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The MSCI August report held good news and bad news. Inventories for flat-rolled are continuing to decline, completely negating the view that flat-rolled pricing strength …more
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Our Advance/Decliner Index increased for the first time in five weeks, after falling to an eight-week low. The uptick was mainly driven by rebounding Chinese …more
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Steel Market Production Cuts – The details of yesterday’s directive received by Italian steelmaker Ilva – from the court of Taranto – were made public today. Ilva will have to decommission two blast furnaces (No. 1 and No. 5) and its No. 1 BOF will be closed. The No. 2 BOF will be upgraded along with a reorganization of their scrap yard; costs from the maintenance plan are estimated to be €400 – €500 million.
Steel Market Production Cuts – Keystone Steel & Wire Co. is expected to take a two-week maintenance outage from Oct. 20 to Nov. 3 at its melt shop and rod mill in Peoria, IL.
Steel Market Production Increases – Brazilian-based Tuper finished construction on its 180,000 tpy OCTG plant in São Bento do Sul and announced a plan for a possible subsidiary in Houston, TX as the company’s primary goal is to meet U.S. demand.
Steel Market Production Increases – ArcelorMittal announced a €58 million, four-part investment plan for its operations in Poland. The plan includes upgrades for its No. 2 BOF and its hot-dip galvanizing line, a new service center for sheet (85,000 tpy capacity), and a high speed rail mill. The projects are expected to be completed by the end of next year.
Steel Market Production Increases – Gerdau announced plans to restart their Colombian longs operations that have been idled since late 2010. Muña (135,000 tpy) will be restarted in 2012 and Tocancipá (200,000 tpy) will be restarted in 2013.
Steel Market Production Increases – Brazilian steelmaker Arvedi Metalfer has ordered a new 150,000 tpy high frequency welded tube plant that is scheduled to become operational in May, 2013.
Sources: Steel Business Briefing, SteelOrbis, American Metal Market
Steel Market Production Cuts – As of today, Italian steelmaker Ilva will have to cut back production at its Taranto plant to upgrade its pollution control equipment. It is unclear how much production will decrease and the plant is already operating at only 70% capacity.
Steel Market Production Cuts – ArcelorMittal announced today that it no longer plans to invest €138 million in its Liege plant after failing to agree with unions over job losses.
Steel Market Production Cuts – ArcelorMittal announced on Friday that its Piombino facility in Italy will idle its pickling and cold-rolling lines in the last three months of 2012.
Steel Market Production Cuts – CISA issued an update on Friday on the overhauls being carried out as of September 13. It included outages or planned outages for 13 blast furnaces (5.53 mt), 32 rebar lines (870,000 tonnes), 14 plate lines (1.185 mt), 12 HRC lines (1.305 mt), 3 CRC lines (110,000 tonnes), 5 steel strip lines (122,000 tonnes), and 2 section steel lines (65,000 tonnes).
Steel Market Production Increases – Ukrainian steelmaker Metinvest announced on Friday, that repairs to hot rolled plate mill 3000 – at subsidiary Ilyich Iron and Steel Works – has been completed. The mill was idled for 15 days and has capacity of 2.0-2.1 m tpy.
Steel Market Production Increases – Gerdau announced an investment of $253m in its Peruvian subsidiary Siderperú on Friday. The investment includes a new rolling mill for rebar and wire rod that will increase capacity from 300,000 tpy to 1.2m tpy, as well as a new EAF that will add 360,000 tpy of liquid steel, bringing total liquid steel capacity up to 1 m tpy.
Steel Market Production Increases – Chinese steelmaker Hebei Zhihang Pipeline Equipment Manufacturing, set a 2012 production target of 120,000 – 150,000 tonnes of ERW from its new mill.
Sources: Steel Business Briefing, SteelOrbis, Reuters
ArcelorMittal just announced a tentative agreement with the USW. No details are available, and we expect to see few in the coming weeks, as the ratification process is typically sensitive and typically companies – both USS and Mittal in this case – have very little to say until the contract is voted on.
We believe this development is a healthy one for the industry, as the high profile of the tenor of negotiations most probably was unnerving some buyers – unnerved buyers double order, build inventories and seek out imports.
So this is good news for all.
Update from Pittsburgh: September 8, 2012 – 1 p.m. EDT
The following statement is from ArcelorMittal USA and includes a quote from Michael Rippey, President & CEO, ArcelorMittal USA:
ArcelorMittal has reached a tentative agreement with the United Steelworkers (USW) on a new, three-year labor contract covering nearly 14,000 USW-represented employees at 15 of ArcelorMittal USA’s flat carbon, long carbon and iron ore mining locations. The tentative agreement will replace the existing contract that was originally set to expire on September 1, 2012 and remains subject to ratification by the USW membership.
“We are pleased to have a new, tentative agreement with the USW and to have reached a fair and equitable outcome without disruption to our business operations,” said Michael Rippey, president and CEO of ArcelorMittal USA. “We extend our appreciation to our employees, customers and the community for their patience and support during the negotiation process.”
Steel Market Production Cuts – The China Iron and Steel Association (CISA) reported that for the last 11 days of August average crude steel production was 1.8715 million tonnes per day, down 3% from the middle 10 days of August.
Steel Market Production Cuts – China’s Ministry of Industry & Information Technology (MIIT) has released a variety of new environmental and productivity standards to be enforced starting October 2012, including a rule that requires a company that produces common steel products have a capacity of 1 million tpy and specialty producers have a capacity of 300,000 tpy.
Steel Market Production Increases – Chinese steelmaker Hebei has admitted that local government has discouraged permanent cuts to steelmaking capacity – instead favoring short-term maintenance outages.
Steel Market Production Cuts –China’s Ministry of Industry & Information Technology (MIIT) has reported that it intends to carry on with its campaign to close 7.8 million tpy of steelmaking capacity along with 10 million tpy of iron making capacity in 2012
Steel Market Production Cuts – Custodians of Italian steelmaker group Ilva’sTarantoplant have reportedly received a letter from Italian prosecutors asking them to immediately reduce harmful emissions – a request that according to unions could result in the cessation of melting.
Steel Market Production Cuts – Chinese steelmakerHebei’s subsidiary Tanshan Iron & Steel will be conducting blast furnace maintenance for 45-50 days, causing a total loss of 300,000-350,000 tonnes of hot metal output.
Steel Market Production Increases – Chinese steelmaker Liuzhou has begun production on its 2.25 million tpy iron-making capacity blast furnace number 4 following construction work.
Steel Market Production Cuts – Gerdau Long Steel North America plans to conduct a 5-10 day outage in early October at its 700,000 tpy crude steel making capacity mill inBeaumont,Texasto complete upgrades on the rolling end.
Steel Market Production Increases – Egyptian steelmaker Suez Steel will begin production this November on a new 1.25 million tpy capacity EAF.
Steel Market Production Increases – Mexican seamless pipe producer Tamsa is increasing production capacity by 50% to 1.23 million tpy by way of a new rolling mill that is ramping up production in the central state ofVeracruz.
Steel Market Production Increases – Czech plate and sections steelmaker Evraz Vitkovice has resumed production at its 950,000 tpy capacity meltshop which is now running at 76% capacity.
Sources: Steel Business Briefing, American Metal Market, SteelOrbis
The United Steelworkers and US Steel have reached a tentative contract about an hour ago covering a 3-year period including all of the company’s steelworker operations with the exception of the Canadian business, which just reached a new labor contract earlier this year.
While there is no official word on any progress from ArcelorMittal (AMUSA) we have heard that the company is bringing its blast furnaces back on – the furnaces were just taken down a few days ago. This development would indicate that the company at a minimum is confident that they and the USW can work without a contract, and may indicate that the company is close to a contract of their own.
Steel Market Intelligence has confirmed that ArcelorMittal is taking “asset preservation” steps at facilities ahead of the risk of a work stoppage. The USW has scheduled a picket for 3pm on Monday near the company’s East Chicago office. We continue to believe that the company and USW are far apart on major issues, however, there is a longstanding history of top-notch relationships between local AMUSA management and rank-and-file as well as USW leadership – as we approach the deadline on 8/31, these relationships will count more and more! For further information, please subscribe to Steel Market Intelligence by contacting Jasmine at info@steelmarketintelligence.com
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Australian steel company BlueScope Steel Ltd. today reported a $530 million net loss after tax (NLAT) for the first half FY2012, including significant one-off restructuring costs of $260 million, an impairment of deferred tax assets of$184 million and income advanced under the Federal Government’s Steel Transformation Plan (STP) of $46 million. The 1H FY2012 NLAT is 9.6 times larger than the 1H FY2011 NLAT of $55 million.
The WSJ is reporting that the company has hired JP Morgan to sell its North American assets, which the company has alluded to liquidating in the past.
The company alluded to further growth at its Delta, Ohio Northstar-Bluescope joint venture (with Cargill) but did not give an update to previously disclosed potential to raise the plant’s capacity from 2.1mtpy to 2.5mtpy with the addition of a second caster.
Underlying NLAT Almost Triples Y-O-Y
Underlying NLAT for the half also grew dramatically year-over-year, totaling $129 million, which includes year-end net realizable value (NRV) adjustments of $53 million. Excluding NRVs, the result was $76 million. This is 2.7 times the underlying NLAT of $47 million for the prior corresponding period in 1H FY2011.
BlueScope Plans Debt Reduction
Company executives say it is on track to deliver a full year working capital release of $400-500 million and has initiatives for further debt reduction. The company has deferred the recognition of a tax asset totaling $184 million in respect of tax losses generated during the half year, largely due to export losses and restructuring costs. BlueScope has deferred the recognition of any further tax asset for the Australian tax group until a return to taxable profits has been demonstrated. Australian tax losses are able to be carried forward indefinitely.
As of December 31, 2011, net debt was $796 million, a reduction of $759 million since October 31 2011 including a working capital reduction of $357 million. BlueScope expects an additional reduction in working capital in the second half, noting in Q3 FY2012 there will be a seasonal increase in working capital and further payments associated with the restructure of the Australian business. The current total cost of the Australian restructure is still in the range of $430-450 million, of which $350-370 million is expected to be paid in FY2012
2H Outlook Includes Lower NLAT
For 2H FY2012, BlueScope expects a slightly lower underlying Net Loss After Tax (excluding period end net realizable values (NRVs) and/or impairments, subject to spread, currency exchange rates and market conditions, compared with the 1H FY2012 result, including expectation of a return to a profitable underlying run rate by the end of FY2012.
Source: BlueScope Steel, Wall Street Journal
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Driven by strong commodity pricing, Rio Tinto (RIO) reported 2011 EBITDA of $28.5B, higher than the Street’s $27.2B, and a 10% uptick from $26.0B in 2010, as the company recovered from severe flooding in 1H and a difficult market for the company’s aluminum business.
In the near term, Rio said the U.S. appears to be recovering, though risks remain, and China’s economy could be achieving a soft landing with expected growth of 8% in 2012, offsetting problems in Europe. Rio remains concerned about cost pressures but remains confident in the medium- and long-term market for its products.
