Page 79 from: May 2016

79May 2016

Ferrous

US$ 290 per tonne for HMS I/II 80/20
in containers out of the USA.

Decline in US steel imports
Reports from the USA suggest that
improved weather conditions have
helped to boost volumes through the
gate at some shredder facilities but that
the increase differs markedly from one
part of the country to another.
Staying in the USA, pressures on the
domestic steel sector have not gone
away but have certainly eased for many
players. ‘Steel customer inventory levels
have moderated and import levels have
declined,’ said Mark D. Millett, president
and ceo of Steel Dynamics Inc. (SDI),
at the release of the company’s latest
results. ‘When combined with steady
underlying steel demand, the result has
been some improvement in domestic
steel producer utilisation, yet industry
utilisation still remains below histori-
cal performance due to the issue of
unfairly-traded steel imports.’
SDI’s metals recycling operations
returned to profitability in the first
quarter of 2016 as demand for ferrous
scrap improved, resulting in increased
shipments and selling values.
Compared to the final quarter of 2015,
the company’s ferrous shipments
jumped 9% while metal margins
climbed more than 30% as demand and
pricing improved ‘due to both increased
domestic steel mill utilisation and scrap
export demand’.

Competing commodities
Having ended the first quarter of 2016
at around US$ 54 per tonne following

a brief sortie into US$ 60-plus territory,
the Metal Bulletin 62% iron ore index
started to record rapid upward pro-
gress in the second full week of April.
The US$ 60 barrier was breached once
again towards the middle of the month
and, following a brief backward step,
the index resumed its sharp upward
progress.
Buoyed by substantial steel price
increases, iron ore’s value cruised past
US$ 70 per tonne with around a week
still to go in April, before dropping back
to below US$ 64 at the time of writing
in response to, among other factors,
steelmaking capacity cut announce-
ments in China. But this still represents
a remarkable recovery since December
last year when the Metal Bulletin index
plumbed an all-time low of US$ 38.30
per tonne.
China’s production of iron ore fell 6%
year on year across the opening two
months of 2016 – but its first-quarter
imports increased by a similar percent-
age, according to latest customs data.
A total of 241.56 million tonnes was
received from abroad in the first three
months of this year for an increase of
6.5% over the January-March 2015 fig-
ure; the total includes the 85.77 million
tonnes of iron ore imported by China
in March alone which compares with
80.51 million tonnes 12 months earlier.

Steel
In March, global crude steel capacity
utilisation exceeded 70% for the first
time since June last year. The rate of
70.5% for the 66 countries report-
ing to the World Steel Association

(WSA) represented an increase of
3.9 percentage points over February
this year but was still 1.3 percentage
points shy of the figure recorded for
March 2015.
The total output of those same coun-
tries was 0.5% lower than in March last
year at 137.322 million tonnes while
the tally of 385.671 million tonnes for
the first three months of 2016 was
3.6% short of that for the correspond-

ing period of last year when a fraction
over 400 million tonnes was produced.
The capacity utilisation increase in
March coincided with Chinese output
returning above 70 million tonnes. The
country’s total of 70.65 million tonnes
equated to a year-on-year increase of
almost 3% whereas China’s first-quar-
ter production was 3.2% lower than
for the same period last year at 192.01
million tonnes.

US steel industry leaders urge full use
of trade remedy laws
The USA must take action to
reduce global steelmaking overca-
pacity ‘by working to remove sub-
sidised production from the world
supply so basic market forces can
once again determine outcomes’.
Above all, American administra-
tors must ensure that the coun-
try’s trade laws are ‘aggressively’
enforced, two of the US steel
industry’s leading lights have writ-
ten in a CNN opinion piece.
US Congress handed the country’s
Commerce Department new tools
last summer when it sharpened
trade remedy laws ‘and now it is
critical that the department aggres-
sively use them’, insisted Thomas
J. Gibson, president and ceo of the
American Iron and Steel Institute
(AISI), and Chuck Schmitt, presi-
dent of steelmaker SSAB Americas
and chairman of the AISI’s board of
directors. The Chinese government
has set a goal to cut steel capac-
ity by 100-150 million tonnes over
a five-year period ‘but it failed to
specify how it proposes to achieve
these reductions’, they added.

These observations coincided with
a forecast from leading Chinese
steelmaker Baosteel that its out-
put will climb around 20% in 2016.
According to a Reuters report,
completion of the company’s main
production lines at Zhanjiang will
help propel its crude steel output
from 22.6 million tonnes in 2015 to
27.1 million tonnes this year.
Furthermore, rising steel prices in
recent weeks have already been
enough to tempt a general increase
in production by Chinese mills:
crude steel output by members of
the China Iron & Steel Association
was more than 3% higher in the
opening third of April when com-
pared to the final 11 days of March.
US Commerce Department officials
issued a statement pointing the fin-
ger at China and other unnamed
countries for ‘preventing broad
consensus’ at OECD talks in mid-
April aimed at addressing excess
capacity in the steel sector. But Chi-
na’s Xinhua news agency described
such accusations as ‘a lame and
lazy excuse for protectionism’.

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