Capacity utilisation improving, but at different speeds

Germany’s major steelmakers are driving the recovery of European steel output, with both ThyssenKrupp and Salzgitter running at 100% capacity utilisation in August, and both are expecting this to continue, Steel Business Briefing learns from the companies. Voestalpine’s carbon steel activities in Austria are similarly fully loaded.

Other prominent steelmakers in the region are currently running at lower figures than this. For example ArcelorMittal's flats steelmaking is understood to be operating at about 80% of Q2 2008 output, the high point of European steel production – so effectively full capacity – while long products steelmaking is at about 55% using the same yardstick. 

Overall, Europe looks to have a better performance than in the US, where the country’s capacity utilisation is put at around 70% according to official data. Some there think it may never get much better – or if it does it will take a long time.

In China, longs mills have been operating at, or above, 100% capacity utilisation for much of the time since 2008, helped by the government’s economic stimulus package. But capacity utilisation in flats slipped from over 70% in Q1 2010 to weaken through Q2 before rising last month. 

Longs output also weakened in June and July before recovering, and Chinese output of both flats and longs is expected to increase further from this month on improved demand. 

See also “Capacity utilisation slowly climbs into higher figures” SBB Insight 1 September

Shagang raises flat steel prices, HRC output falls

Eastern China’s Shagang issued its September list prices yesterday, and raised its hot rolled coil prices by RMB 150/tonne ($22/t), commercial plate by RMB 300/t and ship plate by RMB 250/t. 

As a result, Shagang’s ex-works price of Q235 5.5 HRC is RMB 4,400/t ($646/t), while its Q235 14-20mm plate is RMB 4,650/t. Both prices include 17% VAT.

Shagang’s HRC output will fall in September because of maintenance work and an iron shortage due to hearth damage at its No.1 blast furnace, Steel Business Briefing learns from market sources.

Shagang’s No.1 blast furnace was idled on 20 August, as SBB reported. Although the company has finished repairing the BF and brought it back on stream on 1 September, it will take a while for the BF to reach full operation. 

The No.1 BF is the upstream facility of Shagang’s 1,700mm hot strip mill, which has a HRC production capacity of 380,000 tonnes/month. The BF, which is capable of producing 6,000 t of iron per day, is currently only producing 4,000 t/d. 

Although it is still unknown how much Shagang’s HRC output will drop this month, Shagang has already informed its trading agents that it will only deliver 40% of their contracted volume in September. One of these agents tells SBB that normally Shagang will deliver more than 70% of their contracted volume every month.

Costs, supply & demand underpin EU coil price rises

ArcelorMittal is looking to increase hot rolled coil base prices by at least €30/tonne for the fourth quarter, targeting a level of €630/t ($808/t), company executives tell Steel Business Briefing. The move is motivated by higher costs, and supported by today’s supply-demand balance, they say.

Iron ore and coking coal bought at higher July-September contract prices will continue to feed into HRC production throughout Q4; scrap prices have rebounded in the past month and could rise further. Added to this, major European strip mills did not fully achieve targeted, cost-driven price increases for Q3. ArcelorMittal said in July that it needed price increases of 10% to maintain margins.

Order volumes for HRC in Europe for Q4 should be better than in Q3, although are unlikely to match Q2. The German economy is seen as the engine driving regional steel demand, with high-end, export-oriented automotive manufacturers in particular consuming decent volumes. Demand from Poland is also said to be “surprisingly good.”

Strip inventories in Europe are low and customers returning from the summer break will need to buy, but the industry is managing stocks carefully and a surge in restocking is not anticipated. Supply is reasonably tight, with ThyssenKrupp delivering slab from Duisburg to its new mill in Alabama and ArcelorMittal keeping three European blast furnaces idle for the rest of the year.

Imports are also not considered a threat by European strip producers. Booked volumes in July when the euro strengthened somewhat against the dollar are destined for consumers, and traders are not believed to have unsold positions.

Scrap import offer prices soften in Taiwan

Offer prices for containerised scrap are falling in Taiwan. Offers for 80:20 HMS 1&2 from USA in-container are down to $395-400/tonne cfr Taiwan this week from $400-405/t offered last week. Bookings made about ten days ago are heard to have closed at around $402-404/t cfr Taiwan for 80:20 compared to offers at around $407/t at that time.

“Bulk offer prices recently concluded below $410/t cfr Korea so there is no basis for containerised scrap to be above $400/t,” a Taipei trader tellsSteel Business Briefing.

With market expectations that scrap prices will continue to slide, import buying interest is now thin. Trading sources say that the importers in Taiwan are holding off from buying because they are pressing for lower prices of $380-385/t cfr levels. The domestic price of 80:20 is prevailing at the equivalent of $376-382/t. 

“There are a lot of offers (for containerised scrap) in the Taiwan market now,” a regional trader notes. He attributes this to traders releasing position cargoes. “There will be a price correction but it is unclear if it will be short-lived,” he says. 

The Turkish and Middle Eastern steel markets will play a major part in determining the direction of the regional scrap markets, Asian sources add.

Offers of 80:20 in-container are prevailing at $400-410/t cfr Southeast Asia, SBB is told.

US mills make spot sheet price hikes official

After weeks of speculation regarding the likelihood of US spot sheet price increases, several domestic mills made those hikes official yesterday.

Severstal North America, US Steel, ArcelorMittal and Nucor were among the mills informing customers that sheet prices will go up, effective with new orders, sources told Steel Business Briefing.

SNA, in a notice to customers, attributed its roughly $40/short ton hike to "recent increases in scrap and other raw material costs." The company's hotrolled sheet now lists for $620/s.t, coldrolled and galvanized substrate for $720/s.t, galvalume substrate for $730/s.t and electro-galvanized for $810/s.t, SBB learns.

US Steel and ArcelorMittal also told customers their sheet prices will rise by $40/s.t for new orders. It was unclear how much Nucor is hiking its prices, but sources said the company's increases are in line with those being implemented by other leading US mills.

Prior to the hikes, HRC had been selling for about $580-600/s.t, fob, on the spot market, while CRC was around $680-700/s.t and hot-dipped galvanized was roughly $730-780/s.t, SBB notes.

Brazil’s high tax burden reduces competitiveness, says study

Brazilian steel industry competitiveness is being negatively affected by elevated local taxes being applied to production, sales and investments, according to a study conducted by consultancy group Booz & Co, as requested by the country’s steel group IABr.

The study focuses on taxes on hotrolled coils and rebar applied during 2009 in six countries: Brazil, China, Russia, Germany, Turkey and the US,Steel Business Briefing notes.

Taking into account production costs and excluding taxes, HRC from Brazil proved to be the third most economical, following Russia and China, while the country’s rebar production costs are the fourth lowest, after Russia, the US and China. The Brazilian tax system, however, raises these costs by 47.7% for HRC and 41.2% for rebar, against the other country average of 24.1% and 28.7%, respectively. 

According to the study, taxes on production and sales of Brazilian steel products represent about 30% of their costs, the highest amount amongst the participating countries. The countries with the lowest tax percentage cost are the US (10%) and China (11.2%). Furthermore, Brazilian steel exports also have a high tax cost when compared to elsewhere – 12.7% for HRC, against the average of 7.2%.

“High tax costs burden end-users such as automotive, equipment and machinery and construction industries,” concludes the report.

Atlas aims to double iron ore production by end-2012

Atlas Iron says a 50% lift in its iron ore reserves will allow it to meet production targets of 6m tonnes/year by the end of this year and 12m t/y by the end of 2012.

The Perth-based producer has increased the iron ore reserves for its northern Pilbara projects to 53.7m t, grading 57.7% Fe. Its northern Pilbara projects include Pardoo and Wodgina - which together are currently producing at around 4m t/y of direct shipping ore - as well as up-coming projects Abydos and Mt Webber.

Atlas announced a maiden 19.1m t reserve at Mt Webber, which will allow it to maintain long-term production levels as its projects at Pardoo and Wodgina only have mine lives of up to five years, Steel Business Briefingunderstands.

The miner said the reserve upgrade would “underpin” its next phase of growth from 6m t/y. Further drilling at Wodgina this quarter is expected to result in a resource upgrade by the end of this year.

Earlier this week Atlas reported a A$42.1m (US$37.3m) loss for the 2010 financial year on weaker ore prices, and said its operating costs for producing iron ore would be A$40-43/t in the January-June half.

The company has been stocking iron ore close to the new Utah Point wharf at Port Hedland, which will begin operating later this month with the miner’s first shipment to China from the port due on 17 September.

IronClad to self-fund Australian iron ore project

IronClad Mining has decided to self-finance its Wilcherry Hill iron ore project in South Australia after prospective Chinese investors were deterred by Australia’s controversial resources profits tax.

IronClad executive chairman Ian Finch said this issue had resulted in the start date for phase 1 of the project on the Eyre Peninsula being pushed back to the first quarter of 2011 from late this year.

“We’re 95% committed to going it alone and our definitive feasibility study is based on us funding it ourselves rather than any Chinese investment,” he told Steel Business Briefing. 

Finch said the memorandum of understanding with China’s Liuzhou Iron & Steel for half of the mine’s 2m tonnes/year of direct shipping ore remains in place, and other offtake customers will be announced within the next four weeks. The ore will be sold on both spot and longer-term contracts.

IronClad had initially targeted production of 4m t/y from its Wilcherry Hill and Hercules projects by next year, but is constrained by a lack of port capacity at Port Adelaide and requires the proposed Port Bonython to be constructed.

Japan’s flat steel stocks climb in July

Stocks of hot rolled, cold rolled and coated coils at Japanese steel producers, distributors and coil centres at the end of July increased by 2% or by 64,000 tonnes from end-June to reach 3.69m tonnes.

The increase reflects Japan’s continued sluggish construction sector, says a spokesman for Nippon Steel that compiles the data. Steel mills need to monitor demand carefully and produce under actual demand levels to adjust stocks, a spokesman tells Steel Business Briefing. 

Stocks of HRC, CRC and coated coils at steelmakers at end-July increased by 3.3% to 1.7m t; those at distributors slipped by 1.3% to 703,000 t, and those at coil centres rose by 1.6% to 1.29m t. 

By product, HRC stocks increased by 3.4% to 1.97m t, CRC by 1.1% to 708,000 t and stocks of coated coils decreased by 0.8% to 1.02m t.

August inventories are likely to increase again because the summer slowdown usually causes stocks to swell. Last year, August stocks rose 3% or by 100,000 t from July, SBB notes.

Flat product demand after September is unclear because government subsidies on environment-friendly vehicles will end this month and this could dent car sales. Nippon Steel admits to being concerned about the likely impact and says it will cautiously watch market trends.

But the rise in flat stocks may also be a consequence of the Japanese yen’s recent appreciation, a trader says, because foreign mills can export steel to Japan more competitively. However, Japanese demand is low and whether mills abroad can actually lift shipments to Japan is far from certain.

Posco commissions new NGO plant in southern China

Korean steelmaker Posco expects that its new annealing and coating facilities for making non grain-oriented electrical sheets in China will be able to operate at almost full capacity from next month. 

In late August, Shunde POSCO Coated Steel (SPCS) in Shunde City in southern China’s Guangdong formally commissioned a new NGO facility following the start of hot trials earlier in the month. The line has a capacity of 180,000 tonnes/year.

When added to the mill’s existing NGO facility that has a capacity of 100,000 t/y, SPCS’s total capacity for NGO sheets has consequently reached 280,000 t/y.

Posco aims to mainly supply home appliance makers located nearby including Samsung Electronics and Chinese electronics company Midea. But the Korean mill is considering exporting some output as well, depending on demand abroad, Steel Business Briefing learns from the company. 

SPCS is currently sourcing its full hard coil feeds almost totally from Posco Korea.

Established in 1997, SPCS is a joint venture owned 87% by Posco and 10% by Posco-China, with local firm Beijiao Investment in Guangdong holding the balance.

China’s energy conservation might help boost steel prices

Although the Chinese domestic flat steel market remains stagnant due to lack of demand, some market watchers believe the government’s order for mills to control their energy consumption within annual targets will cause China’s steel output to decline from September, which might help boost prices.

Zhejiang province’s Ningbo Iron & Steel has already idled one of its two blast furnaces since 1 September, complying with a provincial government order to rein in energy consumption within its quota. As a result, Ningbo I&S will loss around 170,000 t of HRC production every month from September-December, as Steel Business Briefing reported.

Meanwhile, Jiangsu province has also issued orders relating to energy conservation at flat steel mills in the province such as Shagang and Nanjing Iron & Steel. As a result, Nanjing I&S will lose about 50,000 t of crude steel in September, while Shagang will only able to deliver 40% of the contracted HRC volume to its agents in September (See related article). But Shagang’s HRC output reduction is also partly a result of blast furnace damage. 

A Guangzhou-based market watcher says so far only Zhejiang, Jiangsu, Hebei and Shanxi have issued energy conservation orders to their local mills, but if more provinces join in later, China’s steel output might see a visible drop in the next few months which would ease the pressure on the oversupplied domestic market.

So far most of the affected mills are longs steel producers, but if longs prices, such as rebar, firm up due to production cuts, the flat steel market will sure to follow, the market watcher says.

Sahaviriya in 'future cooperation' space with Corus

Fresh from signing last Friday’s memorandum of understanding to buy Corus’s Teesside Cast Products slab plant in the UK, Sahaviriya Steel Industries' president Win Viriyaprapaikit says SSI, which is already exporting its higher-value hot rolled coils to the European market, has “instead developed a framework for future cooperation” with Corus. He was responding to a question about whether the pact also includes a non-competition clause.

Should the deal proceed, TCP would resume operations in 1H 2011, asSteel Business Briefing reported previously. Slabs will primarily be shipped to SSI’s 4m tonnes/year hot strip mill at Bang Saphan on Thailand’s east coast. Some slab might also be sold to other re-rollers and to SSI’s affiliate, the 1m t/y Sahaviriya Plate Mill. 

SSI originally planned to lift its HRC sales to 3m t/y by 2012, thus taking most of TCP's total slab output of 3.5m t/y. “We will revise that sales target upwards if this deal goes through because selling HRC is never a problem – sourcing slab is,” Win adds.

SSI’s parent Sahaviriya Group suspended own project to build a blast furnace-based steelworks with 5m t/y semis capacity in January 2009 "due to the lack of clear regulatory process in Thailand," Win tells SBB. "It remains so," he adds.

Environment and health impact issues recently suspended and delayed industrial projects at Map Ta Phut including Siam Yamato’s second beam mill earlier this year. “We were fortunate to have foreseen the problem and made the right decision then; other projects remain hindered until today," notes Win.

Posco expanding P&O capacity at Gwangyang

Posco has begun building a fourth pickled and oiled line at its Gwangyang works, holding a ground breaking ceremony on 1 September. The new facility will have a capacity of 400,000 tonnes/year and be commissioned in September 2011.

Posco also plans to introduce a ‘push pull line’ on the No.4 facility capable of rolling hot rolled coil up to 12mm thick. This compares with the mill’s current capability at Gwangyang’s three existing P&O lines that can roll HRC only 4-7mm thick. 

The new facilities will be supplied jointly by Dongbang Plantech, a Korean equipment supplier, and Belgium’s UVK Group, Steel Business Briefinglearns.

At a total cost of KRW 59.2bn ($50m), the new line aims to meet the growing demand for P&O mainly from the automotive sector, Posco says. 

Though the capacity of No.4 P&O line will be smaller than those of the other three lines at Gwangyang, Posco will be able to meet demand for P&O coils from consumers who need thicker materials, an industry source notes.

Gwangyang's three P&O lines each have capacities of 800-860,000 t/y.

Shagang increases its rebar and rod prices

Eastern China’s Shagang raised its rebar prices by RMB 100/tonne ($15/t) and wire rod prices by RMB 70/t for delivery by 10 September. After the increase, its 16-25mm HRB335 rebar and 6.5mm Q235 wire rod are respectively priced at RMB 4,230/t ($621/t) and RMB 4,350/t, with 17% VAT. 

Traders said that Shagang will only deliver 45% of contracted volumes to local agents this month, because production cuts implemented to meet local government energy saving targets will cut about half of its September rebar output. 

Market sources in eastern China believed the limited supply will give impetus to price increases in September. Given that prices now at high levels, buying for speculation was not active, but Shanghai traders tellSteel Business Briefing that transactions for downstream use are “not bad” at present. 

In Hangzhou, transaction prices for 16-25mm HRB335 rebar on Wednesday rose by nearly RMB 150/t from last Friday to about RMB 4,170/t, but offer prices have been lifted to RMB 4,230/t. Shanghai prices for similar-sized rebar, sourced from tier two mills, rose by about RMB 100/t to about RMB 4,020-4,030/t. 6.5mm Q235 wire rod prices are between RMB 4,220-4,260/t, with transaction prices close to the low end of the range. 

Beijing prices for 16-25mm HRB335 rebar, sourced from Hebei Iron & Steel, have increased by about RMB 20-40/t to RMB 4,160-4,190/t. Its 6.5mm Q235 wire rod prices inched up by RMB 40/t to about RMB 4,220/t.

On the Shanghai Futures Exchange, prices for its November rebar contract increased by RMB 37/t to close at RMB 4,229/t on Wednesday.

Bank regulator says China should focus on affordable housing

China’s rebar producers may have to rely on affordable housing to generate demand as Beijing is unlikely to loosen credit restrictions on the country’s real estate sector anytime soon.

Earlier this week, Ye Yanfei, deputy head of the Statistics Department of the China Banking Regulatory Commission, said the organization will continue to support Beijing’s tighter control on mortgage lending. Ye said that in addition, banks should lend to local governments to build more affordable housing.

The central government has pledged to build around six million affordable housing units this year. A further 800m square meters of commercial housing are also expected to be finished this year, as Steel Business Briefing has reported. These could generate rebar demand over the rest of 2010, but the outlook beyond this is uncertain.

As SBB noted last month, poor housing sales may lead to up to 300m sq m of housing stock at the end of this year, which may result in housing starts decreasing in 2011. This could soften demand for construction steel in the first quarter of next year.

Real estate prices in mainland prices jumped around 68% year-on-year in the first quarter of this year, according to mortgage analysts, causing Beijing to clamp down on lending to avoid a housing bubble.

Karnataka's iron ore exports ban may be revoked by month-end

Iron ore exporters in India’s southern state of Karnataka are hopeful that the state government’s prevalent ban on ore exports will be revoked by end-September, Steel Business Briefing understands from local market sources.

Their hopes follows a state high court hearing on 27 August in which the Karnataka government was directed to introduce effective procedures within a week to check illegal mining and exports without hindering legal businesses. The subsequent court hearing – to resolve the ongoing dispute between the state government and local exporters on the issue of the ban – is scheduled for 3 September.

“While exporters demand that the ban be revoked immediately, the state government is stalling for time to be able to introduce better mechanisms to regulate illegal mining,” a Bangalore-based exporter tells SBB.

A Karwar-based trader expects the court to issue a verdict revoking the ban by mid-September. “Following that, the state government may take another two weeks to resume issuing permits to facilitate exports,” he muses.

If ore exports from Karnataka resume by the end of September, it would coincide with the state-controlled ports – Karwar and Belekeri – restarting export operations following the end of monsoons, SBB notes.

Meanwhile, the opposition party of the Karnataka government has alleged that, despite the ban, illegal mining is still rampant and that ore is being exported through ports in the neighbouring state of Andhra Pradesh. But local market watchers contend that Karnataka’s official crackdown on illegal mining “has definitely reduced, if not entirely eliminated,” unlawful production and exports of iron ore.

Indian pig iron export prices move up

Indian pig iron export tenders in recent weeks have been settling at higher prices. MMTC awarded its recent tender for the supply of 30,000 tonnes of pig iron, for mid-September shipment, to its subsidiary, MMTC Transnational Pte Ltd (MTPL) at $432.08/tonne fob. MTPL's original bid in that 20 August tender was $430.75/t fob but MMTC negotiated a higher price. 

MTPL's booking price was just above $395/t fob for a similar MMTC pig iron tender in end-July.

Vizag Steel will be calling its export tender for 30,000 t of pig iron for October shipment at the end of this week. Technical bids for this tender are due on 3 September and price bids on 7 September. Also on 7 September, MMTC is inviting bids for its next tender which will supply of 30,000t of pig iron for shipment by 30 September.

"I am not too sure where pig iron is heading," an Indian trader tells Steel Business Briefing. Spot iron ore export prices are falling whereas scrap prices are holding firm. Another tells SBB that the recent firming of domestic iron ore prices and tightening supply of iron ore are likely to impact domestic pig iron prices. However, he concedes that Indian spot iron ore export prices are sliding.

Meanwhile, regional trading sources report hearing of Korean import bookings of various origin pig iron at $460-470/t cfr around ten days ago.

Chinese EMM prices stay strong, Mn alloys quiet

Export prices of Chinese electrolytic manganese metal flakes stayed strong at $2,900-3,000/tonne fob China this week spurred by strong domestic demand. Offer prices of silico-manganese (65% Si, 17% Mn) are heard at a wider range while those for high carbon ferro-manganese are unchanged.

EMM prices continue to be propped up by tight supply and good demand from Chinese mills, market participants tell Steel Business Briefing. Export demand has improved slightly but is generally quiet, they say. A north China-based trader notes that her offers at around $2,900/t to Europe were mostly met with disinterest. An official with a Hunan smelter says closing export deals at $3,000/t are "not a problem” but trading remains slow.

SiMn offer prices are heard at $1,400-1,550/t fob China this week compared to $1,140-1,500/t fob China last week. Supply is tight following production stoppages but demand remains muted. “Though demand is not good, there is limited supply, and factories are saying 'if I need stock, I will have to pay more',” says a Hong Kong trader who received offers at the higher end of the range.

Meanwhile, SiMn (65% Si, 16% Mn) offer prices from India are heard at $1,350-1,400/t fob India, up from $1,320-1,350/t fob India in mid-August.

Offer prices for FeMn (75% Mn) are still at $1,550-1,700/t fob China respectively, but trading is sparse as Chinese prices are uncompetitive in the export market. “It's still hard to sell FeMn overseas; there are almost no enquiries,” says the Hong Kong trader.

Offers dry up in Chinese FeSi market

Smelters and traders in China’s ferro-silicon market have refrained from putting out export offers this week in anticipation of price increases due to production stoppages in Ningxia autonomous region. 

Most market participants polled by Steel Business Briefing have not put out offers this week but the consensus is that prices for FeSi (75% Si) will have to be higher than $1,380-1,390/tonne fob China for new offers. 

“Everyone is waiting for a clearer picture of production stoppages in Ningxia but for sure, prices will have to rise to above $1,380/t,” says a north China smelter official. 

Only a Beijing-based trader is heard offering at $1,400-1,410/tonne fob China, but no deal has been concluded by the trader. With supply expected to tighten, enquiries from overseas customers have picked up but transactions are still lacklustre, sources say. Deals for FeSi took place at $1,370-1,380/tonne fob China last week.

Industry observers say several smelters in Ningxia – a key FeSi production base for China – have received governmental orders to halt production following environmental checks. It is unclear how many smelters have obeyed the demand, though sources note that some factories in the region, plagued by high production costs, had already halted output earlier.

Posco’s FeSi ambitions follow pattern of FeCr, FeNi and FeMn

Posco’s plans to add ferro-silicon capacity in Korea – that might also involve Norwegian silicon alloys maker Elkem – are perfectly consistent with the Korean mill’s record in ferro-alloys investments.

On Tuesday, Posco confirmed a plan to build an FeSi smelter near its Pohang steelworks whose capacity local sources suggested might be around 30,000 tonnes/year, as Steel Business Briefing reported. 

At the same time, it was insisting comments made earlier by CEO Chung Joon-yang – that Posco was “internally considering” taking over Elkem – were “incorrect”. Elkem itself was unwilling to comment to SBB, but market watchers in Asia express no surprise that Posco might be looking to shore up FeSi supplies.

“Posco has been buying FeSi from China but supplies are falling because of China’s own increasing domestic demand,” one commented. Indeed, Korean customs data seen by SBB show that during January-June this year Korea imported 100,500 tonnes of FeSi from China. This was up on the 72,500t it imported during H1 last year but down on the 127,900t China shipped to Korea in H1 2008. 

“Posco is also looking to backward integrate to meet the (ferro-alloys) needs of its steel projects abroad, such as in Indonesia and India. And with FeSi market prices low compared with 2008, now would be the time to invest,” the source notes. 

And Posco is not averse to linking with partners for ferro-alloys. It holds 25% of Poschrome, the ferro-chrome joint venture established with Samancor in South Africa; 49% of the ferro-nickel plant in Gwangyang with New Caledonia’s Société Minière du Sud Pacifique, and 65% of a ferro-manganese venture with Dongbu Metal also in Gwangyang.

Shanxi’s coke industry sees good H1 profits

Three of the five publically listed coke companies in Shanxi province, China’s main coke producing region saw their profits rise in the first half of this year, Steel Business Briefing learns from the companies.

Shanxi Coking Co. Ltd., Shanxi Meijin Energy Co. Ltd, and Taiyuan Coal Gasification Co. Ltd all saw their profits rise, while Shanxi Antai Group Holding Co. Ltd (Antai) and Shanxi Luan Environmental Protection and Energy Co. Ltd (Luan) saw y-o-y decreases in their coke profits in H1 due to the small size of their coking business units and poor market conditions.

Shanxi Coking, the largest listed coking company in the province, had a profit of RMB 2.2m ($322,893) for its coking business, compared with an RMB 92m loss in the same period last year. The company cites cost cutting as the main reason it made a profit in H1. 

Coal Gasification’s saw a 50% y-o-y increase in its coke profit, while Meijin Energy’s coke profit rose 76%.

The three companies’ financial gains seem to go against the rest of the market. An official with Antai tells SBB the first half of the year was not a good time for the coking industry, because although prices for coke were rising so were prices for coking coal. 

“Coal prices were rising too, so it hard for us to make profit,” she says. “Conditions could be worse in the future, as the coal prices seem unlikely to drop, and mills’ demand is uncertain.”

Wugang’s iron ore demand expected to reach 90m t in 5 years

The iron ore demand of Wuhan Steel & Iron Group (Wugang) is expected to rise to 90m tonnes in five years, Steel Business Briefing learns from the company.

The company says it will focus its efforts in developing the iron ore resources in Africa. “We won’t give up on Australia and America,” an official with Wugang tells SBB. “However, opportunities in Africa are better.” He says the mill has already started to look into some projects in the region, but refused to disclose details.

Local media reported Wugang is targeting mines in Guinea, Mauritania and Mozambique as well as South America. But the official refused to confirm this.

Wugang also announced it has over 3bn t in captive iron ore reserves, and it intends to enlarge them to 10bn t by 2015. But a schedule has yet to be set, according to the official.

The company intends to enlarge its steel capacity to 60m tonnes/year by the end of 2015, as SBB has reported. This along with higher transport costs compared with its competitors in eastern and southern China is forcing Wugang to build up its captive iron ore reserves to cut costs.

Chinese manufacturing sees demand recovery in August

The HSBC China Manufacturing Purchasing Managers’ Index (PMI) recovered to a three-month high in August, indicating a pick-up in market demand. August’s headline figure reached 51.9, up from July’s 49.4. Steel Business Briefing notes that a reading above 50 indicates market growth.

Respondents attributed the rise in the PMI to new orders, indicating that the manufacturing growth is likely demand driven. However, they add that most of their new business came from within China and that their export business is declining. That indicates that while demand in China appears to be recovering, the same may not be true for the country's export markets.

The price of raw materials, including steel, were cited by respondents as increasing, which in turn caused manufacturers to raise their prices during the month. Chinese domestic steel prices ended their downwards trend at the beginning of last month and steadily rose throughout August, as SBB reported.

Qu Hongbin, HSBC’s chief economist for China, sees the rising PMI as indicative of a strong economic performance for China over the second half. “This reconfirmed our long-held view that China is moderating rather than melting down. Domestic demand will be resilient to uphold around 9% GDP growth in 2H and 2011, while external demand is more likely to turn worse in the coming months,” he said in a statement sent to SBB.

Japan's July exports show clear decline

In a worrying sign for Japanese steelmakers, the country’s steel exports plunged by nearly 14% in July from those of June to 3.33m tonnes. Exports had been the key driver behind the steel sector’s recovery and the July dip made the first month-on-month drop since March, the Japan Iron & Federation (JISF) announced Wednesday.

Not only were the month-on-month numbers a concern. The JISF notes that Japan’s steel export volumes year-on-year had been growing by double-digit increments since October 2009, but in July the y-o-y growth languished at only 4%. Exports are clearly slowing down, a JISF spokesman tells Steel Business Briefing. 

Overall volumes still remain high but weakening market prices in Asia and increasing stocks dented export volumes, especially for blast furnace items. “Because the integrated mills put priority on prices, not volume, when export market prices were unacceptable to them the mills cut shipment volumes,” the JISF spokesman says. 

Stock adjustment among producers in Asia, particularly in China, should be completed this month and the Japanese blast furnace makers may be able to export their products at their desired prices levels after October. “But if the yen’s exchange rate against the US dollar remains strong, this may lead export volumes to decrease further,” he added.

By country, Japanese exports to Korea decreased by 9% from June and by over 9% year-on-year to 795,231 t while those to China decreased by 13% m-o-m and by 4.5% y-o-y to 604,843 t. Meanwhile, exports to Thailand declined sharply – by 18% from June – but rose by 37% year-on-year to 366,247 t.

China's vehicle sales recover in August

China’s vehicle sales rebounded in August after four months of sales declines, Steel Business Briefing learns from the China Automotive Technology & Research Center (CATARC).

According to CATARC data, China’s vehicle sales reached 1.22m units in August, up 15% month-on-month and 56% year-on-year. Among which, passenger car sales were 977,300 units, seeing a 19% m-o-m increase and a 59% y-o-y increase. Meanwhile, China’s vehicle output was 1.2m units a m-o-m decrease of 3% and a y-o-y increase of 10%. 

During the period of January-August, China’s accumulated vehicle output was 10.9m units while sales reached 9.5m units, an increase of over 30% y-o-y in both areas.

CATARC told reporters at a news conference that the sales recovery was due to promotions by vehicle dealers in an effort to reduce their inventories. With more new models being launched in September, passenger car sales are expected to perform even better in this month.

The steel industry saw growing demand from China’s auto sector in August. A source with Maanshan Iron & Steel (Magang) tells SBB that its auto sheet orders climbed to the steelmaker’s maximum monthly capacity of 70,000 t last month, up nearly 30% from July.

Construction machinery sector may use 20m t of steel in 2010

The China Machinery Industry Federation (CMIF) announced on 31 August that China's construction machinery sector recorded a 67% year-on-year sales increase in the first seven months of this year.

According to CMIF data, during the period of January-July, both excavating machinery and earth moving equipment had y-o-y production rose by over 55% while compact machinery production increased over 100% y-o-y. CMIF didn’t disclose detailed production and sales figures, however, as construction machinery is produced to order, the sales volume is almost equal to the production volume.

The large sales increase is due to Beijing’s growing investment in infrastructure projects and the country’s real estate industry, an official of CMIF tells Steel Business Briefing. 

According to National Bureau of Statistics data, China’s investment in the fixed assets increased 25% y-o-y during January-July while investment in real estate increased 37% y-o-y during the same period. Post-disaster reconstruction also contributed to construction machinery sales. 

SBB notes that steel is the main raw material in construction machinery production. According to the CIMF official, the industry consumed around 17m tonnes last year, including plates, hot and cold strips, rods and bars and steel pipes. 

As the construction machinery industry is expected to continue its fast-paced growth in the rest of this year, its demand for steel will increase and could potentially reach more than 20m t for all of 2010, the CIMF official predicts.

Turkish re-rollers complain about billet shortage

Re-rollers in Karabuk, in Turkey’s Black Sea region, are complaining about a shortage of billet supply from local producer Kardemir. As Karabuk was the region where Turkish iron and steel making first developed, the re-rolling industry there is considerably important.

The president of the Karabuk re-rollers association, Gokalp Buyukbektas, tells Steel Business Briefing that Kardemir now just supplies billet to re-rolling mills which are owned by interests linked to the management of the company; it will only sell to others if they accept to pay a premium of $5-10/tonne. 

Buyukbektas also says that, when Kardemir opens a new orderbook, it is closed again in 5 minutes with all the material allocated to these privileged companies. 

General manager of Kardemir, Fadil Demirel, explains that this sales policy is a result of arrangements the company made for the financing of its rail and heavy sections rolling mill in 2003. When the company was looking for a loan, it asked its shareholders to contribute: some 46 companies were involved in the process, and privileged access to billet was an article of the contract Kardemir made with them. 

Demirel also confirms that these shares are now mostly owned by three families in the management of the company: Yolbulan, Gulec and Yucel families. He added that sales of the billet are made strictly at the list price announced by the company publicly, and 50% of the company's billet production is sold under this policy.

Demirel says that all these sales are controlled by Capital Market Boards of Turkey, and in line with the regulations.

UK rebar prices picking up on back of scrap

Demand remains subdued but prices have picked up somewhat in the UK rebar market, local sources tell Steel Business Briefing.

Celsa increased its prices by £20/tonne (€24/t) earlier this week, up from around £400/t delivered at the beginning of August, and Thamesteel is likely to follow suit, traders and other sources suggest. 

This will take average rebar prices to £420-430/t delivered (€506-518/t), SBB understands. The movement was mainly driven by scrap price changes, which rose around £20-25/t over the course of last month after merchants renegotiated prices with steel mills, SBB understands. 

“There’s been no surge in demand but prices picked up on the back of scrap and increases in most other regions,” one trader says. “I think there might be another upward movement on 1 October as scrap increases,” another trader adds, suggesting one big UK scrap merchant is currently trying to secure a further rise with steel mills. "Break-even" comes into it as mills try to improve margins, he continues. 

Imports have not been competitive recently because of weak UK prices, and they are unlikely to pose much of a threat despite domestic prices moving upwards. “While requirements are so slow it’s unlikely anyone is going to try and bring too much material in,” one trader believes.

Turkish Kardemir increases its rebar and billet prices

Turkish long steel producer Kardemir has announced new list prices effective from 1 September. Its rebar prices increase by TL 25/tonne ($16.4/t) to TL 940/t ($617/t) ex-works. 

The company’s new billet prices are $566-569/t ex-works, up from $540-543/t ex-works.

The price increases appear to be in accordance with the increasing raw material and export prices, but demand is still slow.

Kardemir opened its bookings on 25 August, for rebar, sections and pig iron, as Steel Business Briefing reported previously.

Turkish alloy steel imports continued firm in the first half

Turkey’s imports of alloy steel continued growing in the first half with the support of the good demand from strengthening buyer sectors like automotive, Steel Business Briefing learns from local market sources.

Turkey imported 55,456 tonnes of alloy steel flat products in June, which is 81% higher than the same month of last year and 5% less than the May imports. 

The first half imports of alloy flats totalled 373,576t, that is 132% higher than the same period of last year, SBB understands from data released by the Turkish Statistical Institute (TUIK).

Turkish alloy long product imports were also strong in the first half. June imports were 11,491t, up by 39% y-o-y and the imports in the period of January-June hit 72,681t which is 129% higher compared to the same period of 2009 (see tables).

Spanish scrap prices rose in August, outlook unclear

Scrap prices in Spain rose during August but are now stable because of low activity in the market, Steel Business Briefing learns from market sources. 

While longs producers in the country are announcing price increases on the back of higher scrap costs, scrap traders say uncertainty still surrounds future developments in Spain.

“The trend in Spain (for scrap) is currently upward, but the situation remains unclear over the longer term,” a scrap trader suggests. “We are trying to pass on increases, but demand remains low and the international panorama shows volatility,” he adds. 

“Buyers and sellers are waiting for a clear market direction before placing orders, not many offers are out now,” a scrap supplier explains.

Prices for shredded scrap (E40) are said to be €305-315/tonne ($390-403/t) ex-yard, while new arisings (E8) are being offered at €335-350/t and HMS 1&2 at €290/t. Russian turnings are at €270-275/t cfr northern Spain.

Ferro-alloys imports of Turkey remained strong in H1

Ferro-alloys imports into Turkey remained firm in the first half of this year, supported by growing steel production, Steel Business Briefing learns.

According to data published by the Turkish Statistical Institute (TUIK), Turkey imported 43,804 tonnes of ferro-alloys in June, which is 10% higher than the same month of last year and also 30% higher than the 33,681t imported in May.

In January-June, Turkish imports totalled 200,947t, 45% higher than the same period of last year (see table).

In January-June period, Ukraine remained the largest ferro-alloys supplier to Turkey with 99,778t – almost half of the whole imports. Russia exported 26,756t and China followed with 19,602t, SBB understands from TUIK’s data.

Czech stockholder aims to increase sales by 26% in 2010

Czech steel stockholder Ferona expects to sell 810,000 tonnes of steel products in 2010, representing an increase of 26% on last year, a company executive informs Steel Business Briefing.

Following a difficult 2009, Ferona intends to stabilise its financial situation and maintain its leading position in the Czech domestic market this year. It suffered a 31% year-on-year decrease in sales volumes in 2009, selling 641,000t of steel that year. “Nevertheless we believe that [our] market share increased in 2009,” the company says.

It also plans to increase sales, as well as service provision, at its Polish subsidiary, Ferona Polska, which it established in 2007. This could include opening a new sales office in Poland. “The market potential is there, but we want to increase the value of the company instead of just going for volumes,” Ferona comments. “Providing services to clients is the way we want to [establish] our market position and one of the options we have is to open some new sales offices there,” it adds.

The company posted a loss of CZK 1.5bn (€60.7m) in 2009, after achieving a profit of CZK 326m (€13.2m) in 2008. The loss last year was mainly due to the sharp fall in steel prices.

Ferona sells flat (40% of sales) and long steel products, as well as pipe and wire, supplied mainly by ArcelorMittal, Trinecke Zelezarny and Evraz Vitkovice.

Spanish logistic company expanding in steel

Heavymovement, a Spanish company specialised in logistics services, has concluded a new contract with long steel producer Celsa, Steel Business Briefing learns from a spokesperson. 

Heavymovement will manage some of the main outsourced processes at one of Celsa’s Northern Spanish mini-mills. The company, which already manages some of the processes at Celsa’s Barcelona facility, expects the contract to generate over €20 million in revenue.

Heavymovement will manage the scrap yards, move scrap baskets, evacuate slag, clean the furnace and transport the billets between the meltshop, warehouses and rolling mill.

“We are now in the process of discussing new contracts with big European steel groups, with an eye on expanding into some key markets, such as Italy” Heavymovement explains to SBB. 

At a time when European producers are trying to cut costs, the main issue for logistics companies is to create processes capable of assuring the same quality at a lower cost, SBB notes. “The main thing is to rethink the processes and find new solutions,” a spokesperson confirms to SBB.

Italy’s crude steel output up slightly in July m-o-m

Italian crude steel output rose slightly in July compared to the previous month, Steel Business Briefing learns from data released by Italian producers' association, Federacciai.

Production edged up 0.2% to 2.27 million tonnes, and was up 37.6% on July 2009. In the first seven months of this year, Italy’s crude steel output was 15.69mt, up over 36% on the same period of last year. 

In June (the latest month for which detailed production figures are available) Italy's longs output was down 3.7% m-o-m, but rose 7.4% y-o-y, to 1.06mt, while flats output was down 26% m-o-m to 0.92mt. 

“The flats data is not good for June, but in general if we look at the y-o-y trend, which is more relevant, we can see long products are suffering again more than the others”, an analyst comments. 

"I do not see long product output increasing significantly before the end of the year, while the outlook for flat products is more uncertain," he concludes.

Severstal NA preps BF for restart, could scrap asset sale

Severstal North America could shift away from the sale of three US steelmaking assets, and its Sparrows Point, Maryland blast furnace will return to steelmaking - likely by the end of this month, a source familiar with the company's operations tells Steel Business Briefing.

He says CEO Sergei Kuznetsov won't be backed into divesting the Warren, Wheeling and Sparrows Point flats mills for below-market prices. At the same time, Kuznetsov isn't averse to considering competitive offers to sell the assets individually, he says, stressing that Kuznetsov is prepared to scrap a divestiture plan if it's not in SNA's best interests.

"I think he'll hold on to all the assets if he doesn't get a good offer," the source says. "He'll move on and come up with a strategy to make them work. I think he has an aggressive plan running into 2011."

SNA also is preparing to restart the BF at its 3m short tons/year Sparrows Point facility - aiming for a September 27 startup. Contrary to published reports, SNA never delayed the restart a second time after extending it by 30 days in July. Kuznetsov told SBB previously the restart would take place at the end of September.

"It's always been the end of September," the source says. "It's never changed from that date."

He also says SNA has a specific plan for the Sparrows BF: "The goal is to make steel in the US."

An SNA spokeswoman declined comment on the asset sale plan or the Sparrows restart.

More US plate price hikes likely, even as demand slumps

Market sources expect US plate makers to soon seek price increases on the back of rising scrap costs, but such increases are unlikely to be successful in the current market, those sources say.

A36 plate is selling for about $750-780/short ton, fob, on the spot market. And according to The Steel Index, a unit of Steel Business Briefing, the latest reference price for the material is up $7 week-on-week, to $758/s.t.

American plate producers notified customers last month that list prices were going up by at least $40/s.t, but those increases never really stuck, sources tell SBB. Any hope mills might have of implementing additional price hikes will be met with opposition, they say.

"The mills are going to raise prices," one eastern market source says. "If they want to try to raise the prices in the middle of a demand slump, go ahead and try it, but don't be surprised if it doesn't stick."

The reason they won't stick is simple, he says.

"There ain't no demand. Our order book is ... absolutely dead," the source says. "We all need a good slug of demand to get us out of this and get us in a position where we can all make money."

AK's G-O electrical surcharge to remain flat

Specialty steel producer AK Steel is keeping its grain-oriented electrical surcharge flat for October shipments.

AK’s surcharge will remain $350/short ton, Steel Business Briefinglearns.

The surcharge dropped to its current level in September from $385/s.t in August.

Sumitomo buys $140.4m in Marcellus Shale

US energy firm Rex Energy has opted to sell about $140.4m in Marcellus Shale formation land to a subsidiary of Japanese trader Sumitomo.

Sumitomo is expected to pay $88.4m in cash up front for about 12,900 net acres in the state of Pennsylvania. The company will then fund 80% of Rex’s drilling and completion costs in the area to the tune of $52m,Steel Business Briefing reports.

The deal is expected to close by the end of September. 

AK Steel hikes October stainless surcharges

AK Steel of the US has announced a surcharge increase for its bellwether stainless products.

Type 304 coil surcharges will rise 8.5% to about $1.02/pound in October,Steel Business Briefing learns.

Type 316 coil surcharges will rise about 9.63% to $1.48/lb, while type 430 coil surcharges will remain flat at $0.27/lb.

US scrap market still expecting September price increase

US scrap market players tell Steel Business Briefing they still expect September prices to increase, though some were less bold about their predictions compared to a week earlier.

“My opinion has not changed (since last week),” said one Mid-Atlantic region dealer, who last week said the market was headed for more than a slight increase, driven by tight supply. 

“We are expecting an increase but won’t know till the second week in September,” said a source in the South.

“We have peaked and the market could go anywhere, but I am betting on up $30 a long ton on shredded,” said a west coast US source.

A second Mid-Atlantic source also estimated shredded prices would increase by $30-35/l.t, driven by export buys. He guessed that price might not hold, however, because of strong flows he has seen into scrap yards. “If they’re holding it (now), they’re dumping it,” he said. He was also skeptical about the seemingly universal agreement that prices would increase. “You can’t have everybody on the bullish side,” he said. 

Shredded is currently at $340-360/l.t, delivered mill.

Also last week, in issuing earnings guidance, metal recycler Sims Metal Management said it expects US scrap prices to increase in the near-term.

Mexican raw materials output mostly up

Mexico's steelmaking raw materials output continued to move up in June, in light of improved demand from both local and foreign markets.

Steel Business Briefing learns from the latest data reported by domestic statistics bureau, Inegi, the country produced 687,875 tonnes of iron ore during June, an 8.7% hike over the same period last year. In the same comparison, coke production increased 35.1%, from 102,897 t to 139,037 t.

Meanwhile, June Mexican zinc output remained flat in a year-on-year comparison, at 34,308 t, SBB notes.

According to local market sources, steelmaking raw materials output has been in line with the recovery in Mexico's steel industry. However, they also observe that steel production rates a below pre-crisis level.

Horsehead to return to pre-mishap zinc level by 2011

Leading producer of specialty zinc and zinc-based products Horsehead Holding Corp said it anticipates being able to restart all four furnaces for zinc oxide production at its Monaca, Pennsylvania, facility by the end of September, Steel Business Briefing learns. 

The zinc oxide and metal refinery at the plant remain shutdown following a July 22 accident.

According to a company statement, it expects to restart the zinc oxide and refined zinc metal columns in stages starting in November, with the goal of bringing production of zinc oxide and refined zinc metal to pre-accident levels by January 2011. 

The company said yesterday it believes the accident was caused by "liquid zinc escaping into the much hotter combustion chamber surrounding the distillation column. The liquid zinc then vaporized and expanded rapidly, breaching the column wall and combusting upon reaching the atmosphere," according to a company statement. Two workers were killed in the accident.

US won't investigate undervalued China currency as subsidy

Despite calls from American industry and Congress to deem China's undervalued currency a countervailable subsidy, the US Department of Commerce (DOC) will not investigate China's currency as a subsidy in two trade cases involving aluminum extrusions and coated paper.

"The allegations made by domestic producers do not meet the statutory standard for initiating an investigation under the requirement that benefits provided under China's unified foreign exchange regime be specific to the enterprise or industries being investigated," a DOC import administration official said.

Had the DOC decided to investigate the currency manipulation, the same could have been done in trade cases involving steel, Steel Business Briefing notes. Domestic groups quickly responded to news of the DOC's decision.

"The decision flies in the face of the consensus that China is, in fact, undervaluing its currency by as much as 40% and ignores the thorough economic and legal analysis that was provided several months ago by the USW and the companies," United Steelworkers union international president Leo Gerard said.

Fair Currency Coalition executive director Charles Blum said "one irony of Commerce's refusal to act on China's undervalued currency is that the decision undermines the National Export Initiative's goal to double US exports in the next five years."

Congress is still considering legislation that would allow undervalued currencies to be considered subsidies. The US House ways and means committee has scheduled a September 15 hearing to discuss China's exchange rate policy, the pending legislation and other alternatives to address the issue.

US import licenses down in August

US steel imports appear to have fallen in August, as licenses to import material into the US were under 1.9m tonnes for the month after a strong July with 2.19m t of imports.

Although the license count by the US government is not final, it's generally used as an indicator for what actual imports will total during the month, Steel Business Briefing notes.

August's decline was led by big reductions from Canada, Russia, India and Australia, despite large increases from Mexico, Brazil and Turkey, according to an analysis of the US Department of Commerce license data.

Licenses to import semifinished steel from Canada fell by almost 100,000 t from July to August, and Canadian hot-dipped galvanized and hotrolled sheet licenses dropped 30% and 51% month-on-month to 35,070 t and 37,180 t, respectively.

Mexican license applications rebounded 54% m-o-m to 254,840 t in August, led by a 67% semis rise.

Russian semis import applications slowed in August, to just 44,115 t, compared to a monthly average of 98,840 t in the first seven months of the year.

After averaging 49,770 t/month between January and July, Australian licenses also fell considerably (see chart).

A Brazilian rebound was mostly due to a jump in semis licenses, and licenses to import from Turkey more than doubled thanks to a large increase for rebar.

Worth noting is that import licenses for China rose for the sixth month in a row, with more than 92,000 t counted for August.

Canadian trade case brewing against Chinese steel grating

A Canadian trade case may be brewing against steel grating imports from China, Steel Business Briefing has learned.

Canadian producers have submitted complaints of dumping and subsidization to the Canada Border Services Agency, a source tells SBB. CBSA will make a decision whether or not to initiate formal investigations by September 20, the source said.

As of late Wednesday, a spokeswoman for CBSA could not confirm that complaints have been filed.

In June, the US Department of Commerce and International Trade Commission both finished their investigations of Chinese steel grating. Antidumping (AD) and countervailing duties (CVD) of 136-145% and 62.46% were levied against the imports as a result of that investigation, as SBB has reported.

Earlier this year, the US-based National Association of Architectural Metal Manufacturers, which sets standards for steel grating, issued an advisory warning to consumers as a result of the US investigation.

US grating producers have alerted the US Occupational Safety and Health Administration (OSHA) and the US Consumer Product Safety Commission about the potentially hazardous steel and are calling for an investigation into it.

US manufacturing continues expansion despite sour economy

Despite mostly glum macroeconomic indicators, the latest report from the Institute for Supply Management shows the US manufacturing sector continued to expand in August.

The ISM's purchasing managers' index (PMI) came in at 56.3 for August, up less than one percentage point from July’s 55.5. A PMI above 50 generally indicates growth, while a reading below 50 indicates contraction in the manufacturing sector, Steel Business Briefing notes.

August's increase stopped the fall in the PMI after three consecutive months of decline.

The "bottom-line," says IHS Global Insight chief economist Brian Bethune, is "the manufacturing sector still looks fairly solid, driven by solid momentum in export orders across certain key industries and apparent gains in market share by the re-structured domestic automotive industries."

The production, employment and price indexes saw the greatest month-on-month gains (see chart), while new orders grew again - but at a slightly slower rate, according to the ISM.

"On a cautionary note," Bethune says, "inventories expanded and customers reported that inventories were considerably less lean. This could point to some slowdown in September, but inventory gauges, in general, are still looking fairly healthy."

The report also shows steel prices were down for the month.

Steel shipments through Port of Houston hit 17-month high

Steel volumes continue to increase through the largest steel port in the US, with July's tonnages marking the strongest month for steel that the Port of Houston Authority has seen since March 2009.

Volume totaled 282,300 short tons in July - 95% import, 5% export, Steel Business Briefing learns from port data.

July's steel volume was up 77% from June’s total of 166,320 s.t and a 130% increase from July 2009.

While July saw a slowdown of overall container volumes, port CEO Alec Dreyer says steel shipments in particular have been showing consistent and strong improvement.

"Steel continues to methodically improve, with a welcome increase in steel activity during July this year," said Dreyer in his monthly financial report.

Year-to-date steel volume, however, is down year-on-year. The 1.3m s.t shipped through the port so far this year is a 39% decrease from the 2.15m s.t shipped in the same period in 2009.

Northwest taps former Evraz North America CEO for board

Northwest Pipe Co has added the former CEO of Oregon Steel Mills Inc and Evraz North America to its board of directors.

James Declusin became president and CEO of Oregon Steel in 2003. When the company was sold to Evraz in 2007, Declusin retained his post as CEO. He retired earlier this year, Steel Business Briefing notes.

Before joining Oregon Steel, Declusin served with Kaiser Steel Corp and California Steel Industries.

"Jim brings valuable perspective and experience to Northwest Pipe," Northwest chairman William Tagmyer said in a statement. "I am very pleased that he is joining our board at this time."

August sales down for two of US Big Three auto makers

Two of Detroit's Big Three auto makers posted both month-on-month and year-on-year sales declines in August, Steel Business Briefingunderstands.

General Motors saw combined August sales for its four brands decrease 11% to 184,921 units compared to August 2009. Sales were down 7% m-o-m. Year-to-date sales were up 23% to roughly 1.45m units, the company said.

Ford dealers delivered 157,503 new vehicles in August - down about 5% from 166,092 vehicles in July and 11% versus a year ago. Y-t-d sales are up 18% to 1.28m cars, Ford said. It plans to produce 570,000 vehicles in the fourth quarter, down from 574,000 during the same quarter last year.

Chrysler Group LLC reported sales of 99,611 units, a 7% increase over both July and August 2009 sales and the fifth-consecutive month of y-o-y increases. Chrysler's y-t-d sales total about 720,140 units, SBB notes.

Chile’s CAP approves nearly $1bn in iron ore projects

Two iron ore projects awaiting approval by Chilean mining company CAP have now been given the go-ahead by CAP directors, with the combined value of the proposals said to be $916m. 

The projects at Cerro Negro Norte y Los Colorados will enable the company to produce 6m more tonnes/year of iron ore, taking the total to 17m t/y in 2013.

"Our objective is to reach 20m t/y,” the company tells SBB. However the expansion at Los Colorados is still subject to environmental approval.

CAP’s plan to construct a $248m desalinization plant has also been approved by the company's board. As previously reported by Steel Business Briefing, the plant would supply fresh water to CAP's Cerro Negro Norte iron mine and could be operational by mid-2012. 

Brazil's pig iron makers optimistic about export markets

Brazilian pig iron producers are more optimistic regarding their export prospects, as September's iron production in the country's northern region has already sold out, Steel Business Briefing learns from domestic traders and producers.

"The iron makers in Brazil's northern region are sold out, following three deals closed with the North American Cargill," one source says. "Their pig iron shipments will be available only from mid-October."

Currently, producers are trying to reach deals for about US$460-470/tonne cfr with US buyers, reflecting positive sentiment within the market. As reported, the last deal was concluded at US$435/t cfr in August.

Sources believe higher freight costs are affecting current exports prices. "Freight rates have increased roughly US$5/dry tonne. Freight from Brazil to New Orleans, US, may be now at US$15-20/dry t," a trader says.