Eurobench.com

voda 24 juli 2014 11:56

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NMDC plans to boost iron ore output by two thirds

Reuters reported that NMDC Limited, India's biggest iron ore producer, aims to ramp up output by two thirds in five years to 50 million tonnes a year, helped by the launch of new mining facilities and expansion of existing infrastructure.

State owned NMDC's plans will add to surging global growth in output of the steelmaking raw material, although a push by the new government to revive manufacturing and industrial growth may boost domestic appetite for iron ore.

NMDC, which produced close to 30 million tonnes of iron ore in the year that ended in March, or close to a fifth of the country's production, aims to mine about 32 million tonnes this year and reach its target by 2018 ro 2019.

Mr Narendra Kothari, who took over as NMDC's chairman in April said that "There is a natural demand for iron ore in the country, we don't have any shortage of demand whatever we produce, we are able to sell.”

NMDC is currently enhancing output at its three existing mines in Chhattisgarh and Karnataka and is in the process of securing leases for mines in Jharkhand. It has also gained from curbs on illegal mining in Goa and Karnataka states plus the closure in May of nearly half the mines in Odisha, the top producing state, ordered by the Supreme Court while leases dating back years were renewed.

Mr Kothari said that he expects international prices for iron ore to firm up in the near term. Iron ore prices have recovered slightly after the increase in global supply available to top consumer China pushed prices to a 21 month low of USD 89 per tonne in June. They closed at USD 95.40 per tonne. I feel international price should remain in the USD 95 to USD 105 range for the next six months."

NMDC, which fixes prices every month, raised its prices by up to 9% in June, taking advantage of the cuts in supply from Odisha and elsewhere that had prompted some domestic steel makers such as JSW Steel Limited to import the raw material.

Mr Kothari said that "Our quality of iron ore is much better than anyone else in the country so we can demand a little higher price than the market. NMDC's mines produce ore with higher iron content which are preferred by local steel mills. Every percentage point increase in iron content improves productivity by 2 percentage points.

He said that NMDC would target exports of about 8 percent to 10% of total production a year, up from about 6 percent in the year ended March 2013, as it seeks to focus on companies in Japan and South Korea. Demand (for exports) is much more, but due to the requirement in the country, we are not exporting much."

Source - Reuters

voda 24 juli 2014 11:57

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Chinese iron ore and steel futures dip further on demand worries

Benchmark indicators of Chinese steel Industries health, steel and iron ore futures at SHFE and DCE respectively went down further on Wednesday

Rebar prices on the Shanghai Futures Exchange ended Wednesday at CNY 3,036 per tonne, down 0.46% - their sixth daily decline in a row.

Most active iron ore contract for September delivery on the Dalian Commodity Exchange ended down 0.87% at CNY 683 per tonne. Iron ore for immediate delivery into China .IO62-CNI=SI dipped 0.6% to USD 95.4 per tonne on Tuesday, the fourth daily decline in a row.

The continued downtrend reflects pessimism among market players as they feel that Chinese property market would remain sluggish, depressing demand for construction steel. The rainy season also reduces construction activity

It is learnt that government measures to support real estate sector by way of relaxing rules on purchases by non residents and providing subsidies and tax breaks have already begun in around 20 cities. But market players feel that this kind of mini stimulus measure is unlikely to trigger any lasting recovery in the steel market, which will continue to face relatively weak demand and credit restrictions over the remainder of the year.

Source – Strategic research Institute

voda 24 juli 2014 11:59

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Outokumpu verkleint verlies

AMSTERDAM (Dow Jones)--De Finse producent van roestvast staal Outokumpu Oyj (OUT1V.HE), sectorgenoot van Aperam, heeft zijn verlies in het tweede kwartaal verkleind met de hulp van hogere metaalprijzen en kostenbesparingen.

Het nettoverlies was EUR58 miljoen, in vergelijking met een verlies van EUR248 miljoen in het tweede kwartaal van 2013. Het operationele verlies nam af tot EUR10 miljoen van EUR171 miljoen.

De netto-omzet kwam uit op EUR1,75 miljard, vrijwel onveranderd ten opzichte van de EUR1,74 miljard een jaar terug. Outokumpu leverde 675.000 ton staal af in de periode, een ton minder ten opzichte van het eerste kwartaal.

Vooruitkijkend verwacht Het Finse bedrijf relatief goede marktomstandigheden in de rest van het jaar, met een robuuste vraag uit de Verenigde Staten. Voor het derde kwartaal rekent de onderneming op een licht lager operationeel resultaat, vooral vanwege de seizoensgebonden vertraging gedurende de zomermaanden.

Outokumpu is de marktleider in Europa op het gebied van roestvast staal, gevolgd door Aperam. Aperam, genoteerd aan de Midkap index in Amsterdam, maakt 31 juli nabeurs de resultaten over het afgelopen kwartaal bekend.

- Door Levien de Feijter, Dow Jones Newswires; +31 20 571 52 00; levien.defeijter@wsj.com

voda 24 juli 2014 11:59

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US imposes duties on Chinese steel wire rod

The US Department of Commerce has imposed preliminary duties on imports of carbon and alloy steel wire rod from China after ruling that they are produced with the benefit of “unfair” government subsidies.

The Commerce Department set a rate of 81.36% for Hebei Iron & Steel and 10.30% for Benxi Steel and all other producers and exporters in China.

Action was taken because of complaints by ArcelorMittal USA, Charter Steel, Evraz Pueblo, Gerdau Ameristeel, Keystone Consolidated Industries and Nucorp.

Steel wire rod imports to the USA totalled $313 million in 2013.

The Commerce Department will review the situation over the coming months, before making its final decision on 12 November, at the same time as a final decision is made concerning a parallel investigation into the ‘dumping’ of steel wire rod by the Chinese.

Source – Strategic research Institute

voda 24 juli 2014 12:01

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Update on weekly raw steel production in USA

In the week ending July 19, 2014, domestic raw steel production was 1,893,000 net tons while the capability utilization rate was 78.7%. Production was 1,852,000 net tonnes in the week ending July 19th 2013, while the capability utilization then was 77.3%.

The current week production represents a 2.2% increase from the same period in the previous year. Production for the week ending July 19th 2014 is down 0.5% from the previous week ending July 12th 2014 when production was 1,903,000 net tonnes and the rate of capability utilization was 79.1%.

Adjusted year to date production through July 19th 2014 was 52,627 net tonnes, at a capability utilization rate of 76.7%. That is up 0.2% from the 52,534 net tonnes during the same period last year, when the capability utilization rate was 76.8%.

Broken down by districts, here's production for the week ending July 19th 2014 in thousands of net tonnes: North East: 235; Great Lakes: 683; Midwest: 237; Southern: 649 and Western: 89 for a total of 1,893.

The Raw Steel production tonnage provided in this report is estimated. The figures are compiled from weekly production tonnage provided from 50% of the domestic producers combined with monthly production data for the remainder. Therefore, this report should be used primarily to assess production trends.

The AISI production report AIS 7 published monthly and available by subscription, provides a more detailed summary of steel production based on data supplied by companies representing over three quarters of US production capacity.

Source – Strategic research Institute

voda 24 juli 2014 12:05

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BHP Billiton updates on iron ore production

Iron ore – Iron ore production increased by 20% in the 2014 financial year to a record 204 MT, exceeding initial full year guidance by more than 8%. Total iron ore production is forecast to increase by 11% in the 2015 financial year to 225 MT.

Western Australia Iron Ore production of 225 MT (100% basis) represents a fourteenth consecutive annual record and was underpinned by the early commissioning of Jimblebar and our productivity agenda, which raised the capacity of our integrated supply chain. Production from the Wheelarra Joint Venture, which was previously processed through Newman, was permanently connected to the Jimblebar processing hub during the period. The spare capacity created at Newman is now being utilised by existing operations. The ramp-up of Jimblebar to 35 million tonne per annum (100% basis) is now expected before the end of the 2014 calendar year.

In the 2015 financial year WAIO production is expected to increase by a further 20 MT to approximately 245 MT (100% basis). Yet another year of record performance will be supported by additional productivity gains despite the tie-in of shiploaders 1 and 2 during the period. A low cost option to expand Jimblebar to 55 million tonne per annum (100% basis) and broader debottlenecking of the supply chain are expected to underpin further growth in capacity towards 270 million tonne per annum (100% basis).

Samarco production of 22 MT (100% basis) was broadly unchanged in the 2014 financial year. The fourth pellet plant was commissioned in the March 2014 quarter and the ramp up to 30.5 million tonne per annum (100% basis) is expected before the end of the 2015 financial year.

Source – Strategic research Institute

voda 24 juli 2014 12:06

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Disposal of Severstal North America is credit positive for Severstal - Moody's

Moody's Investors Service has said that it views as credit positive for Severstal OAO (Severstal; Ba1 positive) Severstal's announcement that it had entered into separate definitive transaction agreements to sell its Severstal Columbus, LLC and Severstal Dearborn, LLC subsidiaries, collectively known as Severstal North America (SNA), to Steel Dynamics Inc and AK Steel Corporation, respectively, for a total cash consideration of USD 2,325 million.

On 21 July 2014, Severstal announced that it had signed the deal on the disposal of its wholly owned subsidiaries, Severstal Columbus, LLC and Severstal Dearborn, LLC subsidiaries, collectively known as Severstal North America, for a gross consideration of USD 2,325 million. Completion of the sale is subject to customary closing conditions including the expiration of the Hart Scott Rodino Antitrust Improvements Act waiting period. The closing of the transaction is not subject to any financing conditions and is expected to be realised by year end 2014.

The disposal is credit positive for Severstal for the following reasons:
1. Despite the fact that disposed subsidiaries contributed around USD 3.9 billion of revenue into consolidated sales (30% of total revenue), their contribution into consolidated EBITDA was more modest at around USD 240 million (12% of total EBITDA). We estimate that Severstal's consolidated EBITDA margin will increase by about four percentage points following the closing of the transaction, all things being equal;

2. The company will be able to focus on its higher margin steel operations in Russia, which are fully utilised, where the company continues deriving around USD 79 per tonne of benefits per tonne of slab on an integrated basis (in Q1 2014), owing to its vertical integration into Russian mining (iron ore and coking coal) assets despite currently fairly low iron ore prices and the somewhat high cash costs of the company's Vorkutaugol coking coal subsidiary;

3. The deal value involves around USD 0.2 billion of third party debt, therefore the transaction would reduce consolidated debt by this amount while indicatively adding around USD 2.1 billion to Severstal's cash balances (pre special dividends), which stood at around USD 0.9 billion as of March 31st 2014, improving the company's solid cash cushion;

4. We estimate that the company might use at least around USD 0.7 billion to USD 1.0 billion, to reduce gross debt with the remaining amount to be paid out as special dividend to the shareholders. As at 31 March 2014 the debt structure was dominated by public debt (loan participation notes) and therefore the company might be able to reduce its gross debt, inter alia, via repayment of maturities in 2016 and 2017 of USD 543 million and USD 1,514 million, respectively;

5. The company's leverage, as measured by Moody's-adjusted gross debt and EBITDA and net debt and EBITDA, stood at 2.1x and 1.7x as of March 31st 2014. We estimate that, despite the lower absolute amount of consolidated EBITDA following disposal of SNA and the expected special dividend, the transaction will reduce the company's leverage as measured by net debt/EBITDA by at least 0.2x;

6. Despite slowing GDP growth in Russia, the key steel consuming construction sector (which is responsible for about 68% of end user demand) keeps growing, with steel demand estimated by the company's management to grow by about 1% to 2% in Russia in 2014.

Reduced geographical diversification, as the company is effectively leaving the North American market, and smaller scale (in 2013 the disposed subsidiaries sold 4.7 million tonnes of steel products, or around 30% of crude steel production) are the negative sides of the transaction. However this is mitigated by the credit positive factors outlined above.

Severstal is a vertically integrated steel and steel related mining company, with assets in Russia, Ukraine, Latvia, Poland, Italy and Liberia. Severstal is listed on the Moscow Interbank Currency Exchange (MICEX) and the company's global depository receipts are traded on the London Stock Exchange (LSE).

Currently approximately 79.17% of Severstal's share capital is indirectly controlled by Mr. Alexey Mordashov, the company's CEO. In 2013, Severstal had revenue of USD 13.3 billion (2012: USD 14.1 billion) and Moody's adjusted EBITDA of USD 2.1 billion (2012: USD 2.1 billion). Severstal's crude steel production in 2013 reached 15.7 million tonnes (2012: 15.1 million tonnes).

This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer entity page on www.moodys.com for the most updated credit rating action information and rating history.

Source – Strategic research Institute

voda 24 juli 2014 12:08

0

Mechel record results for H1 2014

Mechel OAO, one of the leading Russian mining and metals companies, reports reaching record results in supplying coal to Asia Pacific in the H1 of this year.

In January to June 2014, Mechel exported 5.3 million tonnes of coal to Asia Pacific markets, which is the highest result in the company's history.

In the same period in 2013, the company shipped approximately 3.8 million tonnes of coal to Asia Pacific. Mechel's coal exports to the East thus increased by 39%, with Asia Pacific states accounting for 75% of its total coal export.

Shipments for Asia Pacific customers generally go by sea through Port Posiet in Primorye, which is part of Mechel, and Port Vanino in Khabarovsk Region. Record shipment results were primarily due to the launch of specialized transshipment coal complex at Port Posiet into preliminary operation.

Mechel's shipments through Port Vanino also increased due to upgrading of the port's transshipment equipment which is currently under way.

Mr Oleg Korzhov CEO of Mechel OAO said that "The Group's sales subsidiaries focus their attention on the burgeoning Asian markets. We successfully work at expanding our business ties with coal consumers in that region and intend to consolidate our leading position among global exporters. Our indisputable advantages lie in our Far Eastern coal deposits' close proximity to Asia Pacific, comfortable logistics and fairly low mining costs."

Meanwhile, Mechel is an international mining and steel company which employs over 70,000 people. Its products are marketed in Europe, Asia, North and South America, Africa.

Source - Strategic Research Institute

voda 24 juli 2014 12:10

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BHP join application with ArcelorMittal

According to people familiar with the plan, BHP Billiton Limited (BHP) has made a joint application with ArcelorMittal to export iron ore from a project in Guinea through neighboring Liberia.

According to the people, BHP and ArcelorMittal have asked the two West African governments to approve the plan for ore mined at the Nimba project.

Three of the people said that the world’s largest mining company wants to arrange for ore to be transported using a railway line and port controlled by steelmaker ArcelorMittal.

Two of the people said that the joint application is part of negotiations for ArcelorMittal to buy BHP’s stake in Nimba. BHP and ArcelorMittal in 2010 tried to combine their iron-ore mining projects that straddle the Liberia-Guinea border before abandoning those discussions seven months later. The Wall Street Journal reported in May that ArcelorMittal was close to buying BHP’s Nimba mine.

Companies seeking to develop iron-ore mines in West Africa face a lack of transport links to ship the steelmaking ingredient to customers. Rio Tinto Group signed a USD 20 billion investment agreement with the Guinean government last month that includes the construction of a 650-kilometer railway. Sable Mining Limited, a London traded producer, is also seeking to move ore on ArcelorMittal’s rail link.
Newmont, Areva

BHP rose 2.1% to 2,054.5 pence by the close of trading in London. ArcelorMittal gained 1.2% to EUR 11.185 in Amsterdam.

Spokesmen for BHP, ArcelorMittal and the Liberian government declined to comment. A spokesman for the Guinean government and Mines Minister Kerfalla Yansane didn’t return calls seeking comment.

Mr Andrew Mackenzie CEO of BHP Billiton Limited said at the company’s shareholder meeting in October that Liberia and Guinea don’t feature in BHP’s iron-ore expansion plans. Melbourne-based BHP owns 41% of the Nimba mine in Guinea. Other shareholders include Newmont Mining Corporation and Areva SA.

Source - Bloomberg

[verwijderd] 24 juli 2014 14:37

0

Redactie ABM Financial News - 24 juli 2014, 10:52
Onveranderd verkoopadvies op staalreus.
UBS heeft ArcelorMittal van de lijst met minst favoriete aandelen verwijderd, maar handhaafde wel de verkoopaanbeveling op de staalreus.

Analisten van de Zwitserse bank constateerden dat de consensusverwachtingen voor het tweede kwartaal en voor heel 2014 "significant" zijn verlaagd in de afgelopen weken. De in de ogen van UBS te hoge consensus was aanvankelijk de voornaamste reden voor een plek op de lijst van minst favoriete aandelen.

De consensus, die eerder deze week door de staalreus werd gepubliceerd op basis van 22 analisten, wijst voor het tweede kwartaal op een bedrijfsresultaat van 1.851 miljoen dollar. ArcelorMittal verwacht voor heel 2014 een bedrijfsresultaat (EBITDA) te boeken van circa 8,0 miljard dollar.

ArcelorMittal noteerde donderdag op een vlak Damrak een half procent hoger op 11,16 euro.

Door: ABM Financial News.
Info@abmfn.nl
Hoofdredactie: +31(0)20-737 17 42
Redactie: +31(0)20-262 29 78

Nic48 24 juli 2014 14:40

0

Inmiddels 11,26 gaat het dan vanaf vandaag gebeuren?

svh21 24 juli 2014 16:50

0

Verwachting us steel:
www.trefis.com/stock/x/articles/24837...

voda 25 juli 2014 13:07

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TATA Steel raises USD 1.5 billion in overseas bond sale

PTI reported that TATA Steel raised USD 1.5 billion (about INR 9,000 crore) in a dual tranche bond sale in the international market, making it the largest such deal by the TATA group firm.

According to the merchant banking sources, the dollar money was raised by the Singapore arm of TATA Steel ABJA Investments and the issue got an oversubscribed worth nearly USD 9 billion,.

The sources at the i-banks, which include RBS and BNP Paribas said that the dual tranche RegS bond include USD 500 million of 5.5 year money priced at 4.85% over the US treasury and the remaining USD 1 billion carries a tenure of 10 years carrying a coupon of 5.95%.

The company could not be reached for comments. The TATA Steel issue is the second largest bond issue from the country after the ONGC Videsh, the international arm of oil major ONGC earlier this month.

TATA Steel, which is the top producer of the alloy in the country, has been trying it pare its huge debt to lower interest costs and has a headroom to raise USD 3.2 billion for debt repayment through refinancing.

The company has to repay USD 5 billion worth of debt by the end of 2015. According to the balance sheet, the company has over USD 14.4 billion of bonds and loans outstanding.

It can be noted that after struggling for years, the domestic business of the company turned around last fiscal, but its larger international subsidiary Corus or TATA Steel Europe has been a drain on the company ever since it bought out the struggling Anglo Dutch steel maker in March 2008 for USD 12.04 billion.

Source – Press Trust of India

voda 25 juli 2014 13:09

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Chinese steel market plummets despite encouraging factory activity

Chinese steel prices followed the usual course losing another 1% during the week despite encouraging factory output. China's factory activity expanded at its fastest pace in 18 months in July, a preliminary HSBC survey showed on Thursday, suggesting that the country's mini stimulus measures were having a positive effect.

However both iron ore and finished steel market lost further owing to inherent weak fundamentals. In iron ore mills are now decreasing their inventories of iron ore there are more than 115 million tonnes at seaports and so nobody is worried about supply. Mills are reluctant to indulge in buying as they are well stocked.

The Chinese steel sector, the world's biggest, is struggling with severe overcapacity, a slowdown in demand growth, rising environmental compliance costs and a crackdown on easy credit, and caution continues to prevail in the sector.

The key issue for the sector is a weak property industry, which is responsible for well over half of China's total steel demand. The problem is that now demand for construction is falling- 80% of Chinese mills produce rebar and wire rod for construction.

Source – Strategic Research Institute

voda 25 juli 2014 13:10

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Tangshan mill closure reflects wider problems in Chinese steel industry

SCMP reported that the Xinming Steel Pipe plant in Tangshan, a polluted industrial city that produces more steel a year than the entire United States, shut earlier this month, leaving more than 400 workers and a host of creditors unpaid.

The turmoil at the firm shows how huge overcapacity is pushing scores of similar steel enterprises to the brink of bankruptcy. Unlike in the past, however, provincial governments are now unwilling or unable to bail them out.

In a bid to rebalance the world's second-biggest economy, Beijing is dismantling a local government support structure that gave steel firms a lifeline of cheap credit, lucrative construction contracts and preferential tax rates.

This support has saddled the mainland's steel industry with huge debts and at least 200 million tonnes of excess production capacity far more than either US output of 87 million tonnes or the European Union's 166 million tonnes. The mainland is estimated to have a steel production capacity of more than 1 billion tonnes.

Tangshan, 170 kilometers east of Beijing, produces 100 million tonnes of mostly low end steel used in construction every year and has been at the centre of a campaign aimed at closing obsolete and polluting steel works.

After a devastating 1976 earthquake killed at least 250,000 people and levelled much of the city, Tangshan was given free rein to use steel to rebuild its shattered economy. But it is now feeling the pressure from Beijing's efforts to control chaotic, credit fuelled growth.

A manager at one of Xinming's creditors said that while the government was holding discussions with creditors to see whether the firm's debts could be rescheduled, bankruptcy proceedings could be launched if there was no agreement. This is just one example of many - most firms have been trying to cling on until rivals disappeared and the market improved, but they can't all do so.

Source - SCMP

voda 25 juli 2014 13:13

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US to keep antidumping duty orders on steel threaded rod, malleable iron pipe fittings from China

Xinhua reported that the US government determined would maintain the existing antidumping duty orders on steel threaded rod and malleable iron pipe fittings from China, despite Beijing's repeated calls for Washington to drop protectionism.

The US International Trade Commission concluded in a ruling that revoking the current antidumping duty orders on these products from China would be likely to lead to continuation or recurrence of material injury within a reasonably foreseeable time.

It is the first sunset review for the antidumping duty order on imports of steel threaded rod from China, which was introduced in 2009. The antidumping duty margin on this product runs from 47. 37% to 206%.

This is the second sunset review for the antidumping duty order on imports of malleable iron pipe fittings from China, which was first issued in 2003. The antidumping duty margin on the product runs up to 111.36%.

A sunset review was conducted every five years after anti dumping and countervailing duties were introduced. The Uruguay Round Agreements Act requires the US Department of Commerce to revoke an anti dumping or countervailing duty order, or terminate a suspension agreement, after five years unless the department and the ITC determine that revoking the order or terminating the suspension agreement would likely lead to the continuation or recurrence of dumping or subsidies and of material injury within a reasonably foreseeable time.

The Chinese Ministry of Commerce has repeatedly urged the United States to abide by its commitment against trade protectionism and work together with China and other members of the international community to maintain a free, open and just international trade environment.

Source - Xinhua

voda 25 juli 2014 13:15

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TATA Steel Scunthorpe GBP 30 million rebuild of Queen Anne furnace

Scunthorpe Telegraph reported that work on the GBP 30 million rebuild of the Queen Anne blast furnace on the Scunthorpe TATA Steel plant is said to have passed the half way stage.

The former off gas system and number 12 stove have been removed from the 60 year old blast furnace and the installation of new parts is under way. Most of the work has been going on around the clock with up to 350 contractors and 60 TATA Steel employees on site on any given day.

Since March a 1,350 tonne crawler crane has been assembled on site to tackle the heavy lifting operations. This week a team of experts were due to start the refractory installation which will last 45 days.

Two hundred and fifty stave coolers are being fitted from tuyere breast level to the middle of the stack, ready for the furnace to be wrecked down to the lower hearth. The clearing out operation has also seen a 282 tonne lump of residual iron broken into small pieces and removed.

Mr Stuart Woodliffe project manager of TATA Steel said that "I'm really pleased with the team working and commitment from everyone on the project. Many people who have visited the project recently have been amazed at the amount of activity that is ongoing."

Source – Scunthorpe Telegraph

voda 25 juli 2014 13:18

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London Commodity Brokers iron ore daily report

Swap:

The market had some volume going through in morning hours as the Dalian exchange and the Rebar futures were both marginal down, then there were some trades on global ore and two tenders which gave the market some ideas, however even though the numbers on the tenders were lower, there was little to incentivise traders after the initial drop, and the market then went very quiet for the London afternoon. TSI 62% down USD 1.10 to USD 94.30.

Physical;
We finally saw some real activity for the first time this week and the weak sentiment was clear for all to see in the numbers going through. Two of the Australian miners held tenders today. A PB lumps cargo traded at USD 0.12 premium to index, while the PB fines concluded at flat to the benchmark. A Yandi tender was also held and closed at USD 80.38. There was also some activity on the platforms as we saw an MNP trade close at USD 93.00 as well as a Newman cargo at USD 0.10.

Source – Strategic research Institute

voda 25 juli 2014 13:19

0

Juniors will have to slash price to export low grade ore - Mr Walsh

The Australian reported that Australia’s smaller iron ore producers will need to offer increasingly large discounts if they are to continue selling lower quality ore into China.

Mr Sam Walsh CEO of Rio Tinto said that a strong commitment in China to tackling the country’s pollution problems, coupled with years of rising supply, meant lower-grade material out of Australia would find it more and more difficult to find buyers in China.

Iron ore heavyweights Rio Tinto and BHP mine a greater proportion of high grade material compared with rivals such as Fortescue Metals and Atlas Iron.

Mr Walsh said that while Rio Tinto was seeing strong demand for its products, lower-grade material was now attracting a discount of about USD 22 per tonne from the iron ore spot price of about USD 96 per tonne. We’re actually easily selling everything that we’re producing.

But the significant amount of new iron ore supply that has come into the market as a result of expansions and new mines in Australia, coupled with China’s commitment to cutting pollution, would make it increasingly difficult for lower quality iron ore to find a home.

Mr Walsh said that “I think (China’s commitment to tackle pollution) is a major factor (in the increased discounting on lower quality iron ore), plus the fact that there’s been a lot of the lowgrade ore come into the market and it’s flooded that segment of the market. So the juniors are having to discount to physically move their product. That’s the only way that the steel mills will take it.”

He said that the steady drop in iron ore prices this year had forced the shutdown of high cost Chinese production, revealing that 85 million tonnes a year of output had closed as a result of the price drop.

China’s pledge to address its environmental issues was genuine, noting that Chinese Premier Mr Li Keqiang had told chief executives in a private meeting at the China Development Forum that tackling pollution was China’s most challenging and difficult issue.

Mr Walsh said that “Planning to move to higher quality ore is a response by the steel mills to improve their environmental performance, improve their energy use and reduce the amount of smoke they’re producing. The benchmark spot iron ore price has fallen 29.3% so far this year and last traded at USD 95.40 per tonne.

India’s new Prime Minister Mr Narendra Modi has flagged the prospect of India resuming the export of iron ore, potentially adding a new source of supply to an already well supplied market.

Mr Walsh acknowledged the possibility of Indian iron ore re entering the market, but said the broader reformist vision of Mr Modi could help improve India’s internal steel demand.

He said that “The effect of that will be to also free up the steel industry and provide growth to the iron ore producers there. We’re currently exporting from here to India, that’s a little bit like shipping coal to Newcastle, but it will be what it will be. An important issue will be what is the growth vehicle within India itself in terms of their urbanisation.”

Source – The Australian

voda 25 juli 2014 13:23

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Rio Tinto confident on demand from China

AAP reported that Rio Tinto says Chinese demand for iron ore remains strong despite a short term oversupply and indications that India will resume iron ore exports.

Mr Sam Walsh CEO of Rio Tinto said that Rio was having to play a balancing act as it and other Pilbara iron ore producers brought on more supply. Demand is quite strong. We're easily selling everything that we're producing. A short term oversupply of iron ore was still weighing on prices.

He said that India may restart iron ore exports, but freeing up that nation's economy would also free up the steel industry and provide growth for Indian iron ore producers.

Mr Walsh said that "As the world urbanises, and as Rio Tinto is the lowest cost producer in the world, proximate to the major growth markets, we're incredibly well positioned. China's economy was achieving its expected growth rates, and around 85 million tonnes of iron ore produced in China had been displaced since the start of the year amid lower prices.”

He said that major pollution problems in China had also boosted demand for higher grade iron ore. Despite the upbeat outlook, he ruled out any acquisitions in the near future. Would Rio be involved in a major acquisition? I doubt it.

Source - AAP

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