Turkey and Ukraine, biggest threat to Tata

A SENIOR Tata Steel figure said Turkey, Ukraine and Russia posed the biggest commercial threat to the steel giant.

Paul Brooks added that “very high” UK energy prices compared to the US were a big issue

Dr Brooks, Tata Steel group director of environment, was speaking about climate change and the steel industry at Swansea University.

He said world steel consumption was expected to double by 2050, and that meaningful agreements to reduce the industry’s carbon dioxide emissions had to have China on board.

Outlining threats to steel-making, Dr Brooks cited “well meaning” but “often very blunt” cap and trade schemes, in which the quantity of pollutant is fixed and participants trade emissions.

“All we ask for is a level playing field,” he said.

“Our largest threats commercially are from Turkey, Ukraine and Russia.”

He said steel arrived in the UK every day from Ukraine, and China.


Read more: http://www.thisissouthwales.co.uk/story-18733936-detail/story.html?#ixzz2QtOnKNGO

Aperam front runners to acquire Italian steel maker Terni

A consortium led by Luxembourg-based stainless steel maker Aperam is the front runner for the acquisition of a stainless steel plant in Terni, Italy, market sources said this week.

The consortium, which besides Aperam, a firm floated by ArcelorMittal in 2011, includes Italian steelmakers Arvedi and Marcegaglia, is expected to place on Friday a binding bid for the acquisition of the Acciai Speciali Terni (AST) plant, in central Italy.

Three other firms though are also still in the running: Chinese steelmaker Tsingshan and private equity firms Apollo and JP Morgan’s One Equity Partners, sources said.

Finnish stainless steel maker Outokumpu has to sell the steel mill, one of Europe’s most modern, by May 7 to gain approval for the acquisition of ThyssenKrupp’s stainless steel branch Inoxum, the previous owner of AST.

“I think the Aperam consortium is the front runner; it is the best solution for the European market,” a first industry source said.

“There is a belief in Italy that if a private equity company gets the plant it will downsize it within 3-4 years while they believe that in the Aperam group there is a long term solution where Terni is secured.”

Italian unions said they would prefer an industrial participant rather than a financial player to buy the plant to guarantee its competitiveness.

Outokumpu, Aperam, One Equity Partners and Apollo declined to comment on the sale process.

Acciai Speciali Terni has facilities in Terni and its group is composed of several subsidiary and affiliated companies in Italy and abroad. The group is involved in the sector of special (stainless, low-alloyed and carbon) steels

Steelmaker Evraz shares fall as they post unexpected losses

BILLIONAIRE Roman Abramovich’s personal fortune took a £155m dent yesterday after Russian steelmaker Evraz axed its dividend and sent its shares plummeting, reports the Daily Express.

Abramovich, who has a fortune estimated at £9.5bn, holds a 31% stake in the FTSE 100-listed company.

Its shares fell by 11% after it slumped to an unexpected loss of £217m for 2012, prompting it to cancel its dividend payout. The fall in Evraz shares saw its stock market value slide by £339m to £2.7bn.

The firm blames weakening demand for steel in China and Europe. Looking ahead, its chief executive Alexander Frolov said:  “Prospects remain fragile, with strong downside risks and volatility likely to persist throughout the year.” ·

Read more: http://www.theweek.co.uk/business/52464/roman-abramovich-fortune-dented-evraz-crash#ixzz2QKXA7YHU

Steel demand and prices remain flat in EU

Conditions in the European flat products market are exceptionally quiet at present, leading to renewed downward pressure on basis values. As consumption has not improved, both end-users and distributors are reluctant to place forward orders of any significant volume. The mills are so short of business that their determination to lift prices appears to be crumbling. However third country offers are no longer attractive since the euro has started to weaken.

The German mills still have free capacity for the second quarter as order intake is slow. Buyers, who are currently in negotiations for that period, expect to pay less, once deals are concluded. Service centres are trying to keep inventories as low as possible because they have little confidence in the performance of the market, either in terms of price or consumption.

End-user activity remains subdued in France, with very short order books and completion times. As a result, steel demand from distributors is weak. Consumption by the auto sector is down, while activity in the remainder of industry is stable at a modest level.

The Italian economy is very depressed. The results of the recent election have produced an uncertain political scenario. Steel market conditions are described as “tough”, with few buyers. Final demand is weak and, consequently, distributors are sourcing only limited quantities as they try to cope not only with a lack of sales opportunities but also payment issues with their customers.

There is little, or no, import threat in the UK at present because the exchange rate is favourable for the domestic producers. Certainly, some, if not all, of the proposed £30 per tonne rise, announced in early February, has been secured. However, service centres are keeping inventories at a low level as resale values are not moving up as quickly as mill figures.

There has been no improvement in Spanish demand. Service centres are struggling as a result of minimal profit margins. They are fighting over every available order. End-users say they can virtually put their business out to tender if they have any to place.


Steel Strip, demand and pricing at the start of 2013

Economic actively, or the lack thereof, will make it difficult for the likes of ArcelorMittal to impose their proposed €20 increase (they tried to imposed a €40 increase in November).

Customers and service centres are very sceptical about price increases at a time of very poor demand.

The major European manufacturing countries describe demand as very weak, with little optimism from any areas.

Steel Prices falling around the world

Despite mill efforts to resist, prices are falling around the world according to MEPS.

Falling raw material costs, together with a flood of imports resulting from weak economic conditions in other regions of the world, have created further downward pressure on flat product prices in the US. Overall, the domestic economy is performing satisfactorily but steel demand has declined. Currently, although end-user activity has not changed, service centres are unloading their high priced inventories to make room for lower cost steel in the future. Consequently, resale values are becoming very competitive…….

West European buyers are reluctant to place orders in what they perceive to be a declining market. Although the mills are attempting to hold on to selling values, it is a struggle to do so. They may decide to lower their capacity utilisation rates even further in order to try to balance supply with demand. As the euro loses ground against the US dollar, third country import offers are scarce.

Read the full report here

The mills efforts to resist price fall (i.e. restricted production), are having some affect upon the special steels sector, as high carbon and spring steel shortages are becoming apparent


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Arcelor Mittal considering cutting more capacity

Chief Executive Lakshmi Mittal is considering cutting steelmaking capacity in the face of low demand and falling steel prices within Europe.

In an interview with Reuters he said "Demand (in Europe) was 200 million tonnes. Now it’s 150 million. Clearly there is a need of some capacity adjustments. ArcelorMittal is looking at it,"

Full story at Reuters

EU Steel prices continue to fall

MEPS reported further falls in prices:

European buyers of flat products are reluctant to place orders in what they perceive to be a declining market. Although the mills are attempting to hold on to selling values, it is a struggle to do so. They may decide to lower their capacity utilisation rates even further in order to try to balance supply with demand. As the euro loses ground against the US dollar, third country import offers are scarce. Although international raw material prices have come down a little, the weakening currency is eating away at what should be a reduction in production costs.

In Germany, offers from southern European mills are below those from domestic sources at present. There is no threat from third country importers as their quotations are more or less in line with Italian ones and delivery lead times are far more extended. Service centres have started to reduce their stocks to the absolute minimum over the last few weeks because of concern that the euro crisis will hit the German economy.

In France, service centres are fighting for orders, with very low resale values. End-users’ order books are getting shorter, with investments still being postponed, linked to the general economic uncertainty throughout Europe. Producers are trying to resist the downward price movements without success.

The Italian market has weakened even more, with further signs of developing price erosion. Service centres report that business levels have reduced significantly. Consequently, they are afraid to buy more steel. Their current inventories are losing value as ex-mill basis figures trend downwards. As a result, their already poor profit margins are being eaten away.

In the UK, buyers are waiting to see if the mills in mainland Europe will offer further reductions. However, resale values are holding up relatively well, so far. Distributors’ stocks are in line with current demand and some service centres report good levels of business with fair order books to the end of the year.

The Spanish market is quieter than it was in May. Demand is very low with few enquiries either on the mills or the distributors. A number of small stockists, who have been struggling to survive in the economic gloom, have found they can hang on no longer. Finance is a major factor in the grim state of the market.

A general lack of confidence in Europe and fears over the economic situation, particularly in Southern Europe is impacting on manufacturing and putting a brake on activity. A combination of the crisis in the Eurozone and weak domestic demand is putting the skids under the UK’s manufacturing sector once again, which has failed to grow in line with earlier optimism.

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