VALE Could Lift Iron Ore Prices

Vale (VALE5) should raise the prices of contracts quarterly iron ore by 8.8% to U.S. $ 149.20 per ton in January, according to Reuters calculations. An industry source in China confirmed to Reuters that the mining company established prices for the first quarter by calculating the average daily price of the commodity in northern China between September 1 and November 30. Vale took the quarterly pricing system in April 2009, replacing the old format year, in which prices were set once a year, amid a long period of negotiations between buyers and suppliers. According to the Chinese source, the contracts with Vale predict that prices for each quarter to be signed as the average "days within the period of three consecutive months beginning on the first day of the fourth month preceding the start of the quarter in question ".

Steel scrap price brazes EUR 400 per tonne mark in Italy

The flare rages unabated with shredded quality having touched EUR 400 per tonne in Italy. Prices are under pressure in Northern Europe as well having increased by EUR 20 per tonne to EUR 30 per tonne. 

In this situation that is apparently due to low availability Turkish buyers have been forced to increase purchase prices that have almost steadily by passed USD 450 CFR FO

However long product prices have remained indolent owing to weak demand during the festivity.

Almost all operators are sharing the opinion that prices will keep rising during January '11. After that the question mark will be the usual one, i.e. whether or not the general consumption will be able to sustain the demand at a level enough strong.

China’s Steel Industry

by James Holloway, Ivan Roberts and Anthony Rush.

China’s steel industry has grown rapidly in recent decades, with China now the world’s largest producer and consumer of steel. this has resulted in a sharp increase in demand for iron ore and coal, Australia’s two largest exports, which are key inputs for the steelmaking process. this article discusses the growth of the Chinese steel industry over the past couple of decades.

Introduction
Over the past 30 years, China’s steel production has increased at a rapid pace as the economy has industrialised and urbanised. The expansion of steel production, particularly over the past decade, has been a significant driver of China’s demand for raw materials, especially iron ore and coking coal. This has resulted in a considerable increase in China’s imports of these commodities. This article discusses the Chinese steel industry, focusing on its structure, the geographical distribution of its steel production and recent developments.

Growth of the Chinese Steel Industry


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http://www.rba.gov.au/publications/bulletin/2010/dec/pdf/bu-1210-3.pdf

Spot iron ore prices steady at $175-177/T

Shanghai 28 December 2010 08:14

Spot iron ore prices held at $175-177 per tonne cfr on Tuesday, and are expected to remain stable until the end of the year.

The market remained quiet, as Chinese steel mills continued to stand aside and few transactions were reported.

Offers of 63.5% Indian fines stayed at $176-178 cfr during the day, and 52/52% Indian fines were heard offered at $98.

“The middle and small-size steel mills are the biggest customers of spot iron ore, and they are short of funds at the year-end. They can hardly afford such high prices,” said a Shanghai-based trader.

“Most of my Australian and Indian suppliers are still on holiday this week, so together with limited interest being shown by Chinese buyers, prices should be flat this week,” said a Shandong-based trader.

Some traders said the current price was quite near its peak, and there would be little upward room even if demand recovers next month.

Another Shanghai trader said as the prices move closer to $180, fewer Chinese buyers will be active in the market and Indian suppliers would have to lower their offers.

“Prices will hit the highest point at $180 after new year’s day,” a trader based in Anhui province predicted.
Copyright © Metal Bulletin Ltd. All rights reserved.

DAILY SCRAP REPORT: Index surges as reports of new cargo bookings stun market

London 23 December 2010 16:20

MB’s Ferrous Scrap Index cfr Turkey shot up to $476.68 per tonne cfr Iskenderun on an HMS 1&2 (80:20) basis on Thursday after the market was stunned by reports of two unconfirmed cargoes booked at much higher prices.

The index increased by $14.81 on Wednesday’s figure after a flat product steelmaker bought two deep-sea cargoes, according to market participants. Neither the recycler nor the steelmaker has confirmed the cargoes.

One was 40,000 tonnes of material including HMS 1&2 (80:20) grade at $475 per tonne cfr, shredded material at $480, and bonus at $485.

The second booking consisted of 40,000 tonnes of HMS 1&2 (80:20) grade at $480 per tonne cfr, shredded grade at $485, and bonus at $490.

“I think it’s real – prices have been rising so quickly this month,” a merchant said.

But traders were not all convinced by reports.

“Those prices? Not yet,” one trader said. “The mill is trying to get up its finished product prices.”

“Flat product steelmakers can afford higher prices, but these are not realistic,” a second trader told MB.

Copyright © Metal Bulletin Ltd. All rights reserved.

China / Steel Prices Up In Nov.

December 27 -- The domestic steel price index rose 3.19 points month-on-month to 124.51 points as of end November, reports Xinhua, citing the Ministry of Industry and Information Technology.
The prices of 6.5mm general steel wire and 16mm threaded steel rose by 220 yuan and 251 yuan per ton month-on-month to 4,560 yuan and 4,552 yuan per ton as of end November, according to data from the China Iron and Steel Industry Association (CISA).
The price of 0.5mm cold-rolled thin steel plates increased by 72 yuan per ton month-on-month to 5,705 yuan as of end November while the price of 0.5mm hot-rolled thin plates increased by 25 yuan per ton month-on-month to 4,982 yuan.
November imports of iron ore increased 12.4 percent year-on-year and 25.5 percent month-on-month to 57.38 million tons.
The average import price of iron ore dropped by $2.5 per ton to $145 per ton in November. Iron ore imports dropped 0.9 percent year-on-year to 560 million tons in the first 11 months.
According to CISA's data, steel inventory in major cities dropped nine percent month-on-month to 13.06 million tons as of end November.
Inventory of threaded steel in major cities fell 16.8 percent month-on-month to 4.21 million tons as of end November while steel wire inventory decreased 22.6 percent month-on-month to 980,000 tons.
Inventory of cold-rolled steel plates increased 1.8 percent month-on-month to 1.47 million tons in November.

US Exports of Shredded Scrap

US Exports of Shredded Scrap (in tonnes)
	Oct.	Sept.	Aug.	Year to date		Percent change
				2010	2009
China	213,870	4,157	55,907	1,114,321	2,487,416	-55
India	85,660	19,975	34,475	352,618	566,644	-37.8
Malaysia	28,767	12,356	15,972	363,796	174,733	108.2
Mexico	44,069	2,037	42,938	269,140	167,062	61.1
South Korea	79,981	94,167	38,008	695,811	707,345	-1.6
Taiwan	50,623	30,701	58,803	396,797	427,419	-7.2
Thailand	62,235	633	39,618	349,991	271,262	29
Turkey	147,478	211,008	213,207	1,413,140	1,211,263	16.7
Vietnam	47,422	49,963	17,108	233,592	221,628	5.4
Others	38,038	98,468	109,344	869,793	755,513	15.1
Totals	798,143	523,465	625,380	6,058,999	6,990,285	-13.3

Brazilian pig iron prices hit $480/tonne

By Juan Weik Published: Dec 29 2010 5:40PM SAO PAULO, Brazil -- 
Pig iron producers in Brazil's southeastern Minas Gerais state closed two export deals at $475 to $480 per tonne f.o.b. after several weeks out of the market, while companies in the northern region of Carajás have refused bids as high as $500 per tonne, according to producers and trading sources.
One of the Minas Gerais transactions was for 35,000 tonnes of pig iron sold at $475 per tonne to a trading company taking long-term positions reportedly looking to purchase more material to fill a 50,000-tonne vessel expected to sail to the United States in March.
One market participant claimed to have sold about 20,000 tonnes at around $480 per tonne also to a trading company, but it was unclear whether this was the same company that purchased the 35,000 tonnes.
The transactions came after several weeks of inactivity by Minas Gerais producers struggling to find alternatives to ship sold cargoes due to problems at Vale's Praia Mole seaport terminal in Espírito Santo state. Producers will ship some of those cargoes via the Paul terminal in Espírito Santo and the remainder from Rio de Janeiro.
"If this trading company is to really sell the cargo to the U.S. I would say the 50,000 tonnes would reach the country at around $510 to $515 per tonne c.f.r.," a trading source told AMM sister publication Metal Bulletin. "Freight costs from Rio de Janeiro to New Orleans for a ship of 50,000-tonne capacity are no less than $35 per tonne.
" In Carajás, producers have been trying to sell a 70,000-tonne cargo for as much as $510 per tonne f.o.b., according to sources. "We've just refused a bid at $500 per tonne," one executive from a major local producer said. The bid reportedly was made by a trading company looking to sell the material to the U.S. market in March.
With freight costs from Carajás to the United States running slightly below $20 per tonne, a transaction at $510 per tonne f.o.b. would mean a c.f.r. price of as much as $525 to $530 per tonne in New Orleans, market participants said.

China to raise export tax on rare earth

Taxes will be increased on rare earth exports starting next year, the Ministry of Finance said on Tuesday, as China, the largest producer of the precious minerals, moves to protect the environment and its resources as well as regulate exports.
Rare earth, a group of 17 minerals, are a vital component in most of the world's new technologies and are used in high-tech processes ranging from wind turbines and hybrid cars to missiles.
The ministry did not specify which of the 17 minerals would be subject to the tax increase. Rare earth exports are currently subject to taxes ranging from 15 to 25 percent.
China has about 30 percent of global rare earth reserves, but produces 97 percent of the world's total. It reduced export quotas for 2010 to 60 percent of 2009 levels, causing alarm among importing countries, such as Japan, about supplies.
The market has yet to feel the impact of the announced tax adjustment.
"Our company will cut rare earth exports next year, but not on a large scale. The higher tariff will affect our exports," said a senior manager of Ganzhou Rare Earth Mineral Industry Co, in Jiangxi province, who declined to be named. The company is the largest State-owned heavy rare earth producer in the province.
Lin Donglu, secretary-general of the Chinese Society of Rare Earths (CSRE) and also chairman of Baotou Steel Rare-Earth (Group) Hi-Tech, the largest producer in the world, said the CSRE has proposed tariff adjustments to relevant ministries but declined to give details.
China said the move was due to environmental concerns, as rare earth is usually found in underdeveloped regions and too much extraction has damaged the environment.
Since 2006, the country has imposed temporary taxes on rare earth exports and set limits on quotas.
Exports of 10 of the heavy rare earths, which have dwindling reserves, are likely to be affected more by increased taxes, industry sources said.
The Ministry of Commerce said in November that China still needed to improve the management of rare earth exports by using a combination of measures including export quotas, tax and regulation of exporters. The country now has 32 licensed exporters.
The ministry set higher environmental standards for producers and exporters and also said that the government will crack down on those who lack the required qualifications to work in the industry.
In the first nine months of this year, China exported 32,200 tons of rare earth, with half going to Japan and 19 percent to the United States, the ministry said.
Zhou Shijian, an early advocate of controlling rare earth production and member of a think tank appointed by the Ministry of Commerce, agreed with the tax increase.
"The decision is wise and I strongly suggest that the government take more measures to control exports of rare earth," he said.
"It is not wise for China to randomly produce rare earth and sell at cheap prices. It is time for China to protect rare earth and protect the environment.
"Foreign nations do not make sense when they blame China for reducing exports. Some of them can produce rare earth themselves. Nations that own rare earth resources should take the responsibility of producing and help supply global demand."
Chen Gong, chairman of Anbound Group, a private industry think tank, said the latest move by the Ministry of Finance protects precious resources.
"Other options may include further limiting export quotas or levying resource taxes," he said.
Decreasing exports from China have forced countries to seek alternative sources in Mongolia, Australia and India.
Producers in the US, which also has sizeable reserves of rare earth, are considering restarting production, stopped in 2002 because of low prices.
The US company Molycorp Inc, the only rare earth producer in the US, said on Monday that it had been granted permits to start a mining facility in California.
The company is expected to produce 20,000 tons of rare earth annually, more than the US demand of 16,000 tons.
The Japanese trading company Sumitomo has invested $130 million into Molycorp for a guaranteed supply of rare earth for seven years.

Ocean freight rate to increase in next Jan. on rising crude oil and steel prices

Driven up by the rising crude oil and steel prices in global prices, the shipping merchants have decided to increase the ocean freight rates in next January to reflect the costs.

It’s known that the ocean freight rates have almost remained unchanged this year. However, the US dollar has been deprecating while the international crude oil prices have been increasing.

Moreover, shipping merchants indicated that the severely cold winter has caused the ships stop at port; therefore, it has seriously affected to dispatch on time.

Consequently, the increasing costs have forced shipping merchants to increase the ocean freight rates to avoid the loss.

News Date 12/29/2010 9:32:31 AM reported by Ivy Wei

Major World Markets, percentage change year to date

China Demand Drives Raw Materials Higher

By DONALD H. GOLD, INVESTOR'S BUSINESS DAILY Posted 12/23/2010 06:06 PM ET

Imagine a vast country that, after being held back for decades by Maoism, must build almost everything from scratch.

By now you know the story: Pro-business policies and cheap labor helped China become the factory to the world. New wealth means new investment in public- and private-sector infrastructure. A new consumer class means new demand for goods, everything from toy cars to real cars.

What does China need to meet its industrialization, modernization and consumer needs? Raw materials, such as copper, coal, iron ore, zinc, lead, aluminum, oil and gas.

London-based metal ores producer Rio Tinto(RIO), featured in this column on Thursday, announced on Wednesday its $3.9 billion acquisition of Australian miner Riversdale Mining, which owns huge coal properties in Mozambique.

China's relentless demand has lifted prices for steel and steel's ingredients: iron ore and coke. That's been a major factor in the success of mining stocks. Many of the leaders in that industry are foreign companies.

Here are some other highly rated names from IBD's Mining-Metal Ores group :

Australia's BHP Billiton (BHP), a producer of metal ores, coal, oil and gas, is trying to bust out from a slightly short cup-with-handle. But volume is dry. The company is expected to report a 38% earnings hike in fiscal 2011, which ends in June, and 59% for fiscal 2012.

Brazil's Vale (VALE), a big-cap stock, has been trading tightly for the past three weeks with support at its 10-week moving average. That action may be seen as a high handle to a cup that started in November.

Iron ore makes up 59% of Vale's output, nickel accounts for 13%. Aluminum, copper, manganese and coal make up the rest. Vale logged triple-digit EPS gains for two straight quarters, and is expected to make it a three-peat in Q4.

Canada's Thomson Creek Metals (TC) is a producer of molybdenum, a precious metal that can be used to make high-strength steel alloys.

The company saw profit surge 227% in Q3, with a consensus estimate of a 50% gain for Q4. After-tax margin in Q3 leapt to 32%, its highest in years.

South Africa's Impala Platinum Holdings (IMPUY) produces platinum-group metals. Platinum, palladium and rhodium are key ingredients to the catalytic converter. China's booming auto sector is a source of hot demand for the PGMs .

Impala suffers from negative three- and five-year EPS growth rates. Total fund ownership is falling.

The stock trades just 3,000 shares per day in the U.S. But on its primary listing in Johannesburg, Impala trades 1.9 million shares.

NMDC to lift iron prices by 3% in Jan-Mar qtr: Report

India's top iron ore miner, NDMC, is likely to raise iron ore prices by 3% for the January-March quarter on rising demand and a squeeze in global supplies, the Economic Times said, citing an unnamed company official.

Quarterly prices for the ore will be decided on December 29, the paper said, citing chairman and managing director Rana Som. 

Offers of Indian ore fines with 63.5 iron content stood at USD 177 to USD 179 per tonne on Monday, CFR (cost and freight) delivered to China, unchanged since the middle of last week.

NMDC supplies iron ore to Japan's Nippon Steel, Kobe Steel, Mitsubishi Steel, JFE and South Korea's POSCO . NMDC officials were not immediately available for comment.

Steel scrap prices up in Russia

It is reported that inflation expectations of 2011 furthered metallurgical raw materials prices increase in the 4th quarter of 2010. Scrap, iron and steel finished products prices followed the increase in iron ore global market.

Turkish scrap exporters turned back to Russian and CIS markets due to prices boost in Turkish market, which was caused by limited offers from Europe and the USA. The US scrap suppliers increase the prices due to domestic consumption growth and imports from China. The latest offers from the USA are at the level USD 445 per tonne to USD 450 per tonne for HMS1&2 80:20 and SHROT correspondingly.

In Europe bad weather conditions resulted in scrap collecting volumes decrease. This caused prices boost in EU domestic market. Thus European exporters increase their prices as well. In this situation scrap prices at Azov and Black sea ports are almost the lowest. Eventually spot prices hiked to USD 415 per tonne to USD 420 per tonne C&F. January offers reach USD 440 per tonne C&F.

Scrap prices jump in global market affected Russian domestic prices. During recent weeks exporters’ buying prices in Rostov port were not lower than RUB 9,100 per tonne to RUB 9 200 per tonne. Currently the port stevedores’ prices are RUB 9400 per tonne to RUB 9,500 per tonne and continue to grow.

Russian local consumers have to follow exporters’ prices. The buying price at steel mills in Russia have to be at least by RUB 100 to RUB200 rubles higher than at a port. Thus, the competition between steel mills and the exporters of south of Russia is expected.