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SBB STEEL MARKETS DAILY
COVERING THE RAW MATERIALS INPUTS TO STEELMAKING
Volume 7 / Issue 135 / July 16, 2013
[STEEL ]
www.twitter.com/PlattsSBBSteel
Today in raw materials
Iron ore market
Iron ore prices edge up as mills
restock, doubts emerge 3
Coking coal market
Australian miners make aggressive
coal offers into EU 4
Scrap market
Ukraines scrap price steady, seen
rising in Aug on exports 7
Exchanges
Volume and prices recede in
iron ore swaps market 7
Ferroalloys market
Manganese ore soft, buyers hold
back from purchasing 8
Other News
Glencore Xstrata to halt Queensland
magnetite output 8
Marketplace
11
Platts raw material assessments, July 16
Close/Midpoint Change % Chg
IODEX Iron ore fines 62% Fe ($/dmt)
CFR North China 128.75-129.75 129.25 0.25 0.19
Please see Platts complete iron price/netbacks table, p.3
Coking coal, premium low vol ($/mt)
FOB Australia 129.50 129.50 0.50 0.39
CFR China 142.50 142.50 0.50 0.35
Please see full metallurgical coal price/freight table, p.4
Ferrous scrap ($/mt)
HMS FOB Rotterdam 334.00-338.00 336.00 0.00 0.00
A3, FOB Black Sea 332.00-338.00 335.00 0.00 0.00
HMS CFR Turkey 364.00-368.00 366.00 0.00 0.00
Ferrous scrap ($/lt)
Shredded del Midwest US 390.00-395.00 392.50 0.00 0.00
Shredded del dock East Coast 290.00-300.00 295.00 0.00 0.00
HMS del dock East Coast 280.00-290.00 285.00 0.00 0.00
TSI raw material indices, July 16
Frequency Change % Chg
Iron ore fines 62% Fe
Chinese imports (CFR North China port), $/dmt 129.00 Daily 2.10 1.65
Please see TSIs complete iron ore price table, p.2
Ferrous scrap
HMS 1&2 80:20, Turkish imports (CFR port), $/mt 364.00 Daily 0.00 0.00
Shredded, US domestic (del Midwest mill)*, $/lt 384.00 Weekly (Fri) 4.00 1.05
Shredded, Indian imports (CFR port)*, $/mt 372.00 Weekly (Fri) 4.00 1.09
* Latest index July 12
MelbourneRio Tinto could potentially
extract additional iron ore capacity from its
existing Western Australian mines rather than
developing more expensive greenfield pro-
jects, which would likely delay planned expan-
sion there to 360 million mt/year.
The Anglo-Australian miner said Tuesday work
was under way to expand port, rail and power
infrastructure in the Pilbara to handle 360 million
mt/year, but noted a number of options for mine
capacity growth were under evaluation.
Rios board has yet to sign off on the addi-
tional 70 million mt/year of capacity required to
reach 360 million mt/year and is expected to
make a decision by the end of this year. Some
of the miners large shareholders have been
putting pressure on Chief Executive Sam Walsh
to delay the expansion, given the weaker longer-
term outlook for iron ore and slowing Chinese
economy. Were keeping our options open, a
Rio spokesman said.
Rio Tinto could slow Pilbara expansion
The potential for a more phased expan-
sion had been flagged by some analysts,
including JP Morgan, who said in a July 10
research note that Rio will likely reach 360
million mt/year in 2019 rather than in 2015
as originally planned. This suggests the mar-
ket is overestimating Rios iron ore supply
over the next five years, JP Morgan said.
The delay would also support the views of
those analysts who believe the iron ore mar-
ket will stay stronger for longer, on the basis
that new supply will not come online in the
expected timeframe.
Rio said it remained on track to reach annu-
alized production capacity of 290 million mt/
year in Western Australia in the September
quarter, from around 237 million mt/year cur-
rently. This is despite heavy rain in the Pilbara
in June and a conveyor belt breakage in May
that resulted in one of the shiploaders at Cape
Iron ore market
Iron ore prices firm, views
mixed on uptrend duration
SingaporeSeaborne iron ore prices
continued to rise Tuesday on limited supply
of mainstream cargoes and stronger offers.
Demand for mainstream material remained
good and there was little on offer, leading sev-
eral participants to believe the uptick would
last for a few days as end-users were willing to
pay higher prices to restock. There are mills
who would pay high prices for mainstream ore
cargoes, as there is a very evident shortage of
mainstream material available both in the
seaborne and port stock markets, a source at
a state-owned Chinese trading house said.
Sentiment is quite positive and there looks to
be more room for improvement to both iron ore
and steel prices.
(continued on page 2) (continued on page 2)
SBB STEEL MARKETS DAILY JULY 16, 2013
2
Copyright 2013 McGraw Hill Financial
TSI DAILY IRON ORE PRICE INDICES
TSIs indices reflect average daily iron ore spot prices. Full price histories are available to TSI
subscribers on its website. Details of TSIs methodology and product specifications, together with
general information about TSI and its full range of steel indices and subscription services, can also be
found on its website: www.thesteelindex.com
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General Manager, Metals
Andrew Goodwin
SBB STEEL MARKETS DAILY
TSI daily iron ore indices, July 16
$/dmt Change % Chg Low* High*
62% Fe fines, 3.5% Al, CFR Tianjin port 129.00 2.10 1.65 86.70 158.90
58% Fe fines, 3.5% Al, CFR Tianjin port 118.90 1.00 0.85 79.30 146.60
62% Fe fines, 2% Al, CFR Qingdao port 130.10 2.10 1.64 88.50 160.00
63.5/63% Fe fines, 3.5% Al, CFR Qingdao port 131.50 2.10 1.62 88.90 161.70
* Past 12 months
Per 1% Fe differentials, $/dmt
$/dmt Change
Range: 61-64% Fe 2.25 0.00
Range: 56-59% Fe 3.00 0.00
FOB netback per route / basis TSI 62% Fe, 3.5% Al fines
Origin Vessel Type FOB ($/dmt) Change % Chg
W.Australia Capesize 121.24 2.12 1.78
India Supramax 114.90 2.10 1.86
Brazil Capesize 108.53 2.10 1.97
Rolling Averages, $/dmt
5-day Monthly Quarterly
62% Fe fines, 3.5% Al, CFR Tianjin port 126.36 123.23 123.23
58% Fe fines, 3.5% Al, CFR Tianjin port 116.82 114.29 114.29
62% Fe fines, 2% Al, CFR Qingdao port 127.46 124.30 124.30
63.5/63% Fe fines, 3.5% Al, CFR Qingdao port 128.86 125.71 125.71
One Singapore-based trader said
mills were maintaining high capacity utili-
zation given the recent improvement in
steel, thus needed to buy. Some of my
mill customers have been asking the
major miners to increase their term allo-
cations of iron ore for the month of
August because steel is doing very well,
the trader said. There are some mills
Rio Tinto could slow Pilbara
expansion
... from page 1
Lambert port being sidelined for almost
three weeks. Rio operates 14 iron ore mines
in Western Australia, some 12 of which can
contribute to the Pilbara Blend product.
Rio produced 66 million mt of iron ore
from its global operations in April-June, up
7% on the same period a year earlier and up
8% on the January-March quarter, but
shipped just 61.3 million mt due to the
Pilbara disruptions. Total production in
January-June was 127.2 million mt, up 6%
on the first half of 2012, with shipments of
118.6 million mt 4% higher than the same
period last year. Rio expects to produce 265
million mt of iron ore in calendar 2013.
Meanwhile, Rio produced 1.9 million
mt of hard coking coal in April-May, down
5% on the same period in 2012, but up
15% on the previous quarter. It produced
7.1 million mt of semi-soft and thermal
coal in the quarter, up 23% on last year
and up 17% on January-March.
Paul Bartholomew
Iron ore market
...from page 1
SBB STEEL MARKETS DAILY JULY 16, 2013
3
Copyright 2013 McGraw Hill Financial
PLATTS DAILY IRON ORE PRICE ASSESSMENTS
Platts daily iron ore assessments, July 16
$/dmt Midpoint Change % Chg
IODEX 62% Fe CFR North China 128.75-129.75 129.25 0.25 0.19
63.5/63% Fe CFR North China 130.00-131.00 130.50 0.25 0.19
65% Fe CFR North China 136.00-137.00 136.50 0.25 0.18
58% Fe* CFR North China 114.50-115.50 115.00 0.25 0.22
52% Fe CFR North China 88.00-89.00 88.50 0.25 0.28
*Al = 4.0% max
Per 1% Fe differential (Range 60-63.5% Fe), $/dmt
$/dmt Change
Range 60-63.5% Fe 2.20 0.00
Platts weekly iron ore lump premium spot assessment, July 10
$/dmtu Midpoint Change
Spot lump premium assessment 0.1350-0.1450 0.1400 NA
FOB netbacks per route / basis IODEX 62% Fe
Route Vessel Type Freight rate ($/wmt) Moisture (%) IODEX ($/dmt)
Australia Capesize 7.60 8.03 120.99
India West Panamax 12.00 8.11 116.19
India West Handymax 14.00 8.11 114.01
India East Handymax* 15.00 8.00 112.95
Brazil Capesize 20.50 9.00 106.72
South Africa Capesize 13.50 3.00 115.33
* Typical two-port co-loadings from Haldia and Paradip
Freight differentials to major import ports, $/wmt
From Qingdao on a Free Out basis
To North China: Caofeidian, Tianjin & Xingang 0.30
To East China: Beilun -0.30
To South China: Zhanjiang & Fangcheng -0.80
Rolling monthly average, $/dmt
IODEX 62% Fe 123.88
IODEX 62% Fe CFR North China OTC swaps assessment, July 16
switch
IODEX 62% $/dmt Change % Chg TSI 62
Aug 13 126.750 -0.500 -0.39 0.500
Sep 13 123.750 -0.500 -0.40 0.500
Oct 13 122.750 -0.750 -0.61 0.500
Q4 2013 121.500 0.000 0.00 0.500
Q1 2014 121.500 0.000 0.00 0.500
Q2 2014 116.500 0.000 0.00 0.500
Calendar 2014 115.500 0.500 0.43 0.500
Detailed methodology and specifications are found here: www.platts.com/IM.Platts.Content/
MethodologyReferences/MethodologySpecs/ironore.pdf
that are ramping up their crude steel pro-
duction levels because steel demand is
doing well, and mills have a need to buy
more iron ore for steelmaking.
A Hunan-based steelmaker said there
was a definite need for Chinese mills to
replenish iron ore and many were looking
for spot cargoes.
However, some believed mill inquiries
were beginning to slow given the quick
increase in ore prices, which they said had
outpaced steel. There needed to be more
balance between the steel and iron ore
markets, which could lead to a weakening
in the latter, they said.
Mixed market sentiment was evi-
dent in the rebar futures market with
the most active January rebar futures
contract in Shanghai trading Yuan 16
higher from Monday at Yuan 3,677/mt
($596/mt), while settling Yuan 5/mt
lower at Yuan 3,670/mt. The spot price
of square billet in Tangshan was down
Yuan 10/mt from Monday at Yuan
3,120/mt ex-stock, according to a
Shandong-based mill source.
Melvin Yeo
and Celestyn Wong
Iron ore prices edge up as
mills restock, doubts emerge
SingaporeSpot prices of seaborne
iron ore edged higher Tuesday as some
mills were still seeking material, but there
was growing skepticism over whether
steel fundamentals supported a continued
uptrend. Platts assessed the 62% Fe Iron
Ore Index up 25 cents at $129.25/dry mt
CFR North China.
Many sources noted resilience in buy-
ing appetite as Chinese mills were still
replenishing stocks after destocking in
late May/June when the market view on
steel prices was bearish. You do not
see the mills scrambling for cargoes
today, but spot supply is limited and you
are not able to buy a PB cargo with a
price tag of $128/dmt, said a
Shandong-based mill source.
However, some mills were heard to
be retreating from the spot market
because they were not confident cur-
rent steel prices were able to support
iron ore. There are at least three mills
who approached me for seaborne iron
ore yesterday, but not a single one
wanted to buy iron ore from me today,
said a Hebei trader source. The mills
told me that in comparison to steel,
ore prices are too expensive, and they
are not confident that the price of iron
ore will be supported.
Another Jiangsu-based mill source,
who also saw demand for iron ore
weakening, said a price correction was
inevitable as prices needed to come off
some dollars before mills would be
comfortable to buy. When the price of
iron ore is hovering near $130/dmt
level you need more than positive senti-
ment to motivate the mills to buy iron
ore, said a Singapore-based trader. It
doesnt help much when steel prices
are not moving up much these days
and that explained why buyers are put-
ting on hold their spot purchases.
SBB STEEL MARKETS DAILY JULY 16, 2013
4
Copyright 2013 McGraw Hill Financial
Platts daily metallurgical coal assessments, July 16
Asia-Pacific coking coal ($/mt)
FOB CFR CFR Change
Australia China India Australia China India
HCC Peak Downs Region 131.00 144.00 147.50 +0.50 +0.50 +0.50
Premium Low Vol 129.50 142.50 146.00 +0.50 +0.50 +0.50
HCC 64 Mid Vol 117.00 130.00 133.50 +2.00 +2.00 +2.00
Low Vol PCI 105.50 118.50 122.00 +0.50 +0.50 +0.50
Low Vol 12 Ash PCI 95.50 108.50 112.00 0.00 0.00 0.00
Semi Soft 88.50 101.50 105.00 0.00 0.00 0.00
Met Coke - - 250.00 - - -1.00
North China prompt port stock prices
Ex-stock Jingtang CFR Jingtang
(Yuan/mt, incl VAT) equivalent ($/mt)**
Premium Low Vol* 1070.00 143.52
HCC 64 Mid Vol* 965.00 128.96
*weekly (assessed July 12), 20-day delivery from date.
**ex-stock price, net of VAT and port charges.
Atlantic coking coal ($/mt)
FOB US
East Coast Change VM Ash S
Low Vol HCC 132.00 0.00 19% 8% 0.80%
High Vol A 127.00 0.00 32% 7% 0.85%
High Vol B 115.00 0.00 34% 8% 0.95%
Detailed methodology and specifications are found here:
http://platts.com/IM.Platts.Content/MethodologyReferences/MethodologySpecs/metcoalmethod.pdf
Dry bulk freight assessments
Route Vessel Class Freight rate ($/mt) Moisture (%)
Australia-China Panamax 13.00 9.50
Australia-India Panamax 16.50 9.50
USEC-China Panamax 35.00 8.00
USEC-India Panamax 34.00 8.00
USEC-Rotterdam Panamax 12.90 8.00
USEC-Brazil Panamax 15.00 8.00
East Australia: basis Hay Point port. USEC: basis Hampton Roads. See methodology for further details.
HCC assessed specifications
CSR VM Ash S P TM Fluidity
Premium Low Vol 71% 21.5% 9.3% 0.50% 0.045% 9.7% 500
HCC Peak Downs Region 74% 20.7% 10.5% 0.60% 0.030% 9.5% 400
HCC 64 Mid Vol 64% 25.5% 9.0% 0.60% 0.050% 9.5% 1,700
Penalties & Premia: Differentials ($/mt)
Within % of Premium Low Vol FOB Net value
Min-Max Australia assessment price ($/mt)
Per 1% CSR 60-71% 0.50% 0.65
Per 1% VM (air dried) 18-27% 0.50% 0.65
Per 1% TM (as received) 8-11% 1.00% 1.30
Per 1% Ash (air dried) 7-10.5% 1.25% 1.62
Per 0.1%S (air dried) 0.3-1% 1.00% 1.30
The assessed price of HCC Peak Downs originates with Platts and is based on price information
for a range of HCCs with a CSR> 67% normalized to the standard of HCC Peak Downs (CSR 74%).
Peak Downs is a registered trade mark of BM Alliance Coal Operations Pty Limited BMA. This price
assessment is not affiliated with or sponsored by BMA in any way.
Source: Platts
There were few spot bids and offers,
but most market participants said the
repeatable price of 61% Fe Australian
Pilbara fines was in the $128-128.50/dmt
CFR China range, up from $128/dmt CFR
China the day before.
Sources said a Newman 90,000 mt
cargo was sold on a 62% Fe basis on glob-
alOre, at $128.50/dmt for delivery in
August. There were no details on either the
buyer or seller of this cargo.
Elsewhere, Australian miner BHP
Billiton was heard to be inviting bids pri-
vately for 63.5% Fe Australian Newman
lump Tuesday, according to traders who
received the invitation to bid. The
90,000 mt shipment will load over July
26-August 4.
Two traders, one based in Shanghai
and the other in Hong Kong, said there
was healthy demand for lump cargoes
now as there was a shortage of domestic
pellet cargoes in the market. Weve
been seeing stronger demand for pellet
from mills in the past two weeks and
there isnt much supply available, so this
will drive up the buying appetite for lump
cargoes, the trader in Hong Kong said.
Lump and pellet cargoes are mutual sub-
stitutes, with the latter processed in a
plant from concentrate material.
Melvin Yeo
and Celestyn Wong
with Annalisa Jeffries in London
Coking coal market
Australian miners make
aggressive coal offers into EU
LondonEuropean mills are seeing
some offers closer to their expecta-
tions from Australian producers follow-
ing recent low-priced deals from the US
into Brazil.
One European mill source said he
was offered this week a low-volatile
blend from Australia at $130/mt for
material with 19-21% volatile matter
(VM), 100-120 fluidity, reflectance of
1.35, vitrinite at 72.5 and CSR at 58-60.
He described the offer as aggressive
and said costs are currently more impor-
tant than 3 or 4 CSR points, with mills
running at below full capacity.
He said the Australian offer was
lower than anything he has seen from
the US. He had seen one US offer of low-
vol coal in the low $130s/mt FOB US,
which with freight to Hamburg of around
$15-16 would result in around $150/mt
delivery into Europe.
The offer for Australian low-vol blend at
$130/mt was below the deals seen from
the US last week for straight run coals at
SBB STEEL MARKETS DAILY JULY 16, 2013
5
Copyright 2013 McGraw Hill Financial
Metallurgical Coke 62% CSR
$/mt Change % Chg
CFR India 250.00 -1.00 -0.40
FOB North China* 231.00 -5.00 -2.12
Yuan/mt
DDP North China* 1330.00 0.00 0.00
*weekly
SBB-SMD raw materials reference prices
$/mt Change % Chg
Coke and coal
Charcoal - Brazil domestic 222.81 0.00 0.00
Iron
SGX 62% Fe Iron Ore cash-settled swaps (dry mt) - front month 126.08 10.14 8.04
Iron ore concentrate 66% Fe wet - China domestic 145.01 4.07 2.89
Atlantic Basin iron ore pellets* FOB Basis (cents/dmtu) 200.61 -16.45 -8.20
Pig iron - FOB - Black sea export 382.50 2.50 0.65
Pig iron - FOB Ponta da Madeira - Brazil export 385.00 -2.50 -0.65
Pig iron - Hebei - China domestic 411.40 -8.15 -1.94
HBI - Venezuela export 275.00 -12.50 -4.55
*Reflects estimated monthly price term contract delivery
SBB-SMD ferrous scrap reference prices
Price Change % Chg
Scrap, Europe/Turkey ($/mt)
OA (plate & structural) - UK domestic, delivered 314.38 0.00 0.00
Shredded - delivered - N. Europe domestic, delivered 344.99 -4.90 -1.40
Shredded - delivered - S. Europe domestic, delivered 339.79 -6.44 -1.86
Scrap, Asia* ($/mt)
H2 - del Okayama - Tokyo Steel purchase price, at works gate 313.38 -10.11 -3.13
H2 - del Utsunomiya - Tokyo Steel purchase price, at works gate 323.49 -5.05 -1.54
Heavy - Shanghai - China domestic 379.18 0.00 0.00
HMS 1/2 80:20 CFR - East Asia import (WEEKLY) 365.00 0.00 0.00
Shindachi Bara - del Okayama -
Tokyo Steel purchase (list) price 333.60 -10.11 -2.94
Shindachi Bara - del Utsunomiya -
Tokyo Steel purchase (list) price 343.71 -5.05 -1.45
Shredded scrap A (auto) - del Okayama -
Tokyo Steel purchase (list) price 321.47 -10.11 -3.05
Shredded scrap A (auto) - del Utsunomiya -
Tokyo Steel purchase (list) price 331.57 -5.05 -1.50
Scrap, Americas ($/lt)
#1 Busheling - N. America domestic, del, Midwest US 415.00 0.00 0.00
HMS 1/2 - N. America domestic, del Midwest US 347.50 0.00 0.00
Plate & Structural - N. America domestic, del Midwest US 377.50 0.00 0.00
($/mt)
HMS 1/2 - Brazil S.E. domestic 210.53 0.00 0.00
*Monthly unless otherwise noted
$131/mt FOB USEC. However, the offer
from Australia is for a blended coal, indi-
cating that coking prices are relatively sta-
ble in the Atlantic.
Platts assessed US low-vol hard coking
coal flat at $132/mt FOB USEC Tuesday.
US high-vol A remained at $127/mt FOB
USEC and high-vol B also remained at
$115/mt FOB USEC.
However, suppliers were becoming
more competitive. One trader said he had
July deals all in place, with prices around
the levels of $132/mt FOB USEC for low-
vol and high-vol B at around $115/mt FOB
USEC. He also said he was talking with the
Australians and said they had a very good
grasp of the current market and that he
had seen competitive offers.
Canadian producers also understood
realities now, despite saying they are
close to costs, he said, adding I dont
think theyre making money, but if they are
covering costs they should be happy.
Elsewhere, a source at another
European mill said although prices were
quite low, it was not enough to bring them
back into the spot market. He had room
for maybe an extra 50,000-100,000 mt
but this was an option within his contract
deals. He believed the coking coal market
would remain flat this year and was unlike-
ly to fall further.
David Braid
Spot met coal rangebound
as traders take positions
SingaporeSpot coking coal prices
in Asia were assessed slightly higher
Tuesday, though the market was yet to see
any sustained upward movement after an
extended period of price stability.
Premium hard coking coals coals
(HCCs) gained 50 cents on the day, to
$142.50/mt CFR China and $129.50/mt
FOB Australia.
Higher offers were heard for prestig-
ious Australian brands with low-volatile
matter, typically in the $147-148/mt CFR
China range, up from $145-148/mt last
week. Perhaps in reaction to these higher
offers, price opinions from large Chinese
steelmakers were also observed to have
risen marginally.
Meanwhile, premium mid-vol HCCs
were seen tradeable at a wider-than-
usual discount to premium low-vols,
with firm offers heard around $139/mt
CFR China for August loadings. The
spread was reportedly causing Chinese
mills to shun higher-priced low-vol. Big
mills are refusing premium low-vol
because of the high price, a Beijing
trader said.
There was some market talk of a spot
deal done in the northeast Asian market
for premium mid-vol HCC last week. It was
understood to be a Panamax cargo and its
offer price reported earlier was around
$127/mt FOB Australia.
Meanwhile, second-tier HCC was
assessed $2/mt higher on the day, revers-
ing a $1.50/mt drop Monday. There was a
lack of consensus on this market seg-
ment, where recent volatility could be a
reflection of the wider tradeable range cur-
rently prevailing.
SBB STEEL MARKETS DAILY JULY 16, 2013
6
Copyright 2013 McGraw Hill Financial
6
Steel Mill Economics: Global Spreads, July 16, 2013
Change % change
China Flat Steel Spread (CFSS using IODEX)* 302.81 $/mt -1.77 -0.58
China Flat Steel Spread (CFSS using TSI)* 303.21 $/mt -4.73 -1.54
China Long Steel Spread (CLSS using IODEX) 279.31 $/mt -3.38 -1.20
China Long Steel Spread (CLSS using TSI) 279.71 $/mt -6.34 -2.22
China Hot Metal Spread (CHMS using IODEX)* 291.06 $/mt -2.58 -0.88
China Hot Metal Spread (CHMS using TSI)* 291.46 $/mt -5.54 -1.86
China Coking Margin (CCM)** 365.00 RMB/mt 0.00 0.00
China Billet-Rebar Spread (CBRS) 320.00 RMB/mt 0.00 0.00
Turkey Scrap-Rebar Spread (TSRS: Platts) 217.00 $/mt 1.00 0.46
Turkey Scrap-Rebar Spread (TSRS: TSI) 219.00 $/mt 1.00 0.46
Turkey Scrap-Black Sea Billet Spread (TSBS: Platts) 142.00 $/mt 0.00 0.00
Turkey Scrap-Black Sea Billet Spread (TSBS: TSI) 144.00 $/mt 0.00 0.00
US Scrap-HRC Spread (US SHRC) 294.58 $/st 0.00 0.00
US Scrap-HRC Futures Spread (US SHRCF) 284.58 $/st 0.00 0.00
US Scrap-Rebar Spread (US SRS) 279.58 $/st 0.00 0.00
*Weekly, assessed on Mondays. **Weekly, assessed on Fridays.
For spreads calculation and assessment methodology, please go to:
http://platts.com/IM.Platts.Content/MethodologyReferences/MethodologySpecs/steel.pdf
Several traders expressed interest
in purchasing typical Rangals with
60-63% coke strength after reaction
(CSR) at $115-116/mt FOB Australia,
or $125-130/mt CFR China, even for a
Panamax-size cargo, contradicting
claims from two sell-side sources
Monday they would happily sell at
$125-127/mt CFR.
Most sources described the market as
steady, and all agreed there was only very
little room for prices to drop further.
Meanwhile, three end-users from
north China expressed a cautious atti-
tude toward current prices, suggesting
any price rebound cannot last for long
and [has] little [leeway]. Highlighting a
pick-up in trader activity, out of 15
reported hard coking coal and PCI trans-
actions concluded last week, nine were
sold to traders.
With regards to domestic coking coal
prices, a Tangshan-based coke plant said
he thought Chinese miners had become
more determined in negotiations with
mills since steel prices had picked up.
On metallurgical coke, several mar-
ket participants were said to be prepar-
ing documents for a coke procurement
tender floated by a west Indian mill last
week. The tender called for 40,000 mt
of blast furnace coke with specifica-
tions of 62/60% CSR for August load-
News in Brief
The direct reduced iron (DRI) plant to be built by Austrian steel-
maker Voestalpine in the US will be the worlds largest when it is
completed in 2015. Plantmaker Siemens, which Voestalpine has contracted
to build the facility in Texas together with Midrex Technologies, confirmed
Tuesday the plant will be the largest single module of this type worldwide.
The plant has a design capacity of 2 million mt/year of hot briquetted iron
(HBI), which will be produced from iron ore pellets using natural gas as the
reducing agent. Voestalpine will use half the HBI for its own steelmaking opera-
tions and plans to sell the remainder.
Nikopol Ferroalloy Plant (NFP), Ukraines biggest ferroalloy smelter,
saw June output fall 0.3% month on month to 33,600 mt, producers
association UkrFa said Tuesday. NFP produced 32,700 mt of silicomanga-
nese and 900 mt of ferromanganese. Junes total output was down 45.1% year on
year, UkrFa said. NFP produced 250,300 mt of ferroalloys in the first half of the
year, down 20.7%. That was made up of 228,800 mt of silicomanganese, down
12.5%, and 21,500 mt of ferromanganese, down 60.4%. NFP, one of the worlds
biggest producers of ferromanganese and silicomanganese, is capable of produc-
ing about 1.2 million mt/year of ferroalloy. In 2012 NFP produced 657,800 mt of
ferroalloy, down 14.6%.
AIM-listed South Africa-focused miner and developer Ironveld has
upgraded the iron ore resource at its Lapon properties in South Africa,
it said in a statement. The company is developing a pig iron project on the
northern limb of the Bushveld minerals complex in Limpopo, South Africa, for
which these mines will provide the feedstock. According to the statement, the
company has doubled its tonnage in the Indicated category to 27.26 million mt at
a cut off (minimum grade) of 20% Fe. The ore in the Measured category is now at
1.58 million mt, also at 20% Fe cut-off. Also, the deposits main magnetite layer
has seen a grade increase from 46.7% to 48% Fe. The total mineral resource now
sits at 32 million mt at 20% Fe cut-off and there is sufficient recoverable iron
ore in situ to produce [its previously declared figure of] 1 million mt of pig iron/
year for 25 years, the company said. The company joined Londons Alternative
Investment Market (AIM) in July last year.
In the face of a declining metallurgical coal prices, US miner Alpha
Natural Resources announced layoffs at various mining operations in
West Virginia as well as the idling of its Pocahontas met coal mine. The
mine is operated by White Buck Coal Co. Generally speaking, met coal is in an over-
supply situation right now, a company spokesperson told Platts. And prices for the
mid-vol spec that Pocahontas produces, have dropped considerably.
TENDER NOTICE
Get more visibility for your Tender
Notice and reach a broad market of
global metals suppliers and end users.
Advertise your Tender Notice in
Platts Steel Markets Daily.
+44 20 7176 7638 | neil_roberts@platts.com
SBB STEEL MARKETS DAILY JULY 16, 2013
7
Copyright 2013 McGraw Hill Financial
Platts steel industry assessments, July 16
Close/Midpoint Change % Chg
Asia
Hot-rolled coil $/mt
FOB Shanghai* 505.00-515.00 510.00 7.50 1.49
Reinforcing bar $/mt
FOB China* 500.00-505.00 502.50 5.00 1.01
* Assessed July 11, 2013
Europe
Hot-rolled coil Eur/mt
Ex-works, Ruhr 415.00-420.00 417.50 0.00 0.00
CIF Antwerp 425.00-431.00 428.00 0.00 0.00
DDP NW Europe (Accessible to SBB Briefing subscribers at sbb.com)
$/mt
FOB Black Sea 505.00-515.00 510.00 0.00 0.00
Plate Eur/mt
Ex-works, Ruhr 495.00-505.00 500.00 0.00 0.00
CIF Antwerp 425.00-435.00 430.00 0.00 0.00
Reinforcing bar Eur/mt
Ex-works, NW Eur 450.00-455.00 452.50 0.50 0.11
$/mt
FOB basis Turkey 580.00-586.00 583.00 1.00 0.17
Billet $/mt
FOB Black Sea 508.00 508.00 0.00 0.00
North America
Hot-rolled coil $/st
Ex-works, Indiana 640.00-650.00 645.00 0.00 0.00
CIF, Houston 580.00-600.00 590.00 0.00 0.00
Plate $/st
Ex-works, US SE 680.00-700.00 690.00 0.00 0.00
CIF, Houston 640.00-660.00 650.00 0.00 0.00
Reinforcing bar $/st
Ex-works, US SE 620.00-640.00 630.00 0.00 0.00
CIF, Houston 535.00-540.00 537.50 0.00 0.00
Europe and US cold-rolled coil assessments, July 16
Eur/mt Close/Midpoint Change % Chg
Ex-works, Ruhr 515.00-520.00 517.50 0.00 0.00
CIF Antwerp 495.00-502.00 498.50 0.00 0.00
DDP NW Europe (Accessible to SBB Briefing subscribers at sbb.com)
$/mt
FOB Black Sea 580.00-590.00 585.00 0.00 0.00
$/st
Ex-works, Indiana 740.00-750.00 745.00 0.00 0.00
CIF, Houston 620.00-640.00 630.00 0.00 0.00
ing. There was also talk of a coke pro-
curement tender in Brazil for 40-100
mm sized coke with 66/64% CSR for
August laycan. The volume requested
was 50,000 mt.
Helena Sheng
with Julien Hall
and Edwin Yeo
Scrap market
Ukraines scrap price steady,
seen rising in Aug on exports
LondonDomestic scrap prices in
Ukraine remain unchanged Tuesday
from two weeks earlier, but several trad-
ers said the resumption of exports may
result in a Hryvnia 200-250/mt or 10%
price increase in August.
Scrap continued to sell for Hryvnia
2,050-2,150/mt ($251-263) ex-yard for
A3 grade (HMS I/II 80/20). At the same
time, port buyers were paying Hryvnia
2,200/mt for A3, merchants in eastern
Ukraine said.
As soon as exports resumed this
month, it affected scrap flow. It was direct-
ed overseas to the detriment of steelworks
in close proximity to ports particularly
Kryviy Rih, Ilyich and Zaporizhstal, a mer-
chant said.
Deliveries to Ukrainian mills fell from
nearly 110,000 mt/week in mid-June to
90,000 mt/week in mid-July, which cov-
ers only 80% of the mills combined
scrap needs.
Although mills have sufficient
stocks, roughly 270,000 mt in all, their
suppliers are running out of stock,
meaning shipments to mills can only
fall unless the mills raise bids, accord-
ing to Kiev-based industry analysts
UkrPromZovnishEkspertiza.
Katya Bouckley
Exchanges
Volume and prices recede
in iron ore swaps market
LiverpoolThe iron ore swaps mar-
ket was quieter again Tuesday as a
lack of activity in the physical market
and growing concern over the longev-
ity of recent increases saw prices
soften marginally throughout the curve.
The Singapore Exchange cleared just
444,000 mt of swaps.
Jul y traded at $126.50/dry mt
and $126.25/dmt, whi l e August
pri nted down from $126.50/dmt to
$126/dmt duri ng Asi an tradi ng.
September was done at $124.25/
dmt, $124/dmt and $123/dmt,
whi l e Q4 pri nted at $120/dmt. The
August- September ti mespread, whi ch
had been the focus of much l i qui di ty
over the past two days, traded at
$2.50/dmt, after tradi ng at $2.50-
3/dmt Monday.
Prices were down around 25 cents-
$1/dmt across the curve from the pre-
vious session. Brokers said liquidity
had thinned and one quipped that peo-
ple should sell the curve, given high
steel production relative to sales in
China. He said iron ore swaps have felt
overvalued compared to the physical
market for some time.
SBB STEEL MARKETS DAILY JULY 16, 2013
8
Copyright 2013 McGraw Hill Financial
The Steel Indexs 62% Fe CFR North
China reference price rose $2.10/dmt
to $129/dmt on the back of limited
supply of mainstream material. Platts
62% Fe Iron Ore Index, however, crept
up just 25 cents as some sources
doubted the longevity of increases
given lagging steel fundamentals.
European steel and scrap contracts
were quiet, but a US hot-rolled coil trade
was done for the 2014 calendar year at
$610/short ton, at 500 st/month, bro-
kers said.
Colin Richardson
Ferroalloys market
Manganese ore soft, buyers
hold back from purchasing
LondonManganese ore prices
moved down Tuesday, with sources
reporting weak buying activity and
softer offers from suppliers. Platts
assessed its 44% manganese ore price
at $5.51/dry mt unit, two cents lower
from the previous day.
A Chinese trader said Gabon ore
was being offered at $5.40/dmtu CIF
China and that market sentiment was
weak, but he thought manganese ore
prices were near the bottom and could
not fall further.
A trader selling into China said pric-
es had softened over the week and he
was hearing Gabon ore being offered
below $5.40/dmtu. He said sellers
reporting high offer levels in May and
June were not able to sell ore without
discounting. Chinese prices are all
coming down even though some people
are still talking high prices. They can-
not sell at these prices, the trader
said. The Chinese dont need ore and
they are not looking to buy very much.
A Chinese purchasing source said she
had also seen soft prices for manganese
ore. However, she was not yet in the mar-
ket to import.
Jitendra Gill
and Clement Kwok
Molybdenum oxide prices
stable, pressure remains: trade
LondonMolybdenum oxide prices
took a breather from the losses seen over
the past seven days and were unchanged
at $9.30-9.40/lb Tuesday.
Theres no change in prices, it seems
to be holding a little bit now, one produc-
er said. He said the market was nervous
as people were not expecting prices to fall
as quickly as they did from the $10/lb
mark seen six days ago.
A Europe-based trader said: Bids are
lower today at $9.20/lb but nobody wants
to buy anyway. They dont want to get their
finger burnt.
He said prices were under pressure
because of poor sentiment and declines
would not stop until consumers return to
the market. It cant stabilize because
there are no deals, he said.
A source reported a deal at $9.30/lb
CIF Busan. Sources agreed buying sig-
nals were not yet seen from China. We
may see resistance if Chinese decide to
come in and start to buy and this will
help stabilize prices, a European con-
sumer source said.
A second Europe-based trader said
the market was lacking activity. Anyone
who wants to put a bid on it now is going
to go lower.
Jitendra Gill
Other News
Glencore Xstrata to halt
Queensland magnetite output
MelbourneGlencore Xstrata will
stop producing magnetite concentrate
at its Ernest Henry Mining operation in
Platts proposes to assess Australia-China Capesize coal freight
Platts is seeking feedback on a proposal to enhance its suite of metallurgical coal
freight assessments by adding a new daily assessment for spot Capesize cargoes.
The assessment would reflect cargoes of 140,000 mt loading 7-45 days forward from
the day of assessment, between Hay Point, eastern Australia and Qingdao, north China.
The assessment would reflect well approved modern tonnage only, not exceeding
10 years of age. Platts invites feedback about this proposal by July 29, please con-
tact: julien.hall@platts.com, and copy cokingcoal@platts.com
Platts clarifies freight netback for metallurgical coal FOB Australia
Platts clarifies its procedures for calculating freight netbacks for metallurgical coal
assessments on an FOB Australia basis. When deals, bids/offers are observed to
be illiquid, inconsistent and non-repeatable, spot price bids/offers or trades in key
consumer markets basis CFR China, India, Europe, Japan or South Korea Taiwan may
be netted back to FOB Australia. Freight netbacks from China will be calculated using
assessed Panamax spot freight rates for dry bulk carriers on the day of assessment,
while from other regions, the prevailing vessel size on the given route will be used.
Platts clarifies standard specifications for Asia coal & coke assessments
Platts clarifies its standard specifications by adding new quality parameters for several Asian metallurgical coal and coke assess-
ments. Standard vitrinite percentage will be 71% for HCC Peak Downs Region (FOB Australia, CFR India and CFR China), 65% for
Premium Low Vol (FOB Australia, CFR India and CFR China), and 55% for HCC 64 Mid Vol (FOB Australia, CFR India and CFR China).
Total Moisture (as received) will be 10% for Low Vol PCI (FOB Australia, CFR India and CFR China), and 10% for Low Vol 12 Ash
PCI (FOB Australia, CFR India and CFR China).
Standard Hardgrove Grindability Index (or HGI) will be 80 for Low Vol 12 Ash PCI (FOB Australia, CFR India and CFR China).
Crucible Swelling Number (or CSN) will be 1 for Low Vol 12 Ash PCI (FOB Australia, CFR India and CFR China). Maximum fluidity will
be 200 dial divisions per minute (or ddpm) for Semi Soft (FOB Australia, CFR India and CFR China). Standard sulfur (air-dried basis)
will be 0.65% for Met Coke (CFR East India, DDP North China and FOB North China).
Platts clarifies loading ports considered for metallurgical coal FOB Australia
Platts clarifies the ports considered in its metallurgical coal FOB Australia assessments. These include Dalrymple Bay, Hay Point,
Gladstone and Abbot Point; and in New South Wales: Newcastle and Port Kembla. Freight rates for hard coking coal from any of
these ports are normalized to Hay Point port for assessment purposes. For PCI and Semi Soft assessments, freight rates from any
of these ports are normalized to Dalrymple Bay.
SBB STEEL MARKETS DAILY JULY 16, 2013
9
Copyright 2013 McGraw Hill Financial
Queensland, Australia, from mid-August
due to weaker iron ore prices and high
logistics costs making exports uneconom-
ic, the company said late Monday.
The Switzerland-based commodity group
said a 30% drop in iron ore prices over the
past two years and higher costs for produc-
tion and transportation have eroded margins,
prompting the decision to suspend magnet-
ite output. The magnetite has to be trans-
ported some 780 km by rail from Ernest
Henry mine, east of Mount Isa, to a port
facility at Townsville for export to China.
Parts of the magnetite circuit at Ernest
Henry will be placed on care and mainte-
nance, with the regrinding circuit reconfig-
ured to produce copper concentrate.
Exports of magnetite concentrate start-
ed from Ernest Henry in 2011 and produc-
tion capacity had been ramping up towards
an ultimate target of 1.2 million mt/year of
magnetite concentrate. An Ernest Henry
Mining spokeswoman said the mine pro-
duced about 500,000 mt of magnetite
concentrate in 2012. Our magnetite con-
centrate went predominantly to the
Chinese market, with a very small amount
for domestic use, she told Platts.
The mine had been earmarked for clo-
sure in 2012. But in late 2009, the com-
pany decided to invest US$542 million to
extend the life of the mine until 2024. This
followed a feasibility study into construct-
ing a magnetite processing facility and
building full-scale underground mining oper-
ations at Ernest Henry.
Last month, Glencore-Xstrata said it
would cut 450 jobs from its Newlands and
Oaky Creek coal mines in Queensland, cit-
ing weaker coal prices and the high
Australian dollar.
Paul Bartholomew
S&P downgrades NWR on
lower coal prices
LondonCentral European coal and coke
producer New World Resources (NWR) has
been given a lower credit rating by Standard &
Poors on the back of the negative coal price
outlook for 2013-2014 and uncertainty related
to NWRs ability to limit negative cashflow, S&P
stated in a press release.
According to S&P like Platts, part of
McGraw Hill Financial the business risk
represented by the Amsterdam-based NWR
has slipped from weak to vulnerable
(from B to B-) reflecting its high cost profile
and need to downscale its operations. At
the same time NWRs liquidity was termed
less than adequate from adequate.
The downgrade is also based on the newly
adjusted coal price assumptions by S&P for
2013-2014, to $140-150/mt from previous
level of $150-160/mt. This results in NWR
generating more negative free cash flow in the
second half of 2013 and 2014 than we previ-
ously assumed, S&P explained.
The agency also made clear that further
downgrading is possible in the coming quar-
ters if coal prices keep softening, and NWR
fails to fully meet its cost-cutting targets and
sell its 800,000 mt/year coke facility OKK
Koksovny in the Ostrava region of the Czech
Republic. The miner was in talks with poten-
tial buyers, it said earlier this month.
NWR was also planning to divest its
Czech Paskov mine but recently said the
sale was unlikely to materialize and other
scenarios were under evaluation including
a potential temporary or permanent shut-
down of the mine.
Wojtek Laskowski
Equatorial to apply for Congo
mining license immediately
MelbourneAustralias Equatorial
Resources has completed the scoping
study for its Mayoko-Moussondji iron ore
Steel headlines
Chinese HRC export prices rise, Korean buyers hold off
Korean buyers of Chinese hot-rolled coil are holding back on bookings amid a
surge in Chinese export prices and persisting weak demand in Korea. Recent export
offer prices from major Chinese mills to Korean buyers were at $540-545/mt CFR for
SS400B 3mm thick HRC, up $20/mt or more compared with prices late last month,
Platts was told Monday.
For more steel news, please visit: www.sbb.com
Marcegaglia raises sheet, plate prices by around Eur30/mt
Keystone raises wire rod prices $15/st for August shipments
Shanghai HDG market sees modest price increase
Turkish flats prices firm with improving market sentiment
Legal battle over UK hot strip mill to be settled in 2014
HRC level at $640-650/st
CRC stays at $740-750/st
Severstal, USS dissolve Double Eagle galvanizing JV
US sheet pricing steady, import concerns linger
Southern European HR coil price up; US price rise continues - TSI
Indias Sail dispatches first switch rail consignment
Taiwan rebar makers lift prices on better demand, scrap rise
Northern Chinas rebar price still rising on better sentiment
Vietnams sales of longs for first-half 2013 rise by 1.5%
Rebar mini-mill in southwest Russia may start up by August
New Russian bar mill aims to start rolling before year-end
Nucor: Long product prices unchanged until further notice
Fullacero sole distributor of Deacero rebar in Chile
Ezz Steel raises rebar exports to fund raw materials imports
Chinese company to complete new Iranian steelworks
Jordanian re-roller seeks investor to help in restructuring
Low demand, over-capacity depress OCTG sales for Tianda
Seamless pipe prices stable in eastern China
US to conduct full sunset reviews of rectangular P&T
Saudi pipemaker secures $67 million OCTG supply contract
Chinese stainless export prices show signs of stabilizing
Turkish stainless coil import prices steady in July
Carpenter gets new leader for distribution businesses
Chinas GDP growth betters target, achieving 7.6% for H1
Special Report: Chinas auto output dips again in June
Chinas crude steel output dips in June, up 4.6% on year
Klckner not expected to break even this year
Tata Steel made operating loss of GPB354 million in EU in 2012/13
Mexicos industrial output flat in May
US steel industry capability utilization at 78%: AISI
Special Report: Colombia steelworkers to fight outsourcing
Brazils crude steel production falls 6% on month in June
Egypts Misr Ataqa approves debt payments for Suez DRI plant
Egypt mills operating despite social unrest, but market slow
Saudi state spending reduction to hit infrastructure growth
Qatars $200 billion construction boom to kick off in 2014
SBB STEEL MARKETS DAILY JULY 16, 2013
10
Copyright 2013 McGraw Hill Financial
Australia lump premium contract price settlements with China mills
$/dmtu
Q2 2013 0.1350-0.1450
Lump premiums vary from company to company, depending on when agreements are reached, brands,
volumes, and whether they are negotiated as a package with other products like fines. Platts has been
reporting on the settlements in the form of news articles, and is publishing them more regularly for
easier access by subscribers. The published lump premium represents what Platts understands most
Chinese mills have agreed to. Premiums that are settled under known, special circumstances, would be
reported about in news articles, but would be excluded from the published premium. For further details,
see http://www.platts.com/MethodologyAndSpecifications/Metals.
Platts steel assessments currency and unit comparisons, July 16
Prior assessment
Eur/mt $/mt $/st $/CWT $/mt $ change % change
Hot-rolled coil
Ex-works, Ruhr* 417.50*** 548.80 497.87 24.90 544.38 4.42 0.81%
FOB Black Sea* 387.98 510.00*** 462.67 23.14 510.00 0.00 0.00%
CIF Antwerp* 428.00*** 562.61 510.40 25.53 558.07 4.54 0.81%
Ex-works, Indiana** 540.27 710.98 645.00*** 32.25 710.98 0.00 0.00%
CIF, US Gulf states, basis Houston** 494.20 650.35 590.00*** 29.50 650.35 0.00 0.00%
Cold-rolled coil
Ex-works, Ruhr* 517.50*** 680.25 617.13 30.86 674.77 5.48 0.81%
FOB Black Sea* 445.04 585.00*** 530.71 26.54 585.00 0.00 0.00%
CIF Antwerp* 498.50*** 655.28 594.47 29.73 649.99 5.29 0.81%
Ex-works, Indiana** 624.04 821.21 745.00*** 37.25 821.21 0.00 0.00%
CIF, US Gulf states, basis Houston** 527.71 694.44 630.00*** 31.50 694.44 0.00 0.00%
Plate
Ex-works, Ruhr* 500.00*** 657.25 596.26 29.82 651.95 5.30 0.81%
CIF Antwerp* 430.00*** 565.24 512.78 25.65 560.68 4.56 0.81%
Ex-works, US Southeast** 577.97 760.58 690.00*** 34.50 760.58 0.00 0.00%
CIF, US Gulf states, basis Houston** 544.46 716.49 650.00*** 32.50 716.49 0.00 0.00%
Reinforcing bar
Ex-works, Northwest Europe* 452.50*** 594.81 539.61 26.99 589.36 5.45 0.92%
East Mediterranean, basis Turkey* 443.51 583.00*** 528.90 26.45 582.00 1.00 0.17%
Ex-works, US Southeast** 527.71 694.44 630.00*** 31.50 694.44 0.00 0.00%
CIF, US Gulf states, basis Houston** 450.23 592.48 537.50*** 26.88 592.48 0.00 0.00%
*LN 16:30 Eur/$ ex rate = 1.3145; **NY 16:30 $/Eur ex rate = 0.7599. ***the primary assessments and have not been converted
project in the Republic of Congo and plans
to apply for a mining license immediate-
ly, the company said Tuesday.
The scoping study has identified an
immediate pathway to a 2 million mt/
year hematite mining operation producing
a premium product transported by the
existing railway and port facilities,
Equatorials Managing Director John
Wellborn said in a statement.
The Perth-based company plans to pro-
duce a Mayoko premium fines iron ore of
grading 64.1% Fe from the project at a rate
of 500,000 mt/year during stage 1, ramping
up to 2 million mt/year within 18 months.
Initial capex required for first produc-
tion has been estimated at $114 million
with total capital costs to achieve the 2
million mt/year rate estimated at $231
million. Operating cash costs for the mine
are expected to average $41/mt FOB
Pointe-Noire over the life of the mine,
which is expected to be 23 years.
Equatorial plans to reduce some of the
costs for Mayoko-Moussondji through part-
nership opportunities in rail and port infra-
structure with Exxaro Resources, whose
project Mayoko-Lekoumo is adjacent
to Equatorials.
Equatorial said Tuesday it expects ini-
tial production from its mine to start 15
months from when investment decisions
have been satisfied.
Marnie Hobson
Asia
Posco scraps Karnataka plan,
some point to ore supply
SingaporeSouth Koreas Posco has
abandoned plans to build a 6 million mt/
year integrated steelworks in the south
Indian state of Karnataka and agreed with
the state government to stop work on the
project, it said Tuesday.
In a disclosure to the Korea Stock
Exchange, Posco cited delays in gaining
approvals to mine along with persisting
problems with land acquisitions. It had
signed a Memorandum of Understanding
with Karnataka in June 2010.
There was not much expectation of
success in this project [from the planning
stage], a source from Posco told Platts.
For its own political purposes, the state
government had initially intended to lure
several steelmakers, he added. Political
uncertainty in the state was also a major
reason behind the companys decision,
he added.
Meanwhile, Posco has been struggling
with a much delayed 8 million mt/year pro-
ject in eastern Indias Odisha, he noted,
adding that there has been some progress
with that project though at a slow pace.
Poscos decision is hardly surprising,
a Mumbai-based analyst said. Even exist-
ing [steel] mills in Karnataka dont know
where they will source iron ore for the next
few years or even decades. It just doesnt
make sense to pump in more investments
there, he said.
Most other Indian steelmakers have
SBB STEEL MARKETS DAILY JULY 16, 2013
11
Copyright 2013 McGraw Hill Financial
Marketplace
Iron ore: 63.5% Fe Australian Newman lump BHP Billiton heard inviting bids pri-
vately for 90,000 mt, loading July 26-August 4, according to traders who received
the invitation to bid
Iron ore: freight Shanghai-based trader heard Capesize freight from W. Australia
to Qingdao fixed at $7.60/wmt
Iron ore: freight Shanghai-based trader indicated Capesize freight from W.
Australia to Beilun at $7.30/wmt
Iron ore: freight Shanghai-based trader heard Capesize freight from Brazil to
Qingdao fixed at $20.40-20.50/wmt
Iron ore: freight Shanghai-based trader heard Capesize freight from S. Africa to
Qingdao fixed at $13.50/wmt
Iron ore: freight Shanghai-based trader heard Capesize freight differential from
Qingdao to Beilun at $0.30/wmt
Iron ore: spot lump premium Hong Kong-based trader estimated tradeable value
at IODEX +$0.16/dmtu
Met coal, freight: Hong Kong trader estimated Panamax DBCT to Jingtang at $12-13/mt
Met coal, HCC: Hong Kong trader would consider buying Jellinbah Lake Vermont at
$115-116/mt FOB Australia
Met coal, PCI: Hong Kong trader would consider buying Yancoal Yarrabee 12% ash
at $110/mt CFR China
(This is a sample of trade and market information gathered by Platts editors as they
assessed the daily , coking coal, steel, scrap and freight prices. They were first pub-
lished on Platts Metals Alert earlier in the day as part of the market-testing process with
market participants. For more related information about that process and our realtime
news and price services, please request a trial to Platts Metals Alert or learn more
about the product offering by visiting http //www.platts.com/Products/metalsalert)
also put their plans for setting up integrat-
ed steelworks in Karnataka on hold until
there is more clarity on the iron ore mining
scenario in the state. No investor in their
right mind will dream of setting up a steel
plant in India now unless they have captive
iron ore mines under their belt first, a
Mumbai-based mill official said.
Anitha Krishnan
and Hera Oh
Chinese mills conflicted on
scrap price development
SingaporeMajor mills from eastern
China expressed caution in changing
their scrap purchasing prices at a regu-
lar gathering of important consumers
in northern Chinas Tianjin on Friday,
July 12. Heavy scrap over 6mm was
assessed by Platts at Yuan 2,320/mt
($377/mt) delivered including VAT on a
delivered basis on Friday, stable week
on week as market participants held con-
flicting views on the market.
The meeting of 8-10 steelmakers plus
other participants was hosted by Tianjin
Pipe Group Corporation, Chinas third larg-
est consumer of ferrous scrap. The next
meeting is due to be held at Zenith Steel
in Jiangsu in early August.
Baosteel said some mills at the
event believed prices should go up in
July following prices of finished steel.
Platts assessed 18-25mm HRB400
rebar in Shanghai at Yuan 3,415/mt
Friday, up from Yuan 3,210/mt on July
1, an increase of Yuan 205/mt during
two weeks.
However, Baosteel was not sure the
increase was sustainable in July and
August and other mills also argued that
the price increase was temporary. It there-
fore did not want to increase its scrap buy-
ing prices, especially since it had ample
and relatively cheap hot metal supply.
Baosteel believed scrap prices would be
stable in July.
As to the long-term, Baosteel believed
the price trend would likely depend on gov-
ernment policies in areas such as urbani-
zation or high-speed rail projects. But stim-
ulus on the scale seen in 2009, when
Yuan 4 trillion was injected into the econo-
my, was very unlikely, it affirmed.
Shagang was also uncertain about
the price trend going forward. Meanwhile,
Nanjing Iron & Steel Corporation believed
scrap prices might be stable or drop
slightly. Blast furnaces are expensive to
stop and it is easier to keep producing
steel from hot metal and reduce scrap
use, it noted.
One independent Beijing analyst
believed scrap prices would increase fol-
lowing the uptick of iron ore and finished
steel prices, furthermore, smaller mills
have raised their scrap purchasing prices
because they could make profits and plan
to keep production high.
Bryan Gao
Analysis
Take-or-pay deals supporting
Australian coal output
LiverpoolOnly 4 million mt of
Australian coal production will close this
year, despite 32 million mt currently being
produced at negative margins, Wood
Mackenzie said in a release Tuesday.
The decision to continue production
instead of shutting it down can mainly be
attributed to transport and port contracts
in Australia, otherwise known as take-or-
pay contracts, WoodMac said. Take-or-
pay means miners pay for capacity regard-
less of the tons they ship.
WoodMac said just over 1% of
Australias coal exports in 2013 (4 million
mt) is at risk of closure based on hard cok-
ing coal prices of $171/mt and thermal
coal prices of $92/mt. This is not a sig-
nificant volume of output; however the
amount at risk increases significantly
under a lower price scenario, the compa-
ny said. Platts assessed premium hard
coking coal at $142.50/mt CFR China
Tuesday, or $129.50/mt FOB Australia.
If average HCC prices fall to $122/mt,
however, WoodMac said 13% of Australias
coal exports in 2013 (45 million mt) will be
at risk of closure. At that price 204 million
mt of production will be suffering negative
margins, the company said.
There have only been two mine clo-
sures so far in 2013 compared to seven
in 2012, said Viktor Tanevski, coal cost
analyst at Wood Mackenzie. Despite the
low coal price environment and current
margin squeeze, take-or-pay contracts
are incentivising coal producers to
increase rather than reduce production,
even if additional production is generat-
ing negative cash margins.
The impact of weak met coal prices on
margins, at a time of high costs, has
forced some companies in Australia to
mothball mines or consider asset sales.
Earlier this year Anglo American said it
would place its Aquila mine in the Bowen
Basin on care and maintenance from July
30. It has also been suggested that Rio
Tinto would sell 29% of its 80% stake in
Coal & Allied, as well as stakes in two
thermal coal mines.
Last month Sydney-based CLSA ana-
lyst Dylan Kelly told Platts Australian min-
ers were struggling to reduce costs on
an operational basis and were seeing
record cost levels. Around half of all
open-cut mines in Australia are believed
to be selling coal below their production
costs, he said.
Colin Richardson