Key trends - The world of steel─鋼鐵的世界 · 9/16/2011 · • Demand for welded pipes does not recover in Italy, ... 3 World Steel News, ... Trading companies in the UAE

Steel Products

CIS

• CIS square billet exporters keep no firm grip on situation ................................ 3

• CIS longs exporters prefer to wait instead of cutting prices ............................. 4

Turkey, Middle East & North Africa

• Turkish longs exporters forced to manoeuvre amid slack demand .................. 5

• Export prices for Turkish structurals up again, domestic ones stable ............... 6

• Demand for longs remains moderate in Turkey................................................ 7

• Demand for longs growing in Syria but stays moderate in Lebanon ................ 8

Europe

• Italian long product exporters start to raise prices .......................................... 10

• Fall in prices for flats gathers pace in Poland ................................................. 10

• Demand for welded pipes does not recover in Italy, though prices rise .......... 11

Far East & South Asia

• Domestic prices for longs about to slide in China ........................................... 12

• Mills’ domestic prices for flats largely steady in China .................................... 13

• Prices for Taiwanese flats mainly stable ......................................................... 14

Americas

• Brazilian suppliers of flats focus on exports again .......................................... 16

Friday, September 16, 2011

Key trends

Today's PricesBillet

CIS, $/t FOB 6651

Rebar

Turkey, $/t FOB 720-735

Wire rod

Turkey, $/t FOB 740-755

HRC

Poland, EUR/t DAP 5302

HRP

China, $/t FOB 715-7401 - ex-BMZ2 - 2-12.5 mm, ex-MMK

CIS: long products export prices, $/t FOB Black Sea

685

695

705

715

725

735

745

755

24.06 08.07 22.07 05.08 19.08 02.09 16.09

Wire rodRebar

Turkey: billet & rebar prices, $/t EXW, excl. VAT

660

680

700

720

740

760

780

24.06 08.07 22.07 05.08 19.08 02.09 16.09

rebar

billet

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Prices

See historical price series ...

Raw Materials

Steel Scrap & HBI

• Situation becomes tense in Turkish scrap market .......................................................................................................... 17

• No deals for import scrap signed in Far East in mid-September .................................................................................... 18

Pig Iron

• Bid prices for pig iron fixed in new contracts in USA ...................................................................................................... 19

Iron Ore

• Iron ore quotations to China to fall further inevitably ...................................................................................................... 20

• Rio Tinto to invest $833 million into iron ore capacity expansion in Pilbara ................................................................... 21

Coke & Coal

• Lucchini Group (Italy) to cut coke production ................................................................................................................. 22

• Orpheus Energy (Australia) to launch new coal project in November ............................................................................ 22

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World Steel News, September 16, 2011 www.metalexpert-group.com © 2011 Metal Expert, +38 056 239 88 503

CIS

CIS square billet exporters keep no firm grip on situationCIS / Steel SemisThe situation in the square billet market is still unfavourable for CIS exporters. There has been no seasonal pick-up indemand producers expected, while the recent euro devaluation has considerably affected CIS exporters’ positions.However, most producers doing business in the Azov-Black Sea basin and in the Caspian Sea continue to be in await-and-see mode, hoping the situation will become clearer soon. In the Far East, demand begins to recover gradually,which helps quotations for Russian billet to rise.

European semis have recently become more attractive in the Mediterranean Sea ports. For example, square billetfrom South European producers is now available at EUR 490/t ($676/t at the exchange rate EUR 1 = $1.38) FOB. Tocompare, at the end of last week and the beginning of the current one deals for the products were made at EUR 470-475/t ($642-649 at the exchange rate EUR 1 = $1.366) FOB.

Since there is cheaper material, CIS square billet buyers have had to take a wait-and-see attitude, and many ofthem have started using this strategy to put pressure on suppliers. Moreover, customers’ bids are coming at $645-650/t FOB, while last week traders were ready to sell the material by at least $20-25/t higher.

Thus, on September 5 Belarus SW opened sales of October square billet at $680/t FOB Odessa, though could notavoid reductions. Although seller reported contracts signed at the announced level, it has given a $15/t discount bythe end of this week. Market players say the Belarusian supplier has some 10,000 t of billet left, which it plans to sellalso at $665/t FOB.

However, other sellers continue to maintain prices. ArcelorMittal Kryvyi Rih has been reported to call off offers, becauseit has decided to redirect Ukrainian square billet of October production to in-house companies. IUD and Metalloinvesthave not come back to the market yet, intending to set prices andvolumes of October material next week.

CIS square billet suppliers who work at Caspian ports are still outof the market, and only re-sellers offer the material (that of lastmonths’ production). Nevertheless, Baku Steel (Azerbaijan) andAktau Foundry (Russia) are expected to offer September material(5,000-5,500 t each) next week, while Ural Steel (Russia) andCasting (Kazakhstan) will start selling October products. The lastcompany has already announced a $15/t increase, though it maynot manage to implement the reported hike and prices will staythe same.

CIS: billet export prices, $/t, FOB

645650655660665670675680685690695700705

24.06 08.07 22.07 05.08 19.08 02.09 16.09

FOB Black/Azov SeaFOB Far EastFOB Caspian Sea

www.metinvestholding.com/en


CIS

In the Far East, CIS suppliers have even firmedraised quotations somewhat, amid stronger demandfor semis in SE Asia and limited offers of Russianproducts. Metal Expert has learned Evraz Holdinghas succeeded in selling most of its Novemberbillet at some $670/t FOB ($690-695/t C&F),which is $10-20/t higher than a month ago.

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CIS: export prices for square billet($/t, FOB Black/Azov Sea)Supplier Order book Prices

Metinvest International S.A. September available 685

Elektrostal October available 680

BMZ October available 665

Mechel (DEMZ) October available 680

CIS longs exporters prefer to wait instead of cutting pricesCIS / Long productsCIS export market for longs has seen bearish sentiments by mid-September and trading activity has dropped to zero.Early this month buying activity in Iraq and West Africa improved somewhat. However, CIS material has become lesscompetitive, as devaluation of euro started at the end of last week. Thus, buyers have ceased purchasing it andswitched to wait-and-see mode, while some of them have started showing interest in European longs. And only in theFar East suppliers have managed to strengthen their positions a bit amid limited availability of Russian material.

Market players report rebar and wire rod are currently offered from Southern Europe at EUR 515-520/t ($710-718/t,EUR 1 = $1.38) FOB and EUR 525-535/t ($724-738/t) FOB respectively. Besides, at the beginning of the weekEuropean wire rod was purchased at EUR 520-525/t ($712-719/t, EUR 1 = $1.37) FOB, $40/t below the levelsUkrainian producers quote. Moreover, Turkish exporters have become more flexible this week, dropping wire rodoffers by $5-10/t.

However, most CIS suppliers stand firm and expect the situation to stabilize soon. Only Belarus SW has been forcedto cut prices, as expected. The supplier has already sold most of its October rebar to be shipped before November 20at $700-710/t FOB Odessa EXW, 100% pre-paid, although initially (on September 5) the prices were set at $715/t FOB.Furthermore, the remainder of the material is reportedly available at $695/t FOB at the moment.

ArcelorMittal Kryvyi Rih has left its prices for rebar and wire rod unchanged w-o-w. The seller will probably have tocut its quotations by $15-20/t in view of extremely slack demand for rebar abroad and current offers from Turkey($725-735/t FOB).

At the same time, Metinvest International S.A. has started offering October rolling of wire rod from Makeyevka SWthis week at prices by $10-15/t higher than the levels of last deals for September output. However, no deals havebeen signed yet. Traders believe that only the level no higherthan $745/t FOB may be workable now.

Moldova SW has also started to offer October rolling of wire rodthis week, having raised the bottom end of its price range by $5/t.

Meanwhile, demand for longs in SE Asia is still satisfactory.EvrazHolding has almost closed November order book for wirerod, and the most recent deals have been done at about $740-745/t C&F (about $720-725/t FOB), by $5/t higher than in the firsthalf of September.

CIS: long products export prices, $/t FOB Black Sea

685

695

705

715

725

735

745

755

24.06 08.07 22.07 05.08 19.08 02.09 16.09

Wire rodRebar


CIS

Besides, in the segment of structurals, offers of 100-140 mm channel of S235JR grade from EVRAZ-Petrovskyare reported at $730-735/t FOB October rolling, up $10-15/t from end-August.

CIS: export prices for longs, October production, $/tProduct/supplier Export destination Delivery terms Price W-o-w

Rebar

AM Kryvyi Rih Middle East FOB Black Sea 750 0

BMZ All destinations FOB Black Sea 695 -20

Wire rod

AM Kryvyi Rih Middle East FOB Black Sea 750 0

AM Kryvyi Rih Africa FOB Black Sea 760* 0

Metinvest International S.A. Middle East, Africa, Europe FOB Black Sea/DAP 760 +10-15**

Moldova SW Middle East, Africa, Europe FOB Black Sea/DAP 745-750 +5/0**

* – large coils; ** – as compared to deals for September output

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Turkish longs exporters forced to manoeuvre amid slack demandTurkey / Billet & LongsDemand in Turkey’s export market for longs has started recovering this week, yet at rather slow pace. In this situationmost Turkish rebar sellers added $5-15/t to their offers early this week, quoting $730-740/t FOB. Yet, having got nosupport from foreign buyers, they have been forced to back down by the end of the week.

Export quotations of rebar mainly hover around $720-735/t FOB. Nevertheless, Middle Eastern customers say theycan book the material at $715/t FOB, from Habas in particular. Yet, the producer denies the information. Besides,there are even higher prices for rebar in the market – $740-745/t FOB (in particular from Ekinciler in Iskenderun),though they are rare.

Among overseas buyers the highest interest in Turkish rebar has been from Iraqi traders, to whom the offers are still$750-760/t EXW. Market players report mills in Iskenderun region sold about 15,000 t of rebar to Iraq during the lastten days. In particular, the Iraqi bought a few batches (2,000 t each) at $750-755/t EXW. Demand for Turkish rebarhas been detected in Yemen: deals have been made at $730-735/t FOB early this week.

Trading companies in the UAE say they are ready to resumeimports in mid-October at earliest, citing low buying activity in thedomestic market. Business activity is also affected by oversupply ofTurkish material in the UAE: local traders booked about 170,000 tof the material in late July-early August. Syrian and Lebanesetraders are not particularly interested in Turkish rebar either: theformer wait for reductions, the latter prefer products of Italian andSpanish origin, which are available to them by $25-30/t lower thanTurkish material due to euro devaluation.

Turkey: billet and rebar prices, $/t

660

670

680

690

700

710

720

730

740

750

24.06 08.07 22.07 05.08 19.08 02.09 16.09

Rebar, FOBBillet, FOBBillet ex-CIS, C&F


Besides, market operators believe Iran will become another major sales outlet to the Turkish longs suppliers, asimport duty for rebar has been reduced from 11% to 6% in the country. At present Turkish material is offered to Iran by$10/t lower (incl. import duty) than domestic products.

Turkish suppliers are offering rebar to the USA at $720-730/t FOB ($765-775/t C&F on theoretical weight basis), by$8-20/t down from current domestic levels. As a result, US traders say they are ready to pay for import material atleast $20-30/t less due to risks connected with long delivery period. South American customers also show somedemand. In particular, a deal for rebar to Colombia has been reported at $725/t FOB.

At the same time, wire rod suppliers have mainly lowered quotations by $5-10/t, to $740-755/t FOB seeing poorbuying activity in most export markets. Some exporters start sales at the level of $760/t FOB. However, marketplayers say contract prices largely vary at $740-750/t FOB.

As for the segment of square billet, offers have declined by $5/t there, to $685-700/t FOB. Yet, supply is limited aslocal re-rollers remain highly interested in thematerial, while for most foreign markets exportprices for Turkish square billet are too high amiddomestic finished longs offers. At the same time,CIS semis are available to Turkish customers at$700-705/t C&F, like a week ago, but local re-rollers can book import material at no more than$680/t C&F.

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Turkey: export offer prices for longs and semis, $/t FOBProduct Prices W-o-w

Rebar 720-735 +5/0

750-760* 0

Wire rod (mesh-quality) 740-755 -5-10

Billet 685-700 -5

* – EXW, to Iran

Export prices for Turkish structurals up again, domestic ones stableTurkey / Long productsBuying is improving at a rather slow pace in the Turkish market for structurals. Because of poor demand from endusers and in order to avoid risks connected with national currency devaluation, local trading companies are onlypurchasing the material in small amounts. As a result, producers had to leave domestic structural steel quotationsunchanged in lira terms, but in dollar terms prices dropped by $4-5/t, including currency fluctuations. Few deals forequal angle and channel have been done this week at the bottom end of the price range.

At the same time, demand has slightly increased in foreign markets, which encouraged Turkish suppliers to raiseexport offers of equal angle, beam and channel by $5/t, while flat bar and square bar quotations have stayed at aweek-ago level.

Demand for the products from Turkish suppliers is still observedmainly in West and East Africa. Some buyers in these regions(particularly in Senegal and Morocco) are ready to accept currentoffers. Customers from Cameroon, who purchased enoughmaterial two weeks ago, are bidding at $730/t for flat bar, which isunacceptable to Turkish exporters. A deal for 40-100 mm equalangle to Morocco has been made at $790/t FOB. This week, tradersfrom Senegal have bought flat bar at $810/t FOB.

Turkey: equal angle prices, $/t

740

755

770

785

800

24.06 08.07 22.07 05.08 19.08 02.09 16.09

Export, FOB

Domestic market, EXW



Besides, negotiations with customers from South America are in process. A deal for 60-150 mm I-beam hasbeen reportedly closed with Brazilian buyers at $795/t FOB.

Most of Middle Eastern traders are staying away from purchases thinking prices for Turkish material are too high. Inparticular, Saudi Arabian trading companies are ready to book 40-100 mm equal angle by at least $20/t lower, at$740/t FOB. Having no urgent need in new purchases, buyers from UAE prefer structurals from Italy and Spainbecause of euro devaluation. However, Syrian stockists, who have been out of business for a rather long time, areinsisting on some $10/t reductions and Turkish suppliers will probably agree to that.

Turkey: domestic and export prices for structural steel, S235JR, $/t (TRY/t)($1 = TRY 1.78, excluding 18% VAT)Segment/Product Size, mm Offers Deals

Price w-o-w

Export, FOB

Equal angle 50-100 790-800 +5 790

Flat bar and square bar 20-50, 20-30 800-815 0 n/a

IPN-beam, UPN-channel 65-160 790-800 +5 795

Domestic market, EXW

Equal angle 40-100 757-775 (1,348-1,380) -5 (0) 757-764 (1,348-1,360)

including Tosyali Iron & Steel 40-100 757 (1,348) -5 (0) -

including Celsantas Celik Mamulleri 40-100 764 (1,360) n/a -

including Kocaer Haddecilik 40-100 775 (1,380) n/a -

Equal angle 25-30 787-795 (1,400-1,415) -4 (0) n/a

Flat bar and square bar 20-50, 20-30 784-803 (1,395-1,430) -4-5 (0) n/a

IPN-beam, UPN-channel 65-160 764-775 (1,360-1,380) -4-5 (0) 764 (1,360)

Including Kocaer Haddecilik 65-160 775 (1,380) n/a -

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Demand for longs remains moderate in TurkeyTurkey / Long products, Steel SemisDespite the gradual recovery, buying activity in the Turkish domestic longs market is not high enough. As a result,amid weakening Turkish lira, quotations to local buyers have grown just slightly in the national currency, but decreasedin the US dollar terms given falling semis prices.

So, the general price range for rebar in Turkey is $733-757/t (TRY 1,540-1,590/t) EXW against $740-761/t(TRY 1,540-1,585/t) EXW. All prices in US dollar terms exclude 18% VAT, those in Turkish lira are VAT-inclusive. Theexchange rate is $1 = TRY 1.78. Wire rod quotations have droppedby $2-7/t over the same period, to $747-795/t EXW due to currencyfluctuations, though those in the national currency have climbedby TRY 10/t ($5/t) from the upper end of the range, to TRY 1,570-1,670/t EXW. Rebar and wire rod prices are the lowest in Izmirregion where competition among local producers is rather high,unlike consumption volumes. Meanwhile, the highest offers arerecorded in Iskenderun on the back of rather good demand fromfinal customers and limited number of mills. As a result, the pricerange for rebar and wire rod is quite wide in the market.

Turkey: billet & rebar prices, $/t EXW, excl. VAT

660

680

700

720

740

760

780

24.06 08.07 22.07 05.08 19.08 02.09 16.09

rebar

billet



Domestic billet is being quoted mainly at $690-700/t EXW, but the material, in particular that from ColakogluMetalurji, can also be booked at $685-690/t EXW, market players say. So, the difference between offers of rebar andbillet is $48-57/t, so deals are made at the bottom end of the price range.

Market operators differ in their forecasts. Some of them believe, amid more rapid implementation of constructionprojects, demand will grow faster next week, and prices too. Others, in turn, say that the situation in the domesticmarket is unlikely to improve greatly since local buyers will keep booking only small lots for urgent needs unwilling torun risks connected with currency fluctuations, and thus prices may rise just slightly. Although some deals for importscrap were closed at higher levels, the difference with finished steel quotations remains substantial.

Turkey: domestic prices for longs and semis, $/t (TRY/t) EXW(US dollar prices exclude 18% VAT, those in lira terms are VAT-inclusive, $1 = TRY 1.78)Product Offers Deals

Prices w-o-w Prices w-o-w

Rebar, 10-20 mm 733-757 (1,540-1,590) -4-7 (0/+5)

in Izmir (incl. Izmir D.C.) 733-738 (1,540-1,550) -7 (0) 733 (1,540) -7 (0)

in Marmara (incl. Icdas) 743-752 (1,560-1,580) -2-7 (0/+10) n/a n/a

in Iskenderun (incl. Ekinciler) 747-757 (1,570-1,590) -4-7 (0/+5) 743-752 (1,560-1,580) -6-7 (0)

Mesh-quality wire rod, 5.5-8 mm 747-795 (1,570-1,670) -2-7 (0/+10)

in Izmir (incl. Izmir D.C.) 747-752 (1,570-1,580) -7 (0) n/a n/a

in Marmara (incl. Icdas) 776-781 (1,630-1,640) -2 (+10) n/a n/a

in Iskenderun (incl. Ekinciler) 786-795 (1,650-1,670) -2 (+10) 780 (1,640) -3-8 (+10/0)

Square billet 685-700 -5 685-690 -5

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Demand for longs growing in Syria but stays moderate in LebanonMiddle East / Long products, Steel Semis

Demand for longs from stockists and end-users has started recovering in Syria after the end of Ramadan, while inLebanon buyers are still not quite active amid slow implementation of construction projects.

Syrian customers have started buying more due to weaker interbank exchange rate of $1 = SYP 51 against $1 = SYP 50two weeks ago (official exchange rate is $1 = SYP 47.35), so prices for import material are unattractive for them. Inparticular, domestic quotations for rebar have dropped in the dollar terms by $15/t over the same period, to $745-765/t EXW, though staying unchanged in the national currency – SYP 38-39/kg EXW. As a result, domestic rebar isavailable by $50-55/t higher than Turkish billet (which is not subject to import duty) and by $5-15/t lower (incl. importduty) than foreign rebar. However, local producers may increase quotations to $775-794/t (SYP 39.5-40.5/kg) EXWsoon expecting more significant demand recovery in the country and import price growth.

At the same time, Syrian buyers are interested in foreign wire rod,which is $60-65/t cheaper than the local one, though only Octoberoutput is available.

Despite expectations, prices for Turkish structurals have risen by$10/t to Syria, to $800-810/t C&F Tartus over the past month (theupper end of the price range corresponds to offers fromIskenderun), so local traders are likely to start purchasing, butmainly in small lots.

Syria: rebar & billet prices, $/t

670680690700710720730740750760770780790

24.06 08.07 22.07 05.08 19.08 02.09 16.09

Rebar,EXWRebar, C&F, with dutyBillet, C&F



Although stockist prices for longs and structurals have fallen by $15-17/t due to exchange rate fluctuations inSyria, they are still higher than foreign suppliers’ quotations, so stockists’ positions are quite strong.

Market players say Lebanese trading companies have switched to longs from Europe. In view of weakening euroagainst the US dollar and lower import duty for European material (2.6%), Italian and Spanish rebar and wire rod havebecome more attractive than the same material from alternative suppliers (except for Egyptian one, which is notsubject to import duty). In particular, Italian and Spanish rebar is quoted at $720-735/t (EUR 525-535/t, EUR1 =$1.37) C&F, wire rod – at $730-745/t (EUR 535-545/t) C&F. However, the euro is forecast to become stronger soonand European material will be no more attractive.

Syria: prices for longs and structurals*, $/t (SYP/kg)(interbank exchange rate $1 = SYP 51; duty for Turkish rebar and beams – 2%, for Ukrainian rebar – 3%, for Ukrainian billet – 1%)Products Origin Offers

Prices M-o-mLocal mills, EXWRebar n/a 745-765 (38-39) -15 (0)Wire rod n/a 814-824 (41.5-42) -16 (0)Import, C&F TartusRebar Turkey 745-755 +25Rebar Ukraine 765-770 +15Wire rod Turkey 750-765 0/+5Equal angle, UPN channel, IPN beam Turkey 800-810 +10Billet Turkey 695-710 -5Billet CIS 700-705 0Traders, ex-warehouse in Tartus (without duty)Rebar Syria, Turkey 775-794 (39.5-40.5) -15-16 (0)Wire rod Syria 824-843 (42-43) -16-17 (0)Equal angle, UPN channel, IPN beam Turkey 824-843 (42-43) -16-17 (0)* - rebar – 10-32 mm, mesh-quality wire rod – 5.5 mm, angle – 35-45 mm, 50-100 mm, channel and beam – 65-160 mm

Lebanon: prices for longs and structurals*, $/t(5% import duty for non-Arab products, 2.6% duty for rebar and wire rod from Europe)Products Origin Offers

Price M-o-mImport, C&FRebar Turkey 745-755 +5-10Rebar Egypt 745-755 -5**Rebar Ukraine 770-780 +15-20Rebar Italy, Spain 720-725 n/aWire rod Turkey 755-770 0-5Wire rod Italy, Spain 735-745 n/aEqual angle, UPN channel, IPN beam Turkey 805-815 +10Traders, ex-warehouse (excl. 10% VAT)Rebar Turkey, Egypt, CIS 785-800 -20-25Wire rod Turkey, Ukraine 795-825 -35-45Equal angle China, Ukraine 850 0Equal angle Italy 900-910 0UPN channel, IPN beam Ukraine 800 0UPN channel, IPN beam Turkey 850 0UPN channel, IPN beam Italy 925-950 0Flat bar, square bar Italy, Spain 925-940 -35-50* - rebar, mesh-quality wire rod – 5.5 mm, angle – 50-100 mm, channel and beam – 65-160 mm, flat bar – 20-50 mm; ** - w-o-w



The wish to stir end-users and lower mills’ prices have led to a decrease in quotations of rebar and wire rod from localtraders by $20-25/t and $35-45/t, respectively. It is also reported that there are two price levels for wire rod in the stockistmarket: $795-810/t ex-warehouse for re-sellers, and $815-825/t ex-warehouse for end-users, excluding 10% VAT.

In the segment of structurals, only stockists’ quotations for flat bar and square bar, which were much higher thanthose for other kinds of structural steel, have decreased.

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Europe

Italian long product exporters start to raise pricesSouth Europe / Long products, Steel Semis

Euro devaluation and higher demand in North Africa and the Middle East allowed Italian long product makers tostrengthen their positions in foreign markets. So, export offers of rebar have moved up by EUR 5/t, those of wirerod – by EUR 10-15/t, and of semis – by EUR 20/t.

Rebar from local mills (including Feralpi Siderurgica S.p.A.) is available to foreign buyers at EUR 515-520/t FOB(up EUR 5/t in a week). Mesh-quality wire rod has increased in price by EUR 10-15/t over the same period, toEUR 530-535/t FOB. In particular, Pittini Group is offering its wire rod at EUR 530/t FOB. Italian square billet is offeredfor export at EUR 490/t FOB, while a week ago the material changed hands at EUR 470-475/t FOB.

Despite growing export quotations, some traders think the upturn in demand will be short-lived and mills will probablyfail to keep prices at increased levels.

In the home market, suppliers were forced to back down a bit amid poor demand. Domestic rebar offers have dippedby EUR 10/t, to EUR 260-270/t EXW (base) over the past week. All prices exclude 20% VAT. In particular, 12 mmrebar is quoted at EUR 510-520/t EXW (including extras).

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Fall in prices for flats gathers pace in PolandCentral Europe / Flat Products

Polish flats suppliers’ hopes that the market will become bullish in September have not come true. They have had todrop both domestic and export offers again amid slack demand, by EUR 15-40/t depending on the manufacturer andproduct type. However, that has had hardy any effect on buying activity: traders are still careful about purchases,preferring to keep their stocks moderate. Besides, the situation is worsened by rumours about imminent crisis inEurope, aggravated by currency fluctuations.

In general, market players currently have different opinions concerning the further course of events in the market.Some of them optimistically believe that demand from Polish buyers will rally by the end of the month, while othersinsist that there are no actual signs of improvement so far and the situation will not change until the end of the year.

As a result, local producer ArcelorMittal Poland has dropped base prices for October rolling of HRC by EUR 30-40/tover the past month and those for CRC – by EUR 20-30/t amid unstable market conditions. HDG quotations have lostonly EUR 10-20/t over the same period.


Prices from Hungary’s ISD Dunaferr are now by EUR 15-30/t lower, depending on the product, compared to mid-August figures. Market participants report additional discounts of EUR 10-15/t may be granted when signing contracts. TheSlovak producer U.S. Steel Kosice, who tried to put prices up by EUR 5/t last month but faced buyers’ opposition, has beenforced to back down. As a result, offers of HR and CR flats have slid by EUR 20-30/t over the period under review.

Meanwhile, CIS steel product suppliers are not going to make concessions to Polish customers. Moreover, in spite ofthe current trend, a distributor of MMK material has even tried to push through an increase. Thus, the lower end of theprice range for HRC has risen by EUR 10/t compared to mid-August levels, while CRC have gained EUR 5/t. Theproducer, whose material is mainly targeted at the Middle East (Iran in particular), is not planning to cut its quotations,especially since its offers are not the highest in Poland. Offer prices for October production from Ukraine’s Zaporizhstalwill be announced only next week.

Poland: prices for flat products, October production, EUR/t(domestic prices exclude 23% VAT)Product/Company Type Specifications, mm Delivery terms Price M-o-m

HR flats, S235JR

ArcelorMittal Poland - base CPT 520 -30-40

ArcelorMittal Poland coils 2x1,250 CPT 548 -30-40

U.S. Steel Kosice - base CPT 540-545 -30

U.S. Steel Kosice coils 2x1,250 CPT 555-560 -30

Dunaferr - base CPT 520 -15

Dunaferr coils 2x1,250 CPT 530 -15

MMK coils 2-12.5 DAP 530 +10/0

MMK sheet 2-12.5 DAP 545 +10/0

CR flats, DC01


ArcelorMittal Poland coils 0.5x1,000 CPT 670 -20-30

U.S. Steel Kosice - base CPT 640-645 -20-25

U.S. Steel Kosice coils 0.5x1,000 CPT 680-685 -20-25

Dunaferr - base CPT 590 -30

Dunaferr coils 0.5x1,000 CPT 625 -30

MMK coils 0.9-3.5 DAP 610 +5

MMK sheet 0.9-3.5 DAP 625 +5

HDG, DX51D


ArcelorMittal Poland coils 0.5x1,000, Z200 g/sq m CPT 746 -10-20

ArcelorMittal Poland coils 0.5x1,000, Z275 g/sq m CPT 768 -10-20

U.S. Steel Kosice - base CPT 640-645 -25

U.S. Steel Kosice coils 0.5x1,000, Z200 g/sq m CPT 786-791 -25

U.S. Steel Kosice coils 0.5x1,000, Z275 g/sq m CPT 816-821 -25

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Europe

Demand for welded pipes does not recover in Italy, though prices riseSouth Europe / Tubes & PipesItalian welded pipe suppliers hoped demand would recover after the end of holidays, but there is no improvement.Local traders see low interest from local customers and so prefer to keep stocks at optimal levels, purchasing onlywhen needed. The reason behind sluggish demand is quite clear: no large construction projects are being carried outnow, and new ones will be started next year at earliest.


Europe

However, producers are not going to back down, being encouraged by increasing prices for flats, and haveeven decided to lift their domestic quotations a bit. In particular, Marcegaglia S.p.A has already tried to raise pricesby EUR 30/t on long-term expectations. Nevertheless, it is uncertain whether the supplier will manage to fullyimplement the announced lift amid unfavourable situation in the market.

Stockists’ prices have also risen. Thus, welded pipe quotations have added EUR 15/t compared to the end of July.However, local players say buyers can obtain discounts of about EUR 5/t when purchasing 50-60 t.

Italian galvanized products with 2-2.9 mm wall thickness made to EN 10219 have grown in price by EUR 10-15/t overthe same period.

In the export market, deals are made more frequently. Players say buyers from neighbouring European countries(mainly from Germany, Spain and France) have become much more active over the past two weeks. As a result,export quotations of Italian pipes, which were in line with domestic ones earlier, are EUR 10/t higher now.

Import material is still uncompetitive in the Italian market. Turkish pipe products offered at least by EUR 15-30/t higherthan domestic material are not attractive for local customers.

Italy: prices for welded pipes, EUR/t(excl. 20% VAT, EUR 1 = $1.37)Products Size, mm Grade Standard Prices

Domestic market, EXW (on actual weight basis)

Pipes from HRC (Marcegaglia) 2.0-5.0 S235JR EN 10219 580-590

Stockist market

Pipes from HRC 2.0-5.0 S235JR EN 10219 655-660

Pipes from HRC 1.5 S235JR EN 10219 685-690

Import from Turkey, C&F (on theoretical weight basis)

Pipes from HRC 2.0-6.0 S235JR EN 10219 595-620

Pipes from CRC 1.5 DC01 EN 10219 660-685

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Domestic prices for longs about to slide in ChinaChina / Long productsThe continuous downturn in long steel demand in China makes suppliers unable to put prices up, although theyhoped to do so by mid-September. Moreover, some have decided to give up prices in order to make sales. Traders,whose business is affected by both growing inventories and tough monetary policy, have cut longs quotations by $5-15/t in a week. Mills can keep prices stable, referring to high production costs; yet, some producers have been forcedto make reductions.

In particular, wire rod from Yonggang Group and Rizhao Steel has lost $5/t (RMB 30/t) and $9/t (RMB 60/t) in a week,respectively, while rebar from Yonggang Group and Shagang Group – $11/t (RMB 70/t).

Hebei Iron & Steel, Shandong Group and Nanjing Steel announced they will not revise current domestic offers of longproducts. Wire rod prices from Shagang Group have not changed over the same period either.



At present, most market players doubt that prices will go up until October, especially taking into account theexpected drop in activity in late September before national holidays. This is mainly attributable to the upturn in demandin late Q2-early Q3, i.e. during the traditional lull in the market. Moreover, Wuhan Iron & Steel announced stabilizeddomestic prices for October production of wire rod in case demand is slower than expected next month.

Yet, the overall outlook is not that pessimistic, considering high construction activity, which will help to prevent a majorrollback within the next six weeks. Besides, mills’ production rates have grown: in early September, daily steel productionin China increased by 1.16% m-o-m, to 1.935 mt. Besides, market participants predict prices for longs and structuralswill move up next month in stockists’ market, where quotations are only by $5/t higher than in that of mills.

China: domestic prices for longs and structurals, September production(incl. 17% VAT, $1 = RMB 6.3965)Product* Mills’ market, EXW Stockists’ market, ex-warehouse

Producer Prices, $/t Prices, $/t

Rebar Jigang Group, Laiwu Steel (Shandong) 706-712 743-758

Yonggang Group (Jiangsu) 752 747-782

Shagang Group (Jiangsu) 760 747-782

Hebei Group (Hebei), Nanjing Steel (Jiangsu) 779-782 747-782

Shandong Group (Shandong) 810 743-758

Wire rod Shougang Group (Beijing) 711 771

Laiwu Steel (Shandong) 729 777

Hebei Group (Hebei), Rizhao Steel (Shandong) 779-781 771-777

Shagang Group, Yonggang Group (Jiangsu) 785 793

Nanjing Steel (Jiangsu) 800 793

Wuhan Steel (Hubei) 820** 785

H-beam Rizhao Steel, Laiwu Steel (Shandong) 743-778 750-782

I-beam Rizhao Steel, Laiwu Steel (Shandong) 744-758 760

Channel Rizhao Steel, Laiwu Steel (Shandong)*** 744-758 743

* – rebar (12-25 mm) – HRB335 GB 713; wire rod (6.5-10 mm), H-beam (125-350 mm) and I-beam (140-320 mm), channel (80-280 mm) – Q235 GB 13013

** – October production; *** – incl. Jigang Group (Shandong)

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Mills’ domestic prices for flats largely steady in ChinaChina / Flat ProductsHaving closed September order book, some major Chinese companies have expectedly announced new domesticprices for October rolling of flats. Despite slack business, steelmakers have managed to avoid the price rollbackreferring to a forecast upturn in demand from end users next month and high production costs.

In particular, Wuhan Iron & Steel, Anshan Iron & Steel and Shougang Group have fixed domestic quotations of HRproducts and HDG at September levels. Nanjing Steel said it would not revise current plate offers. Only the segmentfor CRC is seeing the price growth on the back of higher buying activity. Notably, traders’ stocks of CR products keeprunning out gradually, unlike those of HR flats. In such conditions, Wuhan Iron & Steel has voiced a lift in quotationsof CRC to be rolled in October by $11/t (RMB 70/t) over the month, Anshan Iron & Steel – by $5/t (RMB 35/t) andShougang Group – by $9/t (RMB 59/t).

The only exception was the second largest Chinese producer Baosteel that raised prices for all kinds of sheets andcoils, October production. Market participants say the mill has done so due to an expected decline in supply nextmonth on the scheduled repairs.



Traders have followed steelmakers and left quotations of HR products and HDG unchanged, while CRC oneshave gone up by $5/t over the week. Taking into account the fact that mills offer flats to local buyers by $55/t onaverage higher than stockists do, prices of the latter may go upwards in October. As previously reported, traditionallythe gap does not exceed $45/t, and steelmakers grant discounts to regular buyers.

China: domestic prices for flats, October production, $/t(incl. 17% VAT; $1 = RMB 6.3965)Product, mm* Mills Stockists

Producer/Province Prices, EXW Prices, ex-warehouseHRC, 3-5.5 mm Hebei Steel (Hebei) 742** 750-755

Anshan Steel (Liaoning), Shougang Group (Beijing)*** 750-754 741-754Ningbo Steel (Zhejiang), Shagang Group (Jiangsu) 757-758** 749-755

Wuhan Steel (Hubei) 799 747-761Jigang Group (Shandong) 806** 747-755

Baosteel (Shanghai) 880 735-750Plate, 8-28 mm Hebei Steel (Hebei) 742** 736-815

Anshan Steel (Liaoning) 772 763-808Shagang Group (Jiangsu) 778** 754-804

Shougang Group (Beijing), Wuhan Steel (Hubei) 799-805 749-805 Nanjing Steel (Jiangsu) 818** 754-804

Jigang Group (Shandong) 826** 754-802Baosteel (Shanghai) 868 761-810

CRC, 1 mm Hebei Steel (Hebei) 828** 915Shougang Group (Beijing), Anshan Steel (Liaoning) 860-863 857-875

Laiwu Steel (Shandong) 882** 840Wuhan Steel (Hubei) 891 852

Jigang Group (Shandong) 905** 840Baosteel (Shanghai) 991 868

HDG, 1 mm Z120 Jigang Group (Shandong) 874** n/aHebei Steel (Hebei) 899** n/a

Anshan Steel (Liaoning) 960 938Shougang Group (Beijing), Wuhan Steel (Hubei) 971-979 896-902

Baosteel (Shanghai) 1,033 900* – HRC, plate – SS400 JIS G3101 (Q235 GB 13013); extras for SPHC JIS G3131 – $20/t; CRC – SPCC JIS G3141, HDG – SGCC JIS G3302

** – September rolling; *** – including Laiwu Steel and Rizhao Steel (Shandong)

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Prices for Taiwanese flats mainly stableSouth East Asia / Flat ProductsThe situation in Taiwanese flats market has worsened over two weeks. Some improvement in demand observed inlate August has changed into a decline again as a traders’ response to higher mills’ prices. In this situation, steelmakershave decided to maintain offers despite growing import scrap quotations ($5/t up over two weeks). Their moves arepartly related to an increase in stock levels.

Only offers of CRC have climbed by $17-34/t (TWD 500-1,000/t) over the same period amid a growth of Chinesematerial prices (up $10/t in half a month). However, due to devaluation of the national currency, US dollar quotationsof CRC have added just $1-19/t, while those of HRC and HDG have dropped by $15/t on average. Market playersreport relatively stable situation in the car making industry has supported prices for CR flats in some way. In particular,automobile companies (Yulon, Prince, Ford Lio Ho, Taiwan Isuzu, CMC, Sanyang, Kuozui, Taiwan Honda) havescaled up output by 35% y-o-y, though over the month production has declined by 23%.


Taiwan: HRC prices, $/ò EXW

705

720

735

750

765

780

795

24.06 08.07 22.07 05.08 19.08 02.09 16.09

China SteelShang ShingChung Hung

Demand for import flat products has started to fall on the back of national currency devaluation. Offers of HRC,CRC and plate are mainly coming to Taiwan from China at $735/t C&F, $800-810/t C&F and $740-750/t C&F, respectively.As previously reported, HRC and CRC over 600 mm wide are subject to 7% import duty in Taiwan. Also, a 12.5%import duty on HDG is effective in the country.

Market operators believe business activity will remain slack tillearly October since customers intend to knock down prices inview of an expected decrease in electricity costs and thus willdelay talks. However, traders, who have failed to build sufficientstocks, will face an urgent need to make purchases next month.Given that quotations of import slabs stand at an average of$660/t C&F in the region, while the minimal local prices forSeptember rolling of HRC are at $709/t EXW, buyers will hardlysucceed in pressing mills’ offers down. For reference, an averagecost of re-rolling is $60/t. Most local traders generally agreethat domestic prices will be steady till at least mid-October.

Taiwan: domestic prices for flats, $/t EXW(excl. 5% VAT; $1 = TWD 29.6)Product Producer Month of production Offers DealsHR sheet, coil, 2 mm Shang Shing, Yieh Corp. September 709-736 705-709

Chung Hung September 725-730 720-725China Steel September 744 740China Steel October-November 761 -

CR sheet, coil, 1 mm Shang Shing, Yieh Corp., Ton Yi September 794-821 788-794Chung Hung September 819-826 810-819China Steel September 854 850China Steel October-November 864 -

HGI coils, over Zn 120, 1.2-4 mm Chung Hung September 821-838 815-820CGI coils, over Zn 120, 0.5-1.6 mm Chung Hung September 875-878 870-875

China Steel September 993 985China Steel October-November 1,009 -

Plate, 12-20 mm Tung Ho September 794-824 785-794China Steel September 864 860China Steel October-November 858 -

Taiwanese flats exporters, in turn, have maintained offers of HR products at two-week-ago levels, while those of CRChave moved up by $10/t. HRC from Shang Shing and Chung Hung are being quoted to Vietnam at $740/t C&F ($725-730/t FOB). Nevertheless, amid heavy inventories and tough monetary policy, contracts are closed mainly for smalllots of flats (5,000 t). Increased competition with Korean suppliers, who are ready to sell HRC at $730-740/t C&F inthe region, is also the reason for restrained demand for Taiwanese products.

Taiwan: export prices for flats, $/t FOBProduct Producer Shipment Offers DealsHR sheet, coil, 2 mm Shang Shing Steel September 730 725

Chung Hung Steel September-October 730 725China Steel October 740 730

CR sheet, coil, 1 mm Shang Shing Steel September 820 810Chung Hung Steel September-October 820 810

China Steel October 825 820

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Americas

Brazilian suppliers of flats focus on exports againBrazil / Flat ProductsIn spite of falling business activity in the Brazilian flats market, producers are going to raise prices again. Theirintentions are attributed to weaker interest in import material amid rapid devaluation of the real: domestic priceshave stayed unchanged in terms of the national currency but have dipped by $70-95/t in the US dollar terms overtwo weeks.

The strong devaluation of the national currency has forced Brazilian suppliers to focus on exports. Mostly Usiminasoffered the material to foreign markets in early September, but by the middle of the month ArcelorMittal Tubarao hasalso started offering its products for exports. Higher activity abroad has been provoked by increased interest ofEuropean buyers as well as by steadily solid demand in South America. This week, Brazilian plate, pickled&oiledHRC as well as CRC with December-January delivery have been available to Europe at $895-900/t C&F Antwerp,$835-840/t C&F Antwerp and $885-890/t C&F Antwerp, respectively. Exporters of HDG have also decided to cutprices: 1 mm material with 90 g/sq m coating is available at $970/t C&F Antwerp. However, they have not managed toreach consensus as customers’ bids are by at least $20/t lower than initial prices. Nevertheless, Brazilian exportersare still optimistic, saying that buyers who need the material will become more flexible by the end of the month.

Slabs are still available to regional customers at August’s $670-680/t FOB ($695-705/t C&F). As before, customersfrom Asia cannot pay more than $600-610/t FOB ($650-660/t C&F) while buying semis under Q3 long-term agreements.

Demand for imports is almost zero, and domestic trade is depressed also due to tougher monetary policy. Besides,the market is seeing heavy inventories: distributors have enough material to stay inactive within four months(against three months traditionally). End users are still unable to support quotations: automotive companiescontinue to cut purchases.

Brazil: prices for flats, October rolling(domestic prices exclude taxes; $1 = BRL 1.7284)

Supplier Offers Deals Deals for over 5,000 t

Domestic prices, EXW $/t BRL/t $/t BRL/t $/t BRL/t

Plate - 1,144-1,154 1,978-1,994 1,003-1,021 1,733-1,764 n/a n/a

HRC - 1,058-1,071 1,829-1,851 985-1041 1,703-1,800 949-974 1,640-1,683

CRC - 1,256-1,287 2,171-2,225 1,155-1,184 1,997-2,047 1,122-1,144 1,940-1,977

Imports, $/t C&F DDP C&F DDP C&F DDP

Plate (SS400, 8-20 mm) China 775-800 1,047-1,081 n/a n/a n/a n/a

HRC (SS400, JIS G3101) China 765-780 1,033-1,054 n/a n/a n/a n/a

HRC (base) Russia (MMK) 770-775 1,040-1,047 n/a n/a n/a n/a

HRC over 3 mm (ASTM A569) Japan (Nippon Steel) 785-795 1,060-1,074 n/a n/a n/a n/a

South Korea 795-800 1,074-1,081 n/a n/a n/a n/a

Annealed CRC (1 mm) China 830-850 1,122-1,150 810-820 1,095-1,108 n/a n/a

HDG (1 mm, 180 g/sq m) China 920-950 1,245-1,287 n/a n/a n/a n/a

Export prices, $/t FOB $/t

Plate - 840-850 - - - -

HRC - 770-790 - - - -

CRC - 850-870 - - - -

HDG (1 mm, 90 g/sq m) Usiminas 930-940 - - - -


Americas

In this situation, foreign suppliers still hope that Brazilian buyers will become more active due to their flexiblepricing policy. In particular, Chinese sellers of plate and HRC have cut prices by $15/t and $5-10/t, respectively, ascompared to late August. Russian, Japanese and South Korean sellers have not dared to revise offers over theperiod, while Chinese exporters of cold-rolled material have even raised them by $5-10/t. Local buyers have claimedseveral times that they are ready to book import material if prices are by at least 10% lower than domestic transactionlevels: $664-701/t C&F ($895-946/t DDP) and $677-688/t C&F ($912-928/t DDP) for HRC and plate, respectively,and $777-796/t C&F ($1,050-1,076/t DDP) for CRC. Currently, only Chinese CRC suppliers manage to sell smalllots of the material. No deals for import HRC and plate have been reported, as initial prices are by $74-99/t and$98-112/t, respectively, higher than customers’ bids.

For reference, 12% duty on steel product imports is effective in Brazil. In May, the Brazilian government decided tolower import duty on corrosion-resistant plate (NCM 7208.51.00) to 2% for lots up to 30,000 t (the decision is valid tillDecember 31 2011).

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Steel Scrap & HBI

Situation becomes tense in Turkish scrap marketTurkey / ScrapThere is a period of change in the Turkish scrap market, with talks between customers and sellers being very tense.

Importers are in need to purchase the material to be delivered in October, but are not ready to accept the rise in pricesbecause they cannot afford to raise production costs amid currentfinished product sales.

Exporters are not going to reduce quotations to Turkish customersas they can redirect the material to alternative markets. Besides,scrap demand is rather strong in the USA. Business activity isalso improving in European countries after the end of summerholidays. CIS scrap collectors think their reductions were quitesubstantial in the past weeks, so it is unreasonable to cut exportoffers further as, for example, in Ukraine domestic quotations aremuch higher than export ones.

As a result, only one contract for a large batchof scrap to Turkey has been signed on thesecond week of September. The Germansupplier granted a discount and agreed to ship30,000 t of HMS 1&2 (70:30) at $426/t C&F,which is $15/t below prices recorded in the latestdeals with other European traders. However,such level is unacceptable to most of scrapcollectors from the region and they offer thematerial at $435-445/t C&F Turkey.

Turkey: scrap prices, $/t C&F

445

450

455

460

465

470

475

01.07 15.07 29.07 12.08 26.08 09.09 23.09

EU, HMS №1&2 (80:20)

CIS, 3A

USA, HMS №1&2

* - forecast

*

Turkey: prices for import scrap, $/t C&F Iskenderun, MarmaraOrigin Product Price w-o-w

USA HMS 1&2 (80:20) 472 0

USA Shredded 477 0

USA P&S 482 0

Western Europe HMS 1&2 (70:30) 426 -15

Western Europe HMS 1&2 (80:20) 465-470 0

Romania HMS 1&2 (80:20) 450-455* 0

Ukraine À3 450-455 +1

Russia À3 456-457 0

* – nominal price


Higher-quality scrap suppliers are less flexible. Nowadays, European HMS 1&2 (80:20) is available to Turkishbuyers at $465-470/t C&F and American material is offered at $474-475/t C&F. European exporters can set lowerprices amid weakening euro against the dollar.

Russian and Ukrainian scrap collectors follow different strategies. Russian suppliers are keeping offers unchangedand Ukrainian ones have put them up. As a result, the price range for A3 scrap has widened to $455-465/t C&F, whilesporadic deals with traders from Azov-Black Sea region are still signed at $455-457/t C&F, just like a week ago.

Turkish scrap importers will probably not be able to stay away from cooperation with foreign suppliers for a longtime and will mostly have to accept their prices, so deals for the material with October delivery will be closedactively in late September.

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Steel Scrap & HBI

No deals for import scrap signed in Far East in mid-SeptemberFar East / ScrapThe Far Eastern market for ferrous scrap has been dull in mid-September. South Korean consumers, the mainimporters, have been out on holidays for the most part of this week.

As previously reported, South Korean steelmakers were buying the material from all suppliers ahead of holidays.Deals were done with suppliers from the USA, Japan and Russia.

Scrap collectors insist on export price increases, citing an upturn in business activity of South Korean mills at thebeginning of the month. The upturn was due to the fact that most producers expect conditions in the segment forfinished products to improve in October and want to book as much scrap as needed for that period. Besides, theupward trend in the region is also supported by robust demand for import scrap in China, where buyers acceptsuppliers’ prices. In particular, Chinese consumers have reportedly booked 100,000-150,000 t of US material over thepast several weeks. As a result, being able to sell scrap to alternative markets, US West Coast exporters insist on anincrease in quotations to South Korea. They also see support from stable domestic market.

Japanese exporters follow the similar pricing policy, as domestic prices are going up in the country. Local steelmakerslift purchase prices for scrap to restock and attract more material, as they plan to increase output of finished productssince power consumption restrictions are no longer effective. One of them, Tokyo Steel, has lifted its bids for domesticHMS 2 supplied to its division Utsunomiyà by JPY 500/t ($7/t) twice this week. The exchange rate is $1 = JPY 76.97.

Russian exporters have left their offers unchanged. However, theywill join the upward trend soon, lifting prices for A3 scrap by $5-10/t.

Most Taiwanese ferrous scrap importers are interested in buyingscrap from abroad, primarily from the USA. However, they have torestrain purchases now, because the situation in the local marketfor steel products is unfavourable and it is not easy to pass higherinput costs on to end buyers. At the same time, most producersare unable to switch to Japanese scrap under current conditions,as its quality is much worse as compared to the US material whileprices are almost the same.

South Korea: scrap prices, $/t C&F

455

460

465

470

475

480

485

490

495

01.07 15.07 29.07 12.08 26.08 09.09 23.09* - forecast

USA, HMS №1&2 (80:20)

Japan, №2

*


Steel Scrap & HBI

Early next week South Korean scrap market will be calm due to holidays in Japan, as it is most reasonable forlocal consumers to buy Japanese scrap, because it is cheaper than the US and Russian material. Contracts forimport scrap are expected to be signed in South Korea by the end of next week.

At the same time, Taiwanese mills will probably attempt to fix their finished product quotations at higher levels first andonly then start buying import scrap.

Far East: nominal prices for ferrous scrap, $/tOrigin Material Delivery terms Shipment Price W-o-w

USA HMS 1&2 (80:20) C&F Taiwan Containerized 483-485 0

USA HMS 1&2 (80:20) C&F South Korea Containerized 480-485 +5-10

USA HMS 1 C&F South Korea Large-tonnage 500-505 +11-16

Japan HMS 2 FOB Large-tonnage 440-445 +5

Japan HMS 2 C&F Taiwan Large-tonnage 480-485 0

Japan HMS 2 C&F South Korea Large-tonnage 465-470 +3-6

Russian A3 C&F South Korea Large-tonnage 481-483 0

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Pig Iron

Bid prices for pig iron fixed in new contracts in USAUSA / Pig IronUS pig iron market is seeing a surge in buying in mid-September. Customers have won the standoff and madematerial exporters accept their price levels. Steelmakers’ tactics to stay inactive for a long period of time on theunfavourable situation in the finished steel segment has brought results, and the most recent deals confirm this fact.Mills also benefit from considerable volumes of unsold material in traders’ hands, which means the market isoversupplied.

It is reported, about 140,000 t of Brazilian and Ukrainian pig iron have been booked at $510-515/t C&F New Orleans,October shipment, in mid-September, $10-15/t below last-week offers.

Traders say North Brazilian exporters have made reductions and sold 70,000 t of pig iron at $515/t C&F ($499/t FOB).However, they have managed to partly make up for losses thanks to devaluation of real against the US dollar. About25,000-30,000 t of pig iron have been supplied to Nucor at $525/t ò FOB New Orleans barge loading, which means$515/t C&F New Orleans.

Meanwhile, suppliers from the south of the country have agreedto grant $5/t discounts offering the material at $520/t C&F($495/t FOB). However, US buyers still show no interest inoffers given just $5-10/t difference with quotations of higher-quality pig iron from the north. Suppliers claim that they cannotcut offers further due to high production costs, and thus thematerial is sold domestically. At present, Brazilian millspurchase pig iron at BRL 760/t ($445/t) EXW.

USA: pig iron prices, $/t

495

505

515

525

535

545

01.07 15.07 29.07 12.08 26.08 09.09 23.09* - forecast

Import, C&F

Brazil, FOB

*


Pig Iron

The key Russian suppliers are in no hurry to back down, so offers are still coming at $510-515/t FOB. They canafford to wait and see having a wider range of customers, including foundries, although most part of October output isyet to be booked.

Despite slack business in the longs market, some producers will keep purchasing pig iron to cover productionrequirements till the end of the year if prices for the material stand at the current levels. Some suppliers are forecastto meet buyers halfway and a few deals will be closed next week. Yet, most exporters, who have taken a break toanalyze market outlook and fulfil previously signed contracts, will try to drive offers up on the back of successful dealsafter the long lull. However, steelmakers will not accept prices of merchant pig iron producers due to vague prospectsof finished steel segment.

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Iron Ore

Iron ore quotations to China to fall further inevitablyChina / Iron OreIron ore suppliers have no choice but to drop prices to China due to slack demand for the material amid unfavourableconditions in the segment for finished products. However, they failed to shake buyers up by doing that. Deals are stillsigned sporadically, with local trading companies booking mostly low-quality material.

Steelmakers are in no hurry to purchase the raw material, as they doubt that prices for finished products will rise.Besides, prices for rebar and wire rod have lost $10-15/t and $5/t from early September, respectively, discouragingcontracts with iron ore traders. Furthermore, on September 16 futures prices fell to RMB 4,727/t ($740/t), reachingtheir lowest level over the past month.

Quotations of Indian 63.5% Fe fines (moisture – 8-10%) have dipped $2.5/t w-o-w, to $187-188/t C&F northern portsof China, but no contracts have been reported so far. Most market participants agree, that the drop was necessary, asthe prices came close to their peak levels and were absolutely unacceptable in view of unclear market outlook andfinancial instability. Noteworthy, offers have been rather high (above $180/t) since mid-July, which is unusual forChina during the traditional summer lull.

Despite slack business activity, a number of deals for ore with low Fe content have been signed. India’s Fomento hassold two 50,000-tonne lots of 50% Fe and 58% Fe fines to be delivered in end-September – early October at $85/t FOB($105/t C&F) and $141/t FOB ($156/t C&F) respectively. Anothersupplier has reportedly sold 40,000 t of 54% Fe material at $133/t C&FOctober shipment.

Chinese buyers have received discounts from Australian supplierstoo, despite persistently high freight rates of $11.5/t (western ports ofAustralia – Qingdao). BHP Billiton has closed a sale of 61.5% FePilbara fines at $178/t C&F ($2/t down from transaction prices lastweek), which corresponds to the bottom end of the current price range.At the same time, 58% Fe Yandi material has been purchased at$157.15/t C&F ($2/t down).

China: import prices for Indian fines, 63,5%, $/t C&F

175

180

185

190

01.07 15.07 29.07 12.08 26.08 09.09 23.09* - forecast

*


Iron Ore

Business activity is expected to remain weak next week, with sporadic purchases of some mills to feed theirfacilities in the short term, while most producers will remain in a wait-and-see mode, intending to get additional discounts.

Metal Expert believes iron ore quotations will continue to fall, although the decrease will not be dramatic due to highcapacity utilization of steelmaking facilities and limited availability of Indian material.

For reference, in early September the average daily output of steel increased to 1.964 mt in China (3.1% up fromlate August).

China: prices for import iron oreMaterial Fe, % Origin Price, $/t C&F Prort in China Price, $/t FOB Daily change, $/tIron ore fines 63.5/63 India 187,5 North China 172,5 -2,5Iron ore fines 63.5/62.5 India 186-187 North China 171-174 -2Iron ore fines 62.5/62 India 182 North China 167 0Iron ore fines 61/60 India 167-169 North China 152-154 -2Iron ore fines 60/59 India 162-163 North China 147-148 -1Iron ore fines 58 India 156* North China 141 -2Lump ore 54 India 133* North China 128 -3Iron ore fines 51 India 107* North China 92 0Iron ore fines 50 India 105* North China 85 -1Iron ore fines, Newman 63 Australia 182* Qingdao 170 -2Iron ore fines, Pilbara 61.5 Australia 178* Qingdao 167-169 -2Iron ore fines, Yandi 58 Australia 157.15* Qingdao 146.5 -2Iron ore fines, MAC 61.2 Australia 176-178 Qingdao 165-167 -1Lump ore, Pilbara 62 Australia 185-187 Qingdao 173-175 -1Pellets, GIIC 65% Bahrain 212* North China - 0Iron ore fines 56 Iran 128 North China 98 0Iron ore fines 64.5 South Africa 188 North China - 0Iron ore fines 63 Brazil 185-187 Qingdao 157-159 -1Iron ore fines 64.5 Brazil 189 Qingdao 161 -3* – deal price

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Rio Tinto to invest $833 million into iron ore capacity expansion in PilbaraAustralia / Iron Ore

Rio Tinto has approved an investment of $833 million into the project for iron ore capacity expansion in Pilbara(Western Australia): Rio Tinto will invest $706 million, and the rest will be invested by other shareholders. For reference,some $350 million were invested into the project in June.

The programme involves capacity expansion of the assets from current 225 mtpy to 333 mtpy of iron ore by 2015 andwill be implemented in three stages. The capacity will be raised to 230 mt during the first stage (by end-Q1 2012), to283 mt – during the second stage (by end-2013) and to 333 mt – during the third stage.

Production rates will increase owing to higher output at Brockman 4, Western Turner Syncline, Marandoo and Nammuldimines. Besides, additional equipment will be commissioned at Cape Lambert and Dampier ports.

This year, the output is expected at 240 mt of iron ore, including the material produced at Brazilian and Canadianassets (up 1 mt y-o-y).

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Coke & Coal

Orpheus Energy (Australia) to launch new coal project in NovemberAustralia / Coke&CoalAustralia’s Orpheus Energy plans to launch a new coal project in Indonesia (East Kalimantan) in November. Theproject will be part of B26 joint venture, in which the Australian miner holds a 51% interest.

The asset’s capacity will be some 0.5 mtpy of steam and coking coal, 15% of this volume (75,000 t) will be semi-softcoking coal. Production will start at Block 2 area. Then Orpheus Energy will perform supplementary exploration ofnearby Block 6 area, which is also part of B26. The project is expected to produce around 1.5-2.5 mt of the material.

The new asset is located 27 km away from a port. At the moment, the company is negotiating with potential buyers.

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Lucchini Group (Italy) to cut coke productionSouth Europe / Coke&CoalItaly’s Lucchini Group is reportedly planning to cut coke production by 4-6% this month, to 66,000-67,000 t, due to itslower requirements. In the second half of the month the company will reduce capacity utilization rates by graduallyincreasing coking period at its both coke batteries. As a result, in October it will produce 63,000 t of the material, downby 10% from full capacity.

As previously reported, the producer owns two plants – Piombino and Trieste, having one coke battery (0.45 mtpy ofcoke) each. However, the batteries are currently capable of making around 0.42-0.43 mt of the material each, due toworn-out state of equipment.

The company will require less coke, because capacity utilization rate of Piombino’s only operational BF (183,000 tpm)will decrease from current 70% (125,000-130,000 tpm) to 65% (118,000-120,000 tpm). As previously reported, Triestealso runs a BF, which will continue to operate at full capacity (38,000 tpm).

Piombino Lucchini Group intends to revise its pellet purchase plan for Q4, canceling shipments of some previouslybooked lots. Initially, the mill planned to import 2.4 mt of pellets this year, including 1.1 mt – from Russia (KarelskyOkatysh) and 0.7 mt – from Brazil (Vale), the rest being Canadian raw material (mostly from Cliffs Natural Resources).

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