Access to Raw Materials: Russia intents to limit scrap exports

Brussels -- The Bureau of International Recycling BIR and the European Ferrous Recycling federation EFR are very concerned by a recent development in Russia. BIR has been informed that the Russian Federal Customs Service intends to reduce the number of checkpoints for exports of ferrous and steel scrap from Russia. If this project were to be implemented, the free and fair access to a raw material that is indispensable for steel mills and scrap merchants worldwide would be heavily jeopardized.

Foto: Marc Weigert

The intention of the Russian Customs Service is to limit the number of checkpoints for sea transport to three, for rail transport to two and for road transport to five, in an effort to slow down scrap shipments outside Russia, thereby favouring the supply of their domestic demand.

The project foresees the suppression of checkpoints at the ports of Rostov-on-Don and St. Petersburg, which would cause serious problems for countries such as Greece, Sweden and Spain to be supplied with Russian scrap. Finland is also facing similar problems due to the potential closure of some railroad checkpoints.

“Russia’s technical barriers to scrap trade are not acceptable,” states Francis Veys, Director General of BIR and acting Executive Director of EFR. “This will increasingly restrict access to important raw materials, which are indispensible for the steel industry and scrap operators in the EU and worldwide.”

In 2007, iron and steel exports from Russia to EU 27 amounted to 2.178 million tonnes, whereas in 2010 exports dropped just under one million tonnes. Almost 50 percent of Russian scrap exports go to the Spanish market.

BIR strongly condemns the increasing trend towards protectionist measures regarding scrap movements, such as duties, taxes, quota and environmental barriers, which also represent a violation of WTO rules. EUROFER, the European association of the steel industry, has expressed similar concerns and requested DG Trade to urgently address this matter with the Russian authorities.

Quelle: Bureau of International Recycling BIR

Australia's Iron Ore Exports to Rise 5.5% in 2011, Government Bureau Says

Australia, the world’s largest iron ore exporter, will export 5.5 percent more of the steelmaking raw material this year as BHP Billiton Ltd. and Rio Tinto Group increase output, taking advantage of higher prices.

Australia may ship 425 million metric tons in 2011 and 462 million tons next year, the Canberra-based Australian Bureau of Agricultural and Resource Economics and Sciences said today in a report. The nation’s copper and nickel exports will also climb as global consumption increases.

Rio and BHP, the world’s second- and third-largest iron ore producers, are expanding mines in Australia to meet demand led by China. Global steel consumption may climb 6 percent this year to 1.4 billion tons and may reach 1.9 billion tons in 2016, the government-run bureau said.

“Growth in steel consumption in developing Asian economies will form the backbone of world steel demand growth, reflecting the development of infrastructure and rising incomes in these economies,” the bureau said in the report. “Prices for both iron ore and metallurgical coal are forecast to remain well above historical averages.”

Australia’s export earnings from iron ore may be 64 percent higher this fiscal year at A$57 billion ($57.9 billion), it said. That may gain to A$68 billion in the year ending June 30, 2016. Total sales from metals and minerals may gain 12 percent to A$125.8 billion this financial year.

Iron Ore Prices

Exports of iron ore are projected to increase at an average annual rate of 7 percent to 2016 to 599 million tons, the bureau said. By 2016, Australian exports are projected to account for 43 percent of world trade, it said. Exports may rise to 599 million tons by 2016.

Brazil, the world’s second-largest producer, may ship 332 million tons this year, an increase of 7.8 percent, rising to 436 million tons in 2016.

Iron ore prices may average $149 a ton this year, compared with $112 a ton in 2010, it said. Prices will decline as companies including BHP, Rio and Vale SA, the world’s largest producer, expand operations. Iron ore will average $93 a ton by 2016.

China, the world’s biggest producer of steel, is forecast to produce 671 million tons this calendar year, up 7 percent. The nation’s steel consumption is projected to increase by 8 percent a year to 995 million tons by 2016.

Iron ore prices weigh on steelmakers

BEIJING, Feb. 28 (UPI) -- Iron ore prices are expected to rise sharply in the second quarter of 2011 as demand for steel in China rises, a commodities analyst said.
Colin Hamilton, a commodities analyst at Macquarie, said this year promises to be "phenomenal for the miners," The Financial Times reported Monday.
With contract prices set on the last day of the month, Guilherme Cavalcanti, the chief financial officer of mining conglomerate Vale, said, "This is the greatest moment for the company so far but the best is yet to come."
"Expected price increases are anticipated to range between 10 percent up to 60 percent, in some cases, as new contracts for iron ore delivery are negotiated," Mine-Engineer.com reported on its Web site.
Contract prices for iron ore, based on average spot market prices from December to February, are expected to reach $170 per metric ton for Australian iron ore, about 40 percent higher than the same quarter of 2010, the Times reported.
In January, China imported a record 69 million metric tons of iron ore.
Adding to a potential escalation of steel prices, coking coal prices are expected to rise due to floods in Australia, which limited coking coal extraction.

Iron ore rally may resume with India's tax hike

India's move to raise iron ore export taxes to 20 percent will send a shockwave through the $100-billion seaborne market, and fuel another surge in spot prices to record levels as top buyer China rushes to book cargoes before the hike takes effect in April.
The fourfold jump in duty on iron ore fines -- sandy material that typically contains 55 to 65 percent iron -- will hit Chinese buyers, the main market for India's iron ore exports, particularly hard, and drive up prices from the top two suppliers, Australia and Brazil.
"If the Chinese start to panic and come back to the market, it could cause an issue," said Michael Gaylard, strategy director at Freight Investor Services in Shanghai.
"It could cause a further tightening in supply and a reversal of the current price downtrend."
Iron ore spot prices surged to record highs near $200 a tonne in mid-February as tight supplies from India, the world's No. 3 exporter of the steelmaking material, combined with seasonal buying by Chinese steel mills which are building inventory in anticipation of a pickup in demand.
But with real demand still wobbly, Chinese steel futures last week dropped from record levels, knocking down spot iron ore prices as Chinese purchases slowed.
India on Monday hiked the export duty on iron ore fines to 20 percent from 5 percent in a bid to conserve the raw material for its growing steel sector.
The government also raised the export tariff on iron ore lumps to 20 percent from 15 percent. The new rates take effect on April 1.
India last raised the export tax on iron ore lumps in April 2010 to 15 percent from 10 percent, after slapping a 5 percent export duty on iron ore fines in December 2009.
"This would mean 1,000 rupees extra cost for exporters, which could pinch shipments," said Dhruv Goel, managing partner at iron ore trader Steelmint in Orissa.

SURGING DEMAND
India's surging demand for iron ore, with low-quality grades making up about 70 percent of last year's output of 222 million tonnes, has driven miners to invest in pelletizing plants so as to be able to use the iron ore fines.
There are now very few pellet plants in India, but many more are expected to be built with steel giants ArcelorMittal and POSCO looking to expand in the country.
Pellets, made of lower grade powdery iron ore fines once thrown away, but now melted down to make higher grade nodules, are ideal for feeding blast furnaces in steel mills.
The world's largest fifth largest crude steel producer, India is aiming to lift output to 120 million tonnes by the end of 2012 from nearly 70 million tonnes in 2010.
A ban on exports from India's southern Karnataka state since July had already caused iron ore shipments to fall for a sixth straight month in December.
India's top iron ore producing state, Orissa, and another exporting state, Chhattisgarh, are also looking at banning exports.
The higher tax rates "will increase the floor price for Indian prices and if Indian prices increase then that will push prices to China higher," said Henry Liu, regional head of commodity research at Mirae Asset Securities in Hong Kong.
But India's move may be aimed more at curbing illegal mining.
"If they are trying to stop illegal mining and make it much more costly to move that product, it's probably going to help to constrict supply and therefore get more of a handle on that fines market and some of the illegal trading that's going on in India," said FIS' Gaylard.
But the move means even higher costs for Chinese steel mills already reeling from a more than 40 percent jump in iron ore prices last year as the industry shifted to a more volatile quarterly pricing system from a decades-old annual scheme.
"Steel mills can't take more costlier raw materials at the moment as steel prices were heading downward recently on weak demand," said an iron ore official at a mid-sized Chinese steel mill with annual crude steel capacity of around 5 million tonnes.
But traders say India's move has yet to impact spot iron ore prices on Monday as players assess the impact of the policy move and with Chinese mills also likely to scour the market for other potential suppliers.
After Australia, Brazil and India, the next three biggest iron ore suppliers to China last year were South Africa, Iran and Ukraine, with Iran's exports surging the most at more than 100 percent.

Iron-ore prices ease on demand woes, Q2 contract seen at record

SHANGHAI/SINGAPORE – Spot iron-ore prices extended losses on Monday after slumping 5% from mid-February last week, with Chinese steelmakers expecting prices to fall further on demand uncertainties.

But the recent surge in prices to record highs is expected to lift second-quarter contract prices for the steelmaking ingredient up around 20% to an all-time high.

Platts' widely-used 62% iron-ore index has averaged $179,2/t, including freight, from December 1 to February 25 – the basis for the second-quarter contract – up 20% from $149,2 in the September-November period, on which the first-quarter contract was based on, according to Reuters calculations.

The contract price would be the highest since the industry shifted to a quarterly pricing system in April 2010, largely in line with a Reuters poll of analysts earlier this month.

Vale, the world's largest iron ore miner which has seen its profits soar since the decades-old annual pricing scheme was ditched last year, also said it expects second-quarter prices to jump by around 20%.

The rally that began at the start of 2011 faltered last week as spot prices fell 5% from February highs with demand from top buyer China slowing.

Indian ore with 63,5% iron content was quoted in China at $189/t to $191/t on Monday, including freight, down from $191 to $193 on Friday, said Chinese consultancy Mysteel.

"We can't tell how the market will go so far. Demand is weak and steel mills still don't want to buy unless steel prices rise strongly," said an iron ore trader in Shanghai.

SHANGHAI REBAR NEAR TWO-MONTH LOWS

The most active steel rebar contract for October delivery on the Shanghai Futures Exchange rose half a percent on Monday after falling more than 2% to near two-month lows last week on worries about weak steel demand from end-users.

The decline in Shanghai steel futures helped trigger a correction in iron-ore spot prices, sending key indexes lower. Platts' 62% benchmark fell $1,25 to $183,50/t, its lowest since January 17 and marking its seventh straight session of losses.

Metal Bulletin's 62% index dropped $1,72 to $181,86/t, and The Steel Index's 62% gauge was unchanged at 184,10, both hitting their lowest since January 19.

But prices of forward swaps rebounded sharply on Friday after recent declines, with the Singapore Exchange-cleared March contract surging 5% to $175,37/t and April up 4% to $164,25.

"We'll probably see a little bit of hesitancy today after such a big bounce on swap prices on Friday," said Danny Thompson, a broker at Freight Investor Services in Singapore.

"Whenever we see a big move like that market participants prefer to spend a little time digesting the move and trying to understand the implications and where we might go from here before doing anything too aggressive in the market.

"On the physical side of things unless the buyers step in, we should see prices continue to ease down as we go forward into this week."

Given the uncertainty on steel demand and prices, many Chinese steel mills expect iron ore prices to fall below $180/t in the near term, traders said.

Edited by: Reuters

Iron Ore-Prices ease on demand woes, Q2 contract seen at record

* Indian 63.5 pct ore offers fall $2 per tonne-Mysteel

* Prices may extend drop unless Chinese buyers return

* Q2 iron ore contract price seen up 20 pct

By Ruby Lian and Manolo Serapio Jr.

SHANGHAI/SINGAPORE, Feb 28 (Reuters) - Spot iron ore prices extended losses on Monday after slumping 5 percent from mid-February last week, with Chinese steelmakers expecting prices to fall further on demand uncertainties.

But the recent surge in prices to record highs is expected to lift second-quarter contract prices for the steelmaking ingredient up around 20 percent to an all-time high.

Platts' widely-used 62 percent iron ore index IODBZ00-PLT has averaged $179.2 per tonne, including freight, from Dec. 1 to Feb. 25 -- the basis for the second-quarter contract -- up 20 percent from $149.2 in the September-November period, on which the first-quarter contract was based on, according to Reuters calculations.

The contract price would be the highest since the industry shifted to a quarterly pricing system in April 2010, largely in line with a Reuters poll of analysts earlier this month.

Vale, the world's largest iron ore miner which has seen its profits soar since the decades-old annual pricing scheme was ditched last year, also said it expects second-quarter prices to jump by around 20 percent.

The rally that began at the start of 2011 faltered last week as spot prices fell 5 percent from February highs with demand from top buyer China slowing.

Indian ore with 63.5 percent iron content was quoted in China at $189-$191 per tonne on Monday, including freight, down from $191-193 on Friday, said Chinese consultancy Mysteel.

"We can't tell how the market will go so far. Demand is weak and steel mills still don't want to buy unless steel prices rise strongly," said an iron ore trader in Shanghai.

SHANGHAI REBAR NEAR 2-MONTH LOWS

The most active steel rebar contract for October delivery on the Shanghai Futures Exchange rose half a percent on Monday after falling more than 2 percent to near two-month lows last week on worries about weak steel demand from end-users.

The decline in Shanghai steel futures helped trigger a correction in iron ore spot prices, sending key indexes lower. Platts' 62 percent benchmark fell $1.25 to $183.50 per tonne, its lowest since Jan. 17 and marking its seventh straight session of losses.

Metal Bulletin's 62 percent index .IO62-CNO=MB dropped $1.72 to $181.86 a tonne, and The Steel Index's 62 percent gauge .IO62-CNI=SI was unchanged at 184.10, both hitting their lowest since Jan. 19.

But prices of forward swaps <0#SGXIOS:> rebounded sharply on Friday after recent declines, with the Singapore Exchange-cleared March contract surging 5 percent to $175.37 a tonne and April up 4 percent to $164.25.

"We'll probably see a little bit of hesitancy today after such a big bounce on swap prices on Friday," said Danny Thompson, a broker at Freight Investor Services in Singapore.

"Whenever we see a big move like that market participants prefer to spend a little time digesting the move and trying to understand the implications and where we might go from here before doing anything too aggressive in the market.   

"On the physical side of things unless the buyers step in, we should see prices continue to ease down as we go forward into this week."

Given the uncertainty on steel demand and prices, many Chinese steel mills expect iron ore prices to fall below $180 per tonne in the near term, traders said. (Reporting by Ruby Lian and Manolo Serapio Jr.; Editing by Ed Lane)

© Thomson Reuters 2011 All rights reserved

Spot iron ore prices to China fell for a fourth-straight session on Friday to a level last seen in late January, on concerns over slowing demand with steel mills expecting further declines.

The global steel demand has seen a growth in excess of 13% in the year 2010. The revival in the advanced economies and the consumption levels across all continents in the world is propelling the demand for steel worldwide.

JSW said “The Indian manufacturing growth remains positive driven by the demand from key consumption sectors such as infrastructure, automotive, consumer goods and housing, to name a few.”

It said “The demand for steel in India has seen a robust growth in excess of 9% to 10% over the year 2009-10. Rapid urbanization and spending on infrastructure within India is certain to drive steel demand and in the year 2011-12, it is estimated demand is likely to grow by 12% to 14%.”

It said “The international market also has seen a steady rise in steel demand and prices, and the global supply of finished steel also remains well balanced.”

It said “The deluge in the Australian coal mines coupled with low supplies of iron ore from India is resulting in a price volatility pushing up input raw material prices and compelling the steel manufacturers to increase steel prices.”

JSW concluded “Going forward, due to this cost push of the input raw materials, steel prices are likely to see further increase in the coming months.”