01 THE SECRETARY GENERAL MESSAGE FROM - SEAISI 2018.pdf · 03 NEWS HIGHLIGHTS 02 UPCOMING EVENT MESSAGE FROM 01 THE SECRETARY GENERAL SOUTH EAST ASIA IRON AND STEEL INSTITUTE SOUTH

As we welcome the New Year, I would like to take this opportunity to highlight some of the important events and activities of SEAISI in 2018.

The first major event of the year for the Institute is the 2018 Travelling Seminar. The theme of the seminar i.e. “Enhance Opera-tion Efficiency and Quality through Digitisa-tion and Optimisation”, aptly reflects one of the key challenges facing the steel industry today. The seminar is scheduled to be held from 5 to 14 March 2018 in Shah Alam, Malaysia (5 March), Hanoi, Vietnam (7 March), Bangkok, Thailand (9 March), Manila, Philippines (12 March) and Jakarta, Indone-sia (14 March).

Papers to be presented are “Steelmaking Process for High Quality Steel Products” by JFE Steel, Japan; “Improvement on Surface Defect for Billet/Slab Combo Casters” by Tung Ho Steel Enterprise Corporation, Taiwan; “Liberty OneSteel – Readiness for Industry 4.0 Programme” by Liberty OneSt-eel, Australia; “Smartisation in The Steel Industry” by POSCO, South Korea; and “Integrated Value-Chain Analysis and Intelli-gent Decision Optimisation for Steel Cost Reduction in The New Era of Industry 4.0” by N-Side S.A., Belgium.

The most anticipated event of the year, the 2018 SEAISI Conference and Exhibition, will be organised in Jakarta, Indonesia. In view of the Ramadan fasting month in May/June, this year’s event will be held later than usual,

2018 SEAISI Conference & Exhibition

Other things to look out for include the publication of the all-new 2018/19 SEAISI Directory, due out in February, and the 2018 Steel Statistical Yearbook, which will be published in July/August.

In addition to the above, SEAISI plans to organise a brainstorming session toward the later part of the year involving key stakeholders to map out new strategies and direction for the Institute. The last time such a session was held was way back in December 2007, in Bangkok, Thailand.

We look forward to your continued support and participation in the events and activities of the Institute. TAN AH YONG

from 25 to 28 June 2018, at Ritz-Carlton Jakarta Mega Kuningan. The theme of the conference is “ASEAN Steel Industry – Next Leap of Transformation”.

The highlight of the conference is the Keynote Session which will feature several prominent keynote speakers and a CEO panel discussion involving some of the top executives of steel companies in the region. Dr. Edwin Basson, Director General of the World Steel Association, has already confirmed his participation as one of the keynote speakers. Approaches are currently being made to get a couple of leading steel industry captains in Asia to join Dr. Basson in the keynote session.

Other than the keynote presentations and panel discussion, there will also be several interesting sessions dwelling on the status and issues and challenges of the steel industry in the region and beyond. We will also have the usual technical sessions on many important topics of interest to the steel fraternity.

For the plant tour, arrangements are being made to organise two routes covering several leading steel establishments in Jakarta and Cilegon.

In conjunction with the conference, a training course on “Big Data Analytics to Improve Steel Process Operation” will be organised on 24 June 2018. The training will be conducted by Dr. Yale Zhang of N-Side S.A., Belgium.

The 2018 SEAISI Training Programme will be hosted by the Korean National Commit-tee and is expected to take place in the later part of October this year.

The year-end event of the Institute is the 2018 ASEAN Iron and Steel Sustainability Forum which is scheduled to be held in the final week of November in Ho Chi Minh City, Vietnam.

Publisher: SEAISI Editor: Pichsini Tepa-Apirak Contributing Editor: Josephine Fong Printer: PLANAX Marketing (M) Sdn. Bhd.Email: [email protected] Tel: 603 55191102 Fax: 603 55191159 Website: www.seaisi.org

CRC players seek import restrictions... Pg. 4

Taiwanese government to impose AD duties to protect domestic steel industry... Pg. 6

Millcon Steel launches joint venture to expand into Indonesia ... Pg. 7

ASEAN’s semi-finished steel production and capacity utilization ... Pg. 15

NEWS HIGHLIGHTS 03

UPCOMING EVENT 02

MESSAGE FROM THE SECRETARY GENERAL 01

SOUTH EAST ASIA IRON AND STEEL INSTITUTESOUTH EAST ASIA IRON AND STEEL INSTITUTE

NEWSLETTERISSN 0166-9645

2018JAN

Theme: ASEAN Steel Industry – Next Leap of TransformationDate: 25-28 June 2018Venue: The Ritz-Carlton Jakarta, Mega Kuningan, Indonesia

2 SEAISI Newsletter, January 2018

ContentsMessage from Secretary General ....................................................... 1

Australia to continue AD investigation on Taiwanese rebar ........... 2

Krakatau POSCO surpasses 10 million tons in cumulative sales

in 4 years ............................................................................................. 2

Japanese steel imports rose last year .............................................. 3

Korea’s steel exports to US post double-digit growth ....................... 3

S. Korea to impose retaliatory tariffs on U.S. products ..................... 3

CRC players seek import restrictions ................................................. 4

Malaysia to impose AD duties on imported cold-rolled stainless

steel from several countries .............................................................. 5

Southern Steel may rebound higher, says RHB Retail Research ....... 5

Peza, Iligan to revive National Steel .................................................. 5

Taiwan’s ferrous scrap imports plunge 29% in November ................ 6

Taiwanese scrap import prices lower on increased supply .............. 6

Taiwanese government to impose AD duties to protect domestic

steel industry ...................................................................................... 6

Millcon Steel launches joint venture to expand into Indonesia ...... 7

Hòa Phát produces record steel in 2017 ........................................... 7

VN steel export up last year ............................................................... 7

MoIT to support steel businesses ...................................................... 7

Formosa Plastics steel venture in Vietnam set to double capacity . 8

Steel sector set for 20% growth ......................................................... 8

Brazilian flat steel imports nearly double in 2017 on plate, coil

volumes ............................................................................................... 9

Brazil steel institute challenges AD probe findings .......................... 9

Brazilian exports of steel flats in 2017 jump 8.25% .......................... 9

Russian steel production stagnates ......................................... 10

2017 REVIEW: India’s ferrous scrap market choked by new

regulations, competition from Pakistan ......................................... 10

ArcelorMittal, Nippon tie up to jointly bid for Essar Steel .............. 11

Three China steel cities on red alert for pollution .......................... 11

China govt curbs drop avg daily steel output to 12-mth low in Dec 12

Beijing plans checks to halt return of scrap-fed steel ..................... 12

China crude output continued upwards in early January ............... 13

China’s steel base continues huge capacity cuts ........................... 13

More Chinese mills predict bumper profits for 2017 ...................... 13

Analysis: China output cuts not as big as expected: Part 1 ............ 14

Softer demand curbs US raw material imports ............................... 14

ASEAN’s semi-finished steel production and capacity utilization .. 15

2018 SEAISI Conference & Exhibition: Call for Papers ..................... 16

A U S T R A L I A

I N D O N E S I A

Australia to continue AD investigation on Taiwanese rebar

According to the report, the Australian Anti-dumping Commissionannounced to terminate the investigation on imported rebar fromIndonesia exporters Ispat Panca Putera PT and PT Putra BajaDeli because those enterprises were with the dumping marginless than 2%.

In the contrary, the Australian government continued conductingthe investigation of anti-dumping duty on imported rebar fromGreece, Spain, Taiwan, Thailand and Indonesia exportersexcluded Ispat Panca Putera PT and PT Putra Baja Deli.

The customer tariff codes for the product involved were7213.10.00, 7214.20.00, 7227.90.10, 7227.90.90, 7227.90.90,7228.30.10, 7228.30.90 and 7228.60.10.

Yieh, January 24, 2018

Krakatau POSCO surpasses 10 million tons in cumulative sales in4 years

POSCO’s Indonesian steelworks ‘Krakatau POSCO’ exceeded 10million tons in cumulative sales in four years since the start ofits operation. As a result of the preliminary calculation of lastyear’s performances, the company posted about 12 milliondollars in operating income and produced a surplus for the firsttime in its corporate history.

Krakatau POSCO announced that its sales ran to 10 million tonsin total on January 15 as they steadily grew to the 2.8 million tonlevel since 2016 after hitting 1.7 million tons in 2014.

POSCO and Indonesian state-run steelmaker Krakatau Steelinvested 70% and 30% respectively in Krakatau POSCO with anannual production capacity of three million tons which startedits operations in December 2013 as the first integrated steel millin Southeast Asia.

The steelworks was the first case to build a steel mill in a foreigncountry with Korean technology and capital. Indonesia alsosucceeded in enjoying import replacement effects by way of theself-supply of high-quality steel which had been imported fromabroad and enhancing the competitiveness of steel demandindustries a great deal.

Bukaka Teknik, a manufacturer of steel structures, is planning tobuild the first full steel elevated highway in Indonesia by buying120,000 tons of steel plates from Krakatau POSCO.

Kenertec, a wind turbine tower production subsidiary of KorindoHeavy Industries, produces wind power generators and generatortowers with products from Krakatau POSCO and exports them tothe US and Europe.

Krakatau POSCO will further cement its position as the topsteelmaker in Southeast Asia by further strengthening itscooperative relationship with local steel makers and expandingits downstream manufacturing process. Accordingly, POSCO

SEAISI Newsletter, January 2018 3

announced that they hope that Krakatau POSCO will spearheadthe profitability enhancement of overseas investment projects.

Business Korea, January 19, 2018

Japanese steel imports rose last year

Japan’s steel imports during 2017 calendar year increased by4.1% on year to 8.09 million mt, according to preliminary datafrom Japan’s Ministry of Finance Officials in charge of the tradedata were unavailable for comment Thursday but a Tokyo-basedtrader said the increase was mainly in first half of 2017, beforeoversea market prices have increased. “Japan’s steel demandhas been firm and oversea mills were corresponding to thedemand but oversea market prices have increased from summer,less appetite on exporting to Japan because Japan’s prices werelower, so arrival of imported materials have started decreasingafter summer,” he said.

Within Japan’s total imports in 2017, those from Asia at 6.78million mt, up 4.5% on year. Within the Asia total, those fromChina decreased by 11.5% on year to 1.31 million mt and importsfrom South Korea increased by 9.9% on year to 3.98 million mt.

Japan’s steel imports in December were 648,094 mt, down 4.8%and 5.9% from November, for a fifth consecutive monthlydecrease. Within the total, imports from Asia decreased by 2.5%on year and 7.4% on month to 537,271 mt. Imports from China inDecember were at 100,038 mt, down 24% on year but up 3.4%from November, while those from South Korea increased by 4.9%on year but were down 12.7% on month at 308,603 mt.

The average prices of imported material cleared by JapaneseCustoms in December was Yen 122,642/mt ($1,125/mt) CIF, upYen 3,601/mt from the average in November, according to thedata.

Another trader in Tokyo said Japanese mills are limiting theirsupply for spot sales and customers still have to rely on importedmaterials. “But oversea mills are also kept tight to supply,arrivals won’t be increased,” he said.

Platts, January 26, 2018

Korea’s steel exports to US post double-digit growth

Amid intensifying trade protectionist measures against SouthKorea’s steel products by the US, Korea’s steel industry sawdouble digit growth in exports to the US last year, industry datashowed Sunday.

The total volume of steel shipments to the US dropped 4.9 percenton-year between January and November last year. But in value,the amount of exports rose 17.7 percent largely due to an increasein demand and price of oil country tubular goods, according tofigures by Korea International Trade Association.

Korea shipped 3.4 million tons of steel products to the US in2017, totaling $3.4 billion from $3.1 billion in 2016.

J A P A N

K O R E A

Oil country tubular goods refer to drill pipes, casing and tubingused in the petroleum industry to extract oil and natural gas.Demand for oil country tubular goods in the US hiked on surgingpopularity of shale gas.

According to industry insiders, the boost in profit is not all goodnews for the country’s steel industry.

“The US is highly likely to push for tighter regulations againstKorea’s steel products in the soon-to-be-released results of theSection 232 probe citing increased amount,” said an official ofKorea Iron and Steel Association.

“Heightened tariffs on Korean automobiles, which the US is saidto be pushing for in the revision of the KORUS FTA, will also affectthe steel industry.”

US President Donald Trump had invoked Section 232 of the TradeExpansion Act of 1962, which allows imposing tariffs or quotason imports that threaten national security, and launched a probeinto steel imports in April 2017.

The US Commerce Department will report the results of the probeby Jan 14.

In a move to impose stricter measures on Korean steel products,the US government levied 46.37 percent of anti-dumping tariffson OCTG imports from Korea‘s Nexteel in October last year.

Prior to the hike up, the US government had slapped anti-dumpingtariffs of 9.9 percent to 15.8 percent on OCTGs from Korea’sHyundai Steel, Nexteel and Seah Steel in 2014.

Korea‘s steel shipments to the US reached up to $5.7 billion in2014, up 49.4 percent from $3.8 billion a year earlier, accordingto KITA.

Yoo Myung-hee, director-general of the ministry’s trade policybureau, and US Assistant Trade Representative Michael Beemanconcluded the first round of talks to revise the KORUS FTA inWashington last Friday.

According to the ministry, the two confirmed their stancesregarding the automobile and agricultural and livestock sectors.

The Korea Herald, January 8, 2018

S. Korea to impose retaliatory tariffs on U.S. products

The South Korean government is planning to levy import dutiesequivalent to approximately two trillion won (US$1.8 billion) inretaliation for the U.S. safeguard measures against South Koreanwashing machines and solar panels. This is because washingmachine and solar panel exports to the United States, whichamounted to about US$1.155 billion each for the first 11 monthsof last year, can be significantly affected and South Korean steel,automobile and semiconductor products can also be affected bysimilar import restrictions down the road.

In the same context, the government requested a suspension ofconcession in the Dispute Settlement Body (DSB) of the WTO onJanuary 22 so that losses attributable to the anti-dumping tariffson the washing machines can be offset. “The South Korean


government skipped WTO arbitration in making the request unlikein most cases, and this implies a significant change in stance,”said professor Ahn Deok-keun at the Graduate School ofInternational Studies of Seoul National University.

The targets of the South Korean government’s retaliatory tariffsare likely to include agricultural products, which are regardedas the weakest point of the U.S. It is also expected that thegovernment will bring disputes in the steel industry to the WTO.The U.S. Department of Commerce has repeatedly imposed tariffson South Korean steel products since 2016, taking advantage ofAdverse Facts Available (AFA) and Particular Market Situation(PMS).

The South Korean government recently said that it has lookedinto the AFA provision for long and can make a final decision onthe issue sooner or later. In addition, the government is going towork more closely with countries like Australia, Singapore,Mexico and Chile in order to deal with the protectionist policy oftrade giants such as the U.S.

Business Korea, January 30, 2018

CRC players seek import restrictions

THE Malaysian Iron and Steel Industry Federation (MISIF), whichrepresents local cold rolled coil (CRC) players, is in talks withthe Ministry of International Trade and Industry (Miti) to helpcurb the import of CRC into the country.

Among the main publicly traded CRC producers or re-rollers inMalaysia are YKGI Holdings Bhd, CSC Steel Holdings Bhd andMycron Steel Bhd.

“MISIF is talking to the government,” confirms Mycron executivedirector and CEO Azlan Abdullah, who doubles as MISIF deputypresident. “And what MISIF hopes to achieve is to help the localre-rollers.”

In a nutshell, the national industry body for the manufacturersof iron and steel products is fighting for the re-rollers, callingfor the imposition of controls on CRC imports.

Meetings between MISIF and Miti have been ongoing for sometime now with the re-rollers taking a tough stance.

When contacted, the executives of the other two companies —CSC and YKGI — were also vocal. Kenny Ten, the vice-president ofcommercial business at CSC, says, “We need governmentintervention to reduce CRC imports into the country.”

According to YKGI managing director Victor Hii Lu Thian, the“pressure brought about by utility and labour cost increases,and the weak ringgit, has added to the burden of re-rollers”.

Though the executives of the three companies have voiced theirunhappiness at the situation, they do fear repercussions.

According to industry sources, CRC imports from India and Japanhave been increasing rapidly over the past 1½ years — over andabove those of other exporters such as China.

Documents viewed by The Edge show that since February lastyear, CRC imports from India have consistently been above fourmillion tonnes a month since mid-2017 while those from Japanhave shot up to more than 10 million tonnes a month.

“It used to be below two tonnes a month for Indian CRC and lessthan five tonnes a month for Japanese CRC. This seems likely toremain unchanged unless the government intervenes,” remarksan executive with a re-roller.

According to industry players, import duties of 15% on CRC werelargely done away with when the Asean Free Trade Area (Afta)and Malaysia-Japan Economic Partnership Agreement took effecton July 13, 2006.

However, steel company executives say countries with whichMalaysia has signed treaties have imposed sanctions onMalaysian exports or placed barriers to entry.

CSC, Mycron and YKGI have also engaged a trade lawyer to reviewanti-dumping measures against China, Vietnam, South Korea,India and Japan.

At present, the legal team is studying data from some of thecountries to ascertain if any dumping is taking place.

Against this backdrop, the steel industry is grappling with highercosts brought about by the implementation of the Goods andServices Tax from April 2015, and electricity and gas tariff hikesthat were just implemented.

According to MISIF, the natural gas tariff has increased 102%over the past four years, translating into an additional RM200million a year in costs for the steel industry. To recap, there havebeen six tariff hikes for natural gas over the last four years,ranging between RM16.07 per MMBtu and RM32.52 per MMBtu.

The effects of the challenging operating environment are alreadyshowing in the bottom line of the companies.

In its first financial quarter ended September 2017, Mycronposted a net profit of RM5.81 million on revenue of RM179.75million. In contrast, the company’s net profit fell 42.36% whilerevenue gained 7.31% in the previous corresponding period.

Checks on Mycron’s segmental reporting indicate that of theRM8.11 million in pretax profit, CRC only contributed RM2.77million, or 34.15%, with the rest coming from steel tubes, althoughthese generated RM66.36 million or about a third of revenue.

In its notes accompanying the financials, Mycron says, “Theweaker performance in the current quarter compared with thatin the previous corresponding quarter is mainly attributed tothe lower gross profit achieved, due to lower sales volume andhigher unit conversion cost arising from the lower productionvolume in the cold rolled segment.”

In its nine months ended Sept 30, 2017, YKGI suffered a net lossof RM8.11 million on sales of RM283.82 million. In the previouscorresponding period, it had registered a net profit of RM6.28million on sales of RM293.75 million.

In its notes, YKGI says, “The group’s financial performance duringthe current quarter continues to be impacted by soft demand

M A L A Y S I A


and low gross margin … The local steel environment remainsvery challenging.

“Stiff competition from local production and imports willcontinue to impact the margin of flat steel products for the restof the year. It is estimated that steel consumption for the rest ofthe year will remain soft. Without a major upswing in demand,the product margin will remain weak,” says YKGI, painting a bleakoutlook.

In its nine months ended Sept 30, 2017, CSC registered a netprofit of RM44.99 million on sales of RM956.07 million. Incontrast, net profit was down 28.02% despite a close to a 28%gain in revenue in the previous corresponding period.

In its performance review, CSC says, “The significant drop inprofit is mainly due to higher production cost as a result ofsignificantly higher raw material cost and a marginal drop inthe total sales volume.”

However, CSC, in which China Steel Asia Pacific Holdings Pte Ltdhas a 46.3% stake, is in a different league than the rest of theplayers.

CSC closed at RM1.57 last Friday, which translated into a marketcapitalisation of RM596.6 million for the company.

Mycron, which is 71.26%-controlled by Melewar Industrial GroupBhd — the vehicle of businessman Tunku Yaacob Khyra — endedtrading at 55.5 sen, giving the company a market capitalisationof RM157.37 million.

YKGI, meanwhile, is 26.78%-controlled by Marubeni-Itochu SteelInc and 15.34% by Yung Kong Co Bhd, the vehicle of the Hii family.YKGI ended at 18 sen last Friday, which translated into a marketcapitalisation of RM62.7 million for the company.

To recap, in May 2016, Miti imposed anti-dumping duties,ranging from 3.78% to 23.78%, on imports of alloy and non-alloysteel CRC from China, South Korea and Vietnam.This followed an anti-dumping investigation based on a petitionfiled by CSC on behalf of local producers of alloy and non-alloysteel CRC.

“The petitioner alleged that imports of CRC of alloy and non-alloy steel originating in or exported from the People’s Republicof China, Republic of Korea and Socialist Republic of Vietnamare being imported into Malaysia at a lower price than the sellingprice in their respective domestic markets. The petitioner claimedthat this was causing material injury to the domestic industry inMalaysia producing the like product,” Miti’s statement says,adding that the duties will be enforced for five years to May2021.

The Edge, January 23, 2018

Malaysia to impose AD duties on imported cold-rolled stainlesssteel from several countries

Malaysian Ministry of International Trade and Industry (MITI)completed an anti-dumping investigation of cold-rolled stainlesssteel case factual report, found that imports from Taiwan, China,South Korea and Thailand constituted a dumping, the proposed

anti-dumping duties were imposed on Taiwan manufacturers at0% to 14.02%, 3.66% to 23.95% for China manufacturers, 0% to7.27% for South Korean manufacturers and 22.86% to 111.61%for Thai manufacturers.

According to Malaysian customs statistics, Taiwan wasMalaysia’s largest source of imports. In 2015 and 2016, Malaysiaimported about US$47.76 million of products (accounting for41.15% of the total imported stainless steel in Malaysia) andUS$28.63 million (39.35%).

The other major sources of imports were from Japan (24.15%),Finland (14.57%) and Germany (9.34%).

According to the market participants, the range of the goodsinvolved in this case was very wide. The previous adjudicationof levying high provisional anti-dumping duties amounting to13.77~52.17% caused a considerable impact on Taiwan’s exports.

If the final adjudication confirmed the anti-dumping duty of 0%to 14.02% on Taiwan, it remained to be seen whether the negativeimpact on Taiwan’s continued operation of the Malaysian marketwill be slightly reduced.


Southern Steel may rebound higher, says RHB Retail Research

RHB Retail Research said Southern Steel Bhd may rebound higherafter it continued holding above the RM2.00 support.

In a trading stocks note today, the research house said given thatit has formed a white candle for the second consecutive day, thepositive sentiment has been enhanced.

“A bullish bias may appear above the RM2.00 level, with an exitset below the RM2.00 threshold.

“Towards the upside, the near-term resistance level is at RM2.29.This is followed by the RM2.40 level,” it said.

The Edge, January 25, 2018

Peza, Iligan to revive National Steel

The Philippine Economic Zone Authority said it is in talks withthe local government of Iligan City to revive the PhilippineNational Steel plant and restart the local integrated steel industry.

Peza director-general Charito Plaza said the agency had seriousnegotiations with Iligan City, which hosts the steel company,over the back taxes the company must settle with the LGU.

“We also talked with the banks and the previous operator. Wewanted so badly to have an integrated steel sector to the pointthat we may be brokering the revival of National Steel,” Plazasaid over the weekend.

Plaza said Peza would also negotiate the possible repackagingof the back taxes and bank loans to make the company moreattractive to investors.

P H I L I P P I N E S


“We cannot attract new investors if they are to take on all theoutstanding loans. We proposed to the LGU of Iligan that theycan be a stakeholder in the company, with the tax collectibles astheir equity,” she said.

Peza also asked related sectors to give National Steel a chanceto be “restored back since this is an important step toindustrialization.” Several groups also asked Peza to continuebrokering for the revival of the company.

Real estate taxes owed by the mothballed facility ballooned toas high as P4 billion.

Presidential adviser for economic affairs Ramon Jacinto saidearlier the reconstruction of the steel facility could cost about$3 billion for a 3-million metric ton plant.

Jacinto’s family previously owned National Steel before thegovernment took over its operations.

The original facility could produce 1 million MT of long steelbars and other steel products annually.

Manila Standard, January 19, 2018

Taiwan’s ferrous scrap imports plunge 29% in November

Taiwan’s ferrous scrap imports tumbled 29% year on year inNovember, according to the territory’s customs agency.

The island imported 172,320 tonnes of ferrous scrap that month,70,354 tonnes lower than the 242,674 tonnes it took in a yearearlier, data from Taiwan’s Customs Administration showed.

November’s imports are also 3.6% lower than the 166,264 tonnesshipped to the territory a month earlier.

Ferrous scrap from the United States continued to make up thebulk of imported materials, with 68,850 tonnes of such materialsdelivered to Taiwan’s main ports in November.

China remained the second-largest source; it accounted for17,255 tonnes in November. Hong Kong was the third-largestsupplier, shipping over 16,918 tonnes that same month.

Taiwan imported 2.68 million tonnes of ferrous scrap in the first11 months of 2017, down 9.5% from a year earlier.

Metal Bulletin, January 17, 2018

Taiwanese scrap import prices lower on increased supply

Import prices for containerized heavy melting scrap (HMS) inTaiwan showed some signs of softening this week on increasedsupply.Taiwan import ferrous scrap HMS 1&2 (80:20 mix) (USA material)$ per tonne cfr main port

China export rebar index, $ per tonne fob main port (from October16 this changed from a weekly assessed price to a daily index)

Metal Bulletin’s price assessment for imports of United States-origin HMS 1&2 (80:20) into Taiwan was $348-360 per tonne cfrfor the week ended Friday January 19, widening downward by $2per tonne from a week earlier.

Sellers continued to offer cargoes at $360 per tonne cfr thisweek, without letting offer prices slip due to continued harshweather conditions in the US.

“Judging from the number of offers I’m getting, it seems like thenumber of cargoes in the market has increased,” a Taiwanesebuyer source said.

A major scrap consumer purchased 8,000 tonnes of importedscrap at close to $348 per tonne cfr Taiwan, down $2 per tonnefrom last week, a source at the company said.

There were also other price negotiations taking place in the spotmarket at $350-360 per tonne cfr Taiwan, market sources said.

Sentiment in the global market was mixed this week, with sellersin the US maintaining that scrap supply will remain tight becausecold weather and road blockages have disrupted the supply chain,while participants in Taiwan were less optimistic.

“Most US suppliers and dealers remain bullish and expect thatprices may take another hike in the near term,” a seller said.

Taiwanese sources felt less positive about the direction of scrapprices, however.

“The market has turned as a major buyer was able to securecargoes at below $350 per tonne. Furthermore, some marketparticipants are in wait-and-see positions due to the upcomingLunar New Year holidays,” a Taiwanese trader said.

Downstream demand for rebar in Taiwan has not grown thisweek, sources said.

“Spot demand for downstream rebar is flat as local buyers wouldstay away given that export prices in China had continued fallingfrom Monday,” a second Taiwanese trader said.

The Metal Bulletin fob China rebar index was at $557.83 pertonne on Thursday, compared with $565.28 per tonne on January15, causing regional buyers to limit buying while waiting forlower prices in the near term.


Taiwanese government to impose AD duties to protect domesticsteel industry

It was reported that in order to protect Taiwanese steel industries,Taiwanese government would impose anti-dumping duties onthe products sold at dumped prices and caused damage to thedomestic industries.

Currently, Taiwan imposed anti-dumping duties on the importsof certain galvanized and zinc alloy flat rolled steel productsfrom China and South Korea, cold rolled stainless steel products(300 series) and carbon steel plate from Brazil, China, India,Indonesia, South Korea and Ukraine. The range of anti-dumpingduty was 4.02~80.5%.

T A I W A N


V I E T N A M

Taiwanese Bureau of Foreign Trade announced that sinceDecember 1st, 2017, the imports with CCC code 72085110100 of“other flat-rolled products of iron or non-alloy steel, hot-rollednot in coils, of a thickness of 50 mm or more, containing byweight 0.6% or more of carbon” should submit the certificate oforigin issued by the government of the producing country or itsauthorized entity when importing, the products levied anti-dumping duties were excluded.


Millcon Steel launches joint venture to expand into Indonesia

Millcon Steel has launched a joint venture with Artha GrahaGroup, its strategic partner in Indonesia, in a move aimed atexpanding market in the fastest growing market in SoutheastAsia.

Thirapong Khumruangrit, senior executive vice president ofMillcon Steel, said the company had signed businesspartnerships agreement with Artha Graha Group, a leadingindustrial conglomerate based in Indonesia, for a joint-ventureproject in which each holds a 50 per cent stake.

The two companies have committed to start trading activity firstin order to study the market.

Indonesia is fast growing and it is the largest market in SoutheastAsia due to its large population base. Millcon has specialised insteel production and distribution so that the joint venture isexpected to contribute to future success of the company’sbusiness operations, said Thirapong.

The Nation, January 24, 2018

Hòa Phát produces record steel in 2017

Hòa Phát Group, a major industrial group in Viet Nam, produceda record volume of finished steel products – three million tonnes– in 2017, a year-on-year increase of 25 per cent, the group’smanagers said on Thursday.

Of this, construction steel accounted for 2.2 million tonnes, whilesteel pipes contributed to 600,000 tonnes and the remainingwas galvanised steel.

Last year, Hòa Phát exported some 200,000 tonnes of steelproducts. They included 161,000 tonnes of steel bars and rolledsteel to the United States, Canada, Australia, Malaysia andCambodia.

The increase in export volume to strict markets showed highcompetitiveness of the group’s steel products, especially high-quality rolled steel with code SAE1006 and SAE1008.

It was the first time Hòa Phát Steel surpassed an annualproduction of two million tonnes, a year-on-year surge of 20 percent and 10 per cent higher than its plan for 2017.

In the domestic market, Hòa Phát continued to top the marketshare with 24 per cent. Sales in the central and southern regionsgrew rapidly.

Hòa Phát sold 79,000 tonnes of pig irons at home and foreignmarkets. It also consumed over 600,000 tonnes of steel pipesand 200,000 tonnes of galvanised steel sheets, exceeding itsyearly targets for 2017.

Hòa Phát is the leading player in the steel industry in Viet Nam.Both construction steel and steel pipes of the group are leadingthe market, accounting for 24 per cent and nearly 27 per cent ofmarket shares, respectively.

Viet Nam News, January 8, 2018

VN steel export up last year

Viet Nam has transformed from a steel-importing country to aproducing nation, with the export of 300,000 tonnes of steelbillets last year.

This was revealed on Tuesday in a report of the Viet Nam SteelAssociation on the status of Viet Nam’s steel manufacture in2017.

According to the report, Vietnamese steel billets are mainlyexported to markets in the Philippines and Indonesia, with theaverage prices ranging from US$480 to $500 per tonne, dependingon the period.

Besides billets, Viet Nam also exported more than one milliontonne of construction steel in 2017, a year-on-year increase of62 per cent.

The total steel consumption in the country in 2017 is estimatedat nearly 18 million tonnes, up 20.7 per cent compared to theprevious year.

Prior to this, VSA forecast the steel industry to grow by 12-15 percent in the next five years. Of which, cast iron output is forecastto increase 80 per cent to reach 4.5 million tonnes, while steelbillets will jump 47.2 per cent (11.5 million tonnes), finishedsteel products up 12 per cent (20 million tonnes), cold rolledcoils up 13 per cent and steel pipes up 15 per cent.


MoIT to support steel businesses

The Ministry of Industry (MoIT) will continue to support localsteel enterprises this year in their production and business,especially use of trade defence measures protecting the domesticsteel industry.

The domestic steel industry in 2017 saw growth in productionand business, with many factories going into production to meetdomestic demand and export, the ministry said.

To support the steel industry this year, the ministry will continueto apply trade remedies in accordance with WTO rules and freetrade agreements between Viet Nam and its partners to protectthe industry from the competitive pressure of imported steelproducts.

T H A I L A N D


The ministry will also direct enterprises to monitor closely themarket at home and abroad for ensuring suitable business plans.The enterprises must enhance consumption of products, reduceinventory, maintain production and business activities, ensureenough raw materials for production and promote brandadvertisement.

Nguyen Van Sua, deputy chairman of the Viet Nam SteelAssociation, said that in 2018, the association will continue toco-ordinate closely with the MoIT’s Trade Defence Departmentand enterprises in following the cases related with trade remediesfor steel products.

The association has also recommended that Vietnamesesteelmakers should co-operate actively with relevant officeswhen being investigated.

Experts said with the optimistic macro-economic picture thisyear, the real estate and construction markets have been forecastto have strong development in the near future, creating moreopportunities for Vietnamese steel producers. Therefore, theymust have reasonable development strategies to deal withdifficulties as well as take full advantages of production andbusiness.

According to the association’s latest report, in the first 11 monthsof 2017, Viet Nam’s steel imports had a year-on-year decrease of14 per cent in volume to 18.2 million tonnes and 15 per cent invalue to US$9.63 billion.

At present, Viet Nam’s steel imports mainly come from China,with 6.5 million tonnes of steel, accounting for nearly 47 percent of the total steel imports.

Meanwhile, Viet Nam’s steel exports in 2017 reached over 4.3million tonnes, with total export value of nearly $3 billion. Thosefigures reached a year-on-year increase of 33 per cent in volumeand 56 per cent in value. ASEAN is still the main export market,with exports of 2.4 million tonnes, accounting for 58.6 per centof total steel exports.

Significantly, construction steel exports reached over 1 milliontonnes, a surge of 62 per cent over the same period. Viet Namexported 300,000 tonnes of pig iron in 2017 instead of importing2 million tonnes in 2015.

Sýa said steel production and consumption in 2017 of theassociation’s member companies achieved high growth comparedto 2016, meeting the domestic steel demand and export.


Formosa Plastics steel venture in Vietnam set to double capacity

A Vietnamese joint steel venture led by Taiwan’s Formosa PlasticsGroup that includes Japan’s JFE Holdings will open a secondblast furnace this summer, doubling its potential crude outputin a steel-hungry region.

Formosa Ha Tinh Steel operates Vietnam’s first blast-furnaceintegrated steel mill, located in the central province of Ha Tinh.The first furnace began churning out crude steel in May. Thesecond furnace will boost annual capacity to about 7 milliontons.

JFE took a 5% stake in the venture in 2015, entitling the Japanesesteelmaker to a share of output. Taiwan-based China Steel holdsa significant interest as well.

JFE plans to sell hot-rolled steel coil from Formosa Ha Tinh Steelunder its own brand. It also will supply steel from the plant toSoutheast Asian processing facilities run by the JFE group, whichnow use material from Japan.

Vietnam, ranking third in population among the Association ofSoutheast Asian Nations with 93 million people, has become theregion’s largest consumer of steel products amid a wave ofbuilding and infrastructure construction.

Nikkei, January 24, 2018

Steel sector set for 20% growth

The Viet Nam Steel Association has predicted a year-on-yearincrease of 20-22 per cent in steel production this year.

Nguyen Vãn Sua, the association’s deputy chairman, said at ameeting on Thursday a number of steel projects would becomeoperational this year, including a plant of Hòa Phát Group incentral Quang Ngãi Province, with an annual capacity of twomillion tonnes, a three-million tonne capacity plant of Formosain Hà Tinh Province, a 350,000 tonne-capacity production lineof Hoa Sen in Bình Ðinh and three plants of Pomina, Viet-Ý andTung Hô, with a total capacity of 1.8 million tonnes per year.

The new plants would boost steel output significantly, theassociation said.

Specifically, cast iron is predicted to increase by 75 per cent toreach 7,500 tonnes, steel ingot by 14 per cent to 14,000 tonnesand finished steel products by 19 per cent to 26,230 tonnes.

Sua said the association would proactively participate indeveloping national standards for steel products and technicalbarriers as well as promote the application of trade defenseinstruments to protect domestic industry amidst rapidinternational integration.

In addition to these, the association would keep a close watchon the import of products that local producers can manufactureand propose measures to promote domestic production.

According to Nghiêm Xuân Ða, chairman of Viet Nam SteelCorporation, the steel industry has seen rapid increases incapacity, output and demand during the past five years. In 2018,Viet Nam would continue to be a fast-growing market for steel,he said.

He also said the government should increase policies to promoteinvestment and international co-operation and stimulate steelconsumption demand by developing industries such asconstruction, ship building and mechanics.

The association’s statistics revealed that steel output reachedmore than 22 million tonnes in 2017, a year-on-year increase of23.5 per cent, with a sale volume of nearly 19 million tonnes, upby 20.7 per cent.


The industry recorded an export revenue of more than US$3.64billion, up by 45.4 per cent over 2016.

Viet Nam imported nearly 20 million tonnes of steel in 2017,worth $10.5 billion, a drop by 14.2 per cent in volume but a riseof 13.2 per cent in value.


Brazilian flat steel imports nearly double in 2017 on plate, coilvolumes

Brazilian flat steel import volumes nearly doubled year-on-yearin 2017, mostly because of increased shipment volumes of heavyplate, cold-rolled coil (CRC) and hot-dipped galvanized coil (HDG).Imports reached a total of 1.31 million tonnes, against 665,386tonnes in 2016, according to figures released by the country’sforeign trade ministry, MDIC, on Thursday January 4.

China was the largest supplier of flat steel products to theBrazilian market last year, with 698,472 tonnes, compared with387,371 tonnes in 2016.

It was followed by Austria, which raised its shipments to 111,782tonnes from only 1,085 tonnes, mostly in heavy plate.

This contributed to an increase in Brazil’s total heavy plateimports to 205,852 tonnes in 2017, from 11,671 tonnes in 2016.

Metal Bulletin’s weekly price assessment for heavy plate importsinto South American countries, including Brazil, was $600-610per tonne cfr on Friday December 29, stable on a weekly basis.

For December 2017 alone, Brazil imported 86,578 tonnes of flatsteel goods, up from 81,741 tonnes a year earlier, according toMDIC.


Brazil steel institute challenges AD probe findings

The Brazilian steel institute has challenged a report that saysthe imposition of definitive anti-dumping (AD) duties on importsof hot-rolled flat products originating in Russia and China wouldhave a detrimental impact on Brazilian steel-consuming sectors.

The report, released by the finance ministry on 15 January, pointsin particular to the automotive sector, warning that duties wouldreduce competition in the steel market to a harmful extent,resulting in higher steel prices and costs for steel consumers.Overall, there is insufficient need to introduce AD duties becauseBrazilian steelmakers have not been adversely affected by anincrease in imports of hot-rolled flat products, but rather by a

decline in demand from key customers in the automotive andhousehold sectors, the report says.

But the steel institute has pushed back, saying the issue wasscheduled for discussion tomorrow and that the ministry hasbeen premature in publishing a report on it. The institute saidthe report is based almost exclusively on information providedby a single steel consumer.

Furthermore, the report claims that the imposition of AD dutieson Chinese and Russian hot-rolled flat products wouldsignificantly reduce Brazil’s imports of these products, thusreducing competition in the market to a major extent. But theinstitute noted that other major suppliers such as India, Japan,the US and EU would still be able to supply these products toBrazilian consumers, thereby ensuring that a competitive marketis sustained.

The institute highlighted the fact that the department of tradedefence concluded that dumping and damage to local producershas taken place, urging the government to impose measures onChina and Russia.

Brazil launched its investigation into Russian and Chinesesuppliers of hot-rolled flat products on 19 July 2016, afterproducers ArcelorMittal, CSN, Gerdau and Usiminas lodged acomplaint. The authorities concluded in November that thedomestic market had suffered injury, but preliminary duties werenot imposed.

The deadline for the probe was extended by eight months inMarch, with a decision now scheduled by 20 January.

Imports of Russian flat-rolled products to Brazil increased by117pc last year to 113,850t, while imports of Chinese flats roseby 51pc to 721,600t, trade ministry data show.

Argus Metal, January 17, 2018

Brazilian exports of steel flats in 2017 jump 8.25%

Brazil’s total exports of flat steel products in 2017 reached 2.35million mt, up 8.25% from the previous year, data from theMinistry of Development and Foreign Trade showed.

In monetary terms, these exports totaled $1.35 billion FOB, up46%. In 2016, the 2.17 million mt of products exported werevalued at $922.19 million FOB.

Hot-rolled coil exports last year totaled 1.62 million mt, up 7.9%,while cold-rolled exports reached 301,958 mt, up 53.8%.Shipments of hot-dipped galvanized coil came to 424,875 mt,down 9.6%.

In 2016, exports of HRC totaled 1.5 million mt; CRC, 196,347 mt;and HDG, 470,334 mt.

The main destinations for Brazilian exports of HRC in 2017 wereVietnam and Portugal, which took 368,823 mt and 366,051 mt,respectively. Exports of CRC mainly went to Germany (134,071mt) and Argentina (47,844 mt).

B R A Z I L


For HRC, the main destinations were the US (234,589 mt) andArgentina (144,475 mt).


Russian steel production stagnates

Russian finished steel production rose slightly last year, butlegged behind a broader recovery in industrial output, federalstatistics agency Rosstat’s data show.

Russian steelmakers produced 5.4mn t of finished steel productsin December, 1.2pc up on the year and 14pc up on November,when finished products output fell.

The December rise followed November’s rebound in Russianexport prices. Rebar prices rose by 5.8pc on the month to $540/t fob at the end of December, according to Argus weekly fob BlackSea rebar price assessments. The hot-rolled coil export pricerose by 8.1pc over the same period to $570/t fob, Argusassessments show.

Russian steelmakers produced 60.9mn t of finished steel productslast year, up by 0.7pc on 2016, according to Rosstat.

December pig iron output increased by 2.3pc on the year and by4pc on the month to 4.6mn t. Full year output totalled 52.2mn t,up by 0.4pc on 2016. The Argus fob Black Sea Russian pig ironprice assessment shows a similar trend that for to finishedproducts — the export price of pig iron bottomed out in mid-November, before rising by 5.8pc to close the year at $360/t fob.

Russian pipe manufacturers’ output reached 11.3mn t in 2017,up by 4.8pc on the year. Pre-fabricated steel structure productionrose by 7.9pc to 4.2mn t.

Metallurgical coke production totalled 2.3mn t in December,down by 6.3pc on the year, but up by 1.3pc on November. Full-year 2017 output totalled 28mn t, down by 3.8pc on 2016.Rosstat’s industrial production index rose by 1pc in 2017, withsteel one of the underperforming sectors.

Russian Ferrous Production

Argus Metal, January 24, 2018

2017 REVIEW: India’s ferrous scrap market choked by newregulations, competition from Pakistan

The Indian imported ferrous scrap market spent much of 2017under pressure from new government regulations and the abilityof Pakistani counterparts to pay higher prices.

The Indian import ferrous scrap market spent much of 2017 underpressure from new government regulations and the ability ofPakistani counterparts to pay higher prices.

The introduction of the goods and services tax (GST) in July,coupled with the aftereffects of the demonetization policy thatwas introduced in November 2016, has disrupted demand forIndian finished steel and scrap this year.

Meanwhile, a plentiful supply of cheaper local direct-reducediron (DRI) and a burgeoning stock of domestic scrap has meantthat when Indian mills have needed to purchase raw materials,they have been largely absent from import markets.

With Pakistan possessing fewer local alternatives to importedscrap, buyers in that country have been able to pay higher pricesfor material such as shredded scrap from the United Kingdomand Europe.

Given that freight rates to Pakistan’s Port Qasim are similar tothose required to ship into Nhava Sheva in India, offer prices forcontainerized shredded scrap to India have been too high for allbut the largest specialist steelmakers for most of the year.

The average Metal Bulletin India import shredded scrap pricefrom January 1 to December 1, 2017, was $309.45 per tonne cfr,up from $238.45 per tonne cfr in 2016.

“In India, buyers are confused by the GST. DRI availability is highin India, but Pakistan doesn’t have it, so Pakistan needs scrap,”one Middle East-based trader said.

“International prices have gone up without India having anyimpact for some time now,” one UK-based seller said.

The inability of most Indian mills to pay competitive prices hasresulted in a significant drop in scrap imports to the countrythis year.

Shipment volumes of ferrous scrap to India dropped by 31.56%year on year to 2.58 million tonnes in January-July 2017,compared with the 3.77 million tonnes imported over thecorresponding period of 2016, according to statistics compiledby the Bureau of International Recycling (BIR).

When looking at imports of EU-origin scrap alone, volumes intoIndia dropped by 41.5% year on year to around 355,000 tonnesin the first six months of the year, according to the BIR. Pakistaniimports of EU-origin material outstripped India and reached

507,000 tonnes over the same period.

R U S S I A

I N D I A

17-Dec±% Dec

16

±% Nov

172017 ±% 2016

Pig iron 4.6 2.3 4 52.2 0.4

Coke 2.3 -6.3 1.3 28 -6.3Finished steel

products5.4 1.2 13.9 60.9 0.7

Pipes na 1.1 7.5 11.3 4.8Prefabricated

steel structuresna -1.7 -13.8 4.2 7.9


Uncompetitive IndiaOne example of the chasm between India and Pakistan importprices in 2017 came on Friday August 18, at the height of thesummer upswing in ferrous scrap prices.

Metal Bulletin’s Indian import shredded scrap index was $338.09per tonne cfr, while Pakistani mills were heard to have beenopen to paying up to $350 per tonne cfr Port Qasim.

“Bangladesh and Pakistan are hot right now, which is draggingup Indian prices,” one India-based seller said at the time.

Due to business concluded by Pakistani mills, offer pricesincreased to unsustainable levels for Indian consumers, forcingthem out of the market, another India-based seller said. “At theseoffer levels, India will not dream of buying. They will have toraise their bid prices.”

Spread from Turkish pricesBetween January and December of this year, Metal Bulletin’sIndian import price for a containerized 80:20 mix of No. 1 andNo. 2 heavy melting scrap enjoyed a better average price over theTurkish bulk import price for similar material for just threemonths.

This came in March, April and May, when the Turkish market

suffered a sharp downturn due to low demand.

In January-December 2017, the average price for Metal Bulletin’sassessment for containerized 80:20 heavy melt into India was$274.16 per tonne cfr Nhava Sheva. That figure is $11.06 pertonne below the $291.50-per-tonne cfr average price for MetalBulletin’s bellwether bulk ferrous scrap index for 80:20 heavymelting scrap arriving in Turkey from northern Europe.

That spread is is largely stable from the $11.61-per-tonne averagespread in favor of the bulk material imported into Turkey last

year, but it represents a dramatic change from the $5.43-per-tonne average premium enjoyed by the Indian price in 2015 andthe $3.92-per-tonne premium for the material imported into Indiain 2014.


ArcelorMittal, Nippon tie up to jointly bid for Essar Steel

Two global steel giants — ArcelorMittal and Nippon Steel — areteaming up to jointly bid for bankrupt Essar Steel, said two seniorexecutives who did not want to be named. The asset is expectedto go under the hammer in the second week of February.

ArcelorMittal and Nippon Steel had originally planned to submitindependent bids for Essar Steel, which is among the five steelcompanies up for sale following RBI’s directions to refer 12companies to bankruptcy court in June last year. The other keycontenders for Essar Steel are Tata Steel, Vedanta Resources andthe promoters of Essar, the Ruias, in partnership with Russia’sVTB Capital.

Japan’s Nippon Steel and billionaire Lakshmi Mittal-promotedArcelorMittal decided to bid jointly for Essar last week, said thepeople cited above. “The final contours of the tie-up are beingworked out. We don’t really know the rationale for the tie-up asyet,” said one of the persons.

ArcelorMittal declined comment on what it said was speculation.Nippon Steel couldn’t be reached over the weekend and therewas no response to an email.

PARTNERSHIP TO INTENSIFY BIDDING

“Nippon Steel has deep pockets but it does not have any presencein India and therefore partnering with those who are familiarwith Indian regulations is comforting,” said one of the persons.“For Arcelor-Mittal, partnership will add to the financial muscleneeded for acquiring the company.”

This partnership will intensify bidding for Essar Steel and resultin lower haircuts for lenders. Essar Steel faces Rs 54,851 crorein claims from financial creditors and Rs 22,914 crore in claimsfrom operational creditors. The five steel companies among the12 are Electrosteel Steels, Bhushan Steel, Monnet Ispat andBhushan Power & Steel besides Essar Steel.

The Economic Times, January 29, 2018

Three China steel cities on red alert for pollution

The blanket of toxic smog hovering over parts of northern Chinasince the weekend has led authorities in several steel-producingcities to raise their air pollution alerts to red from orange, thehighest in a four-tier system.

Anyang city in Henan province, with Shijiazhuang and Handancities in Hebei, saw alerts raised over the past few days, butindustry watchers believed impact on steelmakers in the citieswould be limited as they had already been asked to cut productionthis winter.

C H I N A


Handan and Shijiazhuang issued red alerts from January 14 andAnyang upgraded its pollution warning from January 16.Earthworks in the three cities were forbidden and steel producersin Handan and Anyang (except Anyang Iron & Steel Group) wereordered to stop sintering operations.

Local news reports said all industrial enterprises in Shijiazhuangwere ordered to stop production by turns or restrict their hoursof operation.

That city governments had to advise residents to stay indoorsand take other steps to protect their health from the smog willdisappoint Chinese authorities. It was to avoid having to issuethe usual winter alerts which led the Ministry of EnvironmentalProtection to order steelmakers in Shijiazhuang, Tangshan,Handan and Anyang among the “2+26” cities — to reduce overallblast furnace utilization rates to 50% during the November 15-March 15 heating season. In fact, Handan took the initiative ofbeginning its reductions from October.

The extent of the cuts is reported as pig iron capacity taken out ofservice, with the reduction in Handan during the October 1-March31 period put at a large 12.32 million mt. Capacity unused inShijiazhuang and Anyang over November 15-March 15 would hit2.34 million and 3.76 million mt respectively, according to Platts’calculations.

In a statement the MEP blamed this week’s spike in smog on acombination of unusual weather patterns. Just last week it wascelebrating the fact that last December, average fine particulatematter (PM2.5) density over Shijiazhuang had dropped by 65.3%from a year earlier. PM 2.5 in Handan and Anyang city had declinedby 50.4% and 47.9% respectively from a year ago.

MEP also announced PM 2.5 concentrations in the 2+26 cities inBeijing-T ianjin-Hebei and surrounding areas averaged 71micrograms per cubic meter during October-December, down byover a third from the same period a year before.

The reductions showed the production cuts that mills wereordered to make were being effective, Platts notes. In its statement,the MEP warned local governments to be prepared to take strictermeasures to cope with severe air pollution from late January toearly February as weather forecasts indicated air quality duringthis period may deteriorate.


China govt curbs drop avg daily steel output to 12-mth low in Dec

China’s average daily steel output fell 1.9 percent in Decemberfrom the previous month, official data showed on Thursday,touching the lowest level in a year as government-imposedproduction curbs deepened.

Total output climbed to 67.05 million tonnes in December from66.15 million tonnes in November, and was up 1.8 percent froma year ago, data from the National Bureau of Statistics showed.Full-year output in 2017 rose 5.7 percent to a record high of831.73 million tonnes.

Still, average daily steel output declined 1.9 percent to 2.16million tonnes in December from 2.205 million tonnes inNovember, according to Reuters calculations based on the data.

“The government-driven production curbs were in force for thewhole of December compared to half the month in November,and with smog getting worse, the cutbacks were deeper andextended to more regions,” said Qiu Yuecheng, an analyst withsteel trading platform Xiben New Line E-Commerce in Shanghai.

Steel mills have been cutting production since mid-November aspart of government efforts to fend off smog in winter months.

Qiu said the growth in annual output was probably becauseproduction from electric furnaces, which have replaced illegalinduction furnaces, was included on the balance sheet.

“This year’s steel output may have stood flat or actually fallenas output from induction furnaces was excluded (from data for2016),” Qiu added.

China closed up to an estimated 140 million tonnes per year ofillegal induction furnace capacity in the first half of 2017, partof Beijing’s efforts to tackle overcapacity.

Pig iron production from blast furnaces, which process iron oreand have dominated China’s steel sector, dropped 4.4 percent inDecember from a year ago. Crude steel output still rose, suggestingmills produced more from electric furnaces that consume scrapmetal.

Full-year steel output rose at a faster pace, about three timesthat of pig iron, data showed.

China’s Ministry of Industry and Information Technology said ina statement on Jan. 8 that the government would encourage steelfirms to build more electric furnaces, which produce loweremissions and fit into China’s push to cut pollution.

Loosening output curbs and still-high profits will likely promptmills to increase production in January, analysts said.

Weaker demand for steel in December pushed prices for thematerial down 5 percent for the month, but they have sincesteadied amid signs of restocking by traders, which mayencourage mills to minimize production curbs.

China’s iron ore imports rose 5 percent in 2017 to hit a record1.075 billion tonnes.

Reuters, January 19, 2018

Beijing plans checks to halt return of scrap-fed steel

The Chinese government will intensify efforts to prevent theresurgence of induction furnace-based steel capacity, after afew such facilities were found to be operating in Heilongjiangand Jilin provinces.

China claims to have eliminated the country’s entire 140mn t/yrinduction furnace sector last year. The plants, which use scrapas a raw material, emitted higher levels of pollution than blastfurnace-based mills and produced sub-standard long products,the government claims.

The industry ministry has ordered large-scale inspections acrossChina to find operational induction furnaces and to punishoperators and local authorities if such facilities are uncovered.


Producers may be tempted to turn to the induction furnace routeagain, given steel prices are expected to rise from late February.Such facilities can be set up much more quickly and cheaplythan blast furnace-based plants. Induction furnace-basedproducers mostly sold rebar in China’s domestic market, demandfor which is expected to remain robust for the first half of thisyear at least.

Beijing has set a target to eliminate 150mn t/yr of blast furnace-based steel capacity in 2016-20, but is aiming to reach the targetthis year after removing 115mn t/yr of capacity in the last twoyears. This year’s capacity control efforts will focus on a completeban on increasing production capacity, steel plant mergers andshutdowns of chronically loss-making “zombie” mills.

China’s steel output and demand this year are likely to be stablecompared with 2017, as the real estate and construction sectorscontinue to grow, the China iron and steel association (Cisa)said.

Infrastructure development is on course to record fast growth,given Beijing has said it will continue its proactive fiscal policy.But real estate investment and sales growth is likely to be slowerthan 2017’s rate of 7pc after the government imposed home-buying curbs in large cities in an attempt to avoid an asset bubble.

Argus Media, January 25, 2018

China crude output continued upwards in early January

Crude steel output at works operated by China Iron & SteelAssociation member companies averaged 1.79 million mt/dayover the period of January 1-10, up 0.4% from late December,which in turn rebounded 3.6% from mid-December, CISA datashowed. The daily figure in early January was 4.7% higher thanthe same period last year.

Compared with the daily output of 1.802 million mt in theNovember 1-10 period – the last before steelmakers begancrimping production – the daily figure in early January was just0.7% lower.

CISA also estimated China’s total daily crude steel output in earlyJanuary at 2.24 million mt/day, up 0.7% from late December.

Market participants and some watchers quizzed by Plattsexpected China’s crude steel output in January to be higher thanin December, as some steelmakers in northern and eastern Chinawould have completed their winter steel output cuts.

Higher steel output in January would accelerate the rise of steelinventories in the spot market, due to weak end user purchasingin winter. The combined inventories of rebar, wire rod, HRC, CRCand plate in major Chinese cities had increased by 21% fromDecember 15 to 9.33 million mt as of January 19, but was still15% lower on year for the moment, according to a Chineseinformation provider Mysteel.

One mill source, however, shrugged off the possibility of outputrises this month, saying steel supply in this winter season wouldbe lower than the same period last year because of the heatingseason cuts.

One industry watcher also said induction furnace steel, due toits underground nature, had not been fully collected for marketinventory data before they were totally phased out by end of Junelast year. So by the same token, the disappearance of inductionfurnace steel had not been reflected in current market stockfigures either.


China’s steel base continues huge capacity cuts

China’s leading steel and iron producer Hebei Province willcontinue with huge capacity cuts in 2018, governor Xu Qin onThursday.

Hebei would draft a new three-year plan to continue pushingforward industrial reform in the province, Xu said when deliveringa government work report at the annual session of the provincialpeople’s congress.

Xu said the province aims to cut production capacity of steeland iron, coal, concrete and coke by 10 million, 10.6 million, 1million and 5 million tonnes, respectively, this year and eliminateall zombie enterprises in the steel and iron industry.

Since 2013, Hebei has set a target to shift its energy and industrystructures from coal and steel to emerging, high-end industries.From 2013 to 2017, the province overshot its five-year targetand cut production capacity of steel, iron and concrete by 69.93million, 64.42 million and 70.57 million tonnes, respectively. Italso reduced production of plate glass and coal consumption bymore than 71.73 million weight cases and 44 million tonnesduring the same period.

Hebei’s capacity reduction is part of a national move to focus onquality and profit improvement, while cutting overcapacity inheavy industries.

China plans to eliminate 100 million to 150 million tonnes ofcrude steel capacity and 500 million tonnes of coal in the fiveyears from 2016. The country completed its 2017 tasks forcapacity cuts in both sectors.

Xinhua, January 26, 2018

More Chinese mills predict bumper profits for 2017

Four of China’s leading steelmakers have said they expected toenjoy skyrocketing profits for 2017, according to recentlyannounced performance predictions. The positive outlook wasattributed to the spike in domestic steel prices seen last year onthe back of Beijing’s efforts to cut overcapacity and eliminate“illegal” induction furnace capacity.

Eight mills have now forecast a combined profit of Yuan 38.38-39.60 billion ($6.07-6.26 billion) over January-December, 2017.Among these, Shanghai-listed Shandong Iron & Steel (Shangang)on Saturday predicted it would make a profit of Yuan 1.94 billionfor last year compared to a loss of Yuan 600 million for the full2016 year.

Baoshan Iron & Steel (Baosteel), the Shanghai-listed unit of ChinaBaowu Steel Group, announced Thursday its net profit in 2017


might reach Yuan 19.07-19.77 billion, soaring by a huge 113-121% or by Yuan 10.1-10.8 billion on year compared to Yuan8.97 billion in 2016.

On the same day, the Shanghai-listed Baotou Iron & Steel(Baogang) flagged a four-figure profit jump last year, estimatingits net profits would increase by Yuan 1.91 billion to Yuan 2billion.

The Shanghai-listed Nanjing Iron & Steel (Nangang) Tuesdayforecast a net profit of some Yuan 3.2 billion in 2017, representingan eye-watering 800% increase from a year earlier.

The four mills all explained in their announcements that thecentral government’s efforts to ease overcapacity and eliminateIF capacity under the supply-side reform policy had sent domesticsteel prices soaring throughout 2017. Thus, their profits jumpedas a result.

Domestic spot market prices of hot rolled coil in Shanghai andrebar in Beijing last year averaged Yuan 3,758/mt ($594/mt) andYuan 3,814/mt ($603/mt), up 37% and 54% respectively on year,S&P Global Platts’ assessment showed.


Analysis: China output cuts not as big as expected: Part 1

Northern China’s production cuts in December did not impactthe market as much as people anticipated, according to analysisby S&P Global Platts. In fact, supply this winter is likely to belarger than expected, compounding already rising stocks.

Chinese pig iron output in December was 54.72 million mt,according the National Bureau of Statistics data; compared withOctober, before the heating season cuts began, this was down5.3 million mt (8.8%).

If winter production cuts were fully carried out in December, pigiron output last month would have been around 10.49 millionmt lower, according to Platts calculations.

Beijing’s campaign to force steelmakers in areas prone to heavyatmospheric pollution during the winter months to reduceoperations started on November 15, and will last until the end ofMarch.

Acheng Iron Steel and Yuzhong Iron & Steel each restarted twolong-idled blast furnaces in October and November, whileShandong Iron & Steel had been ramping up production on thenewly commissioned blast furnace at its Rizhao steelworkstowards the end of 2017. Factoring in these developments, thenet pig iron output loss in December should have been around9.82 million mt (accounting for about 16% of October’s pig ironoutput), much larger than the actual drop.

The lower than expected decline was smaller has sparked manytheories. One industry analyst argued the high profits enjoyedby steelmakers incentivized them to further ramp up productionin November-December. Previously, he believed the drop in pigiron output last month could be as much as 12-13% from Octoberoutput; the actual decline was two-thirds of this volume.

Another reason the reduction in output was not as steep asexpected was that in parts of northern China, waste heat fromthe steelmaking process is used for residential heating. Whensome local governments in Shanxi and Hebei learnt of a fall-offin heating in late December, they relaxed the output cuts at somelocal steel and coking companies.

But the overarching reason was probably more economic – orcommercial – than anything else. China’s steelmakers generallyhave been earning really good profits, which enticed managementto be more ‘flexible’ in deciding how rigorously they would applythe cutbacks. By the end of December, mill margins on hot rolledcoil and rebar were around $135/mt and $134/mt respectively,according to Platts analysis.

The net effect of the lower than expected reduction in steel output,combined with seasonally weak demand, as well as traders’unwillingness to restock, has been a dramatic fall in domesticsteel prices, especially for longs, from December into January.

By mid-January, spot market prices of rebar in Beijing and HRC inShanghai dropped 16% and 6% respectively from early Decemberto Yuan 3,910/mt ($610/mt) and Yuan 4,070/mt, Plattsassessments showed.


Softer demand curbs US raw material imports

Steelmakers in the United States limited their raw materialimports in November due to lackluster demand stemming fromplanned outages and expectations that domestic ferrous scrapwould remain more affordable than its foreign counterpart.

Imports of raw materials in November – booked in October –declined 22.8% sequentially, with ferrous scrap, pig iron anddirect-reduced iron (DRI) intake falling across the board, USCensus Bureau data show.

Deep-sea ferrous scrap prices plunged in mid-September, hittinga floor of around $295 per tonne for an 80:20 mix of No. 1 andNo. 2 heavy melting scrap during the final days of the month. YetUS mills were not tempted by the lower prices.

Domestic prices for obsolete scrap grades were expected toremain flat in November. Shredded scrap in Alabama was tradingat $280 per gross ton ($276 per tonne) at the time, according toAmerican metal Market’s pricing archives, almost $20 per tonneless than what was being offered in the international marketduring the month.

US ferrous scrap imports as a whole were off 26.7% from Octoberlevels, mainly due to a 62% drop in purchases of European bulkcargoes. Only one cargo containing 27,258 tonnes of No. 1bundles was delivered to the US in November.

Several mills in the Midwest were conducting maintenanceoutages in November, contributing to the 10.1% drop in ferrousscrap shipments from Canadian suppliers into the steelmakingregions of Detroit, Chicago and Cleveland. Imports of shreddedscrap and No. 1 heavy melting scrap from Canada declined 24.9%

W O R L D


and 14.2% respectively to 25,950 tonnes and 14,101 tonnes, butintake of No. 1 bundles increased 4.7% to 68,923 tonnes (from65,804 tonnes).

Meanwhile, US imports of pig iron fell 18.6% from October levels,with intake from Russia plunging 54.1% to 141,507 tonnes inNovember from 308,343 tonnes. This more than offset gains inshipments from Brazil and Ukraine. Brazil shipped 75,025 tonnesof pig iron to US shores during the month, double the prior month’s37,080 tonnes; and Ukraine increased its shipments by 23.6% to152,155 tonnes from 123,069 tonnes in the same comparison.

Pig iron export prices from the Commonwealth of IndependentStates declined to $350-360 per tonne, while prices for materialfrom Brazil dropped to $360-365 per tonne in mid-October.


ASEAN’s semi-finished steel production and capacity utilization

ASEAN is not self-sufficient in steel production and is quite relianton imported steel. Most of the steel companies are mini-mills.Semi-finished steel production is not sufficient in the region.Out of the total 77 million tonnes of finished steel demand in2016, less than 32 million tonnes were supplied by domesticproduction and only 20 million tonnes of semi-finished steelwere produced in the region.

Semi-finished steel consumption in the six ASEAN countriessurged by 13% y-o-y to 35.5 million tonnes in 2016. The averageannual growth rate for the period 2010 to 2016 was 3.8%.Production, on other hand, registered a more moderate growthrate of 6.6% y-o-y in 2016 to 20.7 million tonnes. However, forthe period of 2010 to 2016, the average growth rate of the semi-finished steel output was only 1% per annum.

Indonesia’s semi-finished steel demand surged by 8% y-o-y to9.4 million tonnes in 2016. Domestic production dropped slightly,by 2% y-o-y, to 4.7 million tonnes in the same period. Nevertheless,overall domestic semi-finished steel production continued toincrease moderately, with an average growth rate of 4.4% peryear, from 2010 to 2016, while semi-finished steel demand grewmore significantly, by an average rate of 7.6% per year during thesame period.

Indonesia’s investment in expansion of semi-finished steelproduction capacity has increased dramatically. This was mainlydue to the investment from Krakatau POSCO in slab productionwhich commenced its operation in 2013. Billet productioncapacity utilization in Indonesia declined substantially, from50.6% in 2010 to 39.4% in 2016 and slab production capacityutilization also dropped from 60% in 2010 to 54.6% in 2016.

Malaysia’s semi-finished steel demand declined slightly in 2016,by 3% y-o-y. This was mainly due to a sharp decline in hot rolledcoil production in the country. Semi-finished steel productioncontracted sharply, by 27% y-o-y to 2.8 million tonnes in 2016.Overall, semi-finished steel production in Malaysia declined byan average rate of 11% per annum from 2010 to 2016.

Malaysia expanded its production capacity for semi-finishedsteel from 9.2 million tonnes in 2010 to 12.4 million tonnes in2016. However, its production capacity utilization droppedsignificantly during the same period. Billet production capacityutilization rate declined from 66% in 2010 to 32% in 2016 whilecapacity utilization rate of slab slumped from 50% in 2010 toonly 1% in 2016.

Philippines has only long steel hot rolling production and thereis only one billet production facility in the country. Billet demandsurged significantly, by 9.6% y-o-y, in 2016. Domestic productionregistered a double-digit growth rate of 11% y-o-y in 2016.However, the significant growth in billet production came after asharp decline in 2015. Overall, billet production in the countrygrew by an average growth rate of only 0.4% per year from 2010to 2016 while billet demand picked up by an average growth rateof 11% per year during the same period.

Billet production capacity increased from 1.26 million tonnes in2010 to 1.5 million tonnes in 2016. Capacity utilization rate forbillet production was as high as 83.3% in 2010 but dropped to71.7% in 2016.

Singapore has only long steel production and it is the only countryin the region that has not seen any change in steel productioncapacity. Billet production surged slightly, by 2% y-o-y in 2016.However, overall production from 2010 to 2016 declinedmoderately, by 5.4% per annum. Capacity utilization rate alsoreduced from 97% in 2010 to around 70% in 2016.

Thailand’s semi-finished steel demand picked up robustly, by25% y-o-y in 2016. However, domestic production surged only3.3% y-o-y in the same year. Overall, production of semi-finishedsteel in the country declined slightly, by an average rate of 1.3%per year from 2010 to 2016.

Thailand has no capacity expansion on slab production, butbillet production capacity increased from 4.2 million tonnes in2010 to around 5.7 million tonnes in 2016. Slab productioncapacity utilization rate increased from 40% in 2010 to 45% in2016. On the other hand, billet production capacity utilizationrate dropped by half, from 51% in 2010 to 25% in 2016.

Vietnam had no flat steel production until 2016. Billet demandsurged by an average growth rate of 6.6% per year from 2010 to2016 and billet production in the country continued to increaseby an average growth rate of 10% per year during the same period.Vietnam has seen a significant boost in investment of billetproduction capacity, from 7.4 million tonnes in 2010 to 12.8million tonnes in 2016. Capacity utilization rate improvedslightly, from 58% in 2010 to 61% in 2016.

SEAISI, January 2018

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Suggested Topics :

1. Steel Market Developments and Outlook2. Steel Price Trends and Outlook3. Investment in ASEAN Steel Industry: Ways to Move Forward 4. Direction of China’s Steel Export: Impact on ASEAN Steel Industry5. Value Creation in ASEAN Steel Industry6. Industry 4.0 and the Steel Industry7. Raw Materials 8. New Product Developments9. New Technologies10. Process Improvement11. Quality Improvement12. New Steel Applications13. Plant Management14. Environmental Management15. Cost & Energy Savings16. Safety Improvement in Steel Production

SEAISISOUTH EAST ASIA IRON AND STEEL INSTITUTESOUTH EAST ASIA IRON AND STEEL INSTITUTE

2018 SEAISI Conference & Exhibition

25-28 June 2018 The Ritz-Carlton Jakarta, Mega Kuningan, Indonesia

Theme: ASEAN Steel Industry – Next Leap of Transformation

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Paper Presentation: Ms. Pichsini Tepa-Apirak, [email protected], Advertising & Sponsorship: Mr. Eric Lee, [email protected] Registration: Ms. Josephine Fong, [email protected]