Brazil is optimistic about China iron ore consumer market

Carajas project annual output of 109 million tons at present, it is the world’s largest iron ore project, which is expected to reach full capacity of production in 2018 and reach 230 million tons. Exploitation of their planning period is 40 years, extraction volume is expected to reach 4 billion tons, the future will continue to expand the scale according to demand.

Vale last year increased its investment in high-quality ore. July 2012, Carajas mine of development company Vale announced again, invested $ 19.5 billion to develop the Southern District S11D mine, this is the highest investment of iron ore project in the world so far.

International market for such high-quality ore demand remains strong, therefore, its market price is relatively stable, This mine will be the future Vale continues to lead the world iron ore industry of protection.

When reporters interview in Carajas, there are two China-related new attracts the attention of the global steel industry. First, as China’s economic recovery, the Brazilian iron ore exports to China increased rapidly. According to Brazil, Folha de Sao Paulo newspaper reported that the Brazilian iron ore exports to China in September reached 74.6 million tons, MoM growth of 8%, year on year growth of 15%, which create a history record. Second, on October 18, “Chinese version of” iron ore futures was listed in Dalian Futures Exchange, China enhanced pricing.

Although people talk about the iron ore price rises, repeatedly stressed that stable development of China’s economy, U.S. and European economic recovery are the two main factors, but they predict the future is not very optimistic. Vale executive director Mading Si think 2015 iron ore market will basically reached saturation. By 2018, when the excess capacity could reach 5-6 percent, by then the price will remain at $ 100 or more, but is unlikely to reach current peak, the main reason is the major iron ore producers are expanding production capacity.

China needs to import more than 60 percent of iron ore very year. The expansion of China’s urbanization and Chinese exports of finished steel products increased, making China become chasing object in the market by the world’s major iron ore suppliers.

Over the years, China in the international iron ore market lack of pricing power, Long-term restricted to Vale, Rio Tinto, BHP Billiton etc. companies. Global iron ore production capacity to enhance and the importance of the Chinese market, for China increased pricing to provide the conditions. Iron ore futures launch will help to gradually change this passive situation which is China made a bold attempt for greater pricing power of iron ore. First use of RMB for iron ore futures Indicates a new era for globally. Mading Si recently in an interview also said that iron ore pricing is increasingly dependent on the Chinese market.

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Russian metallurgical industry development status

Metallurgical industry is the basic sector of Russian industry. In 2011, the Russian metallurgical industry employment was nearly 1.3 million, 80% of enterprises are belonged to urban construction fields. Look from the production, metallurgical industry (ferrous and nonferrous) output in Russia’s GDP accounted for 9%, exports accounted for 11.6%, industrial sector accounted for 5% of employees, taxes accounted for 5% of the budget.

From an international comparative perspective, the Russian steel output ranked fifth in the world, (only behind to China, Japan, the U.S. and India), iron ore production is also fifth in the world, steel pipe production is third in the world. Exports of metallurgical products is second in the world (only behind to China and Japan), aluminum production is second in the world, titanium production is second too, aluminum exports is first, nickel production and exports are first in the world.

Metallurgical Industrial Structure

Russian metallurgical industry includes black, non-ferrous minerals and non-metallic mineral mining; Iron, steel, rolled, steel, iron alloy, refractory materials, coke, aluminum, copper, rare metals; ferrous metals, alloy production and processing of semiconductors; Scrap, scrap metal processing and certain related chemical products. In addition, the metallurgical industry contains a large supplementary enterprises, scientific research and design organizations.

Metallurgical industrial enterprises for nearly eight years achieves vertical integration, reducing the industry’s competitive risks in the domestic market, improved investment policies to ensure the safety of their raw materials industries. In recent years, metallurgical industrial enterprises actively carry out services in the field of metal processing and metallurgical manufactures.

The overall commentary of industry development of the metallurgical industry

In 2004, the Russian finished steel production was 53.7 million tons, 29.8 million tons of domestic consumption; 2011, finished steel production increased by 10% (59 million tons), domestic consumption grew by 25.8% (37.5 million tons); steel production increased by 60% (9.6 million tons), domestic consumption grew by 78 percent (10.9 million tons).

Russia’s domestic non-ferrous metal products are mainly provided by the Chinese. 2011, the domestic demand for aluminum reached 875,000 tons, compared with 2004 growth of 148.6%. Domestic demand for refined copper in 2011 reached 300,000 tons, an increase of 107% compared to 2004.

The Russian government’s anti-crisis measures in preventing the decline in production capacity of metallurgical enterprises have played a very good effect, which ensure the number of jobs, and enable investment projects to be continued before crisis. In recent years, the metallurgical industry upgrading of fixed assets become one of the main factors of the industry to successfully overcome the financial crisis, also make high-tech products with high added value production has been enhanced.

Over the past decade, metallurgical industry used for the upgrading, transformation and expansion of production investments totaled more than 1.6 trillion rubles. Currently, Russian metallurgical enterprises large equipment of wear rate does not exceed 50%, which makes the industry more flexibility to respond to negative changes in the external market environment.

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Why China’s steel exports in September create new low

China’s steel exports in August created a new high in nearly three years, in September suffered a dump, total exports fell sharply. EU and emerging economies export situation of uncertainty and accelerate the appreciation of the RMB is the main reason about China’s steel exports decline.

According to customs statistics, September China’s steel exports were 4.92 million tons, MOM fell 1.22 million tons in August, drop 4.47%; From January to September, China’s steel exports was 46.9 million tons, an increase of 14.6 percent. September, China imported 74.58 million tons of iron ore and concentrates, MOM in August increased 5.57 million tons, an increase of 14.72 percent, average import price was $ 126.18, MOM rise 7.34 U.S. dollars / ton.

External demand is still uncertain, September China negative growth in exports to the EU

With the gradual recovery of the global economy, September global manufacturing sentiment index rose to 51.8%, an increase of 0.2 percentage points and create a new 27-month high. But the euro-zone manufacturing sentiment index totally fell 0.3 percentage points to 51.1%, according to statistics, compared with the same period of last year September China total value of exports to the EU appeared 1% of negative growth, compared with August fell 3.1 percentage points. On a month-on-month basis, September China exports to the EU fell 8%. Situation is analogous that exported to other area in the world, September total trade of China’s exports in East Asia fell 2.8 percent, only Japan and Vietnam export value MOM appear rise, Japan’s growth of 16.7%, an increase of 7.8% in Vietnam.

Looked from international market’s major economies’ export performance, although the performance of the global manufacturing economy steadily recovering, Asian economies have also maintaining recovery situation, but the total value of imports from China did not improve.

Overall decline in international steel prices, China steel export prices fell slightly

With the Fed’s heating of Quantitative Easing, international markets all want to avoid risk, commodities collectively appeared price decline. Led by the capital market of price reduction, the international steel prices also totally reduce. Because China’s finished steel export prices fell slightly, reducing the low price export advantage of finished steel, which is relatively unfavorable on the latter exports.

Global crude steel production growth, create a new high in past two years

Statistics show that, September 2013 Global 64 major steel-producing countries and regions of crude steel production is132.5 million tons, year on year an increase of 6.1%,the growth rate is the highest level since November 2011, which show that global economy is significant improvement. However, this result directly result an oversupply of global steel market, therefore, China’s steel exports become more difficult.

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Choice between scrap and iron ore: Environmental protection become key factor

In the current vigorously promote energy conservation and recycling economic situation, increase scrap application level is imperative, however, for requiring high-yielding of domestic enterprises, this is also greater difficulties. Therefore, to change the status of low utilization of scrap, it still needs a long process.

At present, China’s steel industry transformation and upgrading of the two cores – green transformation and product upgrades are directly related with the consumption of scrap, but last year to this year, domestic key steel enterprises of scrap consumption was dropped significantly.

Data show that in 1-5 months of last year, China’s overall steel scrap consumption fell 21.7 kg. Among them, BOF steel scrap consumption decreased 8.8 kg more than last year, EAF steel scrap consumption fell 117.6 kg.

Meanwhile, China’s total consumption of scrap also shows a downward trend. Statistics show that in 2012 China consumed 84 million tons of scrap steel, compared with 2011 year of 9100 tons, reducing by 700 million tons.

In this regard, experts said this is mainly due to steel prices continued to slump, scrap costs are high, as well as controllability of steel scrap is poor etc. factors affected. In which the cost of scrap higher than iron is the root cause of low scrap consumption.

In the international market, for example, although iron ore prices experienced several price increases, which has be more than 100 dollars / ton of price, and 1.67 tons of iron ore can produce one ton of steel, but compared with 400 dollars / ton of the scrap price, 1.67 tons of iron ore price is very low.

Experts point up that even adding iron ore steelmaking of consuming energy costs, it still not enough to make up the difference price with scrap, moreover, Iron ore of thermal utilization and recovery can’t be ignored.

It is worth mentioning that another major reason resulting domestic scrap ratio is not high, that is environmentally illegal low cost. Because domestic environmental protection has insufficient attention, illegal cost is low and causing law-abiding at a disadvantage. In contrast, because of stringent foreign environmental system, scrap as energy saving materials is more likely to be favored than iron ore.

In addition, the high scrap import taxes and stringent environmental protection system, also to some extent dampened the enthusiasm of buyers, resulting in insufficient supply of raw materials, eventually had to abandon reliance on scrap and turning to iron ore. However, with the national importance of environmental protection and the increase in volume of output, scrap iron will also be favored by steel enterprises.

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Russia Severstal Group quit India steel project

Russian steelmaker Severstal has announced it quitted from the Indian joint venture plant project, which result to the future direction of the project is unknown. Severstal Group is already the third foreign-funded enterprises quit India steel construction projects this year. Earlier, South Korea’s POSCO abandoned Karnataka construction plans because land acquisition problem. The ArcelorMittal because of the slow progress of the project issues quitted Orissa construction plans.

Severstal and Indian state-owned miner National Mineral Development Corporation of India (NMDC) had reached an agreement in 2010 about Karnataka jointly build an annual output of 300 tons of steel mill. However, because the Indian government reluctant to transfer the majority stake to Severstal, the project has been stopped. Severstal said difficult business environment of India lead to its exit the project. NMDC did not declare how to develop the project in future, NMDC may be carry out independently. NMDC can be through cash reserves and bank loans to India to finance the project. However, NDMC has several developing projects, and previously expressed focus on completed Chhattisgarh Province with an annual output of 3 million tons of steel construction. Meanwhile, through the construction of new mines and the development of existing projects, domestic iron ore production capacity will be expanded from 32 million tons / year to 48 million tons / year.

Brazil levy anti-dumping duties to China stainless steel pipe

Brazil’s Foreign Ministry announced on July 29, levied anti-dumping duties from China mainland and China Taiwan imports of circular welded austenitic stainless steel (outer diameter 6mm-2.03m, thickness 0.4mm-12.7mm), valid for five years. In which to Zhe Jiang Jiuli Special Material Technology Co., Ltd. tax rate is zero, other mainland enterprises’ anti-dumping duty is $ 679.08 / ton; To China Taiwan Yun Qiang Industrial Co., Ltd. of anti-dumping duties levied $ 359.66 / ton, other Taiwan enterprises’ anti-dumping duty is $ 911.71 / ton.

To reply South American steel companies Aperam applications, Brazilian authorities initiated an investigation on the case in last September, investigation period is from January 2007 to December 2011.

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Hyundai Steel plans merger with Hysco to reduce costs and enhance competitiveness

South Korea’s second-largest steel manufacturer Hyundai Steel has said, they were planning merger with Hyundai Hysco to take over the latter’s core rolled and coated sheets business, which intended to reduce financial costs and improve profitability. Hyundai Steel is expected to complete the merger in December 31 of this year, Hysco will hold Shareholders’ meeting on November 29 this year to discuss the merger decision.

The face of the European debt crisis and the slowdown in Chinese demand for steel, Hyundai Steel etc. the world’s major steel mills is in the plight of declining profits. The merger will reduce the financial cost of Hyundai Steel and improve competitiveness with other companies. Beacuse merger will produce a more powerful company, to Posco and Dongkuk is not a small pressure, especially in the domestic cold-rolled capacity oversupply and too little demand of market conditions. Currently, Korea POSCO, Dongbu Steel and Hyundai Hysco annual supply of cold rolled coils plus imports totaled about 21 million tons, while domestic demand only about 12 million tons.

As Hyundai Motor Group’s two subsidiaries of steel, Hyundai Steel sells hot-rolled coils to Hysco, Hysco processed into automotive sheet then sold to their parent company Hyundai Motor Group. This Hyundai Steel and Hyundai Hysco to provide end supply chain for automotive manufacturers is unique in the world.

Hyundai Steel production the third annual capacity of 4 million tons of blast furnace in September, steel production increased significantly. 3 blast furnace of crude steel production capacity is 12 million tons, including 12 million tons of electric furnace steel production capacity, Hyundai Steel Total crude steel production capacity is 24 million tons. After the merger, Hyundai steel sales expected to grow from last year’s 14 trillion won to 20 trillion won, at the same time also reduce financial costs. According to report, for the construction of the third blast furnaces to make Hyundai steel liabilities of approximately 11 trillion won ($ 10.3 billion), who had to pay about 300 billion won of interest a year.

Hysco Founded in 1975, annual production capacity of cold-rolled is 6.2 million tons, cold-rolled steel sales accounted for sales of 71% last year, about 7 trillion won, 91% of its operating profit. Hysco cold rolled coils and coated steel equipment is located in Hyundai Karatsu factory, the cold rolling, coating and cutting equipment is located near POSCO Gwangyang plant. Hysco had gone into operation annual production capacity of 1.5 million tons cold rolling equipment in Karatsu plant in May this year, this year cold-rolled and coated sheets of production is expected to increase from 4.26 million tons in 2012 to 4.8 million tons, desired ratio of Hyundai Motor Group can increase from the current 40% to 60%.

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August Japan export 3.727 million tons of steel, increased 2.4% qoq

Japan Iron and Steel Federation (JISF) released the latest data show, August 2013, Japan’s steel export 3,727,000 tons, exports is 3.547 billion dollars, about 349.3 billion yen. Compared to last year, steel exports increased 1.3%, exports fell 10.8% in U.S. dollars, for 15 consecutive months of decline; Growth of 11.9% in Japanese yen, for three consecutive months of growth. Compared with July, steel exports grew 2.4% and exports increased 0.6% in U.S. dollars, an increase of 0.2% in Japanese yen.

According JISF statistics, August Japanese ordinary steel exports 2,435,000 tons, 1.9% qoq.

Look from the varieties of steel, hot rolled coil export of 1.007 million tons, up by 14.1%, qoq 6.1% for 18 consecutive months higher than the level a year earlier; Welded steel pipe export 79,000 tons, up by 45.8%, 31.8% qoq, four months for the first time higher than a year ago; Electrical steel export volume of 67,000 tons, an increase of 6.9%, reduced 0.7% qoq, two months for the first time higher than a year ago; Wire rod export 62,000 tons, up by 29.8%, qoq 16.9%, 9 consecutive months higher than year-ago levels; Steel bars export 29,000 tons, an increase of 11.4%, reduced 24.9% qoq, four months for the first time higher than a year ago; Galvanized steel export volume is 373,000 tons, representing a decrease of 9.7%, qoq 7.9%, for four consecutive months below the level of last year; Cold rolled steel export 264,000 tons, representing a decrease of 13.3%, 0.2% qoq, for three consecutive months below the level of last year; Plate export 257,000 tons, reduced 15.1%, decreased 6.9% qoq, for seventh consecutive month below the level of last year; Steel section export 70,000 tons, reduced 11.9 percent year on year, decreased 34.3% qoq, two months for the first time below the level of last year; Seamless steel pipe export 53,000 tons, down 7.5 percent year on year, decreased 8.4 percent qoq, three months the first time lower than the level of last year.

Look from the exporting countries, Japan exports to South Korea 673,000 tons, ranking the first, drop 3.6 percent; Japan export to China 500,000 tons, drop 5.2 percent, four consecutive months below the level of last year; Exported to Thailand 496,000 tons, up 1.5%, two months the first time higher than the same period of last year; Exported to Taiwan 312,000 tons, up 5.0%, 3 consecutive months higher than year-ago levels; Exported to American 237,000 tons, up 27.4 percent, higher than the same period last year for two consecutive months.

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