Cliffs plans on $450/short ton HRC in 2016

Mining company Cliffs Natural Resources is betting on a full-year hot-rolled coil price of $450/short ton, Kallanish learns from the US company’s earnings outlook.

The assumption of $450/st is a customer-realised price, rather than an index or spot price, Cliffs notes. Every $50/st positive change in the hot-rolled price ups Cliffs’ revenue per ton of iron ore by $2.25, and every negative $50/st change lowers its revenue per ton by $1.75. Kallanish currently has US hot-rolled coil at $400-440/st.

In 2015, Cliffs generated total revenues of $2 billion, down -40% from 2014’s total of $3.4 billion. The company lost $748 million in 2015, substantially down from its loss of $8.3 billion in 2014 as a result of trimmed costs.

“Despite the severely negative impacts of global iron ore and domestic steel prices, in 2015 we achieved substantial cost reductions in all areas of the business,” says ceo Lourenco Goncalves. “On top of an outstanding year of operating performance, we checked a number of boxes in line with our US pellet-centric strategy, most recently with the full divestiture of our North American coal business.” 

Iron ore gains on flurry of trades

Seaborne iron ore prices gained slightly on Wednesday after a flurry of trades for March delivery boosted confidence. A forecast from the World Bank was less optimistic however, suggesting iron ore would be the worst performing commodity in the metals space this year.

The Kallanish index for 62% Fe Australian fines rose by $0.25 to $ 41.80/dry metric ton cfr Qingdao. Four trades took place on globalORE for March delivery and one for February. Two 170,000 tonne cargos of PB fines traded at $41/t and $42.75/t for March delivery, marking an increase from the morning to the late afternoon. Two 90,000t cargos also traded for March in the MNP category, one at $41.5/t and one at $41.9/t. Finally, a 50,000t cargo of PB lump also sold for February delivery at a $0.07/t premium to the Platts 62% Iodex. Another 170,000t of PB fines also sold in tender for $41.95/t with a laycan in 13-22 February.

The appearance of several trades for March delivery suggests somebody at least is expecting there to be a need for iron ore at the end of Q2 and going into Q3. The market therefore took it as a vote of confidence and futures prices also gained, albeit modestly.

The World Bank released new iron ore forecasts, with 2016 averaging $42/t in 2016, down by around -25% from last year. It thinks iron ore will be the fastest falling metals price this year, although the prices will bottom out. Despite the rapid fall from 2015’s average, the forecast matches a growing consensus that prices have very little room to fall, and should see a little less drama than over the last 12 months. 

Italian scrap prices look weaker for February

In February Italian shredded scrap category (E40) will fall €10-15/tonne ($10.8-16.3/t) compared to December, market sources tell Kallanish. Prices for other grades should also weaken, sources add.

E40 has not absorbed the €10/t decreases that Italian scrap saw in January. This is because contracts for this quality are signed only during the first days of each month and are not negotiated until the month after. This is the reason why Italy has seen a higher price for E40 compared to the usually more expensive new arisings grade (E8) for which contracts are renegotiated every 15 days.

Scrap prices for all other grades are also expected to weaken in February by €5/t, sources believe. Grade E8 is at €180-185/t ($195-201/t) delivered, E40 will remain at €190/t on average until the end of January while demolition qualities E3 and E1 are in the range €160-175/t delivered, depending on quality.

There are currently no high quality grades of demolition scrap available in Italy and the so-called qualities E3 and E1 are closer in price to sheared demolition scrap than the more expensive heavy grade. This is due to the high cost involved in demolishing heavy steel equipment and the low selling prices of such material to scrap merchants. Companies have avoided scrapping plant and equipment such as railways and freight trains and prefer to stock them until selling prices for demolition scrap increase, Kallanish understands. 

As we near the end of January, Italian scrap demand is weaker and most long product mills are cutting monthly production, sources say.  

 

Chinese steel gains on iron ore, reform talk

Chinese steel futures prices gained on Wednesday as a flurry of iron ore trades suggested some were betting on a steady market after the New Year holidays. Continued official statements about ‘supply-side reform’ have also helped to bolster some sentiment, although there is little physical trading activity expected over the coming week, Kallanish notes.

The May rebar contract on the Shanghai Futures Exchange closed up CNY 23/tonne at CNY 1,863/t ($283/t), while the same contract for hot rolled coil closed up CNY 7/t at CNY 1,945/t.

New statements from president Xi Jinping, made during a meeting of the Central Financial Work Small Leading Group, continued to emphasise supply-side reform as a key policy goal. Both Xi and premier Li Keqiang have spent significant amounts of time so far this year talking up the policy, although solid details remain thin on the ground.

More important in the short term for prices was the flurry of iron ore trades that took place on Wednesday (see separate article). This was largely due to spot volumes now being available for March delivery. It was also seen however as a vote of confidence in a steady steel market following the New Year Holidays in early February.

 

Southern European HDG price upticks

Southern European hot dipped galvanized prices have upticked by €5-10/tonne ($5.4-10.8/t) while cold rolled coil prices have also moved up slightly since the beginning of the month, market sources tell Kallanish.

“Prices for HDG are rising extremely slowly and producers are struggling to increase quotations due to strong competition amongst European steel makers and cheaper imported material. CRC is more stable and the recent uptick was easier to achieve because at least we’re not receiving any more material from Russia and China due to the upcoming safeguard duties,” a sales executive explains.

HDG transactions have finally approached the €350/t ($380/t) base ex-works level but most orders still remain below that point. Demand from car makers is on normal levels and producers in Italy keep pushing for increases against a market still affected by overcapacity and good availability, Kallanish notes. At present the Southern European price range for CRC is at €360-380/t base ex-works with some higher points for very small quantities.

Prices for flat products in the region are forecast to further uptick next month by an average of €10/t, sources polled by Kallanish believe. 

Genoa demo costs Ilva €2m/day

Ilva is losing around €2 million/day ($2.17m) due to the sit-in strike and demonstrations organised by local trade union Fiom at the steelmaker’s plant in Genoa, Kallanish learns from the company. The dispute centres on a reduction in working hours imposed by the company.

“… The current occupation… is affecting the reputation and the financial performance of the Group,” the steelmaker says in a statement.

“These losses correspond to the financial resources needed for investment on Genoa’s galvanisation line, on which, in light of what is currently happening, the company will consider how to proceed,” Ilva adds.

The ongoing demonstration, into its third day on 27 January, is also preventing the transfer of large quantities of products intended for processing and export, the steelmaker says.

 

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UAE rail network expansion comes to a halt

Etihad Rail has suspended the tendering process for Stage Two of its United Arab Emirates-based railway network. This signals a setback for the Gulf Cooperation Council (GCC) rail network linkup, which has been expected to provide a significant boost to regional steel consumption.

Stage Two involves the construction of the rail network from Abu Dhabi to the Saudi border at Ghweifat and the Omani border at Al Ain. It also includes connections to Mussaffah, Khalifa Port and Jebel Ali Port in Dubai. Commercial operations of Stage One, linking Shah and Habshan to the port of Ruwais, were commenced last month.

“Etihad Rail is one of the biggest and most complex infrastructure projects ever undertaken in the UAE,” says Etihad Rail chairman Nasser Alsowaidi. “As we enter 2016, we have been working closely with our partners and stakeholders to assess our strategic priorities for the year. As a result, a decision has been taken to suspend the tendering process for Stage Two whilst we review the most appropriate timing for this investment.”

In 2012 the GCC harboured plans to spend over $100 billion on laying up to 8,000km of new railway track up to 2020. Eventually all six countries of the GCC were to be linked by rail, which would require up to 1 million tonnes of rail if the network was all double track. Since there are no rail mills in the region, international producers such as Tata Steel, voestalpine and ArcelorMittal were set to benefit.

However, lower oil prices have created concerns there could be a prolonged period of restricted spending by GCC governments on steel-consuming construction and infrastructure projects. This raised concerns last year of a scaling back of investment into rail networks (see Kallanish 26 August 2015).

Russia’s Evraz said last June, however, that despite the presence of established suppliers, the timing was “… ideal” for its entrance into the GCC rail market (see Kallanish 24 June 2015).

 

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Longhi says headwinds remain for US energy market

US Steel sees little-to-no improvement ahead for the energy market, Kallanish understands from a company conference call with analysts.

The company’s tubular division lost $64 million in earnings before interest and taxes in the fourth quarter and $179m in 2015. Last year, US Steel Tubular posted an earnings before interest and taxes gain of $121m in the fourth quarter and $261m for the full year.

“In the energy markets, low oil prices and rig counts remain a significant headwind,” says ceo Mario Longhi. “At this time, we do not see any catalysts other than increases in oil prices that would drive significant improvement in tubular demand and pricing with impacts to both our tubular and flat-rolled segments.”

Over the course of 2015, US Steel announced several major production cutbacks in both flat-rolled and tubular operations, primarily due to lacklustre demand and high import levels. In December, the company said it would postpone plans to build an electric arc furnace at its Fairfield, Alabama, facility, which produces both flat-rolled and tubular products.

 

US import market share hits record in 2015

Finished steel imports accounted for a record 29% of the US market in 2015, Kallanish learns from the American Iron and Steel Institute (AISI).

In December, finished steel imports rose 3.2% from the month prior to 2,017,000 net tons, capturing an estimated 26% of the total market, AISI calculates, based on preliminary December data. Total imports of 2,323,000nt were down -5.3% from November.

December’s preliminary figures bring finished and total imports to 31,425,000nt and 38,718,000nt, respectively. These are down -7% and -13% from 2014 levels. AISI estimates the US import market share to be 29% for the full year.

Products showing significant increases in 2015 imports from the prior year include reinforcing bar (+38%) and standard pipe (+13%), AISI notes

 

AK Steel focuses on auto for 2016 stability

AK Steel plans to concentrate on its automotive shipments to weather an anticipated still-difficult 2016 steel market, Kallanish learns from the company’s year-end conference call with analysts.

Ceo Roger Newport says that automotive shipments made up about 58% of the company’s total shipments in the fourth quarter.

Doubling down on that sector by producing higher-value, advanced high-strength steels should allow AK to capitalise on continued projected growth in the Nafta automobile market, he says. In 2015, Nafta light vehicle production grew for the sixth straight year, reaching 17.5 million units, Kallanish notes.

“Quite simply, we remain focused on producing and delivering steels that are difficult to manufacture and thus command higher prices,” Newport says. “We remain committed to the automotive market and we work closely with our customers to provide them cutting edge technology to assist in their ongoing efforts to reduce vehicle weight.”

 

 

NSSMC plans US cold heading plant

Japan’s Nippon Steel and Sumitomo Metal Corporation (NSSMC) says it plans to establish a new cold heading wire plant in Indiana in the USA. The 35,000 tonnes/year plant is due to be commissioned in January 2018, the company tells Kallanish.

The new company, Nippon Steel & Sumikin Cold Heading Wire Indiana, will have a registered capital of $24 million. It  see around $50m in investment in a pickling and coating line, four wire drawing lines and two heat treating furnaces.

It will be 42% owned by NSSMC, 12% by Toyota Tsusho Corporation, 10% by Nippon Steel & Sumikin Bussan Corporation, 10% by Metal One and 10% by Sumitomo Corporation. The other shareholdings are 5% by Matsubishi Metal Industry, 5% by Nippon Steel and Sumikin Steel processing, 5% by Miyazaki Seiko and 1% by Sanyu Co.

 

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ATI says rightsizing ops difficult but necessary

Cutting Allegheny Technologies Inc’s exposure to the commodity flat-rolled market was a painful but necessary decision, ceo Rich Harshman told analysts on the company’s year-end earnings call.

ATI plans to idle its Midland, Pennsylvania, stainless melt shop and mill by the end of January. It will also be idling its Bagdad, Pennsylvania, grain-oriented electrical steel mill by the end of April, Kallanish notes. Both operations will be consolidated in the company’s relatively new Brackenridge, Pennsylvania, facility.

“The commodity stainless business had pretty good inventory turns, but there is a large inventory balance associated, obviously, with being in that business,” Harshman says, adding that melting grain-oriented electrical steel in one location and rolling it in another also cluttered up the company’s inventory pipeline.

“So there are significant efficiencies, I should say, that accrue to flat-rolled products by simplifying the business. It’s not something that we wanted to do quite frankly, but the market conditions are such that the products we make have to be profitable. And if they are not, then we’re not going to make them,” the ceo adds.

 

Universal seeks new sales opportunities after hard 2015

Universal Stainless & Alloy Products aims to cut costs and drum up new customers over the course of 2016 to make up for a difficult 2015, Kallanish understands from the company’s end-year earnings statement.

Excluding all charges, Universal posted a net loss of $1.9 million in the fourth quarter and a loss of $3.7m over the course of the year. In 2014, the company generated a net profit of $1.7m in Q4 and a profit of $4.1m for the full year.

“The fourth quarter was as challenging as expected and capped a difficult year for the specialty metals industry,” says ceo Dennis Oates. “The further decline in commodity prices and heightening economic uncertainty, fed by the downturn in China, kept customer orders to a minimum. Their destocking continued as they focused on reducing inventories by year end. All of our end markets were affected.”

A slow-but-steady recovery in 2016 should aid overall business levels, but the company will have to manoeuvre to find new sales opportunities, Oates says.

“While market recovery is expected to be slow in 2016, customers are expressing increasing comfort with their current inventory levels and there are some preliminary indications of stabilisation in metal commodity prices. Fuller recovery in 2016 should occur as orders increasingly match material usage by customers, given the continued positive trends in most end markets.  We are intensely focused on capturing market opportunities as they arise and fully aim to move forward in our strategy over the coming year.”

 

SDI seeks to expand in troubled market

Steel Dynamics Inc sees opportunities for growth in the currently challenged global steel market, company executives told analysts on the company’s end-year earnings conference call.

“We’ve got record liquidity. We’ve got a lot of cash. We’re healthy and in a position to grow. And we still have, if needed, access to capital markets because of all that, whereas many of our peers perhaps will struggle there,” says ceo Mark Millet.

Millet adds that most of the growth will be organic, such as channelling excess crude steel capacity toward value-added products like special bar quality (SBQ) longs. Those products have the added advantage of being difficult for imports to gain significant market share, Kallanish understands from Millet’s comments.

Acquisitions, however, could be another important part of the company’s growth strategy, Millet says. If acquisitions occur, he says, they’re likely to be related to finished products rather than scrap or additional crude steel capacity.

“On the acquisition side, again, the industry’s in stress,” Millet says. “Our main focus is in improving the quality of our margin, the profitability of our business, and I think that speaks more downstream than sort of backstream.” 

USW calls for more transparency with US Steel

The Canadian wing of the United Steelworkers labour union is petitioning an Ontario court to reveal secret dealings between US Steel and the federal government. These may have allowed the company to buy the now-independent and troubled US Steel Canada, Kallanish understands.

The USW has maintained that US Steel reneged on its stated goal of keeping the former Stelco works operational. The US steelmaking major idled the facility, took away most of its high-value business and spun it off while it was in bankruptcy. As a result, the USW is asking to read the exact terms inked between the Canadian government and US Steel when it acquired Stelco to determine if there was any wrong-doing.

US Steel recently recommended that liquidation of US Steel Canada’s assets be considered to satisfy its $2.2 billion creditor claim.

“Access to the terms of this secret deal is crucial to protect the rights and interests of workers and pensioners whose futures are at stake in this process,” says USW Local 1005 president Gary Howe.

 

Mexican steel exports to US tumble in 2015

Exports of steel products from Mexico to the US fell year-on-year in December, confirming the downward trend seen throughout the year, Kallanish learns from US trade administration department preliminary statistics.

Mexican exports into the US fell by -30.8% year-on-year to 169,622 tonnes in December, and by -25% y-o-y to 2.5mt in 2015. This was 800,000t less compared to the previous year.

In 2015 Mexico was the fifth-largest exporter of steel to the US. Canada was the biggest with 5.2mt, Brazil was next with 4.9mt and South Korea came third with 4.4mt. Turkey in fourth place recently overtook Mexico and exported around 50,000t more steel to the US in 2015.

The value of Mexican exports to the US in December totalled $133m, or -46% less compared to the same period in 2014. The average value/tonne of Mexican steel products imported into the US in December fell by -23.1% y-o-y to $785, or nearly $250 less compared to the same month in 2014.

Mexico-origin imports into the US of semi-finished products, such as blooms, billets and slabs, fell by -47.8% y-o-y to 31,678t in December. Hot rolled sheet shipments fell by -39.2% to 12,535t. Plate in coils deliveries totalled 4,397t, down -65.3%, but cold rolled sheets shipments increased by 14.2% to 13,905t. 

First cargo unloads at Zhoushan iron ore port

The first iron ore was unloaded at a new 52 million tonnes/year iron ore transhipment port in eastern China’s Zhejiang province this week. The new Shulanghu wharves at Zhoushan port increase China’s ability to utilise very large ore carriers (VLOCs), Kallanish notes.

The 176,000 deadweight tonne Savina unloaded a nearly full load of iron ore at the new port after stopping off at Australia’s Port Hedland in early January. The new facilities include two 400,000dwt-capable, one 100,000dwt-capable and two 50,000 dwt-capable wharves.

The transhipment port adds new capacity to handle Valemax VLOCs at in the Ningbo region. Ningbo, Qingdao, Dalian and Rizhao can all handle VLOCs, as can Baosteel’s new iron ore port at Zhanjiang.

 

Posco hopes for Iranian Finex project

South Korea’s Posco is planning to sign a preliminary agreement to build a Finex plant in Iran with Pars Hohan Diar Parsian Steel Complex (PKP Co.), Posco says. Discussion on the project began in 2014, documents show, but real progress may now be possible as sanctions on Iran have been lifted, Kallanish notes.

Posco could sign an agreement as soon as March this year to buy a stake in a $1.6 billion, 1.6 million tonnes/year steelworks project, Reuters reports. A Memorandum of Understanding on the project was first signed last September.

Documents seen by Kallanish suggest discussions between Posco and PKP Co. took place as early as 2014 into the possibility of Posco E&P building a 1m t/y Finex plant. At the time, cost was estimated at around $600m and the project would go on for 5 years.

Posco has also been targeting other Iranian project with its Finex ironmaking technology. Reports last year suggested projects in Bandar Abbas and Asalouyeh as well as the PKP Co. plant in Chabahar. In July last year, Posco ceo Kwon Oh-Joon told reporters that, “We are looking for ways to improve POSCO’s financial structure while playing a role of reviving Iranian steel industry.” The company is also known to have held meetings with the Iranian mines organisation Imidro and its subsidiary Mobarakeh Steel.

 

Chinese imports still threaten EU steel, Eurofer warns

European steel producers association Eurofer says that steel imports continued to target the EU market despite still relatively weak demand, low domestic prices and a weak euro in the second half of 2015. In an European steel market update sent to Kallanish, the organisation says that EU mills are fearful of losing further market share in the EU and abroad. This is fuelled by abundant global steel supply and suppliers fighting for tonnage.

EU apparent steel consumption grew 2.7% y-o-y in third quarter 2015, Eurofer says. “This mild increase in apparent demand basically reflects the impact of increasing inventories. The 29% y-o-y rise in imports in Q3 was too much to be fully absorbed by end-users. With real steel consumption stabilising around the level of a year earlier, the oversupply on the market ended up in stock,” the association adds.

Director general Axel Eggert says: “As feared, EU steel mills continued to struggle under these market conditions. The sharp rise in imports and a -13% drop in exports pushed total deliveries by almost -4% down compared with the same period of 2014.”

The outlook for 2016 and 2017 is for a gradual further improvement in EU steel demand. “The expected steady strengthening of end-user activity should translate into a mild growth of steel demand of on average almost 1.5% per annum,” Eggert continues.

“However, the key uncertainty with respect to actual market conditions for EU steel mills is third country exports. China should stop exploiting the export channel for its overproduction due to domestic steel demand having peaked. If this continues, EU mills will lose further market share, not only in the EU but also in their key export markets,” the director general warns.

 

French rebar price flattens as demand remains weak

French rebar prices remain stable compared to the beginning of the month and compared to December. Quotations however, are not seen increasing over the coming weeks, market source tell Kallanish.

If scrap recovers it may push up prices for local rebar and beams. However, scrap in France is on a downward trend in line with Germany and Italy, and February is forecast to bring a further scrap price fall in Europe. Considering the international raw material situation and the weak performance of the French construction sector, first quarter rebar prices are forecast to remain stable at current low levels with weak demand, sources believe.

Meanwhile orders from Algeria have resumed but the latest restrictions by that country on rebar imports remain a threat for European rebar producers and exporters (see Kallanish 15 January).

French rebar quotations are on average €15-20/tonne ($16.3-21.7/t) higher than in Italy and Spain and are stable in the range €330-350/t base ex-works, sources suggest. 

Italian 2015 BF iron output reaches record-busting low

Blast furnace iron production in Italy has officially reached its lowest levels since worldsteel started monitoring global output in 1980, Kallanish learns.

Italian BF iron production in December totalled 451,000t, or -6% less compared to the same month in 2014. Total production in 2015 recorded a -20.7% fall year-on-year to 5 million tonnes, 1.3mt less compared to 2014.

The heavy decrease is even more dramatic when the latest data is compared to the 9.8mt produced in 2011. Ten years ago in 2006, Italian BF iron output reached 11.4mt, more than twice the current production levels.

The progressive fall of BF iron production in Italy is mainly due to the crises at steelmaker Ilva played out in recent years. The trend is expected to change in 2016, when the company’s revival plan estimates Ilva iron production to reach an output of 6mt, union sources reveal.

Ilva is currently dealing with several issues. These are internal, such as the current protests at the company’s plant in Genoa (see related article), and external, such the investigation into Italian support by the European Commission (see Kallanish 21 January). 

Pasaia scrap imports increase by 22% in 2015

Scrap imports into the port of Pasaia in Northern Spain fell in December whilst having grown substantially in 2015. Landings of scrap fell by -14.2% year on-year to 30,456 tonnes in December, while year-to-date imports increased by 22.1% y-o-y to 755,521t, Kallanish learns from the Pasaia local port authority (PPA).

Landings of finished steel products grew by 19.1% y-o-y to 164,362t in December, while total imports for 2015 showed a slight 2.5% increase to 1.4 million tonnes.

In 2015 finished steel products represented 37.8% of the port’s total traffic, while scrap arrivals made up 20.2% of the port’s total flow, PPA data show.

With 174,449t of scrap landed in 2015, Russia confirms its role as the main source of imports, followed by Germany, with 73,163t, and Netherlands at 63,365t over the last year.

Germany remains the main point of origin for finished products, with nearly 35,000t of rolled coil delivered in December and 198,176t in 2015. Arrivals of coil from the Netherlands totalled 63,000t in 2015.

Exports of construction steel to the United Kingdom were 22,000t in December and 327,000t in 2015. Shipments of the same product to Algeria reached 105,800t in 2015. 

Slovenia’s SIJ end-product units merge to boost income

Slovenian Steel Group (SIJ) is merging three of its end product-making subsidiaries. The move will result in increased income and other synergies with direct effect, the Slovenian specialty steelmaker says in a statement seen by Kallanish.

SIJ plans to finalise the merger of Ravne Knives, Ravne Systems (renamed from Sistemska Tehnika earlier in January and recently taken over by Ravne Knives) and Serpa under the name of Ravne Systems. The new entity will play a key role in SIJ’s transition into a manufacturer of not only specialty steel but also of end products such as industrial equipment, the group explains.

“We are planning to increase our income by 10% in 2016, reaching €44 million ($47.9m), in comparison to the income of the individual companies,” says Ravne Systems managing director Peter Cas.

Income will be increased through cross-sales, lower production costs, optimisation of logistics channels, and managing the entire production process within SIJ. Also, fixed costs per unit will be reduced and purchasing synergies exploited, the Ravne Systems merger project manager Samo Jenic explains. “The total synergistic effects are estimated at €2m per year and will be achieved in total from 2017 onward,” adds Jenic.

“This company is export-oriented with the export share amounting to over 75% at the moment, and this year we are planning to export over 80% of our products,” says Cas. The entity will pursue new export opportunities with focus on the US and the EU.

Plans for the new company include also €5.7m in investments “… to enable an increase in productivity, competitiveness on the market and higher added value,” Cas adds.

The move is in line with SIJ Group’s long-term development strategy by 2020/2025, which includes the expansion of its current portfolio by end-products with a high level of heat and mechanical treatment. 

Salzgitter completes blast furnace and converter overhaul

With an investment of €80 million ($87m), Salzgitter AG has relined its blast furnace B after an 11-year campaign, Kallanish learns from the company.

The furnace was built in 1993 and since its last reline in 2004 has produced approximately 21 million tonnes of pig iron. More than 2,100 tonnes of refractory was used to renew the inner cladding of the furnace. Additional modernisations related to the reline include renewal of 14 km of pipeline for the cooling system, replacement of 192 copper staves, and two new bunkers for the refiling of the prepared ore burden.

During the 82 days of reline work, Salzgitter also carried out extensive modernisation to a converter. The steelmaker replaced the complete converter C vessel and carried out system improvements in the continuing casting line by installing a longer casting mould. The replacement will not change the capacity, but in ensures the quality of the crude steel and the availability of the facility, the company notes.

The two available converters and the three continuous casters continued production at the agreed reduced plan level during the entire reconstruction phase in order to ensure slab production, Salzgitter confirms.

 

Evraz Caspian Steel idles production

Evraz Caspian Steel in Kazakhstan has temporarily suspended production, Russian media reports suggest.

Halting production in January is associated with low seasonal demand for rebar, as well as unfavourable market conditions, according to Russian newspaper Vedomosti, which cites a company source. The steelmaker does not plan to introduce mass layoffs or to close capacity, the report suggests.

The shutdown is a “… special case linked to the situation in the Kazakhstan domestic market”, the report adds. Evraz saw a -22% year-on-year reduction in construction products output in the fourth quarter of 2015. It attributed this to the beginning of the low season for construction in Kazakhstan and Russia, Kallanish notes.

Evraz Caspian Steel is a joint venture light-section rolling mill based in Kazakhstan, launched at the end of 2013. It has a planned annual production capacity of 450,000 tonnes of rebar which It supplies to the Kazakhstan market as well as other countries in Central Asia.The Evraz group has a 65% shareholding in the company.

 

Severstal ‘demonstrates resilience’ in Q4

Severstal continues to “…demonstrate resilience” thanks to a focus on cost efficiencies throughout the business, despite challenging market conditions, the Russian steelmaker says.  

Severstal is also focusing on high value-added products, improving customer care, and the geographical advantage of its assets for shifting sales between domestic and export markets, Kallanish learns from the firm.

In the fourth quarter of 2015 hot metal output remained largely unchanged quarter-on-quarter at 2.34 million tonnes. Crude steel production decreased -5% q-o-q to 2.75mt, partially as a result of seasonally weaker demand for long steel products and lower output at Balakovo mini-mill, which remains in ramp-up mode.

Consolidated sales in Q4 decreased -13% q-o-q to 2.62mt on the back of seasonally weaker steel consumption in Russia’s construction sector. Meanwhile, despite the continuing slump in oil prices, healthy demand for steel products was maintained from the oil & gas sector.

Coking coal concentrate sales volumes improved 1% q-o-q in Q4 reflecting a substantial increase in ROM-coal output volumes at Vorkutaugol. This followed the completion of several scheduled long-wall repositionings at the beginning of the quarter.

Sales of iron ore concentrate in Q4 decreased -15% q-o-q due to considerably lower external sales as a result of seasonally weaker demand. Meanwhile, the company is producing captive iron ore concentrate more efficiently thanks to a focus on steady cost improvement and stripping ratio reduction

 

Evraz to produce railway wheels for European market

The European certifying authority for railways, Czech Republic-based VUZ, has issued two TSI conformity certificates to Evraz NTMK for railway wheels, Kallanish learns from Evraz. 

Both wheel types are intended for freight cars and are solid-rolled 920mm railway wheels of BA 314 and ВА 005 types.

“Evraz’s objective is to expand its product portfolio with product types that are most popular in the company’s strategic markets and key product segments,” says Evraz vice-president for sales Ilya Shirokobrod. “In 2016 Evraz NTMK plans to launch production of new freight wheels for North American markets, including those with increased rim hardness, and two more European-standard wheel types for freight cars.”

Evraz NTMK holds five TSI certificates. The earlier certified wheel types ВА 318, ВА 319, and ВА 004 are also intended for freight cars.

 

Turkey cannot afford shift to ore-based steelmaking; Tosyali

A transformation from scrap-based to iron ore-based production in the Turkish steel industry is a must, but investors cannot afford this, Turkish sector player Tosyali’s board chairman Fuat Tosyali tells local media.

Steelmakers are unable to make large investments to shift production in this way because they cannot make profit, Fuat Tosyali says in an interview to daily Dunya, monitored by Kallanish. Scrap prices, which constitute the main input costs for the Turkish steel industry along with energy costs, do not decline therefore, he continues.

Turkey is the world’s largest scrap importer. In 2015, which was a hard year for the industry, the country imported 15 million tonnes of scrap, Tosyali notes. According to him, if only three local steelmakers manage to cease using scrap, a balance could be reached as scrap supply would increase and prices would fall.

The USA, a main scrap supplier, sells scrap to Turkey and China with a $20 [… /tonne] price difference, says Tosyali. Chinese buy scrap at cheaper prices because they are not as dependent on the material as Turkey. But the country can import scrap at lower prices than China if it succeeds with the shift to iron ore-based production, he adds.

With regards to consolidation in the steel industry, Fuat Tosyali does not expect it to happen in Turkey. Consolidation is talked about in China, but steelmakers in China are state-owned, while in Japan for example almost all steelmakers are publicly listed companies, he says.

 

Oxin signs slab procurement agreement with Mobarakeh

Iran’s Oxin Steel has signed an agreement to procure slab from Mobarakeh Steel (MSC) to use in the production of API X60 grade wide plate for the domestic oil & gas industry, Kallanish learns from Oxin.

Following various tests it transpired MSC was able to produce the grade of slab required by Oxin, a first for an Iranian steelmaker. Approval for the wide plate has also been obtained from oil & gas companies. There is therefore now “… no justification to import slab, sheet or tube” into Iran as the oil & gas industry’s requirement is available locally, MSC ceo Bahram Sobhani says in a report.

Oxin managing director Aziz Ghanavati says he believes the new wide plate is competitive both in quality and price terms against European product. The plate requirement of Iran’s oil & gas industry is around 1 million tonnes/year, which equates to Oxin’s production capacity, he adds.

In the last Iranian year, which ran through 20 March 2015, Oxin Steel was Iran’s third-largest finished product producer, with output of 783,601 tonnes of wide plate. MSC produced 5.26 million tonnes of hot and cold rolled coil, and hot-dip galvanized coil.