Steelmakers hit by glut in production,
sinking prices
The country’s steelmakers reduced output last month, adding to
signs of waning demand in the world’s largest producer as companies grappled
with overcapacity, sinking prices and slowing economic growth.
Crude-steel output fell 4.6 percent to 65.84 million metric
tons from June, data from the National Bureau of Statistics showed on
Wednesday.
Production in the first seven months was 476 million tons, 1.8
percent less than a year earlier. Demand for steel in Asia’s largest economy is
falling for the first time in a generation, spurring mills to ship record
amounts of the alloy overseas as prices slump.
The yuan sank on Wednesday for a second day after China
devalued it, and the move may help steelmakers sell even more of their output
abroad.
Lower steel production will hurt demand for iron ore, though,
which tumbled to the lowest since at least 2009 last month.
The drop also showed “that downstream infrastructure and
property had no recovery, therefore demand for steel remained
weak”.
Major mills in China, including Hebei Iron & Steel Co and
Baoshan Iron & Steel Co, are the linchpin of the global industry, accounting
for about half of the supply.
The country’s production probably peaked in 2014, according to
a forecast from the China Iron & Steel Association.
Output of steel products fell 6.2 percent to 92.3 million tons
in July from a month earlier, according to the bureau. In terms of daily
production, output averaged 2.977 million tons last month from 3.281 million
tons a month ago, it said.
Steel reinforcement bars used in construction dropped to 2,102
yuan ($327) a ton last month, the lowest price since at least 2003, according to
Beijing Antaike Information. It was at 2,322 yuan on Tuesday, 16 percent lower
than at the start of this year.
Mills around Beijing including those in Hebei province, the
largest producing region, may face government-ordered curbs later this month and
in September as policymakers seek to clean up the air for a parade and sports
event.
The moves will hurt steel output, Australia & New Zealand
Banking Group Ltd said on Tuesday.
“Some of the output cuts might become permanent as the
government and market work in tandem to squeeze out the least-efficient and
loss-making capacity,” said Li Yaozhong, head of commodities at Beijing Low Risk
Asset Management Co.
Iron ore with 62 percent content in Qingdao fell 0.3 percent
to $56.22 a ton on Tuesday, according to Metal Bulletin Ltd. Prices, which
bottomed at $44.59 on July 8, are 21 percent lower this year.
Source: Bloomberg
Iron ore shipments fall 9 percent as
steel mills struggle
Iron ore shipments on the Great Lakes totaled 6.6 million tons
in July, a year-over-year decline of 9 percent.
And shipments of the key steelmaking ingredient from U.S.
ports fared even worse, declining by 14 percent compared to July
2014.
About 1.5 tons of iron ore must be burned in a blast furnace
to make a ton of steel. The Lake Carriers Association said the steep drop-off in
July reflected cheap steel imports that currently command a record 31 percent of
the U.S. market.
Iron ore trade on the Great Lakes stands at 27.7 million tons
so far this year, an increase of 4.5 percent over the same period in 2014 but
5.2 percent lower than the long-term average.
Another key steelmaking input performed better last month.
Metallurgic coke cargoes on the Great Lakes rose 23 percent over last year at
657,000 metric tons, according to the Chamber of Marine Commerce.
Year-to-date cargo tonnage through the St. Lawrence Seaway was
only 14.5 million metric tons, a 7 percent decrease. Grains have been a bright
spot with a 63 percent increase in the corn that’s sent to Canada and the
soybeans that are shipped off to international markets.
“The Great Lakes-Seaway is a vital trade corridor for American
grain exports which will continue to be relied on into autumn when the new
harvests begin,” Chamber of Marine Commerce President Stephen Brooks said. “The
more buoyant U.S. economy is also creating demand for other products such as
construction, manufacturing and steel-making materials.”
Source: NWI
Crop woes help Brazil robusta coffee
prices to record high
Prices of robusta coffee in Brazil hit their highest on
record, with arabica values rising too, lifted by downgraded expectations for
the country’s harvest, besides the weak real and a squeeze on rival Vietnamese
supplies.
An indicator price of robusta coffee kept by research
institute Cepea hit R$329.92 a bag on Tuesday, up 2.0% on the day, and the
highest on records going back to November 2001.
Cepea’s arabica coffee indicator price rose by 3.5% to
R$478.23 a bag, the highest in seven months.
The strong performances have been underpinned by weakness in
the Brazilian real, which has raised the value in local terms of a commodity
which is traded internationally in dollar.
However, the gains also came amid waning expectations for this
year’s coffee harvest, which has now finished for robusta beans but is still
ongoing for arabica – with the size of both crops failing to meet some earlier
expectations.
‘Greater-than-expected losses’
The official IBGE statistics institute on Tuesday cut its
forecast for the Brazilian robusta crop to 10.75m bags.
And although the IBGE raised its estimate for the arabica
harvest to 33.42m bags, that remains below many market expectations earlier of a
35m-bag harvest.
Commmerzbank said on Wednesday, of Brazil’s overall coffee
output prospects, that it “is becoming increasingly clear that the actual crop
will end up in the lower range of the currently forecast spectrum of 40m-52m
bags”.
“The principal factor driving the price is the smaller
domestic supply and greater international demand,” Cepea said, noting also some
withholding by producers of sales on ideas that “losses to the current 2015-16
crop will be greater than expected until now”.
Vietnam squeeze
Export demand for Brazilian robusta beans began 2015
particularly strongly, running at more than double year-ago rates for the first
five months, according to data kept by Cecafe.
Volumes were underpinned by supplies left over from a strong
Brazilian harvest of the variety last year at a time when traders in Vietnam,
the top robusta producer and exporter, have been delaying sales in hopes for
higher international prices.
Vietnamese coffee exports are estimated officially at 1.09m
tonnes in the October-to-July period, the first nine months of the 2014-15
marketing year, a drop of 23% year on year.
Brazil’s robusta coffee export volumes in July, at 404,489
bags, fell 5.7% behind the year-ago figure, in what many investors have taken as
a sign of tighter supply expectations, evident in higher prices, taking
hold.
‘Potential for damage’
Meanwhile, concerns over Brazil’s coffee output prospects next
year are being provoked by dry weather which, while speeding progress on the
current harvest, is raising concerns over the imminent blossoming period for the
2016 crop.
Jack Scoville of US broker Price Futures said “sources in
Brazil suggest that current hot and dry weather in Minas Gerais [Brazil’s top
arabica-producing state] is affecting flowering for the next crop, and Robusta
production in the northeast has also been hurt
“The dry weather promotes good harvest progress but hurts
flowering and it is the potential for damage to next year’s crop” that has been
supporting prices.
Source: Agrimoney
Steel industry decries Chinese currency
devaluation
The U.S. steel industry and other manufacturers decried
China’s move to devalue its currency, which makes Chinese steel and other
exports artificially cheaper.
“This action is further illustration of the Chinese
government’s active role in manipulating the value of its currency to promote
Chinese exports,” American Iron and Steel Institute President and Chief
Executive Officer Thomas Gibson said.
“China has consistently intervened directly in foreign
exchange markets to control the value of the yuan versus the U.S. dollar to make
their exports more competitive and impose new barriers to imports. Our
government must address the massive damage that China’s undervalued currency is
causing to our nation’s manufacturing sector, especially the steel
industry.”
Gibson said the U.S. government should officially declare
China to be a currency manipulator.
Steelmakers around the world have criticized China, which they
have blamed for having as much half of the world’s steelmaking
overcapacity.
Overcapacity has bedeviled the steel industry, depressing
prices and leading steelmakers to dump steel at below-fair value prices on
foreign shores.
An industry report by E&Y estimated 10 to 15 percent of
steelmaking capacity worldwide would have to be idled or shut down over the next
few years, just to restore prices to a profitable level for the industry. As
many of 300 million tons might need to be taken offline over the next
decade.
Steel industry analyst Charles Bradford said China built more
steel mills than it needed during its period of rapid growth, but now had newer
mills that can operate more efficiently than those that were built a century ago
in places like Northwest Indiana.
U.S. steelmakers have said the Chinese steel that’s flooded
the market is cheaper because of government subsidies and currency that’s kept
artificially low to make imports into China more expensive and its own exports
more competitive.
The yuan depreciated 3 percent against the U.S. dollar on
Monday and Tuesday, which was the largest two-day depreciation since 1994,
according to a PNC Bank economic report. The yuan is at its lowest level in four
years after Chinese growth slowed and Chinese exports declined by 8.4 percent
compared to July 2014.
Source: NWI
Celebrating 130 Years Of
History
BHP Billiton is today celebrating the 130 year anniversary of
the incorporation of BHP and its
significant contribution to the Australian economy and society
for more than a century.
BHP was formed in 1885 after a rich silver and lead deposit
was discovered by Charles
Rasp on a rocky outcrop known as the ‘Broken Hill’ in western
New South Wales two years
earlier.
BHP Billiton CEO, Andrew Mackenzie, said the milestone was an
opportunity to reflect on
the Company’s long history and events that shaped its
culture.
“It’s not often that we get the opportunity to stop and take a
look at where we have come
from, but history has a lot to teach us,” he
said.
“From humble beginnings mining silver and lead at Broken Hill
and tin at Billiton (Belitung)
island, Indonesia, in the mid-1800s, it has been a long
journey to becoming the world’s
largest diversified resources company.
“We have been part of iconic events that have shaped the
nation, such as providing steel for
the Sydney Harbour Bridge and being part of the Commonwealth
Aircraft Corporation which
produced the first military aircraft in
Australia.
“These events show BHP Billiton’s ability to rise to a
challenge and apply technical expertise
to achieve great things – traits that remain part of our
culture today.”
Mr Mackenzie said the anniversary highlighted the contribution
that the Company continues
to make in Australia.
Last financial year BHP Billiton contributed around A$27
billion to the Australian economy in
payments to suppliers, wages and employee benefits, dividends,
taxes and royalties.
In addition, BHP Billiton contributed US$59.5 million through
voluntary community
investment to support social and environmental programs, and
the BHP Billiton Foundation
committed A$55 million to support science, technology,
engineering and mathematics
(STEM) education outcomes across Australia.
“We are proud of our long history in Australia, and the
contribution we make, and will
continue to make, to this country and beyond for decades to
come,” Mr Mackenzie said.
The video, Beyond the Surface, capturing the Company’s history
and with commentary by
renowned Australian mining historian, Professor Geoffrey
Blainey, is available at:
www.bhpbilliton.com/bts
Source: BHP Billiton
Posco, Uttam Steel and Power to set up
`20K crore plant in Maharashtra
After battling a delay of ten years in setting up its proposed
project in Odisha, South Korean steel firm Pohang Steel Company (Posco) on
Tuesday joined hands with the Uttam Galva group to set up a 3 million tonne (MT)
per annum integrated steel plant in Maharashtra at an envisaged investment of
nearly Rs 20,000 crore. The Korean firm signed a memorandum of agreement with
Uttam Steel and Power Limited (USPL), which is jointly promoted by the Uttam
Galva group of the Miglani family and the world’s biggest steel maker
ArcelorMittal to set up the integrated steel plant. The proposed project at
Satarda in Maharashtra’s Sindhudurg district is expected to fructify soon as the
Uttam Galva group has 2,000 acres of land in possession. It will initially build
1.5 MT per annum plant and after 2-3 years, its capacity would be upped to 3 MT
annually.
“To begin with USPL would have 80 per cent equity in the
proposed project and the remaining 20 per cent would be with Posco. The Korean
firm would have an option to increase its equity as the project progresses,”
Uttam Galva group deputy managing director Ankit Miglani told The Indian Express
over telephone. Posco India general manager IG Lee said that the firm was in
talks with Uttam Galva for sometime in this regard. A senior steel ministry
official said such projects would act as force-multipliers for the government’s
‘Make in India’ programme. He said even the ministry is pressing the state-run
steel and mining firms to for special purpose vehicles to execute steel projects
entailing huge investments The key factor in choosing Sindhudurg as the project
site was because of its proximity to Goa, which has huge iron ore reserves.
“While we can easily source iron ore from the neighbouring state, the Goa port
is barely 80 kms away from the site,” Miglani reasoned. The proposed project
which would entail an investment of about Rs 20,000 crore would be funded
through a debt-equity ratio of 2:1, he pointed out. “Importantly for the steel
industry, Posco would be bringing its patented Finex technology for the first
time into India through this project. This technology enables utilisation of
inferior grade iron ore and reduces dependence on high grade iron ore,” Miglani
said. This is the second major manufacturing facility announced in Maharashtra
within a week, after Taiwan’s contract electronics manufacturer Foxconn last
Saturday announced a $5 billion investment for a plant in the state. Miglani
said Maharashtra emerged as the natural choice as both Uttam Galva and Posco
have operating plants in the state. “Our group has two operating steel projects
at Khopoli and Wardha in Maharashtra and the state government is generally
helpful in ironing out the bottlenecks,” Miglani said. Maharashtra is also not a
new destination for Posco as the Korean firm has a steel processing unit of 2 MT
per annum capacity in Vile-Bhagad Industrial Area near the Mumbai
port.
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