Tata Steel says “deep pockets needed” to counter-bid Rio Tinto’s Riversdale offer

Tuesday, 28 December 2010 17:02:45 (GMT+2)

Indian steel giant Tata Steel, which holds a 24 percent stake in Australian Stock Exchange-listed mining company Riversdale Mining Limited (RML), is not likely to counter Australian mining giant Rio Tinto Group's takeover bid for RML.

Quoted by local news sources, Tata Steel managing director H.M. Nerurkar said on December 27, "We have no discomforts with Rio Tinto's bid for Riversdale. We are watching the situation closely and have not taken any decision [on outbidding Rio Tinto's offer]."

He went on, "We have invested in Riversdale not for financial incentives, but to secure coking coal supplies for our Indian and European operations . . . so good management of Riversdale is essential for us," adding, "One needs deep pockets for making a counter-bid."

Meanwhile, other local sources reported that Indian Minister for Steel Virbhadra Singh denied news of plans by International Coal Ventures of India to join with Tata Group, and present a counter offer. The International Coal Ventures of India consortium includes state-owned companies Steel Authority of India, National Thermal Power Corporation (NTPC), National Mineral Development Corporation (NMDC), Rashtriya Ispat Nigam and Coal India.

Rio Tinto Group and RML have entered into a ‘bid implementation agreement' for a cash offer through which Rio Tinto seek to acquire all of the issued and outstanding shares of the company. The offer price of AU$16 (US$16.05) per share values RML at approximately AU$3.9 billion (US$3.91 billion) and is up from the previous AU$15 offer.

RML owns large coal mines in Mozambique and has become a target for global miners. Riversdale's assets include the Benga project and the neighbouring Zambeze project in Mozambique which have high quality coking coal.

Indian newspaper Economic Times said on December 9 that Tata Steel could team up with an Indian metals company or a miner to make a counterbid for Riversdale Mining, in response to Rio Tinto's offer.

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US unemployment rate climbs in November

The US Department of Labor announced Friday that employers only added 39,000 jobs last month, compared with 172,000 jobs added in October, bringing the US unemployment rate up to 9.8 percent, 0.2 higher than October's figure, and the highest level in seven months.

The construction sector took the biggest hit last month losing another 5,000 jobs since October and raising the unemployment to 18.8 percent, a huge jump from the 17.3 percent construction unemployment rate in October.

The construction sector has continued to lose jobs during the past twelve months even as overall private employment has picked up. Since November 2009, the industry has lost 117,000 jobs while the private sector added 1.08 million jobs. The industry's 18.8 percent unemployment rate, not seasonally adjusted, also was the highest of any industry and roughly double the overall unemployment rate.

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Index prices including Daily steel futures:

Rebars world price:626$/mt
HRC world price:664$/mt

Index prices including Daily steel futures:

Index prices including Daily steel futures:

Rebars world price:626$/mt
HRC world price:680$/mt

EU steel market recovery takes hold but uncertainties remain

EU steel market recovery takes hold but uncertainties remain
EUROFER’s Q4-2010 steel market outlook shows a better than expected Q2, not only with respect to economic growth but especially to activity in the steel using sectors. Robust export activity and stock replenishment in the supply chain fuelled a robust rebound in the manufacturing sector in the EU.

EUROFER director general Gordon Moffat: “The recovery clearly shifted into a higher gear in Q2. Despite a further contraction in construction activity, output in the steel using industries grew almost 7% year-on-year. However, this positive growth figure hides diverging trends at the country level. Germany is currently Europe’s powerhouse; most Northern Eurozone countries have benefited from its export success. In contrast, the business situation in southern Europe is still quite depressed”.

As a result, also steel market fundamentals gained further strength in Q2-2010. Apparent steel consumption grew more than 35% compared with the depressed level of consumption in the same quarter of 2009. An encouraging sign is that not only the stock cycle contributed to this positive development. Also improving activity in the steel using industries in the EU has been supportive to steel demand.

The outlook for the remainder of 2010 and 2011 is for a continuation of the rising trend in steel consumption. While support from the inventory cycle is expected to ease further in the coming period, the positive trend in end-user consumption is seen gaining more importance.

Gordon Moffat adds: “At this point in time the key question is whether the rebound in manufacturing will continue. Despite uncertainties regarding the strength of the global economy and international trade, EUROFER sees the recovery sustained in 2011. However, there remains a substantial gap to bridge with pre-crisis levels of industrial activity and EU steel demand. Moreover, steel manufacturers, distributors and users alike are still faced with cash constraints, difficult access to credit and limited visibility on the market situation with respect to imports and raw material prices”.

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Turkey’s Erdemir achieves net profit of $278.7 million in January-June

Erdemir Group, Turkey's largest and Europe's fifth largest steelmaker, achieved a net profit of TRY 418.1 million ($278.7 million) in the first half of 2010, compared to a net loss of TRY 196 million ($131.5 million) in the corresponding period of 2009. On the other hand, Erdemir Group recorded consolidated sales of TRY 3.2031 billion ($2.1135 billion) in the first half of the current year, up 39 percent year on year, due to progress in both the long and flat steel markets.

In addition, Erdemir's Ereğli works produced 698,000 mt of cold rolled coil and 996,000 mt of hot rolled coil in the six months in question, totaling 1,694,000 mt, down16 percent year on year. On the other hand, Erdemir's Iskenderun works produced 827,000 mt of long steel and 912,000 mt of hot rolled coil, totaling 1,739,000 mt, up 33 percent year on year.
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EU-27 construction output remains stable in April

According to a report released by Eurostat, the Statistical Office of the European Communities, in April this year the seasonally-adjusted production of the construction sector in the European Union member states (EU-27) remained stable as compared to March and was down 4.3 percent compared to April 2009. In March, the production figure had increased by six percent compared to the previous month, according to the newly revised data. In the EU, building construction in April dropped 1.2 percent month on month and was down 4.9 percent compared to April 2009, while civil engineering rose by three percent over March and was down 0.8 percent year on year. As compared to March, construction output in April rose in Slovakia by nine percent, in the Czech Republic by 4.8 percent and in Germany by 2.6 percent, while month-on-month decreases of 8.1 percent, 4.9 percent and 3.7 percent respectively were registered in Hungary, Spain and Portugal.
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India may step up measures to limit iron ore exports

India may impose taxes and quotas on exports of iron ore from the country in order to increase availability of the raw material for the domestic steel industry, the Indian steel minister, Virbhadra Singh, stated this week, according to Indian media reports.

"The government has taken a few policy measures to discourage avoidable exports of iron ore and consequently raise domestic availability by increasing export duty on lump ores to 15 percent and having a five percent duty on fines. Although this will have a marginal impact on exports, the government would have to look at the question differently by bringing in definitive deterrence," Mr. Singh said.

"If needed, we will resort to taxation measures and quantitative restrictions to conserve the use of iron ore for today and for the future. But such measures can be brought in a phased manner with a clear long-term plan," he said.

The minister was addressing a press conference on "Challenges for Indian Steel Industry in Infrastructure and Resources", organized by the Federation of Indian Chambers of Commerce and Industry (FICCI).

Minister Singh said his ministry was in close touch with the mines ministry to formulate a new mining policy to ensure domestic coking coal supplies. He also asked public sector enterprises to invest aggressively in the acquisition of mining assets.

Recently, the Associated Chambers of Commerce and Industry of India (ASSOCHAM) recommended imposing a 20 percent duty on exports of iron ore fines as against the current five percent.

India's iron ore exports are directed mainly to China. Most iron ore in the Chinese import iron ore spot market is from India.

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EUROFER: EU steel trade surplus reflects downtrend in steel imports

Wednesday, 05 May 2010 02:13:43

In 2009 the European Union registered for the first time since 2005 a trade surplus in its steel trade. This rather reflects the downward trend in imports in 2009 than a significant rise in EU steel exports, which have been remarkably stable over recent years, according to the Economic and Steel Market Outlook 2010-2011/Q2 2010 Report from EUROFER's Economic Committee, released by the European Confederation of Iron and Steel Industries (EUROFER).

The trade surplus is basically in long products. Robust demand for construction related steel products such as rebar in North Africa and the Middle East offered steel mills in Europe the opportunity to offset weakened demand in the domestic market. Particularly Algeria has been a major export destination for EU long product producers, absorbing 35 percent of total exports of longs.

According to EUROFER, the outlook for 2010 is for a slight increase in exports. However, following a relatively strong start in the first quarter, export volumes are seen trending downwards in the remainder of the year. Existing projects in the key export markets around the Mediterranean Sea are coming to an end while large new projects were postponed during 2009 because of financing problems.

On balance, EU steel exports are expected to increase by almost three percent in 2010. The outlook for 2011 is for exports to stabilize at the 2010 level. Improving demand fundamentals in the EU market will result in EU steel mills being primarily geared for expanding business in their domestic markets instead of the international export markets.
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Spain posts first year-on-year rise in industrial output since Feb 2008

In March this year, Spain's industrial production index improved for the first time since February 2008 on year-on-year basis, according to the statistics released by Spain's National Institute of Statistics (INE).
In the third month of 2010, Spain's industrial production rose 12.87 percent over February and was up 6.76 percent year on year. March was the second consecutive month for which an increase on month-on-month basis was registered.
According to INE, in the given month, basic iron, steel and ferroalloy production surged 25.6 percent, manufacture of articles of iron or steel rose by two percent, while the motor vehicle output of the country increased by 26.7 percent, all compared to March 2009.

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EU steel production at stake

EU steel production at stake
Mia Callanta -->
23/04/2010 9:31 am
Poorly implemented climate policy,raw materials prices and protectionism jeopardize steel value chain in Europe.
“We have now reached a decisive point as to whether steel production has a future in Europe,” warns Gordon Moffat, director general of EUROFER. “If steelmaking is forced to migrate from Europe, others will follow in its stream, such as huge parts of the automotive and machinery sectors, leading to a massive loss in European jobs and expertise. Keeping industrial activity in Europe is essential not only in itself but also for all the business services that industry requires, from R&D to logistics and marketing, which would also be de-located with our industry.”
The steel value chain is threatened by poorly implemented climate policy, increasing difficulties in accessing raw materials at competitive prices, and protectionism by third countries.
"If the EU wants to achieve its objectives for ‘smart, sustainable and inclusive growth’, as set out in its Europe 2020 strategy, it must take the right decisions now," says Moffat. In particular, the Commission must ensure that implementation of the EU Emissions Trading Directive does not increase costs for the most CO2 efficient steelmakers: best performers must receive 100% of their emissions allocations free in order to stay competitive in the global market and in the electric arc furnace sector steelmakers must be compensated for increases in electricity prices caused by the ETS.
EUROFER also repeats its appeal to the European authorities to investigate the pricing behaviour of the major iron ore suppliers, whose recent demands for price increases of around 100% are not justified by market fundamentals or the current global economic situation. The proposed joint venture between the iron ore suppliers BHP Billiton and Rio Tinto must be stopped in order to prevent an even greater degree of concentration in the raw materials market.
EUROFER understands the reasons for the demonstration being held today in Brussels by the unions EMF-EMCEF and shares their concerns on the imminent threats to the sustainability of steelmaking in Europe.

Info from EUROFER
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India’s industrial production falls for second straight month in February

Monday; 12 APRIL 2010

India's monthly industrial production fell for the second straight month in February this year, posting a month-on-month decline of 4.15 percent.
Meanwhile, in the given month, the country's industrial production rose 15.1 percent as compared to February 2009.
Among the industrial sectors, in February metal products and parts, excepting machinery and equipment, showed the highest growth of 57 percent, followed by 40.4 percent for machinery and equipment other than transport equipment, and 36.4 percent for transport equipment and parts, all compared to February 2009.Meanwhile, industrial production in the country's basic metal and alloy industry in February regressed by 4.58 percent over January and was up 7.55 percent year on year.
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Turkey’s wire rod exports surge significantly after three-month decline

Friday, 19 March 2010

In February Turkey's wire rod exports surged significantly in volume and in revenue both on month-on-month and year-on-year basis, after recording monthly drops for three consecutive months. In the given month, Turkish wire rod exports to the US market enjoyed an increase in demand and price advantage, while in the Far East market Turkey replaced Chinese exports, which were at higher price levels according to market insiders.

According to the statistics released by the Istanbul Mineral and Metals Exporters' Association (IMMIB), in February this year Turkey's total wire rod exports amounted to 123,448 metric tons, increasing by 86.25 percent year on year and up 81.28 percent over January. Meanwhile, the revenue generated by these exports totaled $64.65 million, rising by 105.3 percent compared to the same month of the previous year and up 90.76 percent month on month.
In February, the average export price of Turkish wire rod amounted to $524/mt, up $49/mt or 10.23 percent from January levels and indicating an increase of $26/mt or 5.21 percent compared to February 2009.

Turkey's top ten wire rod export destinations in January 2010:

Country Volume (mt)
USA 42,414
Singapore 30,300
Brazil 18,793
Egypt 10,609
Peru 5,202
Taiwan 3,534
Israel 3,000
Iran 2,138
Tunisia 2,000
Bolivia 1,000

Meanwhile, in the first two months of 2010, Turkey's wire rod exports surged 14.72 percent, amounting to 191,542 metric tons, while the revenue of these exports totaled $98.55 million, up 23.45 percent, both compared to the corresponding period of 2009.
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Industrial producer prices in EU-27 up 0.9 percent in January over December

According to a statement released on March 2 by Eurostat, the Statistical Office of the European Communities, the industrial producer price index in the European Union member states (EU-27) rose by 0.9 percent month on month in January this year. The year-on-year growth in the index was registered at 0.1 percent. In December 2009, prices had slightly increased by 0.1 percent in the region, as compared to the previous month.

In the EU-27 in January 2010, compared with the previous month, prices in overall industry excluding the energy sector increased by 0.2 percent, while prices in the energy sector rose by 2.4 percent, prices for intermediate goods gained 0.5 percent, durable consumer goods rose by 0.2 percent and non-durable consumer goods increased by 0.1 percent.

In the month in question, among the member states for which data are available, the highest month-on-month increases in the overall index were recorded in Malta at 17.2 percent, in Denmark at 3.9 percent, in Finland and Sweden, both at 1.9 percent, while the highest decreases were observed in Slovakia at 1.7 percent, in Latvia at 0.5 percent, in the Netherlands at 0.3 percent and in Ireland at 0.2 percent.
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Turkey’s January HR flat steel exports up 27.66 percent over December

According to the statistics provided by the Istanbul Mineral and Metals Exporters' Association (IMMIB), in January this year Turkey's total hot rolled flat steel exports amounted to 29,897 metric tons, decreasing by 60.15 percent year on year but up 27.66 percent month on month. Meanwhile, the revenue generated by these exports totaled $19.37 million, declining by 45.01 percent compared to January 2009 and up 21.31 percent month on month. Turkey's top ten hot rolled flat steel export destinations in January 2010:

Country Volume (mt)
Spain 4,561
Greece 4,527
Kayseri Free Trade Zone (Turkey) 3,152
Nigeria 3,129
Mersin Free Trade Zone (Turkey) 2,103
Syria 1,757
Tunisia 1,750
Brazil 1,596
Ethiopia 1,342
Saudi Arabia 1,053

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EU-27 industrial production drops 1.9 percent in Dec 2009

Seasonally-adjusted industrial production in the European Union member states (EU-27) in December 2009 dropped 1.9 percent month on month, according to a report released by Eurostat, the Statistical Office of the European Communities. In November industrial production in the region had risen by 0.9 percent over October, reaching its highest level since November 2008.
On the other hand, compared with December 2008, industrial production in the EU-27 in December 2009 declined by 13.9 percent.
In December 2009, production of durable consumer goods in the EU-27 increased by 0.4 percent month on month and was down 3.7 percent year on year, while production of capital goods decreased by 2.4 percent over November and declined by 11.4 percent compared to December 2008. Production of intermediate goods dropped by 2.6 percent in December 2009 compared to November, but was down 1.1 percent over the same month of the previous year. In addition, production of energy in the EU-27 increased by 1.2 percent month on month, while the year-on-year drop was 4.5 percent.
Among the member states for which data are available, in December industrial production rose in six member states and fell in twelve other member states, compared to November. The highest month-on-month increases were registered in Lithuania with 2.3 percent, in Portugal with 0.7 percent and in UK with 0.6 percent; meanwhile, the most significant declines were observed in Denmark with 5.2 percent and in Ireland and Latvia, both with 4.2 percent.
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EUROFER: First green shoots of recovery in EU steel market

On February 4, the European Confederation of Iron and Steel Industries (EUROFER) released its report entitled "Economic and Steel Market Outlook 2010-2011." The report states that economic momentum in the EU should gradually gain further strength this year, adding that progress will be slow and surrounded by uncertainty, though the risks are now much more balanced than a year ago.
According to the report, the recovery will also take hold in the steel consuming sectors. Activity in the manufacturing sector will be supported by improving international trade and inventory replenishment. The outlook for the engineering industries and automotive manufacturers has become slightly more upbeat. In contrast, perspectives for the construction sector have darkened, mainly due to a further deterioration in the non-residential sector. On balance, output in the steel using sectors will rise 0.6 percent in 2010. A further strengthening is expected for 2011 with growth accelerating to 3.5-4 percent.
Commenting on the outlook for 2010, EUROFER director general Gordon Moffat said, "We are seeing the first green shoots of recovery and there is confidence that this will translate into a further improvement in EU steel market fundamentals".
According to EUROFER, orders and deliveries have recently risen compared with the depressed levels registered in the final months of 2008 and the first half of 2009. Low imports and reduced levels of domestic supply have resulted in supply currently being much better aligned with still weak demand levels. Nevertheless, apparent consumption is estimated to have fallen by almost 35 percent in the whole of 2009.
Low inventories at the start of 2010 will be supportive to market dynamics gradually gaining strength during this year. Any further improvement in demand side fundamentals should trigger a corresponding need to replenish inventories from their current low levels. This will provide the major boost to the 12.5 percent rise in apparent consumption expected in 2010.
The rebound in real steel consumption expected for 2011 will broaden the basis for growth in apparent consumption.
The import situation remains an issue of concern. So far, rising global steel production has not yet resulted in a significant increase in imports into Europe. However, Mr. Moffat added, "If global demand fails to follow the rising trend in steel output, temporary oversupply elsewhere could lead to import pressure building up in the EU more strongly than currently projected."

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Siemens modernizes rolling mill for Italian structural steelmaker Feralpi

Austria-based giant engineering and plantmaking company Siemens VAI Metals Technologies has announced the receipt of an order from Lonato, Italy-based steelmaker Feralpi Siderurgica SpA to supply a new intermediate mill for its rebar rolling mill No. 1. The plant will be able to roll billets with a larger cross-section when the modernization project has been completed in the fall of 2010. This will also increase the plant's production capacity and widen its range of products.

Feralpi Siderurgica, part of the Feralpi Group, is one of Europe's leading structural steel producers and has production plants in Germany, Italy, the Czech Republic and Hungary. The company runs an electric arc furnace-based mini-mill meltshop with two rolling mills at its Lonato plant in Brescia province, Italy. Rolling mill No. 1 has an annual capacity of 900,000 metric tons of rebars, within a diameter range of 12-40 millimeters.

The new equipment will enable the rolling mill to handle larger billets with a square cross-section of up to 160 millimeters. This will increase output, improve cost efficiency and help Feralpi to expand its range of products.
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European new car market contracts by 1.6 percent in 2009

15 january 2010According to a report released on January 15 by the European Automobile Manufacturers' Association (ACEA), following a marked decline in the second half of 2008 and the first half of 2009, European (EU-27 plus EFTA) new car registrations picked up in the second half of last year, largely due to the impact of fleet renewal schemes in a number of major markets. In total, 14,481,545 new cars were registered in 2009, 1.6 percent less compared with 2008 and 9.5 percent less than in 2007. Meanwhile, in December 2009, demand for new cars in the region rose by 16.0 percent year on year, amounting to 1,074,438 units.In Western Europe, new car registrations totaled 1,003,757 units in December, increasing by 19.3 percent compared to the same month last year and down 10.13 percent over the previous month. In December, British new car registrations increased by 38.9 percent, Spanish registrations by 25.1 percent, Italian figures by 16.7 percent, French figures by 48.6 percent, while German registrations declined by 4.6 percent, all compared to December 2008.In 2009, new car registrations in Western Europe increased slightly by 0.5 percent year on year, reaching 13,632,918 units. A rise of 23.2 percent was recorded in Germany, a rise of 10.7 percent was observed in France and an increase of 8.8 percent was seen in Austria, due to the increase in demand resulting from scrapping incentives. Meanwhile, the demand for new cars decreased by 17.9 percent in Spain, fell by 6.4 percent in the UK and was down 0.2 percent in Italy.In the new EU member states, new car registrations dropped by 16.5 percent year on year in December. Only the Czech Republic and Slovenia posted growth in the given month, with 43.8 percent and 12.4 percent respectively. Elsewhere, the downturn ranged from 3.9 percent (Poland) to 79.3 percent (Latvia).In 2009, the overall decline in new car registrations was 26.6 percent for the new EU member states, compared to the previous year. Only the Czech Republic and Slovakia recorded significant increases, of 12.5 percent and 6.7 percent respectively.

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