude steel total 26.65m t

q-o-q +0.3%

y-o-y -3.8%

Steel product total 24.07m t 18.77m t 5.3m t

q-o-q +6.6% +7.8% +2.6%

(For domestic) 16.26m t 12.76m t 3.51m t

q-o-q +2.1% +2.7% +0.1%

(For export) 7.81m t 6.02m t 1.79m tq-o-q +7.2% +7% +8.1%


Chinas Jan PMI recovers but steel industry unmoved

Chinas manufacturing sector recovered in January thanks to firmer domestic consumption because of theChinese New Year holiday. This was illustrated by the countrys latest purchasing managers index (PMI) forJanuary, released on 1 February by Chinas National Bureau of Statistics (NBS), which climbed 0.2 of apoint from December.

Last month Chinas PMI stayed above the 50 benchmark to reach 50.5, leading NBS analyst for the PMI,Zhang Liqun, to remark on the countrys slow-but-steady manufacturing recovery since December. TheJanuary growth mainly reflected improved domestic demand during the holiday though, he pointed out.

But the recovery in Chinas PMI in January has not eased steel market concerns about manufacturingsgeneral poor health. Chinese industry analysts and traders tell Steel Business Briefing a slowdown in Q1economic growth is palpable and thus the chill in the steel market will linger beyond this quarter.

Indeed, in Januarys PMI the countrys new orders sub-index rose 0.6 of a point to 50.4, but the majorcontributors were commodities industries such as agricultural products, food and beverages, and textiles,SBB notes.

The China Iron & Steel Association (CISA) also says in its latest report that given poor domestic and exportdemand, steel output is unlikely to rebound significantly while market inventories, especially ofconstruction products, will trend upwards during January-March. Thus, prices will continue to fluctuate atcurrent low levels, it warned.

Chinas machinery industry federation, a Beijing-based grouping of 270 of the countrys major machinerymakers, says the machinery sectors growth rate will slow to perhaps 18% this year from last years 25%.


Japanese mills bemoan surge in steel imports in 2011



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A 22% year-on-year jump in Japans imports of carbon steel to 4.48m tonnes in 2011 has predictablysparked fear among local producers that the surge will increase and complaints about the strong Japanesecurrency.

The Japan Iron & Steel Federation (JISF) data published Wednesday showed total iron and steel imports including special steel, pig iron, semis and others climbed 15% from 2010 to 8.3mt. The carbon steeltotal marked the first time since 2005 that imports broke the 4m t-level, Steel Business Briefing notes.

Imports grew especially from Korea chiefly because of the yens appreciation and this condition willcontinue, said a JISF spokesman. An exchange rate of 70=$1 seems to have become the norm andimports will continue to enjoy competitiveness, he told SBB.

Despite the rise, Japans total import volumes amounted to just one-fifth of its total exports last year of41.2mt, SBB notes.

Koreas exports of carbon steel to Japan last year soared by nearly 30% y-o-y to 2.95mt and accountedfor 88% of the total. Among the largest increases were for heavy plates where imports grew 161% y-o-y to370,000t and for hot rolled coils where imports rose 24% to 1.02mt.

The climb in plate shipments seems to reflect aggressive export sales by Dongkuk Steel Mill, Posco andHyundai Steel each of which has newly commissioned plate mills. The rise in HRC shipments would befrom Posco and Hyundai that have also expanded HRC capacity, as SBB has reported.

Japan's leading steel suppliersSource: JISF

2011 ChgeKorea 2,951,848 +29.9%

Taiwan 818,219 +15.8%

China 638,146 +6.4%

Grand total 4,483,496 +22.4%


India's JSPL eyes stake in Odisha's Gopalpur port

Plans by Indias Jindal Steel & Power Ltd (JSPL) to acquire captive port facilities in the eastern state ofOdisha (formerly Orissa) are seen as materializing through the firms acquisition of a 60% shareholding inGopalpur Ports Ltd (GPL), operator of the existing Gopalpur port in the state.

GPL is a 50:50 joint venture between Orissa Stevedores Ltd (OSL) and Noida-headquartered SaraInternational Ltd. The Odisha state government had selected the two partners in September 2006 througha tender to build a 40 million tonnes/year port at Gopalpur.

Sara International is set to offload its entire stake in the project to JSPL while OSL would sell 10% of itsshare to give the steelmaker a 60% majority shareholding in GPL. OSL would hold the remaining 40%,according to a report yesterday by Indian publisher Livemint.

Though JSPL and Sara International officials declined comment on the report, the steelmaker was in talkswith the Odisha government last July to build a captive port to support the 6m t/y integrated steelworks it isbuilding at Angul, some 280-300km north of Gopalpur, as Steel Business Briefing reported.

At the time, JSPL estimated it would require adequate port facilities to handle imports of 5.5m t/y of cokingcoal, 7.46m t/y of non-coking coal, 2.6m t/y of limestone and 3.7m t/y of dolomite. It would also needfacilities to handle outgoing shipments of about 4.93m t/y of coil and 900,000 t/y of plate from Angul. The

steel cargoes were planned to be shipped mainly to Indias west coast.


Turkish sheet prices flat, trade weak

Flat rolled steel trading in Turkey remains quiet and is unlikely to pick up anytime soon; buyers are unwillingto accept current price levels, which are not anticipated to decrease in the immediate future due to risingglobal prices.

Domestic producers are offering hot rolled coil at $660-670/tonne ex-works. Ukrainian import offers standat $620-630/t cfr, while Russian product is pegged at $650-660/t cfr and Romanian coil at $650/t cfr. The 9%duty on HRC imports from non-EU sources makes importing from these locations more costly thansourcing locally. Most buyers have already secured some bookings for February and March delivery and are

therefore in no hurry to order.Heavy snow this week has hampered deliveries and industrial activity, sources tell Steel BusinessBriefing. This is expected to ease in a couple of weeks time, when market activity should pick up, theyadd.


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US Steel Kosice targets 4 million short tonnes in 2012

US Steel is aiming to produce 4 million short tonnes (3.6m tonnes) at its Slovakian integrated mill in 2012,the company said in an annual earnings call monitored by Steel Business Briefing.

We're gonna operate all 3 furnaces so that implies 3-something million or 4 million tons on an annualbasis, the US Steel chairman and ceo John P. Surma comments. Last year around half of US SteelKosice's output was hot-rolled material, SBB learnt.

Unlike the loss-making Serbian mill, U.S. Steel Kosice has produced positive operating results in 2011,Surma said. Despite that the steelmaker is unsure its European unit will report profits in the first quarter of

2012. "Our objective would be to chase a breakeven number for the first quarter, Surma commented.

"It's a really good objective but it's a stretch", he added. The company will still incur losses generated byUS Steel Serbia in January, SBB learns.

While European spot market prices are expected to increase in Q1 2012, contract prices are expected toweaken compared to Q4 2011, SBB heard in the call. "One of our other problems is, of course, that we ranreally low levels in the fourth quarter and raw materials costs are coming down but we still have somehigher cost material we've got to chew our way through now in the first quarter," Surma explained.

US Steel Kosice, US Steel's sole European integrated plant after the sale of its Serbian operation, has acombined capacity of 4.5m t/y, SBB notes.


Ruukki aims at improving profitability at 80% capacity

The Finnish-based steel producer, Ruukki, is launching a project aimed at improving performances andsecuring profitability when steel production capacity is a reduced at 80%, Steel Business Briefing learnsfrom the company.

Ruukki confirmed that it has produced at around 80% of its capacity in Q4 and overall crude production in2011 remained stable at 2.2mt compared with 2010. In Q1 the capacity utilisation is expected to increaseslightly, according to Sakari Tamminen, president and ceo of the company.

To improve its competitiveness, Ruukki Metals is expected to focus more on special steel products (high-strength, wear-resistant and coated steel products), which accounted for 31% of total sales in 2011, SBBunderstands. This represents a rise of 4 percentage points on 2010. A full analysis will be carried out duringQ1 2012, but the company continues targeting to take this share to 60%, as previously reported.

Meanwhile, the company is due to start discussions with its iron ore supplier, LKAB, over the delivery ofmaterial in Q2. The company signed a long-term agreement back in July 2011 that is still in place until theend of Q1. We havent started discussions with LKAB yet, we are not aware of how long the newagreement will run for, Tamminen commented in a conference call with analysts.

Overall, the group posted a profit of 56 million ($74m) in 2011, up from the 38m profit posted in 2010.


UK Mir Steel faces court case over hot strip mill ownership

The UK-based hot rolled coils producer Mir Steel is expected to face a civil court case later this year asLictor Anstalt, a Lichtenstein-based company, seeks to have its claimed ownership of the hot strip mill

recognised, Steel Business Briefing learns from sources close to Lictor.In December the UK high court rejected a bid by Mir Steel to issue a summary judgment in its favour onthe two claims. The case relating to an allegedly unlawful sale of steel-making equipment by a companyin administration is expected to be heard in July 2012, according to the source and documents seen bySBB. If the court finds in Lictors favour, Mir Steel could be forced to pay up to 50m (60.1m) incompensation, SBB understands.

When Libala, a company affiliated to Mirinvest, bought the site in 2008, administrator Begbies Traynor saidthe sale included the plant (then known as Alphasteel) and certain other of its assets.

Lictor Anstalt supplied the rolling equipment to the former owner of the plant in Newport, Alphasteel,between 1998 and 2000. At that time, the company owning the site agreed for Lictor Anstalt to retainownership of the equipment, SBB learns from sources familiar with the matter.

Lictor Anstalt is now seeking compensation from Mir Steel, which had not commented on the matter priorto SBBs deadline.


Serbian state keeps Smederevo open, looks for investors



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The Republic of Serbia is going to continue operations at its Smederevo steelworks acquired earlier thisweek from US Steel, Nebojsa Ciric, the Serbian minister of economy and regional development said.

Production at the loss-making mill is to be maintained, Steel Business Briefing reads on the ministry'swebsite. "The motive of the state is not economic, but social, Ciric explains. The state wants to protect thejobs of 5,400 people working at the Smederevo works, SBB understands.

One of the turnaround scenarios for the Serbian mill would be to invest 80million to expand its productportfolio to produce sheet for car making, the minister notes. This product positions US Steels plant inSlovakia in a better situation. US Steel however was not interested in investing more resources into thecontinuously underperforming site.

Meanwhile, the Serbian government is looking for strategic investors even though US Steel's efforts to finda better positioned buyer was unsuccessful earlier, SBB learns.

Rinat Akhmetov, the owner of Ukrainian steelmaking group Metinvest Holding was said to be interested inthe Serbian plant, local media reported.

Metinvest Holding did not respond to requests for comment before SBB's press deadline.


Turkish mills open March offers, some Feb still available

Turkish producers were heard offering March production billet at $590-595/tonne FOB to traders onWednesday when bad weather limited local sales of construction steel in the East Mediterraneans main

producing regions, market players tell Steel Business Briefing. Mills state that they have filled Februaryorder books, but traders doubt this and one says an offer was received for 5,000t of February productionrebar from a large steelworks at $650/t FOB. This is level on sales pushed through last week. We dontthink the Turkish mills have sold out for February; if Egyptians come in to the market for prompt shipmentswith some reasonable bids, then we expect some tonnage to be found for February, one trader says. Along product producer had received no bids late on Tuesday from Egyptian traders even though producersin the North African country released their February production quotations for finished steel.

The cold snap sweeping across Europe has put paid to the short-lived uptick in Turkish domestic buyingactivity last week; offers of billet are now $605-610/t ex-works Iskenderun but no deals have been reportedat this level. For wire rod, the offers released are pegged at $700-710/t EXW Iskenderun, but again no dealsare pushed through and for larger volumes potential buyers are chasing $10-15/t reductions.


European stainless bar market enjoys renewed energy

European austenitic stainless steel bar base prices25-80mm dia bright bar, cents/kg delivered

SBB 2012

Nov 11 Dec 11 Jan 12 Feb 12 Mar 12*

Type 304L 90 - 120 90 - 120 95 - 125 100 - 125 100 - 125

* SBB forecast, except announced surcharges

There has been a confidence boosting start to 2012 for the European stainless steel longs market, marredonly by thoughts that this year could be a re-run of 2011, with a strong first half and weaker H2.

Distributors have been restocking after running down inventories through the closing months of 2011 as

surcharges declined, although they have been exercising caution about stock levels both by volume andby value, Steel Business Briefing is told by market sources.

Mill-direct business is said to be better than in Q4, although end users, mindful of the uncertaintysurrounding surcharges, are also careful with stock levels. Mill delivery times have increased, and nowrange from eight weeks for rolled commodity bars, to as far forward as August for smaller forged bar.

With surcharges now increasing there is the expectation that, even though base prices are not showingmuch change, margins should improve, particularly on special grades.

Most sources tell SBB that the prevailing gloomy economic sentiment is at odds with their tradingexperience. They report good, stable demand in key markets such as oil/gas, power generation, machinebuilding and automotive. Also in chemicals, with only construction singled out as under-performing.

One south European mill says it has negotiated a 50/tonne increase on austenitics, and hopes to secure

up to another 50/t during Q1. But this seems at odds with experience elsewhere, where increases arethought unlikely, or at best to be modest. One north European mill talks of perhaps achieving a 1-2%base price increase this quarter (so up about 25/t).

Transaction prices for type 304L bright bar, 25-80mm dia will be around 3,050-3,300/tonne this month,SBB calculates.

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European ferritic stainless steel bar base prices8-25mm dia drawn bar, cents/kg delivered

SBB 2012

Nov 11 Dec 11 Jan 12 Feb 12 Mar 12*

Type 430F 130 - 150 120 - 140 125 - 145 125 - 150 130 - 150

* SBB forecast, except announced surcharges[Steel Prices] [related articles] [print] [your comment] [back to top]

Outokumpu/Inoxum tie-up to create largest stainless producer

The new venture between Finland's Outokumpu and Germany-based ThyssenKrupp will be the world's

largest stainless producer, with a capacity of 3.095 million tonnes/year, once concluded in Q4 2012.

The main goal of the new stainless venture will be to implement operational efficiency improvements,including the reduction of costs and better utilisation of production capacities. The combination ofThyssenKrupps Inoxum and Outokumpu will make Outokumpu financially stronger than it is today, ceoMika Seitovirta said in a joint press conference with ThyssenKrupp's ceo Heinrich Hiesinger on Wednesday.

The total estimated synergy cash savings estimated at 225-250 million per annum, 45% of which areexpected by end-2014 and 70% by end-2015.

A major part of the strategy is the reduction of its cost base in Germany, primarily by relocating productionand shutting meltshops at Krefeld by end-2013 and Bochum by end-2016. The reduction in thin cold rollingcapacity in Sweden is to start from 2014 onwards. In total, 1,500 jobs are to be cut as part of Outokumpu'scost-cutting measures.

Outokumpus strategy is built on its integrated mills in north and southern Europe and in Alabama, US. Itremains committed to the on-going Krefeld investment as part of the goal, Seitovirta emphasised. Terni inItaly remains a vital part and capacity utilisation will be higher than before, he added.

Commenting on pending anti-trust approval, Outokumpu was confident that authorities would beresponsive to the matter. Outokumpus managers believe the companies are complementary withOutokumpu serving mainly the industry and Inoxum serving mainly end-users, Kari Parvento, a memberof the executive committee, told Steel Business Briefing.

As a major shareholder in Outokumpu, ThyssenKrupp will aim to provide stability to the company, notedHiesinger.


Outokumpu to cut 1,000 jobs as ceo seeks to stem lossesThe Finnish-based stainless producer, Outokumpu, is set to continue taking actions to restore profitability.Its 2011 results are said to be unsatisfactory as the company closes in on combining ThyssenKruppsInoxum into its operations, Steel Business Briefing learns.

In 2011 the company registered operational losses 66m, compared with losses of 91m in 2010, butincreased significantly its cash flow. In 2012 Outokumpu is expected to reduce its workforce in Finland,Sweden, the UK and its European distribution operations by up to 1,500.

Results weakened slightly in the last quarter of the year, with deliveries of finished products decreasing by5% compared with Q3, to 523,000t.

Since the end of December we have been noticing a slight re-stocking activity among clients, as well as aprice recovery. It is soon to say how the demand will develop, Kari Parvento, member of the executive

committee comments to SBB, citing financial market uncertainty as a negative factor.

We are aiming to turn the company around as quickly as possible, but we dont have a target for whenprofitability will be reached, he adds.

In Q1 2012 higher volumes are expected to lead to Outokumpu's operational result being around break-even or slightly positive, according to the company. Outokumpu has been able to increase prices slightly inboth standard and special grades since the beginning of the year, the company added.

The company is also pushing ahead investments in its ferrochrome operation (see related article) and inits quarto plate production. By 2014 the site at Degerfors, Sweden, is expected to see its capacity increaseto 150,000 t/y, from 110,000 t/y, following a total investment of 104m.


Sandvik Q4 profit disappoints market, lowers growth

Sandvik, the specialty steel and toolmaker, issued fourth quarter net profits of SEK731 million ($109million), down from SEK2.094 billion for the same period last year.

Analysts said Sandvik, which is in the process of restructuring, said it was now looking at 2012 revenuerowth of 8%. That re resented a lowerin of the former tar et which was also set at 8% -- but was a

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number that excluded any acquisitions.

Sandvik said demand at its Sweden-based special steel production unit, Sandvik Materials Technology(SMT) was patchy during the quarter compared with other units.

In Sandvik Materials Technology, the scenario was more fragmented, with high demand in the oil and gasindustry offset by weakness in several other segments, ceo Olof Faxander said. The North Americanmarket was stable during the quarter, as was much of Europe and Asia, Faxander added.

SMT order intake declined at fixed exchange rates by 19% compared with the year-earlier period. Adjustedfor changed metal prices, the reduction was 15%, Steel Business Briefing notes. The financialconstraints in China and the financial turmoil in Europe had a negative impact on investment levels andproduction rates in several segments, Sandvik said. Activity in the nuclear power industry remained low.

SMT recorded a Q4 operating loss of SEK841 million against profits last year of SEK326 million. Sandviksaid changed metal prices had a negative impact of SEK125 million on the result.

Sandvik said although SMT reported favourable demand from the aerospace and process industries, afurther deterioration had been noted from the consumer and electronics industries as well as for low value-added products.


Black Sea scrap vessel sinks en route to Izmir, reports

Cambodia-flagged vessel Vera sank off the north-west coast of Turkey on Tuesday en route to Aliaga, Izmir

region, to deliver a cargo of Russia-origin scrap to one of the steelworks there, according to reports thatSteel Business Briefing could not immediately confirm. Vera is 114m in length, according tovesseltracker.com. The ship is reported to have sunk off Zonguldak port late on Tuesday and has a dryweight capacity of 2,850t. Shipments of A3 demolition scrap are made regularly from Rostov, Russia, tosteelworks in the Marmara, Izmir and Turkish Black Sea coastal regions. The three largest mills withterminals in Nemrut Bay, Aliaga, are Habas, Ege Celik and Izmir Demir Celik. Bad weather in the Black Seahas already affected scrap shipments, with one trading group reporting its vessel struggling to load andleave a port in the Sea of Azov further north due to surface ice. A search conducted by Turkish maritimeauthorities for the eight missing Vera crew members is ongoing.


Outokumpu to double ferrochrome capacity by 2015

Outokumpu is pushing ahead its previously announced project to double ferrochrome capacity. Thecompany expects the investment to benefit the entire combined entity of Outokumpu and Thyssenkrupp'sInoxum, making it self-sufficient in ferrochrome by 2015, Steel Business Briefing learns from thecompany.

Outokumpu expects the new capacity to be operational by 2013 and production to be fully ramped up by2015, when its annual ferrochrome capacity is likely to reach 530,000t. The overall cost of the expansion isexpected to reach 440 million: so far, about 137m has been invested.

Mika Seitovirta, ceo of the company, explained in a press conference this week that this investment andcapacity expansion is expected to diversify the revenue base of the company going forward.

Outkumpu controls a chromite mine in Kemi, Finland, with ore reserves of 36mt. It will be able to produce,after the expansion, 1.3mt/y of ore, SBB notes.


French output up by 2.4% in 2011, not far from expectation

In 2011 French crude production increased by 2.4% to 15.77 million tonnes compared with last yeartriggered by slightly better fundamentals, Steel Business Briefing learns from the latest data publishedby the local producers association, FFA.

2011 was quite good, but still 18% less respect the output registered in 2007. Since April steel productionfallen, and the French Association amended the outlook for the whole year, an analyst says. Before Aprilthe outlook for the whole year was around +4%, and then the outlook was for an output slightly higher thanlast year ... so at the end the production was in line with revised expectations," he explains.

According to the French association data, in 2011 EAF producers increased their production by 9.4% to

6.12 mt, while integrated producers cut their production by 1.6% to 9.65 mt.

In December alone, crude steel production decreased by 1.5% y-on-y to 1.10 mt. The output produced byEAF steelmaker decreased by 6.7% to 368,100, while the crude output from the BF producer increased by1.3% to 739,550t.

In December in France as well as in the rest of Europe mills undertake long stoppages during the



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Christmas period, and this is particularly true when the economy is not great, a trader comments.

According to the Federation, activity in the flat sector has decreased since December, but thefundamentals are not bad, particularly in the mechanical industry. In December, the long sector was stableat a level that has not seen so low for some time.


Italian third country imports up 12.8% in 2011

In 2011, Italy's steel imports from non-European Union (EU) countries reached 8.76 million tonnes,

increasing 12.8% compared with 2010. In the same period, steel exports to non-EU destinations rose 3.1%y-on-y to 4.95 mt, Steel Business Briefing learns from Federacciai, the countrys steel federation.

Overall in terms of economy and fundamentals, the first half year was better compared with the first sixmonths of last year, an analyst says.

In 2011 Italy's flat steel imports from non-EU sources reached 4.66 mt, up 25.1 % y-on-y, while exports fell5.7% to 1.72 mt. Imports of semi-finished products fell 5.4% to 2.94 mt, while exports fell even further by25.2% to 279,000t.

Flat products were the most imported products; followed in absolute term by semi products which actuallydecreased y-on-y. In Italy, the largest domestic re-roller increased its capacity and this partially explainsthe increases, another analyst says.

Last year, Italy's longs imports from third countries reached 638,000t, up 21.8 % y-on-y, while exports

increased even more to 1.47 mt, up by 14.6%.

Long products led the export and this due to the activities of exports into North Africa. The exchange ratehelped [Italian] domestic long mills to sell abroad. We hope that our domestic mills will continue to gainmarket share in the export market to help them to make profits because the domestic market is stillfragile, he concluded.


Special steel maker Zlatoust restores production

Russias Zlatoust Steel Plant (ZMZ) increased production and shipments of saleable steel products by 30%year-on-year in 2011 to 501,300 tonnes and 493,300t respectively, Steel Business Briefing learns fromthe plant.

The special steels producer in Russias Chelyabinsk region haS been ramping up output for the past threeyears. It made 144,000t of finished rolled products in 2009 as it battled with financial problems, andincreased output to 385,400t in 2010.

The continual recovery is driven by strengthening demand for ZMZs higher value long products, the plantsays. Production of stainless steel bars rose 70% to 13,600t, and that of cold-finished bars went up 120%to 13,000t.

In 2010 and 2011, ZMZ suspended all four electric arc furnaces in one of its three melt shops, andcombined the other two shops into a single steelmaking complex. It currently operates five out of theremaining six EAFs, two 5-tonne and three 10-tonne, and doesnt plan to restart any of the idled furnacesat present, SBB understands.

Last year, the mills crude steel production averaged 6,500-7,500 tonnes/month, whilst finished products

output neared 40,000 t/m, with shortfall of billet being sourced from Mechels Chelyabinsk steelworks, withwhich it has a strategic partnership.

ZMZ is now managed by NK-Invest, which succeeded Elektrostali Rossii (Estar) holding, after the lattercollapsed in the wake of the 2009 economic crisis. NK-invest also presides over Russian billet producersRostov Steel Works (REMZ) and Volga-Fest.


ENRC produces less ferro-alloys

Eurasian Natural Resources Corp (ENRC) reported total saleable ferro-alloys production was down 2.9% in2011, to 1.49m tonnes year-on-year, due to unscheduled equipment repairs, Steel Business Briefinglearns from the company.

The decrease affected high-carbon ferro-chrome, ferro-silicon and silico-manganese production, whichwere caused by an emergency halt and subsequent repairs of furnace 63 at its Aksu works and aproduction suspension at Tuoli. Furnace 63 was back on stream in December, ENRC says.

Q4 2011 production volumes decreased for most ferro-alloy products versus Q4 2010, except for increasesof 4.8% for low-carbon ferro-chrome to 22,000t and of 5% for ferro-silico-chrome to 21,000t. Medium-



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carbon ferrochrome saleable output was stable at 13,000t. ENRC's ferro-alloys operations are mainlylocated in Kazakhstan, with an exception of Tuoli, in Xinjiang province in China, where it holds 50%.


ENRC mines, sells less iron ore due to end-year repairs

Kazakh miner Eurasian Natural Resource Corp (ENRC) said on Wednesday its October-December output ofsaleable iron ore products decreased 6.6% against Q4 2010 to 3.87m tonnes, and 5% for the whole of2011 to 16.11mt. It blamed the decline on unexpected repairs and logistics issues in the latter part of theyear.

Whilst production of saleable 65.5% Fe concentrate increased 10.8% to 2.23mt compared to Q4 2010, it fell12.5% quarter-on-quarter. Output in Q4 2011 of 63% Fe pellets fell 22.9% to 1.64mt on the corresponding2010 period, and 2% quarter-on-quarter, due to unscheduled pelletizing plant repairs. The company saysthat, with repairs over, it is looking forward to a stable level of pellet production in 2012.

A decrease in mining and processing was also caused by temporary railway restrictions on transport ofKurzhunkul ore to the processing plant and overloading of ore storage facilities on production sites, thecompany says.

Primary iron ore concentrate production at its mines in Kazakhstan was down in Q4 2011 by 3.8% to4.22mt against the comparable period in 2010, Steel Business Briefing learns from the company.

ENRC produces iron ore in Kazakhstan and Brazil. It mines and processes the bulk of its iron ore at KazakhSokolov-Sarbai mining production association (SSGPO), with Russian steelmaker Magnitogorsk Iron & Steel

and Chinese exports taking the bulk of processed ore.


UGMK sees solid distribution growth in Ukraine in 2012

Distributors and traders may sell up to 2.5 million tonnes of steel products in 2012 in Ukraine, up 3.5%year-on-year, Steel Business Briefing learns from the distributor Ukrainian Mining & Metals Co (UGMK).

In 2011, Ukrainian distributors and traders sold 2.2 mt, exceeding the previous years volumes by 31%.They accounted for roughly a quarter of domestic steel consumption, SBB calculates.

The boost to the outsell market was driven by demand from steel fabricators and rail car manufacturersand power generating companies, whose steel consumption was growing at the fastest rate, whilst the

construction and shipbuilding sectors developed very moderately, according to UGMK.

UGMK itself aims to sell 485,000t in Ukraine in 2012 and thereby increase its share of the domestic outsellmarket to 22%, up from the current 15%. It also plans to sell around 140,000t in Belarus, it says.

In 2011, the company raised its domestic shipments by 22% y-o-y to 340,000t, comprising 35.5% of itstotal sales volumes. UGMK sold 535,000t (or 55.5% of its sales) in Russia while Belarus accounted for85,300t (or 9%).

UGMK, established in 1998, now owns 30 sales outlets in 26 cities and towns in Ukraine. The company is anofficial distributor of Ukraine's Alchevsk and Dzerzhinsky Dneprovsky steelworks, both parts of IndustrialUnion of Donbass, and of Dnepropetrovsk pipe plant.


South African plate offers to the US creating interest

A competitive import offer for 3-6 inch steel plate from South African steelmaker Evraz Highveld hasdrummed up interest in the US market.

The offers range from $1,030 to $1,120 per short ton cfr, depending on gauge, and is scheduled for Aprilarrival. The offer for 3-4 inch plate is $1,030/s.t, 4-5 inch plate $1,070/s.t and 5-6 inch plate $1,120/s.t - allabout $40 below domestic mill fob prices.

The offer is pretty good, one plate source said.

US mills capable of producing plate up to six inches thick include Evraz Claymont and ArcelorMittal. Otherdomestic mills such as Nucor and SSAB only produce plate up to three inches thick.

Mills are aware of it, the source said. If they dont move it quickly enough, they will try to discount that.That is the fear in the market.

As Steel Business Briefing reported earlier this week, plate imports have continued to be a concern inthe first and second quarters for domestic plate mills. Imports have been cited as one of the reasons whyanticipated March price increases are now seen as doubtful.


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US CRC lead times move toward 8 weeks, others mostly static

US coldrolled sheet mill lead times have stretched toward eight weeks, while hotrolled and hot-dippedgalvanized sheet lead times held steady week-on-week.

According to The Steel Index - which like Steel Business Briefing is a unit of Platts - CRC lead times rosew-o-w to 7.9 weeks for the period ended January 29 - up from 7.5 in the prior week and 6.9 the week before.

At the same time, HRC lead times held mostly firm at 5.5 weeks, down just slightly from 5.6, but still higherthan the 5.1-week level of two weeks ago.

HDG sheet lead times remained at 6.2 weeks, which was still down from 6.9 two weeks prior.

Market sources, while not saying the top of US sheet pricing had been reached, said this week they feel adownturn could be in the offing, as SBB reported.


Goldman Sachs raises NA auto output estimate

North American auto production could outpace sales in 2012-2013, mostly due to foreign brand capacityadditions and an increasing export market, Goldman Sachs Global Investment Research says.

The firm says in a recent research note that companies' global platforms have made North American

vehicles "more relevant in other geographies," while an increase in domestic OEM manufacturing activityand currency issues also drive its opinion.

Goldman Sachs has raised its 2012-2013 production forecast for the steel-intensive North American autosector by some 600,000-700,000 units, to a range of 14.1m-14.9m. As Steel Business Briefing hasreported, current estimates peg US sales to be in the range of 13.5m-14.5m units this year.

"With much of the increased production coming from foreign brands, domestic suppliers are directly poisedto benefit over Ford and GM," the firm says in its note. "This, combined with supplier content opportunitiesfrom a multi-year product reinvestment cycle and share gains from smaller region players, underscores avery favorable growth environment..."


US manufacturing index, new orders climb in JanuaryISM Manufacturing Survey IndexJanuary 2012

Jan. 2012 Dec. 2011 Change

PMI 54.1 53.1 +1.0

New orders 57.6 54.8 +2.8

Production 55.7 58.9 -3.2

Employment 54.3 54.8 -0.5

Supplier deliveries 53.6 51.5 +2.1

Inventories 49.5 45.5 +4.0

Customers' inventories 47.5 42.5 +5.0

Prices 55.5 47.5 +8.0

Backlog of orders 52.5 48.0 +4.5Exports 55.0 53.0 +2.0

Imports 52.5 54.0 -1.5

A national US index indicates that the manufacturing sector grew at a faster rate in January, whichcontinues a 30-month trend of expansion.

The Institute for Supply Managements purchasing managers index grew to 54.1 in January, seasonallyadjusted. This is a one-percentage-point change over Decembers figure, Steel Business Briefing finds.

Ratings higher than 50 indicate expansion; below 50 denote contraction.

Prices jumped 8 percentage points to 55.5, from a decreasing 47.5 in December. ISM names steel and

stainless steel as two of the commodities that experienced price increases in January.New orders are also growing at an accelerated rate with a 2.4 point increase month-over-month. At 57.6,new orders represent the fastest growing category.

The index shows that production is up but growing at a slower rate m-o-m arriving at 54.3 in January,compared to 58.9 in December.



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January exports are growing at a faster rate with an index level of 55, and imports are also growing at aslower rate m-o-m with a 52.5 rating.

Inventories contracted in January but at a slower rate than December. The 49.5 index figure continues afour-month trend of slipping inventory levels.

Under guidance from the Department of Commerce, ISM decided to stop adjusting inventories forseasonal factors. Customers' inventories, prices, order backlogs, imports and exports also are notseasonally adjusted.

The DOC also revised seasonally adjusted data for the last seven years and lowered its threshold foroutliers to account for the steep declines in the 2008 recession.


Canadian manufacturing index momentum slows

The Royal Bank of Canadas manufacturing index recorded it slowest expansion since the bank startedtracking manufacturing companies in October 2010.

At 50.6, the January purchasing managers index is a 3.4-point decline compared to Decembers index.Index readings higher than 50 indicate improving business conditions; below 50 show deterioration.

Reflective of the rise in total new orders, Canadian manufacturers raised production and depleted stocksof finished goods in January. However, output growth was only modest and the weakest in the 16-monthsurvey history. Backlogs declined for the fourth consecutive month, with a number of panellists citing the

completion of large projects and weak growth of incoming new work, the report says.

Employment in manufacturing also fell for the first time in the surveys 16-month history.

The Canadian manufacturing index weighs five other indices: new orders, output, employment, suppliersdelivery times and stocks of purchases, Steel Business Briefing notes.


Siemens to modernize two bar mills for Gerdau in Colombia

Gerdau Diaco, the Colombian branch of the Brazilian steel group, is to upgrade two bar mills at its Tuta andTocancip steelworks, Steel Business Briefing learns from the Austrian plantmaker Siemens VAI whichwill supply equipment for the upgrades.

The modernized rolling mills are scheduled to come into operation at the end of 2012, and will be designedto produce rebar in different diameters.

At Diacos Tuta bar mill, the roughing mill will be equipped with a new billet feeder and a new pinch roll. Theremainder of the rolling line will be completely

sbb briefing 2 feb 12

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