STEEL WEEK IN BRIEF: Quarterly coal still not settled, steel prices up in China, Q1 results...

Metal Bulletin reviews the major stories affecting the steel market this week.

Iron ore prices increased to just under $69 per tonne cfr China on Friday April 28, after higher offers emerged as a result of strengthening steel prices.

Metal Bulletin’s 62% Fe Iron Ore Index was $68.80 per tonne cfr Qingdao on Friday, but still down by 16.11% month-on-month.

But spot iron ore transaction volumes quietened on Friday ahead of a three-day weekend.

On Thursday, Brazilian miner Vale said it expects the average iron ore sales price in the global market in 2017 to stay at around $70 per tonne, despite the recent falls in trade values.

"[The] declines were mostly due to market sentiment, rather than fundamentals," Vale’s executive director for ferrous minerals, Peter Poppinga, said.

Meanwhile, in the coking coal market, buyers in Japan continue to purchase seaborne cargoes on a provisional price, with the quarterly contracts yet to be settled.

Metal Bulletin’s indices were all unchanged on Friday at $200.31 per tonne cfr China and $238.60 per tonne fob Australia for premium hard coking coal, and $180.25 per tonne cfr China and $212.64 per tonne fob Australia for hard coking coal.

For May, domestic coal prices in China are expected to remain stable, with supply tightness in the seaborne coking coal market limiting downward movement, while weakening sentiment in the steel market and lack of production curbs are thwarting any upside.

This week, Turkish mills resumed their deep-sea scrap purchases as soon as they had some demand for finished steel products in domestic and export markets, while Indian scrap prices have also recovered slightly, following the Turkish market.

Steel
China’s hot rolled coil (HRC) and rebar prices experienced a sharp increase on Friday ahead of the three-day break following the surge in both futures and billet prices.

In Singapore, import prices for rebar have dropped below $400 per tonne cfr for the first time since the end of November 2016.

Southeast Asian billet importers remained mostly inactive over the past week as prices fell to their lowest level since the end of November 2016.

European stainless steel base prices are expected to fall by €10-20 ($11-22) per tonne next week, to coincide with a drop in May’s alloy surcharges.

Market participants disagreed on the outlook for the European rebar and wire rod market for May 2017.

The downtrend in international scrap prices and subdued export demand were cited as major factors likely to lead to further price falls. However, most customers in both Northern and Southern Europe need to restock, which is expected to support price rises.

Flat steel prices in Turkey’s domestic market fell this week, with some market participants expecting more price falls in May and June.

In Latin America, import prices for flat steel goods in South America plunged during April on lower offers, mostly from China. The regional market believes that prices might have hit a bottom line.

Trade policies
South Africa is considering a temporary rebate of the current 10% import duty for certain steel sections, according to the country’s International Trade Administration Commission (Itac).

Brazil has launched an anti-dumping probe into imports of welded austenitic stainless steel pipes from Malaysia, Thailand and Vietnam.

Thailand proposes extending by a further three years its safeguard duty on imports of non-alloy hot rolled flat steel products that are mainly sourced from India, Russia and South Korea.

And Australia’s has initiated an anti-dumping investigation into certain imports of steel wire rope from South Africa. It has also extended the deadlines of two anti-dumping investigations – one into galvanized steel and the other into alloy steel round bar.

Financial results

Several companies in the global steel chain disclosed their first-quarter performance data over the week.

In Asia, the list includes JFE HoldingsBaosteel, Hesteel, Liugang, Hyundai SteelNSSMC and Kobe Steel.

In Europe, SandvikVallourecKlöcknerAcerinoxTenaris and LKAB are among the firms which reported Q1 results.

In Latin America, the list comprises TerniumValeSiderarSimec and ICH.

Turkey’s Erdemir and Russia’s NLMK also disclosed Q1 financial figures this week.

Around the world
Global crude steel production rose by 4.61% year-on-year to 144.95 million tonnes in March 2017, while output of direct reduced iron (DRI) increased by 13.57%, to 4.81 million tonnes, according to the World Steel Assn (Worldsteel). 

BHP Billiton saw its first-quarter iron ore production rise by 1% year-on-year, to 62 million tonnes.

The Australian miner has narrowed its production guidance range for its Western Australian Iron Ore operations for the 2017 financial year ending June 30. It now expects to produce 268-272 million tonnes on a 100% basis, compared with 265-275 million tonnes previously.

BHP Billiton has also downgraded its production guidance for metallurgical coal for the 2017 financial year ending June 30 due to Cyclone Debbie.

It now expects to produce 39-41 million tonnes of steelmaking raw material, compared with 44 million tonnes previously, due to damage to the network infrastructure of rail freight operator Aurizon caused by the cyclone, which hit north-west Australia between late March and early April.

Anglo American reported annual output increases in January-March 2017 for both iron ore and coal.

Production of DRI at Ezz Steel is intermittent due to shortages of natural gas, raw materials and foreign currency in Egypt.

Use of DRI has cost advantages that will always apply despite the challenges involved in its production, according to UAE steelmaker Emirates Steel.

Cliffs Natural Resources plans to build a DRI plant in the USA in 2018. 

Vale is developing a new product called the Sinter Feed Low Alumina (SFLA) for the iron ore market.

Meanwhile, conditions in the EU steel market are improving on both the demand and supply sides, but there is still a threat from cheap imports, regional steel association Eurofer said.

Russia’s largest steelmaker, Novolipetsk Steel (NLMK), will sell 1.0-1.3 million tonnes of slab in other export markets if the USA decides to block steel product imports.

In the USA, US Steel shares suffered the worst one-day drop in the company’s history on Wednesday as executives pledged to spend more than $1 billion to repair the company's troubled mills.

In Brazil, the national steel institute, Aço Brasil, has cut its forecast for steel sales in 2017, due to the weak performance of the country’s economy.

And finally, ArcelorMittal has signed a deal to acquire an controlling interest in Belgian wire producer Bekaert’s Sumaré tyre cord plant in Brazil’s south-eastern São Paulo state, allowing it to increase productivity and reduce costs through potential synergies.

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