Eurobench.com

voda 20 februari 2015 13:40

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EU Steel prices recover slightly in Feb for most product forms - MEPS

European flat product suppliers claim that they have good order books, as the weakened euro gives them an advantage when selling in US dollar denominated export markets. This should contribute to an increase in their bargaining position during negotiations with domestic customers. However, buyers have remarked that for first quarter business, steelmakers did not push very hard to implement their proposed EUR 30 to EUR 40 per tonne increase.

Indeed, we have noted only small changes from the December price level. It is believed that the mills will try to enforce the hike when second trimester orders are discussed. Although material from the Far East is not so attractive at present, the massive devaluation of the rouble has led to aggressive selling by Russian suppliers.

In Germany, buyers report that they have placed most of their first quarter orders at the same price as in the final trimester of 2014. All that is left to settle is a small amount of spot business. Customers are not anticipating the successful implementation of a significant rise in April either. They see no argument to support the initiative when mills are profitable and raw material costs have become so much cheaper. There is virtually no interest in third country offers at present. Service centres are quiet and have no urgent need to purchase.

Activity remains weak in the French market. Nonetheless, producers have started to implement a number of small price increases. They are benefitting from the situation at Ilva Taranto, which has been declared insolvent. Deliveries of sheets have been blocked even material already on board ships. Buyers need to find other suppliers quickly. As a result, mills have increased their offer prices and customers are accepting them. In contrast, at the end of January, a number of large automotive service centres negotiated reduced prices for the benchmark hot rolled coil in the second quarter.

Italian steelmakers have followed ArcelorMittal's lead by proposing small increases. Output from a number of local suppliers has been curtailed and the euro's weakness against the US dollar is making import quotations more expensive. Nevertheless, the market is extremely quiet. Many customers, who bought in December for delivery in the first quarter, are now waiting to see how prices will develop. Final demand remains slow. However, basis values do appear to have moved up slightly in the marketplace. More time is necessary to verify if this will be the definitive direction.

UK buyers report that major suppliers offered similar prices to last month, for March business. Continental mills are not pushing for an increase because the fall of the euro against the pound sterling has already given them a price advantage. Most producers have yet to discuss April selling values but many customers do not envisage a rise. Distributors enjoyed good January sales and, overall, their profits are reasonable. However, resale margins have come under a little pressure since mill prices weakened in January.

Belgian customers concluded the majority of first quarter deals at the January level. Steelmakers have informed buyers that their goal for the second trimester is a hike of EUR 10 to EUR 20 per tonne. Purchasers are not sure that this is achievable but stocks are low, so companies will need to buy. Moreover, producers are more successful in export markets now and imports have become more expensive.

Suppliers continue to try to improve their prices in Spain but clients report that their efforts are less robust than expected. Although inventories are not particularly high, many distributors can afford to wait before ordering more material. Service centre sales are stable and there is a renewed confidence in the market.

Source – MEPS

voda 20 februari 2015 13:42

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Tenaris announces annual result for Q4 2014

Summary of 2014 Fourth Quarter Results

EBITDA is defined as operating income plus depreciation, amortization and impairment charges/reversals. Operating income in the fourth quarter of 2014 includes an impairment charge of USD 206 million on our welded pipe operations in Colombia and Canada and our net income includes an additional impairment charge of $49 million on our investment in Usiminas which is recorded in the equity in earnings of non-consolidated companies line.

We ended the 2014 year with a good operational performance driven by higher sales in North America. Our sales in the fourth quarter rose 11% sequentially and our shipments of seamless pipe products reached the highest quarterly level since 2008. Our EBITDA rose 21% sequentially to USD 712 million and benefited from an improved mix of products and a high level of operating efficiencies. We recorded impairment charges of $206 million in our operating income on the value of our welded pipe assets in Colombia and Canada, reflecting the decline in oil prices and their impact on drilling activity and the demand outlook for welded pipe products in the regions served by these facilities. Our net income includes an additional charge of USD 49 million related to our investment in Usiminas, due to the deterioration of the business environment in Brazil and the decline in iron ore prices.

During the fourth quarter, our net cash position (cash and other current investments less total borrowings) decreased by USD 360 million to end the year at USD 1.3 billion, following investment of USD 375 million in capital expenditures and the payment of an interim dividend to shareholders of USD 177 million.

Summary of 2014 Annual Results;

EBITDA is defined as operating income plus depreciation, amortization and impairment charges/(reversals). Operating income in 2014 includes an impairment charge of USD 206 million on our welded pipe operations in Colombia and Canada and our net income includes an additional impairment charge of USD 49 million on our investment in Usiminas which is recorded in the equity in earnings of non-consolidated companies line.

In 2014, we maintained our net sales and EBITDA at a similar level to that in 2013, with higher sales in North America, sub Saharan Africa and Ecuador largely offsetting a steep decline in sales in Brazil and lower shipments of high value premium products in the Middle East, where Saudi Arabia began to reduce purchases to adjust inventory levels in the second half.

Our operating income, however, was down 13% year on year as we recorded impairment charges of USD 206 million on the value of our welded pipe assets in Colombia and Canada, reflecting the decline in oil prices, and their impact on drilling activity and the demand outlook for welded pipe products in the regions served by these facilities. Our net income includes an additional charge of USD 49 million related to our investment in Usiminas, due to the deterioration of the business environment in Brazil and the decline in iron ore prices.

Cash flow from operations amounted to USD 2.0 billion for the year. After capital expenditure of USD 1.1 billion and dividend payments of USD 531 million, we had a net cash position (cash and other current investments less total borrowings) of USD 1.3 billion at December 31st 2014, compared with USD 911 million at December 31st 2013.

Annual Dividend Proposal;
The board of directors proposes, for the approval of the annual general shareholders' meeting to be held on May 6th 2015, the payment of an annual dividend of USD 0.45 per share (USD 0.90 per ADS), or approximately USD 531 million, which includes the interim dividend of USD 0.15 per share (USD 0.30 per ADS), or approximately USD 177 million, paid in November, 2014. If the annual dividend is approved by the shareholders, a dividend of USD 0.30 per share (USD 0.60 per ADS), or approximately USD 354 million will be paid on May 20th 2015, with an ex-dividend date on May 18th 2015 and record date on May 19th 2015.

Source – Strategic Research Institute

voda 20 februari 2015 13:42

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UK iron ore price overhangs ferrous scrap market

The ferrous scrap metal sector within the UK continues to come under pressure as market demand for scrap weakens because of lower iron ore prices. And, there have been developments at the top two companies in the UK market EMR and Sims Metal Management this month.

Sims Metal Management has published its half yearly figures while a major appointment has been made at European Metal Recycling Ltd.

At EMR, Mr Bob Garwood, director for southern region, has been promoted to the post of chief executive. His appointment sees him taking on responsibility for the company's UK operations.

Mr Garwood has been with the company for more than 20 years, joining it when the metal recycling firm Mayer Parry was acquired by EMR in 2000. He is based in Erith, Kent and is well versed in UK market trends and activities, shipping and in the acquisition of businesses into the EMR Group.

Mr Chris Sheppard, group chief executive officer, who has responsibility for the company's global operations is expected to continue his global role with an expanded focus on EMR's growing activities in the United States. He took on the post in January 2012.

One observer said that “While the UK operation of EMR is still very important to the company, there is even greater opportunity for it in the US market.”

At Sims, which has had a troubled time in the UK in recent years, the company has published its first half results to December 2014 and noted that tonnage turnover is down 10% to 5.5 million tonnes globally.

Sims is a largely Australian owned business with its headquarters in New York. Chief executive Mr Galdino Claro said that despite the tonnage reduction, the company has however performed better in profit terms through operating discipline and market initiatives which have improved profit by over 50% compared to the prior year.

Mr Claro also highlighted one of the main reasons for the current depressed value of ferrous grades, noting that prices for ferrous scrap are down 15% and iron ore down 25% during the second half of 2014.

The fall in iron ore prices puts pressure on the customers of the ferrous scrap sector because the customers for the material are traditionally electric arc furnaces rather than blast furnaces. The iron ore price has fallen from about USD 96 per tonne last summer towards USD 70 now.

One analyst explained that the lower iron ore, energy and coke prices are of a big benefit to blast furnace operators because they use much less scrap, perhaps around only 25% of the input compared to electric arc furnaces which use around 80% scrap.

He added that the export market is in a state of volatility at present because of the uncertainty over whether or not scrap prices would fall further in the wake of steep falls seen in recent weeks.

Source – Lets Recycle

voda 20 februari 2015 13:44

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Sutor Technology announces financial result for Q2 of FY 2015

Sutor Technology Group Limited announced its unaudited financial results for the Q2 of fiscal year 2015 ended December 31st 2014.

Second Quarter of Fiscal Year 2015 Results;
Revenue. For the three months ended December 31st 2014, our revenue was USD 85.3 million, compared to USD 128.3 million for the same period last year, a decrease of USD 43.0 million, or 33.5%. The decrease was mainly attributable to the change in our business model. In the past, our revenue was primarily derived from selling manufactured products and the sales price included the cost of steel sheets plus a gross profit. With the fee-based processing services, the price of pure processing services does not include the cost of steel sheets as the customers are responsible for procurement of the raw materials.

As a result, revenue from processing one ton of fine finished steel products is only a fraction of the revenue from the traditional business model. We believe that the fee based model is more measurable and allows us to better adapt to the changes in the Chinese economy and improve company competitiveness.

On a geographic basis, revenue generated from outside of China was USD 1.5 million, or 1.7% of the total revenue, for the three months ended December 31st 2014, as compared to USD 5.1 million, or 4.0% of the total revenue, for the same period in 2013. The decrease was mainly because of the decline in demand for our products and the upgrading of PPGI production line. As a result, we did not produce the PPGI products which are our main exported products.

Cost of revenue. Cost of revenue decreased by USD 34.7 million, or 30.3%, to USD 80.0 million in the three months ended December 31st 2014, from USD 114.7 million in the same period in 2013. As a percentage of revenue, cost of revenue increased to 93.8% in the three months ended December 31st 2014, as compared to 89.4% in the same period last year.

The decrease in cost of revenue was mainly due to our new fee based processing model that part of our business became pure processing service, which significantly reduced our cost of revenue However, its percentage of revenue increased because those fixed costs including depreciation and amortization cost did not decrease at the early stage of our transformation period.

Gross profit and gross margin. Gross profit decreased by USD 8.3 million to USD 5.3 million in the three months ended December 31st 2014, from USD 13.6 million in the same period in 2013. Gross profit as a percentage of revenue (gross margin) was 6.2% for the three months ended December 31st 2014, as compared to 10.6% for the same period last year.

The main reason for the declined gross margin was the scheduled technical upgrading of our PPGI production line and as a result, we did not produce high margin PPGI products. In addition, in order to speed up our transformation, we offered more competitive prices for processing services to attract more customers.

Total operating expenses. Our total operating expenses decreased by USD 1.4 million to USD 2.6 million in the three months ended December 31st 2014, from USD 4.0 million in the same period in 2013. As a percentage of revenue, our total operating expenses remained 3.1% in the three months ended December 31st 2014, the same as in the same period last year.

Selling expenses. Our selling expenses decreased by USD 0.5 million to USD 0.8 million in the three months ended December 31st 2014, from USD 1.3 million in the same period in 2013. As a percentage of revenue, our selling expenses decreased to 0.9% for the three months ended December 31st 2014, from 1.0% for the same period last year. The decrease was mainly due to reduced shipping, handling and miscellaneous expenses of approximately USD 0.65 million as a result of our declined sales.

General and administrative expenses. General and administrative expenses was USD 1.9 million, or 2.2% of the total revenue, in the three months ended December 31st 2014, as compared with USD 2.62 million, or 2.1% of the revenue, in the same period in 2013. The decrease was primarily due to reduced office expenses and miscellaneous local fees resulted from the reduction of our sales.

Interest Income. Our interest Income decreased by USD 0.6 million to USD 0.2 million in the three months ended December 31st 2014, from USD 0.8 million in the same period in 2013. As a percentage of revenue, our interest expense was 0.2% of total revenue in the three months ended December 31st 2014, compared to 0.6% in the same period in 2013. The decrease was mainly due to a change in financing structure. Our notes payable decreased during the three months ended December 31st 2014, which resulted in less restricted cash and accordingly lower interest income. The decrease of notes payable reduced our discounted cost and financial cost.

Interest expense. Our interest expense decreased by USD 0.2 million to USD 2.4 million in the three months ended December 31st 2014, from USD 2.6 million in the same period in 2013. As a percentage of revenue, our interest expense was 2.9% of total revenue in the three months ended December 31st 2014, compared to 2.0% in the same period in 2013. The decrease was mainly due to the fact that some of our bank acceptances were converted to short term loans, which reduced our interest expense.

Provision for income taxes. Our income tax expense decreased to USD 0.2 million in the three months ended December 31st 2014, from USD 1.6 million of income tax benefit in the same period last year, mainly due to the decreased taxable profit amount.

Net income. Net income, without including the foreign currency translation adjustment, decreased by USD 6.37 million, or 99.5%, to USD 0.03 million in the three months ended December 31st 2014, from USD 6.4 million in the same period in 2013, as a cumulative result of the above factors.

Ms Lifang Chen, CEO and President of Sutor said that "We are pleased to see our performance turned from net loss for the first quarter of fiscal 2015 to profit for the second quarter. Although our second quarter revenue and net income decreased as compared with same period last year, both of them increased by 124.5% and 100.6%, respectively, compared with the first quarter of this fiscal year, which demonstrates the initial success of our business transformation as we are focusing more on sales quality improvement. We anticipate that we will continue to see improved results in the coming quarters both in overall gross margin and international sales after our PPGI production line upgrading is finished and operation of that line resumes, which are expected to be in the third fiscal quarter."

voda 20 februari 2015 13:44

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part 2

Ms Chen said that "The Chinese economy is undergoing a structural adjustment and experiencing a slowdown. However, we believe this process provides opportunities for Chinese steel enterprises to carry out business transformation and upgrading and we are trying to capitalize on this historical opportunity to change our business model, strengthen our brand awareness and enhance innovation with a goal to develop new markets and cultivate new drivers of profit growth of our company."

She said that "Besides that, our PRC subsidiary, Sutor Technology engages in the development of online to offline (O2O) E-commerce. We believe that the combination of online promotional trading platform and traditional offline sales service not only maximizes our sales opportunity, but also reduces our procurement and sales cost. Following the trend of structural transformation and specialization in the world steel industry, we have made significant progress in taking potential merger and acquisition to consolidate resources of upstream and downstream. Our goal is to integrate all functions of R&D, sales, processing and logistics service together and upgrade ourselves from a traditional manufacturer of fine finished steel to a customized processing service provider. We will update the market on this development when it is appropriate."

Source – Strategic Research Institute

voda 20 februari 2015 13:45

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Japan steel export prices near 9 year low

Japanese steel exports are facing a flood of Chinese products in Asia, resulting in plummeting prices and a slack market.

The export price of hot rolled coil, which is processed into steel sheet, recently came to USD 430 per tonne. It has fallen 17% since the start of the year to the lowest level in nearly nine years. Domestic steelmakers are asking around USD 530 per tonne for H-beam steel, also down 17% for the year, but even then are reportedly having trouble finding buyers.

An oversupply in China, stemming from slower growth in the country's steel demand, has pushed down prices there. This has prompted Chinese steelmakers to increase exports at low prices, dragging down the Asian market as a whole. China exported a record 10.29 million tonnes of steel in January, 50% more than a year earlier.

China discontinued tax preferences that month for some types of steel products, but H-beams and hot-rolled coil were not included. As a result, H-beam steel bound for South Korea in some cases has fallen to USD 400 per tonne.

Scrap iron, used as a raw material by electric furnace steelmakers, dropped nearly 30% to around USD 230 per tonne this month in the US The ripple effect from this touched Japanese steel, which tends to have relatively stable pricing because of its high quality.

In Japan, the price of steel sheet has fallen around JPY 1,000 per tonne or 1%, since the start of the year. Prices dropped several thousand yen between last summer and the end of the year but the pace of decline has accelerated on the plunge in scrap iron export prices.

High inventories have been another factor. Manufacturer and retail inventories for the three major types of steel sheet cold rolled, hot rolled and surface treated grew 6% on the year to 4.18 million tonnes at the end of 2014. Slow shipments to the auto industry were the main reason for the rise.

Source – Asia Nikkei

voda 20 februari 2015 13:46

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Weak ruble brings Russian steelmaker Severstal to new heights

Russian steelmaker Severstal reported its best core earnings margin in six years in the last quarter of 2014, helped by a weakened ruble that lifted exports and cut its costs.

Severstal is the first Russian steelmaker to report financials for the final quarter of last year, when the ruble lost 30% against the dollar due to weak oil prices and Western sanctions over the Ukraine crisis.

While many Russian companies have been hit by a downturn in the economy, exporters are supported by the 50% drop in the ruble since the beginning of last year as their product is now cheaper on dollar denominated global markets.

Severstal said that its margin on earnings before interest, taxes, depreciation and amortization (EBITDA), a measure of a company's operating profitability, reached the highest level since the Q3 of 2008.

Mr Alexei Mordashov, Severstal's main owner said that "We were able to significantly further improve our EBITDA margin reaching 32.1% in the fourth quarter, which are among the highest margins in the industry globally. Domestic steel consumption will weaken in 2015, but Severstal hopes to compensate for it with higher exports.”

Severstal, which reports its accounts in US dollars, said that the depreciating ruble, lower input costs and efficiency improvements at its steel operations in Russia had mitigated the impact of lower selling prices. Its profitability has also been supported by the decision to sell two U.S. steel plants for USD 2.3 billion in September.

Mr Mordashov, who is also Severstal's chief executive, said that he expected the company's EBITDA margin to remain high in 2015 and saw steel output broadly flat with potential for 4% growth. However, the company's bottom line has been hit by non cash write offs: its Q4 net loss widened to USD 795 million from USD 45 million in the previous quarter.

Source – The Moscow Times

voda 20 februari 2015 13:47

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Brazil's Usiminas reports Q4 net loss of BRR 117 million

Reuters reported that Usinas Siderurgicas de Minas Gerais SA, the Brazilian steelmaker known as Usiminas, reported Q4 net loss of BRR 117 million.

The company was supposed to release financial results on Friday morning though the board had not yet approved the report by that time.

Usiminas earned BRR 47 million in the fourth quarter of 2013.

Source – Reuters

voda 20 februari 2015 13:47

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Roy Hill iron ore mine on schedule for Sept 2015

Australian billionaire Ms Gina Rinehart's AUD 10 billion Roy Hill iron ore mine is on track to begin exporting in September 2015 and will have shipped 5 million tonnes by the end of the year.

Mr Garry Torte, CFO of Roy Hill said that “We're certainly on budget. We remain ahead of overall schedule. The 55 million tonnes a year mine is expected to ramp up ahead of the company's original 30 month timeline.”

Mr Torte said that after a string of safety incidents at the mine site, local media recently reported that parts of the project have fallen behind schedule. The time lost as a result of those incidents had been made up by contractor Samsung C&T.

The mine is set to come online as iron ore is trading near six-year lows at just below AUD 64 per tonne .IO62-CNI=SI and amid a deepening glut stoked by low cost, global miners ramping up supply to ship more to China. The price has fallen a further 11% this year, stretching last year's 47% slide.

He said that Roy Hill sits in the bottom quartile of iron ore producers and as a result is protected from dips in the iron ore price. We're very comfortable with prices where they are now.

Source - Mineweb

voda 20 februari 2015 13:49

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HSE warning after TATA Steel is sentenced

HSE has warned companies to ensure they maintain plant and machinery properly and instruct, train, inform and supervise staff consistently, following the prosecution of global steel giant TATA.

The company was fined GBP 200,000 after three employees suffered serious burns when 300 tonnes of molten metal spilled onto the factory floor and ignited.

Swansea Crown Court heard on 16 February that trainee crane driver Kelvin Watts and two colleagues escaped from the top of a crane and over the boom when a huge ladle dislodged spilling the molten metal, which then caught fire, at TATA Strip Products in Port Talbot on April 2nd 2013.

Mr Watts from Port Talbot, was operating an electric overhead crane and being supervised by an experienced trainer and had another trainer present when the incident happened. He had picked up a full ladle of molten metal using the crane and had asked for confirmation that one of the hooks was properly on the ladle as the crane's camera system was not working.

When he was alerted by the plant control room that the hook was not fully attached, he stopped the crane and put it into reverse. But the ladle dislodged, spilling the load onto the floor. Moments later, fire broke out and reached the cab of the crane, resulting in burns to the three men as they desperately tried to escape to safety.

Mr Watts suffered severe burns on his head and forearms and spent several days in hospital. He has suffered repeated infections in the burns since and has been unable to return to work.

His two colleagues, also from Port Talbot, were less severely burnt and although they are back at Tata, neither can face driving the cranes or entering the area where the incident occurred.

TATA has since installed a new camera system, improved lighting, and managers now scrutinise all pre use checks. If the camera system fails, spotters are put in place to ensure crane hooks are properly latched onto ladle handles.

TATA Steel Ltd, of Millbank, London was fined GBP 200,000 and ordered to pay costs of GBP 11,190 after pleading guilty to a breach of section 2(1) of the Health and Safety at Work etc. Act 1974.

Mr Joanne Carter, HSE inspector said that “There was clear evidence at Tata Steel of poor maintenance, inconsistent training and managers misunderstanding the problems faced by operators. Given the potential consequences of a ladle holding 300 tonnes of molten metal spilling its load onto the floor, control measures should be watertight. The incident could have been avoided had the safety measures introduced afterwards been in place at the time.”

He said that “Companies must maintain plant and machinery properly and instruct, train, inform and supervise staff consistently if they are going to prevent injury. Reacting after the event is not acceptable and can be too late for some workers.”

Source – SHP Online

voda 20 februari 2015 13:50

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Second dry bulk shipper files for bankruptcy as freight rates collapse

Reuters reported that a 2nd dry cargo shipper has filed for bankruptcy following a collapse in freight rates that has forced many companies to idle vessels used to haul iron ore, coal and grain rather than hire out the ships at a loss.

Weaker demand from China and an oversupply of ships has led to the worst industry downturn in 30 years, pushing the Baltic dry index, the industry benchmark for freight rates, to an all-time low.

China's Winland Ocean Shipping Corporation filed for Chapter 11 bankruptcy protection in the United States on February 12th, court documents show, the second banruptcy this month.

The document said that due to current market conditions, the financial position of the company and its subsidiaries has deteriorated, leading to immediate difficulties, it had therefore filed for Chapter 11 protection.

Privately owned Danish firm Copenship filed for bankruptcy earlier in February after losses in the dry bulk market.

Mr Hsu Chih-chien, chairman of Hong Kong and Singapore-listed dry bulk shipper Courage Marine, said that "The combination of lower steel demand in China and the huge volume of new tonnage coming on line is what is causing panic and making this the worst bulk market since the mid-1980s."

China's imports tumbled 19.9% from a year earlier as its economy grows at its slowest rate in 24 years.

The current freight rate for carrying a cargo of coal in a panamax ship from Indonesia to southern China is about USD 3,000 per day, compared with more than USD 6,000 last year. The Baltic dry index has slumped by nearly 2/3 in the past 15 months.

Adding to slowing demand is a swelling fleet, with the number of ordered capesize and panamax carriers for the next three years equal to 39% of the existing fleet, according to shipping services firm Clarkson. Yet dry-bulk seaborne trade rose only 4% last year.

As a result, dozens of capesize and panamax vessels have been idle around Singapore, Hong Kong and off South Africa's coast.

Dry-bulkers are not the only shippers in trouble. Over 10% of the global LNG tanker fleet is currently idled after Asian LNG prices fell almost 2/3 since February 2014.

Source - Reuters

voda 20 februari 2015 13:51

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Wereldwijde staalproductie neemt af

VRIJDAG 20 FEBRUARI 2015, 13:36 uur | 25 keer gelezen

BRUSSEL (AFN) - De wereldwijde productie van staal is in januari met bijna 3 procent gekrompen ten opzichte van een jaar eerder. Dat maakte de World Steel Association vrijdag bekend.

China produceerde vorige maand 65,5 miljoen ton staal. Dat is bijna 5 procent minder dan in de eerste maand van 2014. Ondanks die afname blijft het land goed voor bijna de helft van de totale staalproductie.

De productie in de Europese Unie zakte met ruim 1 procent naar 14,5 miljoen ton. Daarvan werd circa een vierde in Duitsland geproduceerd, waar de productie met 0,5 procent toenam. In Italië kromp de productie met ruim 11 procent af, tot 1,9 miljoen ton. In Frankrijk zakte de productie met bijna 11 procent, terwijl in Spanje juist bijna 12 procent meer staal werd gemaakt dan een jaar eerder.

De productie in Nederland zakte met 2,5 procent naar 598.000 ton.

voda 20 februari 2015 13:52

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Nevada Iron signs a rail freight contract with Union Pacific

Nevada Iron Limited is pleased to announce that it has signed a contract with Union Pacific Railroad to transport the Company's iron ore concentrate from its Huxley rail siding to a variety of ports located on the US west coast.

The binding contract is for a term of 5 years, commencing January 1st 2016 and covers iron ore concentrate delivered to the agreed ports. The contract does not impose any fixed minimum volumes or Take or Pay obligations on the Company.

The contract includes standard rail freight rates, with a variable rate schedule that adjusts with the rise and fall of fuel prices, which have experienced a significant downward trend over the past 6 months. The Company will be required to construct a rail yard facility at Huxley, which forms part of the capital cost of the project.

Union Pacific Corporation is one of America's leading transportation companies. Its principal operating company, Union Pacific Railroad, is North America's premier railroad franchise, covering 23 states across the western two-thirds of the United States. In 2013, Union Pacific employed 46,500 people and ran in excess of 8,300 locomotives.

Union Pacific owns the rail line that passes by the Company's owned Huxley rail siding, which connects to the US west coast ports.

Mr McMullen, Executive Chairman, said on the contract that "This contract provides certainty for our shareholders in terms of our ability to access the rail infrastructure between our Huxley rail siding and the west coast ports at reasonable freight rates. It partners us with Union Pacific for our freight needs, who bring a wealth of operational experience to the project. The 5 year term of the contract allows us to get our Phase 1 operation up and running while we assess Phase 2 and its logistical requirements, which may include a rail spur or slurry line from the mine site.

Mr McMullen said that “As with most iron ore projects, the logistics represent a major part of the cost of delivering product to customers. Locking down the Union Pacific rail contract reduces our risk in this area. With the falling oil prices witnessed over the last 6 months, large falls in transport rates from US west coast ports to China have resulted. While iron ore prices have also fallen, the reduction in freight costs from site to China has, at least partially, offset the iron ore price falls.”

He said that "We are continuing with the advancement of the project towards a development decision and are currently working on the completion of the remainder of the required commercial agreements."

Source – Strategic Research Institute

voda 20 februari 2015 16:08

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ArcelorMittal planning to acquire Italy's Ilva

ArcelorMittal SA has expressed that the company is still interested in acquiring southern Italian steel manufacturer Ilva, according to ArcelorMittal's Chief Financial Officer Aditya Mittal.

Aditya reportedly said that he still believes they can create value for ArcelorMittal shareholders but at the same time he added that the company remains very much focused to ensure that they do not move away from the company’s objective of a deleveraged balance sheet.

Ilva operates Europe's biggest steel plant , situated in southernmost Italian city of Taranto but has been facing an environmental scandal off late.

www.ziddu.com/show/7010/sports/arcelo...

(Met dank aan poster TraderRon)

voda 21 februari 2015 15:36

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Global crude steel production dips in January as Chinese dragons goes in slumber

The recent predictions about Chinese steel sector hitting peak seem to have been proved right as Chinese crude steel production has dipped in January YoY. Now the trend is ominously clear that Chinese production growth is definitely flattening, even if it hasn't peaked yet although CISA had projected a further output rise to 837 million tonnes in 2015.

Words of Mr Zhang Guangning new chairman of the China Iron & Steel Association, which generated shock waves in global steel and mining sector, that "China's steel sector has already entered a period of peaking and flattening out" are proving to be right as Chinese crude steel production in January 2015 was down by 4.7% YoY to 65.5 million tonnes plunging the global crude steel numbers in red zone

As per latest release of World Steel Association (worldsteel), global crude steel production in January 2015 (For the 65 countries reporting to it) was 133 million tonnes down by 2.9% decrease compared to January 2014.

Global crude steel growth in past was being driven by China and the January decline of 2.9 YoY is a direct result of slowdown in China. Incidentally, Chinese New Year in 2014 was on January 31st and January 2014 numbers were as such not a true reflection of production rate at that time

Adding to the Chinese woes, crude steel production also declined YoY in some other top steel making nations in January 2015. Other countries reporting YoY decline include second largest steel producing nation Japan (-4% YoY), South Korea (-4.3%), Turkey (-10%), Italy (-11%) and Ukraine (-25%), Mexico (-6%) and France (-11%). While production was almost flat YoY in America and USA, growth is reported for Russia (+5.6%) and Brazil (+7.7%)

The crude steel capacity utilization ratio for the 65 countries in January 2015 was 72.5%. It is -4.4 percentage points lower than January 2014. Compared to December 2014, it is -0.4 percentage points lower

Source - Strategic Research Institute

voda 21 februari 2015 15:37

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Chinese steel market might turn out to be damp squib after Lunar Holiday

With chances of recovery of domestic prices in China next week when markets reopen after New Year holiday being remote, Chinese steel mills could lower their export offers further by USD 10-20 per tonne causing more pain to steel makers in other parts of the world including India

Despair is the last word in Chinese steel market with frequent twists and turns of the dynamics failing to find an outlet from impasse. Even though Chinese steel industry had harrowing 2014 and 2015 fared no better. After a paltry 0.9 % growth in steel production in 2014, the market took second thud with declining steel consumption by 3.4 % to 740 million tonnes, lowest in last 30 years. Piling steel inventory has only led to accelerated export touching 94 million tonne in 2014. In December and January alone the export has been above 10 million tonne signifying the compulsion to ease out volumes otherwise finding no takers in lackluster domestic market.

In consonance with the market sentiments steel production and demand has further receded in the first 6 weeks of 2015 leaving no room for optimism. However expectancy has been building up off late about turn around in market sentiments after the Lunar Holiday (18th-24th February).

Steel demand picks up in after the Spring Break since warming weather brings with it enhanced construction activity. The tendency to expect got more accentuated in contrast to despair and signals of government rearing let go some control over the lending rate in bid to maintain growth at least 7% in 2015 . Much talked about the yearly plan likely to be decided in 1st Week March is raising aspirations of stimulus by a desperate government to rein the downslide of economic indicators.

Chinese mills in the meanwhile have pressed the accelerator to export more volumes despite spanner by the government removing export rebate on some boron added products. But there is strong corroborating evidence that their domestic demand is struggling and as a result domestic steel prices within China are completely bombed out. On the Shanghai Futures Exchange, steel rebar, a form of steel most associated with construction, has spent the last couple of months wallowing at its lowest levels since the contract was launched in 2009. Hot rolled coil, more reflective of the broader manufacturing sector, had been holding up better until it too collapsed in the early part of January.

Ghost towns of empty residential blocks attest to the exuberance of the property boom. As this previous driver of steel demand slows, the consequences of past excess are mirrored in the zombie steel mills producing surplus product at a loss.

Export being the only outlet will remain so as the primary outlet for volumes being churned out of Chinese mills post Lunar Holiday as well, since the domestic demand is unlikely to pick up in the absence of any concerted policy measure by the government.

In this scenario, Chinese export prices are unlikely to recover from current levels, which are already low enough to cause havoc in most parts of the world

HR price levels have already touched low of USD 390 per tonne CFR India in the 2nd week of February with Chinese mills hankering for volumes before the holiday. The rout in Russian Ruble and Ukrainian Hryvnia (50%) arms CIS steel mills to grab export orders at levels. The heat will be on after the holiday with Russian and Ukrainian mills in full steam to book orders along with Japanese and Koreans. The booking levels have already plummeted by USD 5 per tonne meanwhile at USD 385 per tonne CFR India from Ukraine for pipe making and structural grade. In cold rolling grade Japanese and Koreans have already lowered their levels to USD 430-435 per tonne and USD 435-445 per tonne, CFR India respectively. The Russian set to book new orders at USD 400 per tonne the Chinese will have to bid lower to get orders.

In the light of the above the element of surprise is nonexistent after Lunar Holiday. On the contrary, the chances of further slippage of HR FOB levels further by USD 10-20 can not be ruled out

Source - Strategic Research Institute

voda 21 februari 2015 15:38

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Vale update on production result for Q4 and 2014

Production Highlights
Vale delivered a strong operational performance in Q4 2014 and in 2014, with production records in iron ore, nickel, copper and gold. Iron ore inventories decreased by 4.8 million tonnes in Q4 2014 supported by record shipments in the quarter.

Iron Ore
1. Annual supply record of 331.6 million tonnes in 2014, including own production record of 319.2 million tonnes and 12.3 million tonnes of ore acquired from third parties.
2. Annual production record in Carajas of 119.7 million tonnes in 2014, 14.8 million tonnes higher that in 2013.
3. Annual production in the Southern System of 86.3 million tonnes in 2014, the highest annual mark since 2007, 7.3 million tonnes higher than in 2013.
4. Quarterly production record for a fourth quarter of 83.0 million tonnes in Q4 2014, 1.7 million tonnes higher than in Q4 2013.
5. Quarterly production record in Carajas of 34.9 million tonnes, 2.7 million tonnes higher than in Q3 2014 and 3.3 million tonnes higher than in Q4 2013.
6. Quarterly transportation record of 32.9 million tonnes in the Estrada de Ferro Carajás (EFC) railway, 2.1 million tonnes higher than in Q4 2013.
7. Quarterly shipments record of 32.8 million tonnes in the Ponta da Madeira port, 1.5 million tonnes higher than in Q4 2013.

Pellets;
1. Annual production, excluding Samarco's output of 43.0 million tonnes in 2014, just 0.8 million tonnes below our target for the year and 4.0 million tonnes higher than in 2013.
2. Annual production record in Oman of 8.6 million tonnes in 2014, 0.3 million tonnes higher than in 2013.
3. Annual production record in Samarco of 12.1 million tonnes (attributable production) in 2014, 1.5 million tonnes higher than in 2013.
4. Quarterly production record, excluding Samarco's output, for a fourth quarter of 11.6 million tonnes in Q4 2014, 0.2 million tonnes higher than in Q3 2014 and 1.2 million tonnes higher than in Q4 2013.
5. Quarterly production record in Oman of 2.4 million tonnes, 0.1 million tonnes higher than in Q3 2014.
6. Quarterly production record in Samarco of 3.5 million tonnes (attributable production) in Q4 2014, 0.2 million tonnes higher than in Q3 2014 and 2.7 million tonnes higher than in Q4 2013.

Nickel;
1. Annual production of 275,000 tonnes the highest annual mark since 2008, despite the almost two month stoppage of VNC's operation during the year.
2. Annual production record in VNC of 19,000 t in 2014, 3,000 t higher than in 2013.
3. Annual production record in Onça Puma of 21,000 tonnes in 2014, 19,000 tonnes higher than in 2013.
4. Annual production record at PT Vale Indonesia Tbk of 78,000 tonnes of nickel in matte.
5. Quarterly production record of 73,600 tonnes, 1,500 tonnes higher than in 3Q14 and 5,700 tonnes higher than in Q4 2013.
6. Quarterly production of 6,200 tonnes at VNC, the second best quarterly result for VNC finished nickel production and 2,400 tonnes higher than in Q3 2014 and 4,100 tonnes higher than in Q4 2013.

Copper;
1. Annual production record of 379,700 tonnes in 2014, 9,600 tonnes higher than in 2013.
2. Annual production record at Salobo of 98,000 tonnes in 2014, 33,000 tonnes higher than in 2013.
3. Quarterly production record of 105,400 tonnes, 600 tonnes higher than in Q3 2014 and 10,800 tonnes higher that in Q4 2013.
4. Quarterly production record at Salobo of 31,600 tonnes, 5,700 tonnes higher than in Q 2014 and 10,500 tonnes higher than in Q4 2013.

Gold;
1. Annual production record of 321,000 oz in 2014, 35,000 oz higher than in 2013.
2. Quarterly production record of 93,600 oz, 9,600 oz higher than in Q3 2014 and 5,300 oz higher than in Q4 2013.

Coal;
1. Annual production of 8.6 million tonnes in 2014, 0.1 million tonnes lower than in 2013.
2. Annual production record in Moatize of 4.9 million tonnes in 2014, 1.1 million tonnes higher than in 2013.
3. Quarterly production of 2.3 million tonnes, slightly lower than in Q3 2014, negatively impacted by the stoppage of the Integra coal mine in Australia.
4. Quarterly production record in Moatize of 1.4 million tonnes, 0.1 million tonnes higher than in Q3 2014 and 0.8 MT million tonnes higher than in Q4 2013.

Phosphate Rock;
1. Annual production of 8.4 million tonnes in 2014, 0.1 million tonnes higher than in 2013, due to the good performance of Bayovar.

Source - Strategic Research Institute

voda 21 februari 2015 15:43

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Toyota gives Japanese steel suppliers a break despite global slow down

Toyota has reportedly decided to skip price cut demand to its domestic steel suppliers, in a move seen as an unexpected concession as it experiences strong earnings bolstered by the weak yen.

The move comes in spite of falling steel prices on international markets due to weaker demand from China.

The move by Toyota follows earlier decisions to not ask its automotive components suppliers to lower their prices. The steel makers are involved in separate negotiations with Toyota.

Nikkei said that steelmakers went into negotiations with Toyota expecting to be forced to cut prices substantially, but the two sides agreed to maintain prices at current levels.

The report added that some in the steel industry may 'call it a victory for Abenomics', given the government's hopes that Toyota will be one of the key companies to help boost Japan's weak economy.

Source - www.just-auto.com

voda 21 februari 2015 15:44

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Steel & Tube posts 35pct gain in H1 profit on uplift in construction

Business Desk reported that Steel & Tube, New Zealand's largest steel distribution company, lifted first half profit by 35% in line with expectations, following last year's acquisition of S&T Stainless and an uplift in construction activity.

The Wellington based company said that net profit was USD 10.8 million in the six months ended December 31 up from USD 8.03 million a year earlier. Sales rose 22% to USD 258 million.

Mr David Taylor CEO of Steel & Tube said that the results were pleasing against a global backdrop of increasing geopolitical uncertainty, financial market volatility and intense domestic competition.

He said that “Construction has underpinned much of our increased activity and though this is likely to plateau, those parts of our business aligned to the sector are expected to continue delivering strong results.”

The company imports, distributes and manufactures around 58,000 steel products and its key industry sectors include commercial and residential construction, manufacturing, heavy and light engineering, energy, viticulture and rural. It acquired TATA Steel (Australasia) for AUD 28.1 million last April and renamed it S&T Stainless.

Mr Taylor said that the results show S&T's ability to maintain earnings and revenue momentum while making significant investments in facilities, plant and connectivity.

Source - Business Desk

voda 21 februari 2015 15:46

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ThyssenKrupp issued dual tranche bond with a total volume of EUR 1.35 billion

ThyssenKrupp AG issued a dual tranche bond with a total volume of EUR 1.35 billion documented under the company's EUR 10 billion Debt Issuance Programme Joint bookrunners are BayernLB, Citi, Commerzbank and UniCredit Bank.

The bond was issued in two tranches with the following parameters:
1. The first tranche has a maturity of 5 years and 9 months and a volume of EUR 750 million. It carries a coupon of 1.75 % p.a. at an issue price of 99.328%.
2. The second tranche has a maturity of 10 years and a volume of EUR 600 million. It carries a coupon of 2.5 % p.a. at an issue price of 98.818 %.

With this transaction ThyssenKrupp AG makes use of the good market environment, extends its maturity profile and strengthens the debt capital market share in its financing mix.

The bond has a minimum denomination of 1,000 Euro and is therefore eligible to be bought at the stock exchange by retail investors presumably starting on February 25th, 2015.

Source - Strategic Research Institute

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