EBCOM. Limited

Algeria: Danieli to build Algerian Qatari Steel complex; Egypt: Egyptian Steel plans 2 new factories; Libya: LISCO production cut down;


Flat products market trend in Week 10, 2015
Iran

Hot rolled coil 2 mm thickness started the week at Rials17.4million/mt on truck in Anzali including 8% VAT on Saturday but dropped by Rials300,000/mt on the same day. By Monday when it was announced that import tax rate for steel market has increased, prices started rising and HRC price reached Rials18 million/mt . From Wednesday prices were down by Rials200,000. Import tax for this product has increased by just 4%. Import price is USD440/mt cfr Northern ports. It would be Rials13 million/mt when including exchange room allocated currency for it. Final price after custom rates would be Rials15.5million /mt when released. Chinese HRC 2 mm thickness is USD420/mt cfr Southern ports and its cost price for importers would be Rials14 million/mt.If upward trend in flat products market continues, importers will rush for buying and this will decline prices in first 2 months of Iranian New Year ( begin at 21 March) due to higher market inventory. Besides, traders which import HRC from Kazakhstan are facing with limitations about exchange room currency allocation, but Chinese, Korean and Indian products are being imported without this problems.HRC 2.5-6 mm thickness was stable and also HRP market was unchanged. But HRP market is in limited supply due to lower offer level from Mobarakeh Steel Co. HRP thickness 15 mm was upward from Wednesday due to low supply level from Kavian and Mobarakeh Steel mills. CRC market was stable till middle of the week when news about higher import tax and no currency allocation from exchange room for its import made CRC price upward and many market participants stopped offering. Though, market was in a waiting trend. CRC import price is USD500-520 /mt cfr Iranian ports it is logical that cost price reach Rials23million/mt for thickness 0.6-2 mm. Any improvement in CRC market seems unlikely at the moment as global prices are downward.HDG market was also upward like CRC market.

Ex-rate:
In Exchange Room: Rials27,883 /1USD
In free market: Rials 33,950 /1USD

Long products market trend in Week 10, 2015
Iran

Long products were almost stable during last week in Iran. Average price of Esfahan origin debar diameter 14-25 mm just dropped by Rials20,000/mt to Rials15.45million/mt ex-work including 8% VAT.In I-beam market price of sizes 14-18 mm was almost fixed at Rials16.5million/mt ex-work including 8% VAT till last working day of the week Thursday, when Khorasan Steel Co declined its price by Rials300,000/mt. In coming days more mills will follow this trend. But as billet price is stable, long products prices will not decline significantly.Market participants are in waiting mood to see what would be final results of current Nuclear Talks.

Ex-rate:
In Exchange Room: Rials27,883 /1USD
In free market: Rials 33,950 /1USD

Billet market trend in Week 10, 2015
Iran

Billet market experienced a stable week with size 150 mm in import market being offered at Rials13.55-13.65 million/mt on truck in Anzali including 8% VAT. Domestic production for the same size in retail market was Rials13.5-13.6 million/mt including 8% VAT.Esfahan Steel Co offered billet size 150 mm at Rials13.55 million/mt ex-work including 8% VAT and Khouzestan Steel Co at Rials13.3 million/mt. At the moment small producers are scarcely offering billet in the market, so domestic supply level has declined.Imported billet is around USD390/mt cfr Northern Iranian ports, which would cost around Rials16 million/mt for importers with ex-rate of around Rials35,000/1 USD and other related costs for opening letter of credit.At the moment if domestic leaders reduce billet price, it will affect market and prices will decline. Other factors such as scrap price trend or international billet price are less affective as billet downward trend is just USD5-10/mt and scrap price has reached almost bottom in Iran domestic market.

Ex-rate:
In Exchange Room: Rials27,883 /1USD
In free market: Rials 33,950 /1USD

Lira hits new record low against dollar
Turkey

The Turkish Lira has dropped to a new all-time low yet again, seeing TL 2.6 against the U.S. dollar amid the strengthening trend of the greenback and investor concerns about the fate of Turkish economic management.According to analysts, political pressure on the Turkish Central Bank for a rate cut despite the tumble in the lira in addition to contradictory remarks about economic management has triggered distress in the market, adding to the lira's pain. Efforts by Turkish Prime Minister Ahmet Davutoglu and his economic team to soothe the nerves of investors in New York, who hold more than a fifth of the main Turkish stock index, appeared to have had little immediate effect. Turkish President Tayyip Erdogan has demanded deeper rate cuts to drive growth, despite stubborn inflation.

That has raised concern about the futures of Central Bank Governor Erdem Basci and Deputy Prime Minister Ali Babacan. An anchor of investor confidence, Babacan looks increasingly unlikely to return to office after June's general election.

Chinese wire rod products sold cheaper in the local market
Saudi Arabia

The current price of carbon wire rod in Saudi Arabia is reportedly about USD500 per ton. However, the export price from China to Saudi Arabia is around USD390-410 per ton CFR.

Market insiders indicate some Saudi Arabian buyers have interest in Chinese chrome-added wire rod products and competitive prices. They will consider the further quotation from China.

Domestic HRC market remains stable, export prices drop
Turkey

The domestic price of hot rolled coil in Turkey has been stable at around USD440-460 per ton with steady import price of scrap and rebounding steel demand.

On the other hand, the export price of HRC in Turkey has cut by USD20 per ton from last month to around USD400-420 per ton due to keen competition in overseas market. Furthermore, the export prices in Ukraine and Russia are around USD390-410 per ton at present.

Netherlands-based Vopak plans to expand Fujairah oil storage capacity further
UAE

Vopak is building five crude oil storage tanks with total capacity of 478,000 cubic metres at the port of Fujairah and may eventually expand that number, executives from the world's largest independent storage tank operator said on Thursday.Netherlands-based Vopak already has a partnership with Horizon Terminals, the government of the emirate of Fujairah and Kuwait's Independent Petroleum Group at the port, which lies outside the Strait of Hormuz on the east coast of the United Arab Emirates."We didn't start this project to only keep it at five tanks - we hope in future to expand it," Cees De Greve, general manager of Vopak Horizon Fujairah, told Reuters on the sidelines of a ceremony at the port."There is a lot of land so we want to grow. We are also looking around to see what the companies around us are doing, and we've seen opportunity for crude storage in Fujairah."The five tanks, which are due to become operational by June, would take total storage capacity of the joint venture to 2.6 million cubic metres from around 2.1 mcm now; all the current capacity is for refined oil products.The current expansion phase, known as Black Pearl, will also see the construction of a VLCC jetty for the supertankers to dock in Fujairah.

There are two major storage hubs and ports in the region that are just outside the Strait of Hormuz: Fujairah, and the port of Sohar in non-OPEC oil producer Oman.

Danieli signs contract to build Algerian Qatari Steel complex
Algeria

In the presence of the Algerian Minister of Industry Mr. Abdussalam Buchuareb, the Governor of the State of Jijel, Mr. Ali Bedrici, the President of Algerian Qatari Steel (AQS), Mr. Hasnaoui Chiboub, and the C.E.O. of the same company, Mr. Abdulla Ali Al-Buainain, the green light was given to the construction of an integrated minimill for the production of 2 million tons per year.The investment amounts to USD2 billion, including the infrastructures.The technological part of machines, automation and assistance was awarded to the Danieli Group.The order will be managed by Danieli & C. Officine Meccaniche S.p.A. headquartered in Buttrio (Udine), Italy.At the moment the order is worth about USD750 million.The contract was signed by the President of AQS Mr. Hasnaoui Chiboub and by the Chairman and CEO of Danieli, Mr. Gianpietro Benedetti.The Minister also evoked the "positive effects of the commissioning of this industrial complex to annually produce two (2) million tons of steel in the first phase and then double this production in the second phase by 2019."The minister said this complex, which is meant to "meet the needs of the country's needs in terms of steel," has ambitions to export the production surplus."Importing significantly impacts our resources and we are in a race against time," added Bouchouareb before announcing that the Bellara complex "will make Jijel a new industrial platform, after that of El Hadjar (Annaba)." It will employ approximately 1,000 people internally (engineers and technicians) and another 3,000 external personnel for various services.AQS is a jointly owned Algerian/Qatari company (51% and 49% respectively).On March 8, the first stone will be laid in the presence of the prime ministers of Qatar and Algeria.This order confirms the worldwide leadership of the Danieli Group in the field of EAF steelmaking plants, including those that operate in combination with a direct reduction plant.The new steel plant will be supplied by Danieli under a lump-sum turnkey agreement.The complex will be composed of:
> a 2,100,000 tons per year meltshop, featuring two 120-tons electric arc and refining furnaces and two 5-strand continuous casters for billets;
> as well as a rolling mill for the production of 750,000 tons of 16 to 40-mm bars;
> a second rolling mill for the production of 750,000 tons of 8 to 16-mm bars;
> and a third rolling mill for the production of 500,000 tons of 5.5 to 14-mm wire rod.The technological area is complete with all the auxiliary plants that also include a water treatment plant with a capacity of 20,000 cubic meters per hour.The plant will operate according to state-of-the-art environmental technology for fume dedusting and water treatment.

Destined primarily for the construction of infrastructure in the country, this will be the largest and most modern steel complex in Algeria for the production of steel.

ECC approves USD9.4 million for payment of PSM salaries
Pakistan

The Economic Co-ordination Committee of the Cabinet in its meeting chaired by Finance Minister Ishaq Dar Saturday approved an amount of Rs 960 million (USD 9,411,760) for payment of two months'' salaries to workers of Pakistan Steel on an urgent basis. Chairman Pak Steel briefed the meeting about the current profile of Pak Steel saying some difficulties were being faced in production due to power and gas shortage.

The chair while approving the amount for payment of salaries, directed for formation of special committee including Secretary Finance, Chairman/Secretary Privatisation Commission, Secretary Industries, headed by Chairman SECP to look into affairs of PSM. He also asked the Privatisation Commission to table its proposal for the restructuring of PSM at the next ECC meeting.

Govt. approves El Fouledh to borrow USD17 mln from Islamic Development Bank
Tunisia

The House of People's Representatives (HPR), on Friday, passed a draft law allowing the Tunisian Company of Steel (El Fouledh) to borrow 34 million Tunisian dinars (USD 17,096,600) from the Islamic Development Bank (IDB).The bill, discussed at a session that saw the absence of representatives of the Ministry of Industry, Energy and Mining, involves a guarantee agreement related to a "Murabaha" agreement signed by Tunisia and the IDB in June 2014 to allow EL Fouladh to import many goods, including steel, commercial iron and steel barsMPs stressed during the debate the need to find a radical solution to the company which plays a key role in boosting the economy.

They asked about threats of closure weighing on the company that monopolises a strategic economic sector and offers 1,200 jobs, besides more than 5,000 workers operating in scrap iron.

Egyptian Steel plans 2 new factories, seeks 20-25 percent market share
Egypt

Egyptian Steel expects to open two new factories by the middle of 2016, raising capacity to 3.5 million tons per year and boosting its market share, chairman Ahmed Abou Hashima said.In addition to its plants in Alexandria and Port Said, it aims to launch a 3.5 billion Egyptian pound (USD460 million) facility in the Nile city of Beni Suef this July or August with an annual capacity of 1.36 million tons.It also hopes to start a factory in Ain Sukhna on the Red Sea by mid-2016, said Abou Hashima."We are seeking to acquire 20-25 percent of market share after production starts in all of these factories," he said. Egyptian Steel currently claims 10 percent of the market."There is strong demand in the market and we expect that there will be growth."The expansion plans reflect growing optimism that the economy can recover after years of turmoil triggered by the uprising that toppled autocrat Hosni Mubarak in 2011.Egyptian Steel currently produces 800,000 tons of steel per year and aims to raise capacity to 3.5 million tons annually once its new projects are completed.Abou Hashima said it was looking at a feasibility study for a fifth factory that would be powered by coal.Egyptian Steel was established in 2010 as a joint venture between Egyptian and Qatari interests that brought together three existing firms. Egyptian Steel now has capital of about 2.2 billion Egyptian pounds (USD290 million) and plans to raise a further 350-400 million. Abou Hashima reiterated it is preparing for an initial public offering, but added: "We must finish the factories first."

(USD1 = 7.63 Egyptian pounds)

Power struggle spreads to Misrata, LISCO production cut down
Libya

A power struggle between two rival governments that threatens to tear Libya apart has started to take its toll on Misrata, an important shipping and industrial hub that had shrugged off the turmoil until now.Production at the country’s biggest steel works has been cut and the port of Misrata has been forced to restrict operations after infighting spread.Misrata had so far not been affected by the unrest, since its port serves much of the country and it became a major air gateway to Libya when fighting forced Tripoli’s main airport to close in the summer.The country’s third largest city is also home to the biggest free trade zone and the largest dairy products company, making it the only place with significant non-oil industrial activity in a country that relies on petroleum for most of its revenues.In Misrata, the Libyan Iron and Steel Company (LISCO), one of Africa’s largest steel firms, is facing gas shortages and will have to cut production this year by shutting down two of its three direct iron reduction plants, its chairman said.“We agreed with the electricity firm, as instructed by the government, to reduce production to 33 percent due to gas supply problems to save natural gas and power,” Chairman Mohamed Abdelmalik al-Faqih told Reuters in an interview.Output of direct reduced iron, a key steel-making ingredient, would be just 550,000 tons in 2015, a further decrease from last year when it had planned to produce 1.6 million tons, but achieved only about 60 percent of the target due to power shortages.The cutbacks would affect steelmaking operations and two of the company’s six furnaces would shut down.He said ships importing raw materials or fuel were increasingly reluctant to dock at Misrata, though marketing manager Ali Darrat said one ship had just arrived.At Misrata’s commercial port, container volumes fell last year to 174,340 twenty foot equivalent units (TEUs) from 225,929 in 2013, the latest data shows, ending years of steady growth.

Some foreign shippers have diverted cargo to smaller Libyan ports such as Khoms, west of Misrata, after a warplane hit a quayside warehouse, an industry source said.

Global Steel News

Daily crude steel output increases slightly in mid-Feb
China

According to data released by China Iron & Steel Association (CISA), the country’s daily crude steel output averaged at 1.6376 million tons in mid-February. The daily crude steel output in the world's top producer and consumer in mid-February increased by around 0.6% or 9,600 tons compared to the previous period. During the mid-February, the inventories at steelmakers were at 16.46 million tons, climbing by 1.54 million tons or 10.4% compared to the last period.

Output of daily pig iron production also increased by 0.33% to 1.61 million tons during the same period.

Baosteel to hold tinplate domestic prices unchanged for April
China

Chinese steel giant Baosteel Group has informed its customer to maintain its tinplate domestic prices unchanged for April.The company’s price for 0.21mm thickness MR-CA will be around RMB6,602 per ton, holding steady from the last month. The price for 0.21mm thickness MR-BA will be at RMB6,402 per ton.

At the same time, Meishan Iron & Steel, a holding company of Baosteel will also follow the suit to keep its prices unchanged.

Hit by separatist conflict, steel output drops 29 pct so far in 2015 YoY
Ukraine

Steel production in Ukraine, hit by a separatist conflict in the east, fell by 29 percent to 3.46 million tons in the first two months of 2015 compared with the same period last year, producers' union Metalurgprom said on Thursday.The union gave no reason for the fall but some major Ukrainian steel mills located in the eastern provinces of Donetsk and Luhansk suspended production due to fighting there between pro-Russian separatists and government forces.Metalurgprom said pig iron output fell by 31 percent to 3.15 million tons, while rolled steel production fell by 30 percent to 3.06 million tons.

In 2014, Ukrainian steel plants reduced annual steel production by 17 percent to 27.16 million tons.

Steel industry reform needs govt. support - Anshan Steel
China

Chinese steelmakers are facing more headwinds this year as economic growth slows and need government support to tackle long-term overcapacity, the chairman of Anshan Iron & Steel Group said.China's steel sector has been struggling with tepid growth in demand, increasing environmental protection costs and persistent overcapacity, forcing many uncompetitive producers to have closed since last year."The government should strengthen the elimination of outdated capacities, and particularly those enterprises that have failed to meet environmental standards in terms of the new environment law," Zhang Guangning, chairman of Anshan Steel Group, said during a gathering of Liaoning provincial delegates to the annual meeting of China's parliament on Thursday.However, local Chinese authorities have always been desperate to strike a balance between shutting down outdated steel mills to address overcapacity and shielding themselves from surging unemployment and shrinking tax revenue.China's total annual steel capacity is between 1.1 billion and 1.2 billion tons."There are three issues to be solved for the shutdown: how to settle (unemployed) workers, how to deal with debt, and they also need capital for restructuring and upgrading," Zhang added.Zhang also urged the government to cut taxes for domestic miners as the tax duty has resulted in high-cost miners being unable to compete with top global miners."If the taxes are not cut, Chinese domestic miners will have to shut down, which will cause unemployment and bank debt, and the crucial thing is the big three miners will further monopolise the market after squeezing out others, which will be very serious to the steel industry."State-owned steel producers Anshan Steel, parent of Angang Steel, Shougang Corp and Hebei Iron and Steel own a big chunk of the country's iron ore mines. The average taxes on iron ore miners are as high as 25 percent, far higher than top miners.The top three mining giants Rio Tinto , BHP Billiton and Vale are expanding their production despite a slowdown in the world's top consumer.

China's domestic supply is expected to fall by another 70 million tons this year, or about a fifth of the country's output in terms of equivalent imported ore grade, the China Iron and Steel Association has said.

Steel exports fall to lowest in six months on tax change
China

Steel exports from China, the world’s largest producer, fell for the first time in six months as new tax rules for some shipments began to slow sales.The country shipped 7.8 million metric tons of steel products in February, down 24 percent from 10.29 million tons the previous month, according to data released Sunday by the customs administration in Beijing. The government cancelled export-tax rebates starting Jan. 1 for alloys that contain the chemical element boron as part of its efforts to cut oversupply in the industry.The slowdown comes after shipments by the country that accounts for about half the world’s steel output surged to a record last year amid weak domestic demand. China has set its economic growth target for 2015 at about 7 percent, down from last year’s goal of about 7.5 percent. Steel prices fell more than 4 percent this year in Shanghai after plunging 27 percent in 2014.“They pushed out a lot of the export volume with the boron added at the end of the year because there was anticipation that change could be coming,” Vanessa Lau, a senior research analyst at Sanford C. Bernstein & Co., said before the data was released. “It’s beginning to get more and more difficult to find real export markets that can take the growing amounts of Chinese steel.”China shipped a record 93.78 million tons of steel products in 2014 as the economy expanded at the slowest pace since 1990. Boron-alloyed steel accounted for more than 30 percent of those shipments, according to CLSA Ltd. The nation’s steel consumption shrank 3.4 percent to 738.3 million tons last year, the China Iron & Steel Association estimates.The country made 822.7 million tons of crude steel last year, more than double the combined output of the next four largest producers -- Japan, the U.S., India and South Korea, according to statistics from the World Steel Association.

Steel reinforcement-bar, used in construction, fell 1.5 percent on March 6 to close at 2,485 yuan (USD396.77) a ton on the Shanghai Futures Exchange.