01 the secretary general message from - seaisi.org · leading steel establishments in indonesia,...

Delegates to the 2018 SEAISI Conference and Exhibition in Jakarta, Indonesia can look forward to participating in a most interest-ing and insightful event. With the theme “ASEAN Steel Industry – Next Leap of Trans-formation”, the conference and exhibition will be held at The Ritz-Carlton Jakarta, Mega Kuningan from 25 to 28 June 2018.

The highlight of the conference is the Keynote Session on the opening day which will be chaired by Mr. Ashish Anupam, Chair-man of SEAISI. The session will feature several prominent keynote speakers from different regions of the world. They are Dr. Edwin Basson, Director General of World Steel Association, Belgium; Mr. Sanjeev Gupta, Executive Chairman & CEO, GFG Alliance, Australia; and Dr. Bahram Sobhani, CEO, Mobarakeh Steel Company, Iran. After the keynote presentations, the three speak-ers will participate in a CEO Panel Discussion, joined by a couple of prominent steel indus-try players from the ASEAN region.

The opening day of the conference will also feature two general sessions. The first session will cover Regional Developments in which I will present a report on the Perfor-mance of the ASEAN Iron and Steel Industry in 2017 and Outlook. In the same session, Mr. Atilla Widnell of MySteel will talk about the Key Developments in the Chinese Steel industry while Mr. B.P. Sarkar of Steel Tech will present the India Steel Scenario: Challenges & Opportunities.

veteran from Thailand. The session will kick off with presentations on “The Fasci-nation of Steel – New Horizon with the Learning Factory” by SMS Group; “The Digital Transformation of Steel Production” by Primetals Technologies”; and “The Enhancement of Strategic Business Trans-formation in Milcon Steel Group through Industry 4.0” by Milcon Steel Industries Plc. This will be followed by a panel discussion involving the three speakers and two specially invited steel industry captains from ASEAN.

The Plant Tour on day four offers rare opportunities for delegates to visit several leading steel establishments in Indonesia, with one route visiting PT Gunung Garuda & PT Gunung Raja Paksi in Cikarang and the second route covering PT Krakatau POSCO & PT Krakatau Osaka Steel in Cilegon

We look forward to welcoming all delegates to the 2018 SEAISI Conference and Exhibition in Jakarta, Indonesia this June. TAN AH YONG

The second session on Market Perspectives & Challenges will see the presentation of several papers touching on various key development issues affecting the steel industry today. They are “Opportunities for Asian Steelmakers from Chinese Output Control and Reform” by CRU; “Chinese Steel Capacity Replacement Impact on Exports” by S&P Global Platts; “Change Striking Raw Material Procurement Teams” by Argus Media; and “A Holistic Consideration for the Evolution of the Steel Industry” by Horst Wiesinger Consulting.

As usual, there will also be the presentation of Country Reports which will provide an opportunity for the delegates to be updated on the status and outlook of the iron and steel industry in the respective SEAISI member countries.

The Technical Sessions on days two and three will feature many informative papers covering such topics as Technology Devel-opment, Raw Materials & Product Develop-ment, Operation Excellence, Quality Improvement, Environmental Manage-ment, Emerging Technology, Cost & Energy Savings, Plant Management, Process Improvement and Steel Applications. A sample of some of the interesting papers include “Technology Development for Roll Cooling System in Ultra Flexible Reversing Rolling”, “The Application of Modified BOF Slag in High Competitive Strength Concrete”, “Developing the Next Genera-tion of Cost Effective Rebar for the ASEAN Construction Market”, “Development of High Strength Steel Without Accelerated Cooling Process” and “Steel’s Competitive-ness from the Environmental Perspectives”.

As a finale to the conference, we have this time arranged a special plenary session on “Transformation of ASEAN Steel Industry and Its Competitiveness” on the third day which will be moderated by Mr. Wikrom Vajragupta, a well-respected steel industry

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

NEWS HIGHLIGHTS 02

MESSAGE FROM THE SECRETARY GENERAL 01

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

NEWSLETTERISSN 0166-9645

2018MAY

Indonesia seen becoming major stainless supplier to West ... Pg. 2

Malaysia’s Alliance Steel commissions No.2 coke oven ... Pg. 4

Malaysian election upset fuels uncertainty on investment ... Pg. 5

Thai steel sector grows in first quarter ... Pg. 6

Vietnam’s Formosa Ha Tinh fires 2nd blast furnace, said to be lining up 3rd ... Pg. 7

China’s steel production investment in ASEAN countries – Is it the consequence of production capacity control in China? ... Pg. 14

2 SEAISI Newsletter, May 2018

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

Australia retroactively exempts certain zinc-coated steel sheets

from trade measures ................................................................ 2

Indonesia seen becoming major stainless supplier to West ........... 2

Indonesia seizes unlicenced rebar .................................................... 3

Japan’s steel exports down 5.5% in April .......................................... 3

South Korea imposes duties on Chinese steel wire .......................... 3

POSCO’s JV company in US having difficulties due to high tariffs ...... 4

Malaysia’s Alliance Steel commissions No.2 coke oven ................... 4

Steel company being investigated for allegedly stealing nearly

RM500K of water ................................................................................. 4

Ann Joo 1Q net profit down 17% on absence of ‘unusually high’

profit margin ........................................................................... 4

Malaysian steel mills see sales growth ............................................ 5

Malaysian election upset fuels uncertainty on investment ............. 5

Singapore’s import prices for rebar down amid lower offers ........... 6

Taiwan’s China Steel ups Q3 steel offers on bullish market outlook 6

Thai steel sector grows in first quarter .............................................. 7

Thai pipes gain 232 tax exemption .................................................... 7

Hoa Sen records largest steel exports to Europe .............................. 7

Vietnam’s Formosa Ha Tinh fires 2nd blast furnace, said to be

lining up 3rd ........................................................................................ 7

US’ DoC levies import tax on Vietnamese steel ................................ 8

Vietnam’s HRC import prices slide amid pressure from distressed

cargoes ................................................................................................ 8

Steel firms urged to ensure material transparency .......................... 9

Brazilian iron ore exports up 11% in May ........................................ 10

India’s crude steel output growth slows .................................... 10

India: Finished steel exports surge 17% in FY18 ............................. 10

Indian, Australian companies to sign agreement for potential

steel plant in India ............................................................................ 11

China’s steelmaking raw materials extend gains on firm demand

outlook .............................................................................................. 11

China’s crude steel output at record high in April ........................... 11

China’s BF utilization rate up to 80.4% ............................................ 12

China’s steel inventories fall sharply as sales rise ......................... 12

China’s inspections offer steel market boost .................................. 13

Chinese retaliation to 232 concerns scrap suppliers ..................... 13

US line pipe prices jump on Section 232 supply fears ..................... 13

China’s steel production investment in ASEAN countries – Is it the

consequence of production capacity control in China? .................. 14

2018 SEAISI Conference & Exhibition ............................................... 16

A U S T R A L I A

I N D O N E S I A

Australia retroactively exempts certain zinc-coated steel sheetsfrom trade measures

Certain zinc-coated steel sheets from China, South Korea andTaiwan imported into Australia are no longer subject to anti-dumping and countervailing duties with effect from 6 August2017.

Australian authorities announced the retroactive exemption onTuesday May 29.

The decision was the result of an application made by BlueScopeSteel (AIS) Pty Ltd last August for a review of the measures.BlueScope is the only manufacturer of galvanized steel inAustralia, according to an April 20 statement by Australia’s Anti-Dumping Commission.

To be exempt from the duties, the galvanized steel sheets must be4.0mm thick, 1,200mm wide, and 2,160mm long, as well as have

all the following specifications:

• Yield strength of at least 450 MPa

• Tensile strength of at least 480 MPa

• Total elongation of at least 10%

• Total coating mass on all sides at least 275g per square

meter

The five-year anti-dumping measures were initially imposed inAugust 2013 on galvanized steel from China, South Korea andTaiwan. At the same time, countervailing duties were also appliedto exports of those goods from China.

Parties seeking a refund of duties already paid on those goodsshould contact the Anti-Dumping Commission.

Separately, several zinc-coated steel exporters have already beenexempt from the anti-dumping and countervailing duties sincethe measures were introduced in 2013.

The anti-dumping duties do not apply to exports from Korea’sDongkuk Steel Mill and Taiwan’s Sheng Yu Co Ltd and Ta FongSteel Co Ltd.

The countervailing duties do not apply to materials from China’sAngang Steel, ANSC-TKS Galvanizing, Yieh Phui (China)Technomaterial Co Ltd, and Jiangyin Zongcheng Steel Co Ltd.

Metal Bulletin’s assessment of prices for June/July shipments of1.0mm 120g zinc-coated hot-dipped galvanized coil from Chinawas $685-690 per tonne fob for the week ended Tuesday May 29,unchanged from a week earlier.

Metal Bulletin, May 30, 2018

Indonesia seen becoming major stainless supplier to West

Indonesia could become a major stainless steel supplier to theUS and Europe following the ramp up of the stainless steel plantthere owned by China’s Tsingshan Iron & Steel. This is accordingto Olivier Masson, senior analyst at consultancy Roskill.

SEAISI Newsletter, May 2018 3

Chinese stainless cold rolled coil exports have declined since2014 due to trade barriers in the US and EU. In 2014 Chinesestainless CRC exports to these two regions combined reached453,000 tonnes, while in 2017 they dropped to only 23,000t.China has offset most of this by exporting more to Africa, Canada,Mexico, Asia, the rest of Europe, Latin America, the Middle East,and the CIS.

Chinese stainless hot rolled coil exports, meanwhile, reachedan all-time high of 1.9 million tonnes in 2017. Chinese exportsare expected to sustain as shipments to the rest of Asia, a majormarket, have held up well. Moreover, stainless steel demandgrowth is forecast to be concentrated in regions that are strongChinese export markets.

While China is blocked by tariffs, Indonesia’s “… emergence onthe stainless steel scene could have a profound effect on stainlesssteel trade flows going forward,” Masson said at the BIRconvention and exhibition in Barcelona on Monday. Indonesiahas 2m tonnes/year of stainless melting and HR capacity, whichis soon to be increased to 3m t/y.

“Tsingshan’s new mill in Indonesia can supply slab and hot rolledto the EU duty-free for those who are prepared to take it, and forhot rolled there could be takers, slab probably not, that’s far lesscertain,” Masson observed at the event attended by Kallanish. “Ifcold rolled capacity were to be added in Indonesia, there wouldbe takers in the EU.”

Tsingshan also agreed to set up a 300,000 t/y stainless HRC jointventure in the US with ATI, but this was before Section 232 tariffswere imposed. ATI has now applied for a tariff exemption forIndonesia-origin slab imports.

Chinese apparent stainless steel consumption grew 7.8% in 2017,slowing from 12% growth in 2016, although that was from aweak base in 2015.

In the stainless-consuming sectors globally in 2017, themachinery and equipment sector market grew 6.7%, fabricatedmetal products grew 4%, motor vehicles rose 6.5%, and domesticappliances increased 6%. The weighted average growth rate instainless consuming sectors was 4.2% in 2017. The growth hasbeen mainly in emerging economies.

Kallanish Steel, May 29, 2018

Indonesia seizes unlicenced rebar

Indonesia’s Ministry of Commerce says it has seized rebar worthIDR 70 billion ($4.94 million) which did not carry the IndonesiaNational Standard (SNI) mark. The report was confirmed toKallanish by the Indonesian Iron and Steel Institute (IISIA).

The largest haul was 2 million pieces of rebar at a factory inBalaraja last week. In addition, 351,000 bars were seized from awarehouse in South Sulawesi. Without the SNI standard, therebars could be dangerous if used for structural uses, the ministrynoted. The tonnage of the two cargos was not revealed but tradersagree that the total volume likely exceeded 10,000t.

In March, IISIA warned that a new regulation allowing importedsteel to pass customs before being inspected could createproblems for domestic steelmakers.


Japan’s steel exports down 5.5% in April

Japan’s iron and steel export volumes fell 5.5% year on year to2.84 million tonnes in April, according to statistics from theJapan Iron & Steel Federation (JISF) released this week.Carbon finished steel exports made up 1.79 million tonnes ofthat total. This is 6.2% lower than a year earlier.

Specialty steel exports also fell 4.8% on the year to 615,216tonnes, while those for semi-finished products dropped 5.7% to331,841 tonnes.

Exports to four of the five main destinations for Japanese steeltoo declined on a year-on-year basis.

Shipments to South Korea experienced the biggest decrease inpercentage terms, dropping 22.2% to 416,294 tonnes. Exports toChina fell 4.2% to 478,852 tonnes, while those to Taiwan dippedby a slight 0.5% to 233,658 tonnes. Exports to Thailand decreasedby 1.1% to 390,501 tonnes.

Shipments to the United States rose 11.7% to 145,481 tonnes.

The following is a breakdown of Japanese exports made in Aprilaccording to main finished steel products:


South Korea imposes duties on Chinese steel wire

South Korea has decided to impose anti-dumping duties onChinese steel wire, according to South Korea’s Trade Commission.It is expected to levy duties for the next five years on galvanizedlow carbon steel wire which is imported from China, Kallanishnotes.

J A P A N

K O R E A


The South Korean finance ministry plans to confirm the duties by31 July 2018. It says that cheap galvanized low carbon wireimported from China take 70% of the local galvanized marketand has a negative impact on local steelmakers. The galvanizedsteel wire market was valued at about KRW 100 billion ($92.5million) by the end of 2016.

Korea’s Trade Commission has proposed to impose temporaryanti-dumping duties of 4.43-15.71% on several Chinesecompanies. The tariffs are 4.43% for Tianjin Huifu Metal ProductsCo., Ltd., and 15.7% for Tianjin Huayuan Metal Wire ProductsCo., Ltd., and Tianjin Huayuan Times Metal Products Co., Ltd. Theother companies involved face duties of 8.12%.


POSCO’s JV company in US having difficulties due to high tariffs

USS-POSCO Industries (UPI), the US subsidiary of POSCO,remained in the red for the sixth consecutive quarter in the firstquarter of this year. POSCO and U.S. Steel established UPI in1986 by investing 49% and 51%, respectively. The joint venturecompany posted a loss of 22 billion won (US$21 million) in thefourth quarter of 2016 and has remained in the red all the waysince then.

The poor performance of the company has to do with the highU.S. tariffs on South Korean hot rolled steel sheets. UPImanufactures and sells cold rolled and plated steel sheets byimporting hot rolled steel sheets from South Korea, but the UnitedStates imposed anti-dumping and countervailing duties of up to60% on South Korean hot rolled steel sheets in 2016 and this hasmade it almost impossible for UPI to use the material from SouthKorea. UPI sought a local alternative but could not avoid anadditional cost burden as local products were 20% to 30% moreexpensive. Besides, import restrictions followed one after anotherin the United States toreduce the steel supply in the country andmake procurement more and more difficult.

UPI has tried to persuade the U.S. government, only to fail. TheU.S. Department of Commerce has not budged at all in spite ofthe possibility that more than 600 UPI workers could be negativelyaffected. At present, UPI is going through a very hard time, tryingto block the import of plated steel sheets from countries likeJapan so that the prices of its products can be raised at least tosome extent.

The other South Korean steel companies that are running theirplants in the United States are facing a lot of difficulties as well.For example, the local corporation of TCC Dongyang posted aloss of approximately one billion won last year after the U.S.Commerce Department’s 64.7% retaliatory tariff on POSCO’s coldrolled steel sheets in 2016 that has resulted in an excessivematerial cost burden.

Business Korea, May 30, 2018

Malaysia’s Alliance Steel commissions No.2 coke oven

Alliance Steel (Malaysia) commissioned its No.2 coke oven on 9May. Construction had started on 26 February 2017 byMetallurgical Corporation of China (MCC). Alliance plans to build

M A L A Y S I A

the biggest steelworks in Malaysia with a total steel capacity of3.5 million tonnes/year, Kallanish notes.

MCC is responsible for the coke plant construction with a totalcapacity of 1.1m t/y in the Malaysia-China Kuantan IndustrialPark. Alliance Steel is planned to house two 1,080m³ blastfurnaces, and began building these in November 2016. The No.1blast furnace finished construction in December 2017, and wasignited on 26 March 2018. Alliance Steel also commissioned asteel bar production line with a capacity of 1.4m t/y in lateDecember (see Kallanish 26 January).

Malaysia-China Kuantan Industrial Park hopes to include steel,non-ferrous, equipment manufacturing and clean energyindustries. Ten projects with a total investment of CNY 24.5 billion($3.86 billion) had been planned by the end of 2017. Alliancewas established as a joint venture between two Chinese state-owned companies, Guangxi Beibu Gulf Port International Groupand Guangxi Shenglong Metallurgical in April 2014.

Kallanish, May 11, 2018

Steel company being investigated for allegedly stealing nearlyRM500K of water

Alliance Steel (M) Sdn Bhd is being investigated by the NationalWater Services Commission (SPAN) following accusations that itstole nearly RM500,000 worth of water.

SPAN Eastern Region head Arni Shahrina Shaharum said that araid was conducted on May 16 where they cut off the water supply.

She said that Alliance Steel is being investigated under Section45 of the Water Services Industry Act for the construction of awater supply system without approval.

If found guilty, those responsible face a fine of RM500,000 and ajail term of no more than five years.

Alliance Steel is one of the investors in the Malaysia-ChinaKuantan Industrial Park (MCKIP) here.

“Alliance Steel paid RM500,000 for the amount of water that hasbeen stolen for more than 90 days since February,” said Arni.

“They then applied for the temporary water supply and paid thefirst instalment of 10% of the water contribution supply fee, butwe found out on Monday (May 21) that they had reconnected thewater supply when approval had not yet been given,” she alleged.

Kuantan MP Fuziah Salleh said that she contacted SPAN after theissue surfaced on Facebook, and added that that SPAN will nowlook to seal the main valve to prevent Alliance Steel fromsiphoning more water.

The Star Online, May 23, 2018

Ann Joo 1Q net profit down 17% on absence of ‘unusually high’profit margin

Steel maker Ann Joo Resources Bhd’s net profit fell 17% toRM61.45 million in the first quarter ended March 31, 2018(1QFY18) from RM74 million a year ago, due to ‘unusually high’


profit margin in 1QFY17 as a result of a surge in selling pricesand lower carrying cost of inventory.

This resulted in lower earnings per share of 11.88 sen for 1QFY18compared with 14.77 sen for 1QFY17.

Quarterly revenue, however, rose 18% to RM589.06 million fromRM499.17 million a year ago, mainly contributed by higher sellingprices, in line with the up-trend of international steel prices.

In a filing with Bursa Malaysia today, Ann Joo said the improvedrevenue performance was further supported by higher domestictonnage sold on gradual improvement in local demand fromconstruction progress of various infrastructure and large-scaledevelopment projects.

While long-term prospects are positive, Ann Joo expects aseasonally lower second quarter of 2018 due to seasonal factorsthat typically affect construction activity, including the Ramadanmonth and Raya holiday.

“The group is confident that the new government will put in placenecessary measures to drive economic growth and efficient fiscalspending,” it said.

Given the fundamental drivers such as China’s continued effortson steel industry reform and its robust domestic demand, andexpected robust domestic demand from Malaysia’s constructionactivities, as well as continued enhancements in the group’soperating efficiency, Ann Joo is expecting its performance toremain satisfactory in the remaining period of 2018.

Ann Joo shares closed up 2 sen or 0.8% at RM2.52 today, bringinga market capitalisation of RM1.41 billion.

The Edge, May 28, 2018

Malaysian steel mills see sales growth

Malaysian steel firms have reported a steady improvement indomestic sales in the first quarter of 2018. Ramadan and otherfactors will mean a seasonal downturn in Q2 but they expect astronger second half, Kallanish notes.

Ann Joo Resources saw its revenues increase 18% year-on-yearto MYR 589.06 million ($142m) over January-March. It said saleswere supported by both higher prices and a gradual improvementin local construction steel demand as large building andinfrastructure projects got underway. Although net profitsactually fell 17% y-o-y to MYR 61.45m from an unusuallyprofitable Q1 2017, they were actually up again from Q4.

Malaysia Steel Works meanwhile also saw its revenues grow24.7% y-o-y to MYR 434.8m on the back of better prices andhigher sales volumes. It saw profits increase 25.8% to MYR17.72m, aided by a MYR 5.19m foreign exchange gain.

Both mills noted that demand in the second quarter is expectedto decline as a result of the Ramadan and Raya holidays.Malaysia Steel Works also noted that there has been a temporaryhit to demand in May after the newly-elected governmentannounced it would cancel the unpopular GST tax from 1 June.

Both mills say demand should return in the second half of theyear.


Malaysia election upset fuels uncertainty on investment

Malaysia’s opposition alliance has won an unexpected victoryin national elections, putting the country on course for its firsttransfer of power in more than 60 years and generatinguncertainty over the future of Chinese investment in the country’ssteel sector.

The Pakatan Harapan (PH) alliance, led by 92-year old formerprime minister Mahathir Mohamad, won at least 113 of the 222parliamentary seats in yesterday’s election. The victory ends 61years of rule by the United Malays National Organisation (Umno),which has led Malaysia through various coalitions since itbecame independent in 1957. Mahathir is due to be sworn in asprime minister later today.

Mahathir has regularly criticised excessive Chinese investmentin Malaysia on the campaign trail and has promised to focus onattracting only “high-quality” investments from the country.Chinese firms own steel plants and Malaysian independent powerproducer Edra, while they are investing in a new deep-sea port atMalacca under the country’s “one belt, one road” initiative.

The change in government is also expected to bring a shake-up inenergy policy, with the PH alliance having pledged to reinstatefuel subsidies, raise petroleum royalties and examine the role ofdominant state-owned oil and gas firm Petronas.

The alliance has promised to stabilise gasoline prices andreintroduce targeted subsidies for motorcyles and smaller cars.Malaysia abolished fuel subsidies in 2014, when oil prices werefalling from record highs, in a move the government said wouldsave the country 10bn-20bn ringgit ($2.53bn-5.06bn) each year.The reimposition of subsidies at a time of rising fuel prices,together with an election pledge by PH to remove the country’sunpopular 6pc goods and services tax within 100 days of takingpower, could add to budget pressures.

The PH alliance has also promised to raise oil royalty paymentsto producing states to at least 20pc, and allow Sabah and Sarawak— the major oil and gas producing states on Malaysian Borneo— to set up their own energy companies to capture a biggershare of revenue. This and other campaign pledges could erodethe dominance of Petronas in the country’s energy sector.Malaysia’s 1974 petroleum development act will be scrutinisedto review Petronas’ monopoly over national oil and gas products,while the company will be required to pay a fixed percentage ofprofits, set at a minimum of 10bn ringgit/yr, into the country’snational resources fund, PH said. Petronas made a profit of45.5bn ringgit last year.

Malaysia’s dependence on coal-fired power plants will be reducedand the share of renewable energy increased to 20pc in 2025from just 2pc now, PH’s election manifesto said. It promised tofocus on environmental sustainability rather than “uncontrolled”mining.

Argus Metal, May 10, 2018


Singapore’s import prices for rebar down amid lower offers

Import prices for rebar in Singapore decreased over the pastweek with sellers lowering their offers on weakening marketfundamentals.

Major Chinese mills had decreased their offers to $555-565 pertonne cfr Singapore from $575-580 per tonne cfr Singapore aweek earlier.

Turkish mill cargoes were being offered at $555 per tonne cfrSingapore. These offers were also heard in Hong Kong.

Forward cargoes for materials scheduled for loading inDecember and January were offered at $520 per tonne cfrSingapore. These were not taken into account for Metal Bulletin’sprice assessment because they are not within the assessed period.

Bids from end-users were at $535-545 per tonne cfr Singapore,down from $555-560 per tonne cfr Singapore in the previousweek.

“Buyers have lowered their bids because they feel that offers outof China and Turkey have weakened and they do not want to payany higher,” a trader in Singapore said.

The drop in price levels being negotiated tracked last week’ssoftening Chinese export prices.

The Metal Bulletin fob China Rebar Index was at $545.56 pertonne last Friday May 25, compared with $552.08 per tonne atthe start of last week.

Metal Bulletin’s assessment of import prices for rebar in SoutheastAsia - which mainly looks at cargoes sold into Singapore on atheoretical weight basis - was $545-555 per tonne cfr for theweek to Monday May 28, down from $560-565 per tonne cfr inthe preceding week.

In Southeast Asia’s wire rod segment, negotiation levels alsodropped due to lower offers out of China. Traders were alsopersistently short-selling into the Vietnamese market and thisweighed on the market further.

Offers for Chinese mill cargoes remained at $580-590 per tonnecfr Southeast Asia, or around $570 per tonne fob China.

Traders were offering position cargoes at $580-585 per tonne cfrSoutheast Asia, with transactions heard around $570-580 pertonne cfr.

These included deals involving cargoes of 1,000-5,000 tonnes.

“Traders are bearish about the spot market in June, and are short-selling heavily to offload cargoes,” a trader based in SoutheastAsia said last Friday.

Other cargoes were heard to have been traded at $560-570 pertonne cfr Southeast Asia. But market sources considered theseas transactions done by heavy risk-takers, which did notrepresent the wider market.

Metal Bulletin’s assessment of import prices for wire rod inSoutheast Asia - which mainly looks at low-carbon mesh-qualitymaterial sold into the Philippines and Vietnam from China - was$570-575 per tonne for the week to Monday, down from $580-590 per tonne from the previous week.


Taiwan’s China Steel ups Q3 steel offers on bullish market outlook

Taiwan’s China Steel Corporation (CSC) has increased its offersfor the third quarter of this year due to a bullish outlook for theperiod.

“Taiwan has benefited from favorable domestic industrialproduction as well as overseas export markets. The economy isalso expected to continue doing well in the second-half of theyear,” CSC said.

This has been supported by market fundamentals in northeastAsia, where downstream industries have been recovering.

“Downstream segments in countries such as China have beenincreasing their demand and consuming steel inventoriessteadily. Major producers such as Japan and South Korea havealso reduced their exports due to bullish domestic demand,” CSCsaid.

The company will increase its offer prices for steel plate, barsand rods, and hot-rolled coil by NT$495-500 ($16.49-16.66) pertonne. It will increase its hot-dipped galvanized coil price byNT$163 per tonne.

Offers for cold-rolled coil and other coated coils will remainunchanged.Market sources told Metal Bulletin that import prices intoSoutheast Asia were at $635-640 cfr for CRC and at $700-715 pertonne cfr for hot-dipped galvanized coil.

CSC expects environmental protection measures in China tocontinue contributing to the bullish market moving forwardbecause they will likely reduce Chinese production capacity andsteel export supply.

Flat steel products such HRC and CRC made up a combined 56%of CSC’s sales revenue in the first quarter of this year. Theremaining revenue was from wire rod, bars, plate, billet andslab.

About 71% of its revenue was from the domestic market, while29% was from overseas markets.

It sold 2.70 million tonnes of steel in the first quarter of thisyear, of which 33.6% was exported to Southeast Asia and 25%was exported to China. Japan imported 16.5% of CSC steel.

The company has a 9.9 million tonnes per year of steel productioncapacity in Kaohsiung, Taiwan, including other domesticsteelworks at subsidiaries Dragon Steel Corporation and ChungHung Steel.

T A I W A N

S I N G A P O R E


CSC also has other businesses elsewhere in Asia, including CSCSteel Malaysia, China Steel Sumikin Vietnam and China SteelCorp India. It has a total group crude steel production capacityof 16 million tpy.


Thai steel sector grows in first quarter

Thailand’s steel sector has continued to see a recovery in thefirst quarter of 2018, according to the Iron and Steel Institute ofThailand. Production, demand, imports and exports all increasedyear-on-year, with a slight trend in favour of domestic longproduct consumption, Kallanish notes.Domestic finished steel output was up 8.1% year-on-year at 1.947million tonnes over January-March. Although long productoutput was up 4.8% to 1.132mt, the key driver was a 13% increasein flat product output to 815,487t. That in turn was driven bymore than 20% increases each in hot rolled and cold rolled sheetproduction.

Finished steel consumption however was driven by longs. Totalconsumption in Q1 was up 3.3% at 4.352mt, with long productconsumption up 6.5% to 1.511mt. That growth in demand ledfinished long product imports to increase 8.8% to 633,457t, whileflat product imports slipped by -1.2% to 2.205mt. Total imports,including semis, were up 3.7% to 4.279mt.

Higher consumption also pushed up imports of semi-finishedproducts by 12.1% to 934,000t, with a strong contribution togrowth of imports from Iran. Imports of slab from Iran were up74.8% to 258,010t, while imports of semis with carbon contentover 0.25% were up 350% at 170,052t.

Thailand also exported 433,121t of steel in Q1, up 7.3% y-o-y.Long product exports were up 4.6% to 254,199t, while flat productswere up 11.3% to 178,922t.


Thai pipes gain 232 tax exemption

Thai steel pipe exporters will be able to apply for a shipment-by-shipment exemption of the 25% tax on all steel imports to theUSA, according to reports quoting the Thai Ministry of Commerce.The US is a key destination for the country’s pipe exports despiteshrinking volumes this year, Kallanish notes.

Thailand has requested a number of trade privileges from theUS, but has not been given a wider waiver of the taxes. It also didnot say what Thai exporters would have to provide to USauthorities in order to avoid paying the duties.

The Iron and Steel Institute of Thailand has said that Thai steelexports could be cut by as much as 383,496 tonnes as a result ofthe tariffs. In the first three months of 2018, Thailand exported25,242t of welded pipes, of which 16,806t went to the USA.Although total welded pipe exports were up 1.5% year-on-year,exports to the USA were down -18.1%.

The USA was also the largest destination for Thai seamless pipes.In Q1 volumes to the US were up 67.5% y-o-y to 19,636t, out of atotal of 31,662t.


Hoa Sen records largest steel exports to Europe

Hoa Sen Group exported 15,000 tonnes of steel directly to Europeon May 8 from the Quy Nhõn Port in Bình Ðinh Province.

The exported steel was produced in accordance with the Europeanstandard, BS EN 10346: 2015.

This is the largest volume of steel to be exported directly fromthe Quy Nhõn Port to two seaports in Antwerp (Belgium) and LaRochelle (France). The volume was shipped through the Nemea(Cayman IS) vessel with a capacity of 63,000 tonnes.

Tran Ngoc Chu, Hoa Sen’s executive vice chairman, said theshipment marked a step forward in the export activities of HoaSen Group as well as the domestic steel industry, which showedthe potential of Viet Nam in the steel production sector.

This year, Hoa Sen expects to export another 150,000 tonnes ofgalvanised steel to the European market.

The export volume of 15,000 tonnes of steel that was sent toEurope was manufactured at the Hoa Sen-Nhõn Hoi-Bình ÐinhSteel Plant. The group is currently constructing the second phaseof this plant with a capacity of 400,000 tonnes per year, meetingthe higher demand at home and abroad.

The export also marked the first time that Quy Nhõn Port hadreceived a vessel with a capacity of up to 63,000 tonnes of cargo.

Phan Cao Thang, permanent vice chairman of the People’sCommittee of Bình Ðnh Province, said the province hascommitted to creating favourable conditions for enterprises todevelop production in the province and export activities at QuyNhõn Port.

The province will also support the Quy Nhõn Port in improvingits cargo handling capacity, Thang said.

Recently, Quy Nhõn Port has invested in modern infrastructureto receive vessels with a capacity of up to 70,000 tonnes andreduce the time of loading and unloading goods. In future,authorities will strive to transform Quy Nhõn Port into aninternational seaport.

Viet Nam News, May 11, 2018

Vietnam’s Formosa Ha Tinh fires 2nd blast furnace, said to belining up 3rd

Vietnam’s Formosa Ha Tinh has fired its second blast furnaceand is possibly lining up plans for a third blast furnace, marketsources in Vietnam told Metal Bulletin on May 18.

V I E T N A M T H A I L A N D


The firing of the second blast furnace will bring Formosa HaTinh’s total production capacity of carbon steel to 7 milliontonnes once both its blast furnaces are running at full capacity.

This includes 5.2 million tonnes per year of flat steel - primarilyHRC and hot-rolled band - as well as 478,000 tpy of billet, 600,000tpy of wire rod and 600,000 tpy of bars in coil.

The company is also lining up plans for its third blast furnace,market sources said, and this could have a volume of up to 5,000cubic meters and produce 4.3-4.5 million tpy of steel.

However, this could not be confirmed by companyrepresentatives, who said that these plans are ongoing and thatthere were no firm decisions made.

The firing of the 4,300 cubic meter No2 blast furnace is expectedto reduce the market size for one of Vietnam’s largest steelimports – hot-rolled coil.

The major HRC importer has been using foreign-origin HRCsubstrate, mostly from China, to produce downstream cold-rolled,coated, hot-dipped galvanized and pre-painted coils, which areeither used domestically or exported globally.

However, import volumes are expected to shrink because HRCfrom Formosa Ha Tinh is expected to fulfill a portion of domesticdemand.

The company has been selling about 200,000 tonnes per monthof HRC to domestic buyers, and exporting about 40,000-50,000tonnes per month to regional buyers, with a large portion of theexports heading to Malaysia.

Some of its steel volumes are also expected to be sent to Taiwaneseshareholder China Steel Corporation, which said in a May 15report that Formosa Ha Tinh Steel Corporation is a source ofhot-rolled and slab products.

Taiwan’s Formosa Plastics Group and Japan’s JFE Steel are theremaining shareholders.


US’ DoC levies import tax on Vietnamese steel

The US Department of Commerce (DoC) has decided to levy importtax on steel produced in Viet Nam using Chinese-origin substrate.

The US Customs and Border Protection (CBP) will continue tocollect anti-dumping (AD) and countervailing duty (CVD) cashdeposits on imports of corrosion-resistant steel (CORE) producedin Viet Nam using Chinese-origin substrate at the rate of 199.43per cent and 39.05 per cent, respectively.

CBP will also collect AD and CVD cash deposits on imports ofcold-rolled steel produced in Viet Nam using Chinese-originsubstrate at the rate of 199.76 per cent and 256.44 per cent,respectively.

The cash deposit rates were determined earlier in the AD andCVD investigations on cold-rolled steel and CORE from China.

“Cash deposits will apply to all unliquidated entries on or afterNovember 4, 2016, the date the inquiries were initiated. Importersand exporters of Vietnamese merchandise produced fromsubstrate originating in Viet Nam or a third country have theoption of seeking an exemption from cash deposits by certifyingthat the substrate originated outside of China,” DoC said.

It added that shipments of CORE from Viet Nam to the UnitedStates increased from US$2 million to $80 million, and those ofcold-rolled steel increased from $9 million to $215 million afterpreliminary duties were imposed on Chinese products in 2015.

The inquiries were conducted in response to requests from USdomestic producers of CORE and cold-rolled steel, including SteelDynamics, Inc., California Steel Industries, AK Steel Corporation,ArcelorMittal USA LLC, Nucor Corporation and US SteelCorporation.

The DoC’s Enforcement and Compliance unit within theInternational Trade Administration is responsible for vigorouslyenforcing US trade laws and does so through an impartial,transparent process that abides by international law and is basedsolely on factual evidence.

According to Chu Ðuc Khai, Vice Chairman and General Secretaryof the Vietnam Steel Association, Viet Nam’s export volume ofsteel is quite small compared to the US’s volume of import.

The country last year exported 4.7 million tonnes of steel toforeign countries, earning a revenue of US$3.1 billion. Of this,567,000 tonnes of steel were exported to the US, occupying 12per cent of Viet Nam’s total export.

This volume accounted for just 1.67 per cent of the US’s steelimports. In 2016, the US imported 31 million tonnes of steel andin 2017, it imported 34 million tonnes, said Khi.


Vietnam’s HRC import prices slide amid pressure from distressedcargoes

Import prices for re-rolling-grade hot-rolled coil sold into Vietnamtightened downward over the past week with distressed cargoesdampening spot price negotiations and traders becoming morewilling to lower their offers.

South East Asia Import Hot rolled coil $ per tonne cfr (Vietnam)

Metal Bulletin’s assessment of HRC import prices in SoutheastAsia - which mainly looks at Chinese 2-3mm SAE1006 HRC andequivalent grades sold into Vietnam - was $600-605 per tonnecfr for the week ended Monday May 28, down from $600-625 pertonne a week earlier.

Bids for July-shipment materials fell to $590-600 per tonne cfrSoutheast Asia, compared with $600 per tonne cfr a week earlier.

Market sources said the negotiation level for such cargoes wasat $600-605 per tonne cfr, and that at least one 30,000-tonnecargo was sold by a Chinese mill to a major end-user within thatrange.


Offers from first-tier Chinese mills fell to $605-610 per tonne cfr,from $625 per tonne cfr a week earlier.

“Traders needed to sell their cargoes and were willing to lowerprices this week,” a Vietnamese trader said last Friday.

Japanese and Taiwanese HRC was offered at $630 per tonne cfrSoutheast Asia. Market sources said there not a lot of SouthKorean HRC allocated to Southeast Asia due to strong demand inthe country’s domestic market.

But buyers were persistently looking to decrease bids further forprompt and forward cargoes scheduled for shipment in June andAugust respectively.

Market sources said there were a few distressed cargoes in thespot market and that these had dampened sentiment further.

A mill in Russia was heard to have offloaded close to 100,000tonnes of HRC in the form of prompt as well as forward cargoesto end-users in Vietnam at $580-595 per tonne cfr Vietnam.These were not included in Metal Bulletin’s price assessmentbecause they fell out of the current assessment period, sincethey are scheduled for shipment in June and August.

A major domestic producer in Vietnam offered its SAE1006-gradeHRC at $615 per tonne cfr Southeast Asia for July shipment.

It has earmarked about 300,000 tonnes of HRC for the domesticmarket and another 50,000 tonnes for export.

Buying interest for domestic HRC in Vietnam remained strong,with re-rollers still offtaking large volumes from the domesticproducer.


Steel firms urged to ensure material transparency

Local steel makers should follow laws and requirements on originwhen exporting their products to the US.

That’s the message from Ho Nghia Dung, chairman of Viet NamSteel Association (VSA) after the US Department of Commerce(DoC) decided to levy import tax on steel produced in Viet Namusing Chinese-origin substrate.

The US Customs and Border Protection (CBP) will continue tocollect anti-dumping (AD) and countervailing duty (CVD) cashdeposits on imports of corrosion-resistant steel (CORE) producedin Viet Nam using Chinese-origin substrate at the rate of 199.43per cent and 39.05 per cent, respectively.

CBP will also collect AD and CVD cash deposits on imports ofcold-rolled steel produced in Viet Nam using Chinese-originsubstrate at the rate of 199.76 per cent and 256.44 per cent,respectively. Dung said the Viet Nam’s steel exports to the USwould be sharply reduced with the decision.

Statistics showed that the Viet Nam’s steel exports to the US werereduced from more than 900,000 tonnes in 2016 to 500,000tonnes in 2017.

After the DoC’s decision, VSA’s members have been quick to seekmaterial for steel production from other countries or local onesinstead of importing from China.

He said a big amount of hot rolled steel – the material for colourcoated steel and galvanised steel production - was providedinto the market after Formosa came into operation.

The amount of imported steel from China in the first quarter ofthe year was 1.1 million tonnes, half as much from the sameperiod last year and a 29 per cent decrease in term of value.

The US, however, is still the third largest steel importer of VietNam despite of the tax levy. In the first three months of the year,the amount of steel exports to the US reached 217,000 tonnes,accounting for 15 per cent of Viet Nam’s total steel exports.

The chairman said the country’s steel sector has seen stronggrowth of construction steel and flat steel. Viet Nam has beenable to produce construction steel products, from ore, steel scrapto hot rolled steel. Previously, Viet Nam had to import hot rolledsteel from foreign countries including China, South Korea andJapan.

VSA said they co-operated with ministries, sector and businessesto clarify two issues relating to DoC’s investigation on steelproduced in Viet Nam using Chinese-origin substrate.

They would clarify that not all Vietnamese steel originates fromChina. In addition, Viet Nam has been investing in large andmodern scales of final production stages to produce galvanisedand cold rolled steel.

The latest information from the Vietnamese Ministry of Industryand Trade (MoIT) revealed that the DoC would remove the taxlevy on Vietnamese steel exporters if they prove that their productswere not used material from China.The ministry would continue to co-operate with relevant steelproducers to resolve the requirements from the DoC.

Chu Thang Trung, deputy director of the ministry’s Department ofTrade Defence, said they suggested producers study and meetconditions from the DoC to be exempted from the tax levy.

The ministry has closely co-operated with VSA and businesses tofollow the case from the initiating of the investigation in June2016.

MoIT asked the DoC to implement investigations objectively andin line with WTO’s regulations as well as the US’s norms. Theyalso asked the DoC not to impose the tax on Vietnamese steelexporters.

VSA and Vietnamese steel producers have also closely co-operated with the US to clarify the material origin for steelproduction in Viet Nam.



Brazilian iron ore exports up 11% in May

Iron ore export volumes from Brazil increased by 11.01% year onyear in May, according to figures released by the country’s foreigntrade ministry, MDIC, on Friday June 1.Iron ore shipments came to 38.98 million tonnes last month,compared with 35.11 million tonnes in the same period in 2017.

But Brazil’s iron ore export revenues came to $1.55 billion inMay, down by 6.41% from the $1.65 billion reported a year before.

The average export price was $39.70 per tonne fob during themonth, down from $47 per tonne fob in May 2017.

In a monthly comparison, iron ore exports increased by 50.62%from April’s level of 25.88 million tonnes, while revenues grewby 4.07% from the $1.49 billion tonnes in the previous month.

In April, the average export price was $57.40 per tonne fob.

Metal Bulletin’s daily index of spot market iron ore prices with62% Fe averaged $66.32 per tonne cfr Qingdao in May 2018,compared with $65.35 per tonne cfr Qingdao in April and $61.59per tonne cfr Qingdao in May 2017.

The index reached $66.16 per tonne cfr Qingdao on Friday, up by$0.84 per tonne from the previous day.

Metal Bulletin, June 1, 2018

India’s crude steel output growth slows

Indian crude steel output rose by just 4.5pc to 102.34mn t in the2017-18 financial year that ended 31 March, a sharp slowdownfrom a year earlier.

Crude steel output had increased by 8.5pc in 2016-17, after theimposition of higher anti-dumping duties on flat steel productscurbed imports and helped mills boost domestic sales. The slowergrowth in 2017-18 may be largely a result of the higher baseperiod a year earlier.

India’s crude steel output exceeded 100mn t in 2017-18 for thefirst time. Total production capacity increased by 5pc to 134.6mnt, with 57pc using electric arc furnaces (EAFs) while the remainderis blast furnace-based. India’s six largest integrated steelproducers use the blast furnace route to make steel, while smallersteel producers mostly use EAFs.

Total finished steel output in 2017-18 was 104.98mn t, up by 3pcyear on year. Bar and rod output rose by 2pc to 36mn t, while hot-rolled coil (HRC) production fell by 0.8pc to 24mn t.

India’s finished steel consumption increased by 7.9pc in 2017-18 to 90.68mn t, much faster than 3pc growth in 2016-17.

Infrastructure projects have been a major driver of steel sales,but a slowdown in real estate demand and sluggishmanufacturing output growth capped demand and output.

Steel demand from infrastructure projects is expected to remainrobust in 2018-19, which is the last financial year ahead ofgeneral elections scheduled for April or May 2019. This couldlead to higher spending on infrastructure to woo voters.

India’s finished steel exports rose by 17pc to 9.62mn t in 2017-18. Italy was the largest buyer of Indian steel in the period, withits purchases increasing by 31pc to 1.34mn t. Sales of bar androd increased by 224pc to 2.04mn t, while HRC sales fell by 0.2pcto 2.82mn t. India is a major supplier of HRC to Vietnam, one ofthe world’s largest importers, but has not been able to competewith Chinese supplies over the past few months.

Total finished steel imports to India rose by 3.5pc to 7.48mn t in2017-18. The largest supplier was South Korea, which increasedits shipments by 18pc to 2.47mn t, followed by China at 1.93mnt, down by 11pc.

Argus, May 7, 2018

India: Finished steel exports surge 17% in FY18

India’s total export of finished steel increased by 16.7 per cent to9.621 million tonnes (MT) in 2017-18, according to an officialdata.

The country had exported 8.242 MT finished steel during 2016-17 fiscal, the Joint Plant Committee (JPC) said in a report.

“Export of total finished steel was up by 16.7 per cent in April-March 2017-18 at 9.621 MT over same period of last year, inwhich contribution of the non-alloy steel segment stood at 8.727MT, while the rest was the contribution of the alloy steel segmentincluding stainless steel,” the JPC report said.

Empowered by Ministry of Steel, JPC is the only institution whichcollects data on the Indian iron and steel industry.

In March 2018, the overall export fell sharply by 56.3 per cent to0.708 MT from 1.621 MT during the same month a year ago.

The import has also registered a rise during the last fiscal, thefigures show.

Import of total finished steel rose by 3.5 per cent to 7.482 MT inFY18 compared to 7.226 MT in the preceding fiscal.

However, the overall import during March fell by 19.7 per cent to0.482 MT as against 0.600 MT during the same month in 2017.

“Import of total finished steel was at 7.482 mt in April-March2017-18, up by 3.5 per cent over same period of last year, inwhich contribution of the non-alloy steel segment stood at 5.636MT, while the rest was the contribution of the alloy steel segment,including stainless steel,” the JPC said.

India’s total production of finished steel during the justconcluded fiscal grew 3.1 per cent to 104.966 MT.

“The production for sale of total finished steel at 104.966 MT,registered a growth of 3.1 per cent during April-March 2017-18over same period of last year, in which contribution of the non-alloy steel segment stood at 95.004 MT, while the rest was the

I N D I A

B R A Z I L


contribution of the alloy steel segment including stainless steel,”the report.

State-owned Steel Authority of India Ltd (SAIL), Rashtriya IspatNigam Ltd (RINL) along with private players Tata Steel, Essar Steel,JSW Steel and Jindal Steel and Power Ltd produced 62.626 MTduring 2017-18.

The rest came from the other producers, JPC added.

“Overall production for sale of total finished steel in March2018 (9.649 MT) was up by 5.7 per cent over March 2017,” itsaid.

PTI, May 8, 2018

Indian, Australian companies to sign agreement for potential steelplant in India

India’s NMDC and NLC and Australia’s Environmental CleanTechnologies will sign an agreement Wednesday in Canberrathat could lead to a new steel plant at Tamil Nadu.

The A$35 million ($26.2 million) master project agreement —which will support India’s steel industry — includes a researchand development project which will use “technologies aimed atlower cost, lower emission iron and steel production utilisinglower grade or waste iron ore and low-rank coal resources,” ACTsaid.

The pilot plant will used ACT’s Matmor technology to produce 2mt/hour of steel.

Matmor is a lignite-based primary iron making technologycapable of replacing metallurgical coal and high-grade lumpiron ore with lower-cost alternative raw materials, ACT said.

The agreement also provides framework for a A$300 millioncommercial-scale integrated steelmaking facility with thenotional production capacity of 500,000 mt/year of finished steelbillet.

“The site for the R&D plant has been chosen to allow room forexpansion into a commercial-scale facility,” ACT said.

“While domestic iron ore supplies could largely support nationaltargets, India’s domestic mines produce soft ore, which generatelarge quantities of fine material [small particle size] which areunsuited to blast furnace operations without expensiveprocessing and upgrading,” ACT had said.

Platts, May 30 ,2018

China’s steelmaking raw materials extend gains on firm demandoutlook

The price of steelmaking raw materials in China rose for a secondsession on Monday on optimism that steel mills will replenishstockpiles as steel production increases and as iron oreinventories at ports decline.

C H I N A

The utilisation rate at blast furnaces across the country pickedup again last week to 69.89 percent, as of May 11, up 0.97percentage points from a week earlier and at its highest sinceearly November, data from Mysteel consultancy showed.

Meanwhile, iron ore inventories at 45 major ports in China fellnearly 1 percent last week to 158.76 million tonnes, althoughstill not far from record levels.

“The fast pace of reopening at steel mills and falling inventoriesat ports indicate strong restocking demand,” said analysts atOrient Futures in a note.

The most-active iron ore futures on the Dalian CommodityExchange rose 1.1 percent to 482.5 yuan ($76.14) a tonne as ofGMT 0226.

Coke futures added as much as 2.6 percent during early trade to2,089.5 yuan a tonne, thei highest since March 9, supported bytight supply concerns as Jiangsu province looks at shutting smallcoke plants to help tackle pollution.

Coking coal contracts for September delivery edged up 0.2 percentto 1,254 yuan a tonne.

However, Orient Futures warned about the fast pace at whichsteel production has resumed since the end of government-mandated output curbs during the winter heating season.

“If mills continue to keep up the speed of operations resuming,the market will see an oversupply which would then bringpressure on prices,” it said.

Daily crude steel output by major steel companies over April 20-30 stood at a record 1.91 million tonnes, up 7.1 percent from thesame period in the preceding month, data from China’s Iron &Steel Association showed.

Shanghai benchmark rebar futures rose 0.4 percent to 3,666 yuana tonne on Monday, lifted by a firm outlook on the spot market asmajor steel mills raise prices for some steel products for Junedelivery.Physical steel prices rose on Friday after a five-day decline, up0.4 percent to 4,293.84 yuan a tonne, according to data fromMysteel.

Reuters, May 15, 2018

China’s crude steel output at record high in April

China’s crude steel output hit a record high in April, as steelmills boosted production after winter output curbs were removedon 15 March.

Crude steel output in April was 76.7mn t, up by 4.8pc from a yearearlier and 3.76pc higher than the previous month, according tothe national bureau of statistics. The previous high was 74.59mnt recorded in August 2017.

Daily crude steel output was 2.55mn t compared with 2.38mn tin March. The daily crude output rate for 2017 was 2.28mn t.


China had imposed a 50pc reduction in pig iron output in 26cities during 15 November-15 March to reduce emissions.Currently only two major steel-producing cities are still operatingunder some restrictions, with Tangshan mills told to cut pig ironoutput by 10pc until November 2018 and Handan enforcing a25pc reduction in pig iron output until November.

Steel mills have boosted profits since late April with averagemargins of around 700-1,000 yuan/tonne ($126-158/t) comparedwith Yn400-600/t in March. Construction demand has picked up,with projects seeking to complete as much work as possiblebefore the wet season begins next month.

Cumulative January-April crude steel output was higher by 5pcat 288.97mn t. Pig iron output in March was lower by 0.4pc froma year earlier at 63.11mn t, while January-April output was downby 1.2pc at 238.78mn t. Increased scrap use in the basic oxygenfurnace during the blast furnace-based steel production process,as well as more production of steel in electric arc furnaces toreduce emissions may have contributed to the fall in pig ironoutput.

Profitability of the steel sector was supported by the firmperformance of the manufacturing sector. Manufacturing outputincreased by 7pc from a year earlier in April compared with 6pcin March. Equipment manufacturing and automobiles, keyconsumers of flat steel products, were the fastest growing sub-sectors last month.

Real estate investment growth remained robust at 10.3pc fromthe previous year during January-April, marginally lower from10.4pc in January-March. The fast pace of real estate investmentgrowth has surprised many since the property market wasexpected to slow down this year because of home purchasingcurbs applied by local governments in large cities. Theseinvestments will boost steel demand over the next several monthsas new projects enter their construction stage.

New real estate project starts grew by 7.3pc during January-April compared with 9.7pc for January-March and 2.9pc inJanuary-February. Real estate sales in terms of area grew by1.3pc, slowing from 3.6pc in January-March. Housing salesgrowth has been much slower than investment growth this year,which could lead to an inventory build-up later in the year if thetrend persists. Real estate inventories fell by 16pc during January-April compared with a 16.7pc reduction for January-March.

The rate of investment growth in fixed assets has fallen throughthe year, with a growth rate of 7pc during January-April comparedwith 7.5pc for January-March and 7.9pc in January-February.Infrastructure investment growth during January-April was at12.4pc compared with 13pc for January-March. Beijing’sdirectives on curbing government debts could have slowedspending on some projects by provinces, although infrastructureremains a key driver of steel demand. A new city being built nearBeijing, ambitious projects to rebuild shanty towns and lay newrailway lines and increased spending on overseas infrastructurebuilding as part of the Belt & Road project will continue toconsume additional steel this year.

Credit availability was ample in the economy, with new loans bybanks in April rising by Yn79.7bn from a year earlier to Yn1.18trillion. Lending to government and industries increased in this

period, while loans to households, mostly home mortgages,dipped.

Argus Metals, May 15, 2018

China’s BF utilization rate up to 80.4%

Blast furnace capacity utilization among the 247 Chinesesteelmakers which Mysteel regularly surveys nationwide rose1.28 percentage points on week to 80.4% as of May 17. The risein furnace operations saw average production of molten ironamong these producers grow by 35,600 tonnes/day to 2.25million t/d, also as of May 17, according to Mysteel’s latestsurvey published on May 18.

Blast furnace capacity utilization among the 247 Chinesesteelmakers which Mysteel regularly surveys nationwide rose1.28 percentage points on week to 80.4% as of May 17. The risein furnace operations saw average production of molten ironamong these producers grow by 35,600 tonnes/day to 2.25million t/d, also as of May 17, according to Mysteel’s latestsurvey published on May 18.

The uptick in blast furnace capacity utilization was largelyattributable to the continued production ramp-up of some steelmills in North China over the past week, respondents indicated.

According to the survey, twelve blast furnaces resumed operationsover May 12-17 after their scheduled maintenance wascompleted. Most of the units were located in North China’s Hebeiprovince and their return to service more than offset theproduction loss from another six blast furnaces that were takenoffline during the period for their spell of scheduled maintenance.

Meanwhile, the operation rate of the blast furnaces at thesemills edged up by 1.04 percentage point on week to 81.53%, thesurvey found. Furnaces at some plants at Hebei’s Handan andChengde restarted, together with others in Xinjiang UygurAutonomous Region in North China, Mysteel found.

Prior to this, operations on those furnaces in Xinjiang were haltedtemporarily as mills responded to a dip in demand in the region.The cooling of demand there was blamed in part on the recentorder from China’s Ministry of Finance (MOF) that many localPublic-Private Partnership (PPP) projects in Xinjiang besuspended or terminated for progress delays and other failings,as Mysteel reported.

As of Friday, Mysteel’s parallel survey among a smaller group of163 steel producers nationwide showed their blast furnacecapacity utilization rate up by 0.36 percentage point on week to78.98%.

Mysteel, May 18, 2018

China’s steel inventories fall sharply as sales rise

Singapore, 25 May (Argus) — China’s steel stocks fell by 15.3pcfrom a month earlier to 11.38mn t on 22 May, as a pick-up inconstruction activity helped boost downstream sales.

The steepest declines were in inventories of wire rod and rebar,which fell by 22.2pc and 23pc respectively, the China iron and


steel association (Cisa) said. Stocks of hot-rolled coil fell by7.4pc over the period.

Rebar stocks declined in 18 of the 19 markets tracked by Cisa,while wire rod stocks fell in 17 markets.

Steel stocks rose to the highest level this year in March, reachingaround 18mn t on 31 March, after traders bought large quantitiesof steel in January and February in anticipation of a spike insales in March as the winter construction lull ended. Butconstruction demand was slow to increase, with steel buyingpicking up only in late April.

Inventory declines may slow next month as rains in several partsof China are likely to curb construction activity.

The increase in steel sales and reduction in stocks has boostedprofit margins at steelmakers this month. Margins rose above1,000-1,200 yuan/t ($157-188/t) in early May from around Yn500-800/t last month, but a slowdown in construction steel salesthis week has pushed margins lower to around Yn700-1,000/t.

Rebar prices in Shanghai, which showed the steepest decline instocks, increased by around 3pc from 1 April to 25 May to Yn3,830/t, after touching a high for the period of Yn4,120/t on 5 May.Stable seaborne iron ore prices also helped mills control costsand lift profits.

Mills are trying to produce as little pig iron as possible to cutcosts, instead increasing the scrap charge in the basic oxygenfurnace to produce more crude steel from smaller amounts ofpig iron. Iron ore and scrap prices and the difference betweenthe two will affect profits of steel companies to a large extentfrom now on, Cisa said.


China’s inspections offer steel market boost

Beijing will soon launch environmental inspections across 10provinces, which have started pushing steel prices higher inanticipation of possible disruptions to operations.

The inspections will be launched in the two largest steel-producing provinces of Hebei and Jiangsu, then Henan, InnerMongolia, Ningxia, Heilongjiang, Jiangxi, Guangdong, Guangxiand Yunnan. A start date to the inspections may not be announcedin advance.

Steps are being decided to avoid indiscriminate shutting downof operations and disruptions in the workplace when inspectorsare present, said the ministry of environment.

Some steel mills will be suspending operations for maintenancenext month, which could affect production of around 800,000-1mn t of capacity. The maintenance activity does not seem relatedto the inspections and may have more to do with slower steeldemand expected in June amid the rainy season.

Steel market sentiment is currently firm amid the environmentalinspections and maintenance of mills, said a south China-basedtrader. Some mills lifted export offer prices today for hot-rolledcoil.

Environmental restrictions on steel production are this yearpoised to remain a year-round feature rather than just a wintertrend, as China focuses on curbing non-peak season emissions.With steel demand, especially in the real estate sector, expectedto remain robust in the short term, slower supplies will supportsteel prices. Prices of iron ore may be unable to completely trackthe gains in steel market, as restrictions are being put onsintering, a major source of pollution in any mill. Sinteringrestrictions are currently in place until the end of the month inTangshan city, while restrictions are possible in Shandongprovince in the first two weeks of June.


Chinese retaliation to 232 concerns scrap suppliers

Potential further Chinese retaliation to Section 232 tariffs is abig concern for ferrous scrap suppliers, according to Bureau ofInternational Recycling (BIR) ferrous division president Tom Bird.Nevertheless, China is seen resuming from 4 June issuingcertificates for scrap imports from the US.

Most regions are seeing good economic growth and thereforealso steel and scrap demand, but the scrap industry has beenchallenged, according to Bird.

“Current trade disputes have put many recyclers in our industryin a precarious position, leading to trade flow disruptions andmarket uncertainty,” Bird said at Tuesday’s BIR convention inBarcelona attended by Kallanish. China retaliated to 232 bysuspending certificates for US-origin scrap imports in May,leaving scrap suppliers scrambling to find new export markets.There has in recent days been a softening of approach, but thiscould change at any time, Bird stressed.

“There is still uncertainty as to the status of shipments and CCIC(China Inspection and Certification Group) inspection duringthis month’s suspension,” Bird continued. “The consequences ofthese trade disputes will have an enormous impact on ourindustry this year and this is a reminder of how trade iscontinuously challenging and market diversification in ourindustry is critical.”A full-blown trade war between the US and China could result in$2.3 trillion of global trade being wiped out in 2021, Birdsuggested. The EU would not be immune to this.


US line pipe prices jump on Section 232 supply fears

Line pipe prices climbed in the United States after the Section232 import curbs triggered supply fears at a time when theoutlook for oil and gas pipeline demand appears to be strong.Prices for oil country tubular goods (OCTG) were little-changednear multiyear highs, with hikes on the way.

Import seamless line pipe prices soared because countries oforigin may be assigned quotas in the Section 232 negotiations,according to market participants who report already havingtrouble finding enough material.

W O R L D


American Metal Market’s pricing assessment for import seamlessline pipe climbed to a new range of $1,500-1,635 per short toncfr Port of Houston on Tuesday May 29, from $1,300-1,450 onTuesday April 24.

A major source of import seamless line pipe, Brazil, already hasagreed to a quota in exchange for exemption from the Section232 tariff. Negotiations continue with other nations, includingseparate talks to revise the North American Free Trade Agreementwith Canada and Mexico.

“If Mexico gets a quota, the approved import seamless line pipeis really going to be tight,” one southern distributor said.

“The offers right now are small quantities,” a second southerndistributor said. “We are turning the world upside down andtalking to people in countries we wouldn’t normally be talkingto.”American Metal Market’s pricing assessment for US domesticX52 line pipe rose to a new range of $1,350-1,440 per ton fobmill on Thursday, from $1,310-1,400 per ton in April.

American Metal Market’s pricing assessment for US import X52line pipe strengthened by an even greater amount, to $1,150-1,225 per ton cfr Port of Houston, from $1,100-1,175 per ton inthe previous month.

An Asian trading source confirmed that multiple South Koreanmills have exhausted their quota for 2018 and are no longeroffering. They will return to the market in September for shipmentin November and arrival on US shores after January 1, 2019, thatsource said.

The domestic X52 price increases recently have outpaced themills’ higher hot-rolled-coil substrate costs. While steelmakersare offering hot roll at $45 per hundredweight ($900 per ton)and American Metal Market’s hot-rolled coil index is at $44.05per cwt ($881 per ton), the pipe mills are volume buyers on long-term contracts and have been billed at a much lower unit cost.

“That’s certainly got room to come down a little bit,” a midwesterndistributor said of the domestic X52 price. “Those mills are notpaying $900 for their coil.”OCTG prices in May hovered around their highest levels sincemid 2012. Four of the 10 OCTG items tracked by American MetalMarket rose in Tuesday’s assessment. Two weakened slightly.

American Metal Market’s pricing assessment for US domesticJ55 casing jumped the most, to a new range of $1,330-1,450 perton fob mill on Tuesday, from $1,250-1,400 in April.

American Metal Market’s pricing assessment for US import J55casing strengthened to $1,080-1,200 per ton cfr Port of Houston,from $1,030-1,200 per ton last month.

American Metal Market’s pricing assessment for US domesticseamless high-collapse P110 casing weakened to $1,700-1,800per ton fob mill, from the month-earlier levels of $1,750-1,800per ton. Its imported counterpart firmed up to a range of $1,550-1,600 per ton cfr Port of Houston, from $1,500-1,600 in Aprilafter it became clear that South Korea’s Section 232 quota wouldstymie availability for the remainder of 2018.

Market participants explained that there are no acute shortagesat the moment. However, with West Texas Intermediate crude oiltrading over $70 per barrel for much of May and the US rig countrising to 1,059, investment in oil and gas drilling should be robustand OCTG stocks are likely to dwindle. Demand may outstripavailability later in the year.

“The inventory is on the ground, and most things you can stillget,” a second trader said, “but I’ve heard customers say they’reworried about the third quarter.”

Within the past month, Vallourec USA and US Steel TubularProducts announced a $300-per-ton price increase on seamlessand welded material.

That $300-per-ton increase “has yet to be adjudicated” in termsof pricing agreements with spot and contract buyers, one millsource said. The hefty increase signals that prices will be muchhigher on future purchase orders, but the mills have a tendencyto stretch such a large price hike out over several months to easethe shock on buyers and entice earlier ordering.

“People aren’t deciding long-term on contract pricing. They’reonly decided July right now,” the mill source said “The prices willbe higher in July, then August will be higher than July, andSeptember will be higher than August, all on a single price increaseannouncement.”

Domestic OCTG mills want to inject more supply into the thirstymarket, but they have struggled to do so. “They can’t find labor.They can’t hire people,” the second southern distributor said.“So I think we’re in for a shortage.”

A second mill source confirmed that prices have begun the processof ramping upward now that the $300-per-ton increaseannouncements are going into effect. “At times we are worriedabout making a new sale since tomorrow’s price is better asinventory is dropping out as time goes on,” that mill source said.

A third southern distributor said the oil and gas drillers will bewilling to pay, because OCTG inventory on the ground may be aslittle as a 2.5-month supply - and falling.

“They’re accepting the increases,” that distributor said. “Theyrecognize that supply is going to get really tight in the secondhalf, and they want to get that supply locked down.”


China’s steel production investment in ASEAN countries – Is itthe consequence of production capacity control in China?

To improve domestic steel production capability andenvironmental control, China’s government has successfullyminimized obsolete steel capacity in the country. It succeeded ineliminating a total 120 million tonnes of excess productioncapacity over the period of 2016 to 2017 and there will be furtherproduction capacity reduction of 30 million tonnes in 2018.

Along with the capacity reduction, the Chinese government alsostrictly prevented the addition of new capacity in order to

H E A D L I N E S


successfully push the structural supply-side reform for the steelindustry in the country.

The Chinese government has announced an action plan to guidesteel capacity cuts. Along with that, the provincial governmentsalso launched their respective action plans to control capacitycuts in their cities. However, the local action plan differs amongthe difference provinces. For example, the provincial governmentof Hebei announced in late March 2018 an action plan to closeanother 10 million tonnes in 2018, 10 million tonnes in 2019and another 20 million tonnes in 2020.

On the other hand, the provincial government of He’nanannounced that steel output in the province should be reducedby 30% during the 2018 heating season.

As for Handan city, it announced an action plan to cut steel andelectricity companies that are located in the urban area ofHandan city by an additional 10% on top of the 25% averagetarget for all steelmakers. For the companies located in thedistricts where the air quality is rated amongst the top three inHandan City, the reduction target can be 5% lower, while thetarget can be 5% higher for those located in the three districtswith the worse ratings.

The key points in the guidance for steel capacity reduction

announced by Chinese government are as follows:

- Steel capacity should be reduced by 30 million tonnesin 2018 and no new steel capacity projects should belaunched.

- There is a need to facilitate the permanent shutdownof zombie steel companies

- The following steel capacities should be forcibly shut

down and excluded from the market:

o Steel mills that have not obtained a

Discharge Permit, or the Permit has beenobtained, but their pollutants emission level

is far below the national standard

o When the quality of steel products does not

meet the national standard and it is not

possible to eliminate the gap in six months.

o The energy intensity of the steelmaking

process is higher than the national standardand it is not possible to eliminate the gap by

a certain deadline.

o The facilities are not compliant with the

safety standard issued by the local safetyauthority and serious safety risks are noteliminated.

- Need to prevent closed steel capacities fromrestarting production, including both the obsoleteground bar steel capacities and those modern butclosed excess capacities. An on-site inspection andreview for the closed ground bar steel capacities willbe organized in some selected provinces in May andJune.

- Public tip-offs on the restarting of closed steelcapacities are encouraged.

- Remote sensing technology with satellites will be usedto monitor closed steel capacities.

- Need to push forward industry consolidation: trans-regional and cross-ownership mergers and

acquisitions will be supported.

- Steel mills that build large scale scrap recycling

facilities will be supported.- Steel mills that replace some of their BF-BOF

processes with EAF processes will be supported, onthe condition that this does not lead to any capacityincrease.

As a result of the control over new added steel production capacityin the country, some steelmakers in China have shifted theirinvestments to the emerging steel markets like ASEAN countries.Among the ASEAN countries, Indonesia and Malaysia are theprime investment destinations.

Shaanxi Iron and Steel (Shaagang) recently announced its planto build more than 10 million per year steel-making capacity inIndonesia. The projects would be separated into two differentphases, the first one is a 7.5 million tonnes steelworks at JambiIndustrial Park, Indonesia. It is targeted that the production couldreplace the 12 million tonnes per year of steel that Indonesiacurrently imports. The second phase would be a 3 million tonnesper year steelworks to produce construction longs.

Another Chinse company, Xinxing Ductile Iron Pipe is going toinvest in its second-stage expansion of ferronickel smelting jointventure on Obi Island in North Maluku, Indonesia, after thesuccessful first stage production of 190,000 tonnes per year bythe end of 2017. It is targeted that the new capacity in the secondstage of another 570,000 tonnes per year production offerronickel would well serve the strong demand from China’sstainless producers.

China’s steelmaker, Delong Holdings is planning to set up a jointventure to build and operate a 3.5 million tonnes per yearstainless steel plant in Indonesia. It is a joint venture betweenDelong Holdings and Dexin Steel Indonesia. The stainless plantwill be built at Tshingshan Park in Morowali, on the island ofSulawesi, Indonesia.

In Malaysia, Chinese state-owned company, Guangxi Beibu GulfPort International Group and the privately-owned GuangxiShengLong Metallurgical Co., Ltd. are on track with their plan toset up a joint venture plant in Kuantan, Malaysia under the name“Alliance Steel” to produce 3.5 million tonnes per year of high-carbon wire rod, bar and H-beam products. The companycommissioned a steel bar production line with a capacity of 1.4million tonnes per year in late December 2017 and ignited itsNo.1 blast furnace at the end of March 2018.

In addition, China’s Hebei Xin WuAn Steel Group and ChinaMetallurgical Group Corp (MCC) also indicated their intentionto jointly invest in Malaysia’s eastern state of Sarawak by signinga memorandum of understanding with the Malaysiangovernment. The project aims to set up a steelwork, whichcomprises of a 5 million tonnes per year steel plant, a 3 milliontonnes per year cement plant and a 2 million tonnes per yearcoking plant, a million tonnes per year cold rolling mill and amillion tonnes per year welded pipe plant.

SEAISI, May 2018

2018 SEAISI Conference & Exhibition25-28 June 2018, The Ritz-Carlton Jakarta, Mega Kuningan, Indonesia

SESSION HIGHLIGHTSKeynote Session & CEO Panel Discussion

ASEAN STEEL INDUSTRY – NEXT LEAP OF TRANSFORMATION

(Grand Ballroom) Monday 25 June 2018, 10:30 – 12:15

Regional Developments

(Grand Ballroom)

Monday 25 June 13:15 – 14:35

Market Perspectives & Challenges

(Grand Ballroom)

Monday 25 June 14:35 – 16:15

Country Reports I

(Grand Ballroom)

Tuesday 25 June 16:35 – 17:50

Technology Development I & II

Session 5A, 9A – Room A (Ballroom 2)Tuesday 26 June 10:45 – 12:25

Wednesday 27 June 09:00 – 10:40

Operation Excellence I & II

Session 5B, 8B – Room B (Ballroom 1)Tuesday 26 June 10:45 – 12:25

Tuesday 26 June 16:45 – 18:05

Emerging Technology

Session 8A – Room A (Ballroom 2)Tuesday 26 June 16:45 – 18:05

Plant Management I & II

Session 6A, 7A – Room A (Ballroom 2)Tuesday 26 June 13:25 – 14:45

Tuesday 26 June 14:45 – 16:25

Process Improvement I & II

Session 6B, 7B – Room B (Ballroom 1)Tuesday 26 June 13:25 – 14:45

Tuesday 26 June 14:45 – 16:25

Country Reports II

(Grand Ballroom)


Quality Improvement

Session 9B – Room B (Ballroom 1)Wednesday 27 June 09:00 – 10:40

Cost & Energy Savings

Session 10A – Room A (Ballroom 2)Wednesday 27 June 11:00 – 13:00

Environmental Management


Raw Materials & Product Development

Session 11A – Room A (Ballroom 2)Wednesday 27 June 14:00 – 15:40

Steel Applications


Transformation of ASEAN Steel Industry and Its Competitiveness

(Grand Ballroom)


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