Metals analysis

[metalbiz888]

CR plate market showed no indications of recovery with continuously price decline in recent days and merchants were pessimistic about later market. However, analysts predicted that the price decline of CR plate will probably not stop in a short period but will slow down and turn to be stable.
According to market research, price of CR plate in Shanghai kept decreasing last week, with the average decline at 200 Yuan per ton. This is the same with markets in other areas. For example, the price fell 150-200 Yuan per ton with one week in Hangzhou city and Jinan city. Besides, the price decline trend was so string that there seemed to be no indications of recovery with poor transactions and strong wait-and-see attitude. Merchants predicted that price decline will continue so they dared not to increase inventory as demands remained decreasing.
Because market resources kept increasing, which intensified the contradiction between the supply and the demand, some analyst denoted. News from steel enterprises showed that CR plate inventory remained high which caused great pressure. Steel enterprises are eager to sell even at low prices to speed up inventory delivery, which affected spot price directly. For example, the current price of 1.0mm CR plate was only around 3,750-3,950 Yuan per ton in east China, down 150-300 Yuan per ton. It’s from chinametalbiz.com.

 

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Analysis of China steel market trend in Dec

In November this year, the financial storm caused by US credit crisis kept expanding, which shook the global economic structure. The impacts on real economy intensified. Data released by US Department of Labor showed that the CPI index in US fell 1pc in Oct. from the previous month, the largest decline within recent 61 months. The report from US Department of Commerce revealed that new houses being built plunged by 4.5pc in Oct., the lowest since 1947, which indicate the serious economic slump in US.

The monthly investigation from European Commission showed that the integrated prosperity index in Euro zone dropped from 80.0 in Oct. to 74.9 in Nov., the lowest since Aug., 1993 and far below than the prediction of 78.0 from economists.

Nations like Japan, South Korea and India, etc. fell into the same economic recessions. The latest report from IMF pointed that global economic fell into downturn, and the export increase from Asia shrank drastically. Meanwhile, the economic growth will slow down sharply. Therefore, the expectation of GDP growth in 2008 and 2009 on Asia was reduced to 6pc and 4.9pc respectively from chinametalbiz.com

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CISA: Steel spring not too far away

“Steel prices had plunged to the level of 1994. Winter is coming, indicating that spring is not too far away.” Qi Xiangdong, vice general secretary of China Iron and Steel Association (CISA) expressed.

Data from CISA shows that in Jan.-Nov., China produced 462.96 million tons of steel products, up 2.6pc over the same period last year, while the growth dropped back 14.1pc year-on-year. In Nov., China produced 35.9 million tons of steel products, down 4.97 million tons and 12.4pc from the same period last year.

Steel production showed unprecedented rapid decline in Sept.. In June this year, the daily steel production scored the historical high of 1.5648 million tons, equivalent to the annual production of 573 million tons. The daily steel production dropped to 1.3205 million tons in Sept., equivalent to the annual production of 482 million tons, while the average output fell to 1.1581 million tons in Oct., equivalent to that of 423 million tons a year. In Nov., the daily output plunged to 1.07 million tons, equivalent to that of 393 million tons per year. For further info visit chinametalbiz.com

 

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Iron ore entering long-term buyers' market

Although insiders generally thought the buyers’ market of iron ore would come sooner or later, but they didn’t predict that the result had approached in such a prompt and severe speed due to U.S. subprime mortgage crisis.

Affected by the ongoing financial crisis, steel production radically declines, as well as the large-scale concentrated release of iron ore investment previously, the buyers’ market of iron ore has come in the third quarter of 2008.

According to the statistics data from EconStats, iron ore price in international market had rapidly decreased from the peak of $183 per ton in July, 2008 to $71 per ton in November. However, analysts thought latter iron ore demand would continue to slump, iron ore price would keep sinking, and the poor situation would last for 3-5 years.

Buyers’ market of iron ore coming
On Jan.15, on the symposium of 2009 iron ore import held by China Iron & Steel Association (CISA), Wu Xichun, the consultant of CISA pointed out that global iron ore was bound to oversupply in 2009, as bulk commodity’s prices general sank, global iron ore demand sharply declined, and iron ore and steel products demand from China continued to plunge. For further info visit chinametalbiz.com

 

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Nonferrous metals EXW prices expected to be better in Feb.

EXW prices of nonferrous metals products fell 24.6pc in Jan. from the same period last year, according to National Bureau of Statistics (NBS).

Insiders expressed that this was mainly affected by global economic recession. Under a series of favorable policies and consumption stimulation, EXW prices of nonferrous metals will rebound to some extent over Jan., but will also have large decline year-on-year.

On Feb.10, NBS issued that in Jan., EXW prices of industrial products fell 3.3pc from the previous year, while EXW prices of nonferrous metals dropped 24.6pc.

Feb.Aluminum Copper lead zinc
Price up (m-o-m%) -19.8 -41.1 -36.7 -43.0

According to SMMI in Shanghai, price index of nonferrous metals was around 1,400 points in Jan., down 49pc year-on-year. For further info visit chinametalbiz.com

 

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Price trend analysis of recent steel market

Feb.18 MetalBiz--Under the drive of economic stimulus package in January, domestic steel market presented a recovery situation, market confidence further restored, steel production and demand inclined to some extent, and steel products prices slightly rebounded, thus made the declining range of international steel market slowed down.

Domestic steel prices faintly rebounded.
At the end of January, the composite price index of domestic steel products stood at 107.69, up 4.39 month-on-month, but down 18.62pc year-on-year.

The composite price index table of domestic steel products
Price index End-Jan., 2009 End-Dec., 2008 Growth m-o-m (%) Up&Down
(%) The same period last year Growth y-o-y (%) Up&Down
(%)
Composite 107.69 103.3 4.39 4.25 126.31 -18.62 -14.74
Long products 111.96 108.54 3.42 3.15 13.79 -18.83 -14.40
Plate products 106.50 101.69 4.81 4.73 127.74 -21.24 -16.63

In addition, varieties products prices all boosted to some extent, especially hot-rolled coil and plate and cold-rolled sheet. For further info visit chinametalbiz.com

 

[metalbiz888]

Steel market remains dim prospect on weak demand and idle capacity

China's steel market was not yet in sight of recovery as shrinking exports and overcapacity continued, officials from the China Iron and Steel Association (CISA) said.

Luo Bingsheng, CISA's executive deputy director, said at a conference on Monday that the rise in steel prices from December to February was not a sign of recovery. The country's steel market would remain subdued this year because of shrinking demand and huge capacity, he added.

CISA vice secretary general Qi Xiangdong put the rise in prices down to an increase in stockpiling.

"The financial crisis and the domestic economic slowdown resulted in contraction in both overseas and domestic markets", Luo said, noting China, the world largest producer and consumer, was facing many uncertainties.

The lingering financial crisis dragged the world economy into recession.

Many steel-consuming industries were seriously battered, especially construction, automobile and shipbuilding, which caused a steep drop in steel demand and therefore eroded China's steel exports, the Beijing Lange Steel Information Research Center said.

According to the General Administration of Customs, China exported 1.91 million tons of rolled steel last month, a decline of 2.22 million tons, or 53.8 percent, from the same month of 2008. The steel exports were also 1.26 million tons, or 39.7 percent, below the December level.

The prospect is not upbeat as the World Steel Association forecasted the global demand for steel would fall more than 10 percent in 2009 year on year. The Republic of Korea (ROK) and the U.S., the main importers of China's steel, would post declines of 9.5 percent and 10 percent in 2009, respectively. Japan's demand for the first quarter would slide 31.6 percent.

He added the RMB’s appreciation also helped weaken the competitiveness of China's steel products. Additionally, there emerged growing concerns over trade protectionism worldwide.

The global economic turmoil also hurt China's economy, driving it down to a 9 percent growth for the whole year in 2008. For further info visit chinametalbiz.com

 

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Domestic steel market hard to overcome depression in Q1

MetalBiz—Since Feb. this year, steel prices plunged after continuous slight increases in earlier period. The successive price rising has not led to real industrial recovery, instead, some large steel enterprises fell into difficulties of demand decline again. Analysts held domestic steel industry will remain in slump in Mar. before the international iron ore negotiation confirmed.

Short-term price recovery has not brought enterprises out of deficit
Last year, since the broke of the financial crisis, domestic steel industry prices plunged rapidly due to continuous demand decline. Profit losses intensified in most enterprises. However, prices of some products rebounded since Jan..

It is said that the situation of Jan. was much better than that of last Q4. In Jan., Shandong produced 3.91 million tons of iron, 3.54 million tons of crude steel and 4.16 million tons of steel products, down 7.95pc, 1.71pc and 7.61pc year-on-year respectively, and up 22pc, 20.6pc and 9.5pc month-on-month separately. The price of steel products continued to increase slightly on the basis of last Dec., while most prices have recovered to 3,800-4,200 Yuan per ton.

Although steel prices increased on month, they still plunged 15-30pc year-on-year. It is predicted that steel industry of Shandong province is still in profit losses. In Jan., Jigang lost 415 million Yuan profit, down 1.15pc month-on-month and 635 million Yuan from the same period last year, while Laigang lost 360 million Yuan profit, down 380 million Yuan month-on-month and 770 million Yuan year-on-year.

Domestic steel demand weakened since Feb., and prices showed downward trend again. There was hardly order from international market, while domestic orders fell drastically compared with Jan…

 

[metalbiz888]

China mills' regroup sped up, export rebate tax to be adjusted this month

Mar.23 MetalBiz--"The steel industry’s industrial adjustment and revitalization plan" (the following referred to as "Plan") was formally lay down on Friday, which emphasized on planning to control the volume ,eliminating backward products, reorganizing corporation, technological innovation and optimizing the layout, and strived to form super-large iron and steel enterprises such as Baosteel and Ansteel whose production capacity was more than 50 million tons all over the nation till 2011 by accelerating the reorganization of the domestic steel mills, as well as a number of large-scale ones whose capacity was 10-30 mln tons. At the same time, “Strategic Plan” requested the Ministry of Finance to take the lead, Uniting State Administration of Taxation, Ministry of Commerce and other departments, to complete the import and export tax rates adjustment of partial steel products in Mar.

Promoting export
“Plan” put "maintaining domestic market stability, and improving the export environment" in the first place among eight aspects of work in the current and later period of time in the steel industry. And it also put forward policies of expanding exports, while "Iron and Steel Industry Development Policy" was issued in July, 2005; and there was almost no mention of the problem on steel exports. Therefore, “Strategic Plan” reflected the country put great importance on promotion of steel exports.

Since the spread of financial crisis in H2 of 2008, China steel exports dropped significantly. Our total of steel exports in 2008 was 59,230,000 tons, a reduction of 3,420,000 tons year-on-year, down 5.7 pc, while entering in 2009, Chinese steel exports situation was further deteriorated. China's exports of crude steel was 3,690,000 tons, sank 4,090,000 tons on an annual basis, down 51.8 pc in January and February 2009.

Therefore, "Strategic Plan" suggested we should earnestly implement the measures of improving partial steel products export rebate tax rate, and appropriately improve export rebate tax rate of partial steel products with high technical content and high added value. At the same time, we should improve the export credit insurance policy and support for iron and steel enterprises setting up overseas marketing network so as to ensure the stability of the export share of high-end products.

According to the journalist, the Ministry of Finance would take the lead, uniting the relevant departments to finish the adjustment of partial import and export products rate in March. … For further info visit chinametalbiz.com


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This year iron ore long-term contract price should substantially dropped

On April 13, the Ministry of Commerce deputy director of foreign trade Liang Shuhe said in the international market seminar that the domestic steel price had fallen the level of 1994, so the material price especially iron ore long-term contract price must be reduced substantially.

Liang pointed that domestic import iron ore spot price significantly slumped while the imports inclined, and it is possible that the phenomenon would be continuous. The global steel production dropped 23% in Jan. to March this year and the price would keep the continuous downward trend. While, China the first two months production growth did not play a role in the needs-to end and the inventory in March climbed to 10mln tons, which did not made the iron ore price keep stable. He suggested that China Iron and Steel Association (CISA) and China Minmetals Chamber of Commerce should focus on the agent system of iron ore imports and standardize the trade order.

China Minmetals Chamber of Commerce president Xuxu said it is the fact that this year steel production declined, so is iron ore market demand. At present, crude steel reduction in European Union, North America and Asia reached 45%, 50% and 20% respectively.
. … For further info visit chinametalbiz.com

 

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Vale provisionally gives 20% discount for selling iron ore to China

The international iron ore negotiation has not determined, together with the sluggish market, the iron ore pricing system presented the more complicated situation. On April 21, one of the three major mining companies Vale issued a statement that the iron ore contract should take the provisional discount to implement in 2009, that is, 80% payment paid in cash and another 20% will be paid at the end of the price negotiation of 2009.

It is learned that the Australian mining company has given a discount to sale the long-term contract iron ore to China on spot market, which is the first time that three major mines sold iron ore to China by means of discount.

Vale said it will take the benchmark price of 2008 as the provisional price, when the contract implements. Then it will adjust the price according to the results when the benchmark price negotiation of 2009 finished. As is customary, Vale and Asian steel enterprises complete the benchmark price negotiation on April 1 every year, but the negotiation has not had a result at moment. In the past, the suppliers and buyers settles the price with the long-term contract price of last year, when the new annual price had not determined, however, mines made a concession because of the downturn market.

Vale presient of China area Zhu Kai said that it will not first release the price this year, “In the past, we are the engine and now intend to be the back.” Zhu also revealed the company will increase 25% reduction this year, at the same time, it will enhance the sales in China. He believes that Vale products are more competitive in China, because the large-scale mining companies have more cost advantage and 100mln tons iron ore supply is expected to replace by more competitive manufacturers.

It is understood that Vale Q1 iron ore shipments to Europe declined
. … For further info visit chinametalbiz.com

 

[metalbiz888]

Rio Tinto will terminate the contract if the ore price can not reach an agreement

May 6 MetalBiz--Rio Tinto, one of three giant iron ore manufacturers, said that it will terminate the contract if the iron ore price can not reach an agreement as soon as possible. Shan Shanghua, secretary of CISA pointed out the opposite party is in psychological war and this trick can not be effective, as well as the current iron ore spot price has been lower than the requirements of China.

It is understood that China Iron and Steel Association (CISA) participates and guides the iron ore price negotiation all the time this year, and Australia Rio Tinto is the one of the three negotiators. Last year, Australia also threatened to terminate the contract. At the moment, steel enterprises and mines are on the deadlock about the iron ore price reduction, and a 40% price cut over 2008's is Chinese parties’ attitude, but Rio Tinto does not agree.

Rio Tinto iron ore business principle said to analyst that it will stop the contract, if the price can not reach an agreement before June 3. In this regard, Shan Shanghua said, this trick can not play a role this year and it is useless. Also, he expressed that China can not import iron ore for two months, but Rio Tinto can not stop production or give up China market for two months.
Why he addresses this expression? For further information please visit chinametalbiz.com
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In order to seize China market, iron ore giants want to relax pricing

MetalBiz--According to foreign reports, the world's largest iron ore producer Vale will follow the example of its main rivals BHP Billiton and Rio Tinto companies to adopt a more flexible pricing strategy. Analysts believe that the purpose of this move is to occupy a favorable position in the battle of China market.

On May 7, the Chief Financial Officer of Vale Barbosa (FabioBarbosa) said in an interview that Vale is considering the new pricing model for the steel raw material. Under the existing pricing model, iron ore suppliers and steel producers conducts a price negotiation every year to determine the iron ore price for next year.

At present, chief executive officer of BHP Billiton MariusKloppers advocates to change the existing pricing model. He added that the new pricing model will ease the tension relations between the iron ore suppliers and steel manufacturers. BHP Billiton and Rio Tinto both expressed in 2008 that they will not carry out 200 iron ore pricing in accordance with the original ways. Currently, the two companies are the second and the third iron ore suppliers. The iron ore upper managements revealed that due the deadlock of annual price negotiation, Rio Tinto submit a 20% discount offer to Asia steel manufacturers last month.

Goldman Sachs analysts said on March 17 that because the demand shrinkage of downstream products resulted from the economic crisis, the iron ore price should sink 40% in accordance with the original pricing methods. Barbosa said: "We are more inclined to use the existing pricing way, but the market has proven that there are other feasible ways of pricing. If a customer needs, of course, we will consider other methods of pricing."

Iron ore business principle of BHP Billiton, IanAshby said that Chinese market exists two pricing ways. In the past three years, China had surpassed Japan and became the largest iron ore consumer all over the world. He also pointed out that on May 6 that the conventional iron ore pricing methods is being gradually broken at present. While MariusKloppers stated that the old pricing will make the relations between suppliers and manufacturers in fluctuation.

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CISA: Australia long-term contract price should reduce 45% and Brazil should cut 40%

May 21 MetalBiz—On account of the report that China Iron & Steel Association (CISA) has accepted iron ore long-term contract price to cut 30%-35%, CISA secretary-general Shan Shanghua denied this statement in an interview on May 20. He also expressed that China side insists on the price returning back to the level of 2007.
The executive of Vale said that the negotiation will be finished within weeks, while Shan said that the negotiation result can not predict. However, when referring to the progress of the negotiation, he said that China side will not have any contact with the three miners in the following 15 days. It was known that Vale had declared to give up the first negotiation right of 2009 long-term contract price, but recently it has stated the negotiation will complete within weeks. Shan does not understand this version.
Australian and Brazilian ore prices should fall down 45% and 40% respectively
Shan said that on May 21 CISA will issue a statement for some scandals. China side insists on Australian ore long-term contract price should reduce 45% and Brazil should cut 40% price. At present, the iron ore spot price in domestic market is nearly close to the level of 2007.
What do you think of the ore prices? How much it will fall down should be reasonable?

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CISA: iron ore import price should return to the level of 2007

MetalBiz—Luo Bingsheng, Administrative Vice-chairman of China Iron & Steel Association (CISA) said on June 2 that significant drops of imported iron ore price is a growing tendency. Chinese steel mills are negotiating with the iron ore suppliers, aimed to make the price return to the level of 2007.

Analysts believe that the goal is in accordance with the steel manufacturer’s requirement that the benchmark price of 2009-2010 should reduce more than 40%.

Because enterprises in other countries of Asia have reached iron ore initial price with Australian mines, analysts think that China side face greater pressure on the condition of deadlock. In view of this, Luo Bingsheng disclosed that the rough situation can not solve any problem and it is very unfavorable for the opposite side to export iron ore to China.

Luo estimates that this year iron ore market will present serious oversupplying situation. Japan and S.Korea and etc. imports sharply decline and Japan reduction may reach 30%, but China still largely imports.

 

[metalbiz888]

CISA continues iron ore negotiation, not anxious for the result at the end of June

June 16 MetalBiz—With Japan and S.Korea enterprises reach 2009 iron ore long-term contract price with Australian and Brazilian mining enterprises, it is more likely to break the negotiation between mining enterprises and China. However, the world largest mining enterprise Vale broke out this scandal and firstly issued a formal statement that it greatly expects to reach 2009 iron ore contract price with China steel enterprises. Shan Shanghua, secretary-general of China Iron & Steel Association (CISA) revealed that China side is negotiating with the three mines
According to the Q1 report of Vale, China market has been the uppermost profit support. Q1 Vale total revenue from China was U.S.$2.423bln, accounted for 44.70% of accumulative revenues.
The data show that China imported iron ore totaled 444mln tons in 2008, accounted for 52% of global iron ore shipments, thereinto, the import from Brazil, Australia and India was about 100mln, 180mln and 90mln tons, occupied 22.5%, 40.5% and 20.3% of total import respectively. If China only reaches annual agreement with Vale, it must hit BHP-Rio under the condition of iron ore demand setback, in a certain degree, it will collapse the strategic relationships of the three iron ore giants.
Hope the result at the end of June will be a satisfying answer.
For more information please visit chinametalbiz.com

 

[metalbiz888]

Benxi found iron ore reserves of more than 3bln tons, favorable for negotiation

Benxi, Liao Ning province found a large ore reserve, over 3bln tons. According to experts, the type of this deposite is a mixture of magnetite and hematite and iron ore quality is between 25% and 62%. The current 3bln tons is just an estimated number, while its real reserve is likely to be doubled.

Insiders of the industry believe that this iron ore find, plus CISA regulating imported iron ore speculation strongly, which is likely to exert an important role in iron ore negotiation and impose pressure on the three mining enterprises.

Analysts pointed out that no worry to buy ore is a view repeatedly emphasized by CISA in this year’s iron ore negotiation, because iron ore supply is expected to present oversupply of 200mln-300mln tons, plus this new ore reserve, there is no doubt that the favorable supplying position of the three mining enterprises will sharpen. In turn, China side has more confidence in negotiation and adheres to its requirement of 40% reduction.

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Negotiation no outcome, Rio Tinto transfers most contracts to spot pricing from July

June 30, the deadline for iron ore long-term contract, while the negotiation between China side and the three mining giants has no outcome. Based on China side strong attitude towards more reduction, Rio Tinto, the global second largest iron ore producer, said on June 30 that most supplying contract will be transferred to spot pricing from July 1.

The annual iron ore long-term contract pricing mechanism as conventions has been followed by buyers and sellers for 40 years around. This pricing method has firstly presented crack last year, but this year it is going to disappear. Rio Tinto, as the representative of buyers, firstly has not signed contract with most customers before June 30 for 20 years.

Gervase Greene, the spokesman of Rio Tinto revealed that it has been supporting long-term contract pricing mechanism for long time, but if customers choose to buy iron ore on spot market, it will conform to the requirement of customers.

Jpmorgan published forecast last month that to give up annual long-term contract pricing mechanism will add the fluctuation of benefit for Rio Tinto. However, Rio Tinto disclosed on June 1 that its half iron ore was sold on spot market.

China surpassed Japan in 2003, became the largest iron ore consumer. Prior to this, every year’s iron ore long-term contract price is set by Japan and European steel enterprises. In the fiscal year of 2007, China as the leading buyer firstly conclude a 9.5% cut with the Vale.

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CISA：the final outcome of iron ore negotiation is still undetermined

In response to the recent news prevailed in the market that iron ore negotiation outcome has been determined, the principal of China Iron & Steel Association (CISA) made it clear that the final result has not been sure. The principal of Hebei Iron & Steel said that the annual iron ore price negotiation between China side and iron ore suppliers will have a result soon, but he did not reveal the detailed time.

People close to the negotiation disclosed that China side may accept Nippon’s initial price, that is, 33% reduction, but the pricing model needs to be changed and may carry out half-yearly pricing, while, the principal of Heber Iron & Steel does not admit this pricing model.

Roger Agneli, CEO of Vale, one of the three mines said as for the negotiation, which has not concluded with China side, he pointed out that the benchmark has been determined. Customers choose what they want and China also selects what they expect. He also said that Vale did not insist on operation on spot market, but it is willing to deliver goods with the ways what customers want.

According to the reporters, currently three mines will decrease the investment in domestic spot market in the following two months. Mines said they need guarantee the supply of long-term contract consumers in the future, because since Q4 last year, the domestic steel mills had stopped the purchase with the long-term contract but turned into spot market. The present spot price is basically in line with the long-term contract ore.
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CISA: iron ore price finalized with a 33% cut was not true

Overseas media reported on July 15 that China steel enterprises had quietly accepted the Rio-BHP’s agreement on iron ore 33% price reduction.

In response to this scandal, the related officials of China Iron & Steel Association (CISA) said that he had not heard of it and pointed out this version was not true. AmandaBuckley, the media departments in Australian headquarter of Rio Tinto, said in an interview on July 15 that he did not comment on iron ore negotiation.

According to foreign media reports, most steel enterprises had accepted half-yearly contracts and most are one-year contracts, as well as CISA would not public the reached agreement with Australian mines

On account of the above media report, the insiders of public relations department of Baosteel said in an interview that CISA had not released the outcome of negotiation and Baosteel as well as enterprises participating talks also had not issued the related statement, therefore, it is worth doubting that China’ s steel enterprises have accepted 33% price cut. Bond department insider of Baosteel also said he has not received the notice related to the negotiation result.

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