SEAISI€¦ · · 2015-09-02Strong construction a boon for Australian steelmakers ... Slab prices drop further in Asia after Indonesian tender ... produces roughly half of the world’s

Two major activities of the Institute will take place towards the later part of this year.

The first is the 2015 SEAISI Training Programme. The annual programme aims to provide a platform for the transfer of knowledge and skill from the Supporting Member countries of SEAISI to the Regular Member countries of SEAISI in specific areas of steel production and management.

This year is Taiwan’s turn to host the training programme. The theme chosen is “Total Management in EAF Steel Making” and the training will be conducted in Taipei City and Taichung City from 12 to 16 October 2015.

The training contents will cover:

Promotion strategy for Taiwan’s steelmaking and slag recycling;GHG accounting for steel sector – key points and experiences sharing;Introduction to the innovative process in breaking-through the energy efficiency;The management of stainless steel making process in EAF;Cost saving operation in EAF melting shop;Scrap management in EAF melting shop;EAF dust treatment technology at TSU;Introduction of hot metal charging in EAF process; andIntroduction of MT quality system for casted billet.

Message from the Secretary General

The Construction Industry Development Board (CIDB) of Malaysia, the principal body responsible for promoting and enhancing the development of the construction industry in Malaysia, has lent its support to the event. The Chairman of CIDB, Tan Sri Dr. Ir. Ahmad Tajud-din Ali, will be delivering the keynote speech at the Forum. In addition, officials of CIDB will also be delivering/coordinating the presenta-tion of several papers relating to the construction industry.

Apart from the construction sector, the Forum will also address other issues affecting the sustainable development of the iron and steel industry in ASEAN. Thus there will also be sessions on Steel Market Developments; Waste Management; Energy Savings; Emissions Control; and Operation Manage-ment for Environmental Improvement.

The site tour on the third day will visit CIDB Construction Research Institute of Malaysia (CREAM) and Industrialised Building System (IBS) facilities as well as the manufacturing plant of Southern Steel Mesh Sdn Bhd.

We will provide more information about the programme of the Forum as we go along. In the meantime, mark the dates on your calen-dar to make sure you do not miss out on this unique year-end event of the Institute. TAN AH YONG

Training participants will also have the oppor-tunity to visit the plants of Tung Ho Steel, Feng Hsin Iron & Steel Co., Taiwan Steel Union and Dragon Steel.

The number of places for the training is limited in order to ensure the effectiveness of the programme. The National Committees in the Regular Member countries will be responsible for the nomination of participants from their respective countries for this training programme.

The next major event of the Institute is the 2015 ASEAN Iron and Steel Sustainability Forum. The event will be co-hosted by the Malaysian Iron and Steel Industry Federation (MISIF) and will be held at Hotel Istana in Kuala Lumpur, Malaysia from 30 November to 2 December 2015.

The special focus of this year’s Forum will be on the construction sector, the biggest steel consuming sector in ASEAN. The intention is to make use of this Forum to create a platform to promote steel structure for this sector. In this connection, the Forum will have four (4) dedicated sessions on topics related to the construction sector. The sessions are Building Construction System; Steel Structure; Civil and Assembly Works; and Construction Manage-ment and Sustainability.

Publisher: SEAISI Editor: Pichsini Tepa-Apirak Contributing Editor: Josephine Fong Printer: Yeohprinco Sdn. Bhd.Email: [email protected] Tel: 603 55191102 Fax: 603 55191159 Website: www.seaisi.org

SEAISISouth East Asia Iron and Steel Institute ISSN 0166-9645

Newsletter August 2015

Details are available at our website www.seaisi.org

To obtain a copy, please fill out the order form from the website and return to us by

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2 SEAISI Newsletter, August 2015

ContentsMessage from Secretary General ....................................................... 1

Strong construction a boon for Australian steelmakers ................. 2

BlueScope may close Australia steel business ................................. 2

Indonesia imposes safeguard duties on wire rod imports ............... 3

PT Krakatau Steel’s to launch its automotive sheet jv ...................... 3

Slab prices drop further in Asia after Indonesian tender .................. 4

Indonesia conducts interim review of AD duty on Korean HRC ........ 4

Marubeni-Itochu, Sumitomo to merge construction steel units ...... 4

South Korea’s steel exports reach year-high in Jul ........................... 5

South Korea’s steel imports dip 4% during January-July ................... 5

Malaysia imposes mill certification rule on tinplate imports .......... 5

Malaysian flat steel mills will face ‘tough time’ securing orders ..... 6

Philippines extends safeguard duty on steel angle bar imports ...... 6

Philippines budgets more for public infrastructure spending .......... 6

Singapore will become Asia’s financial, commodity trading hub

by 2025, CLSA says .............................................................................. 7

Singapore rebar import prices largely flat despite China’s yuan

devaluation ......................................................................................... 7

Taiwan’s Feng Hsin to replace rebar mill ........................................... 8

Taiwan’s CSC to invest $23m in new ladle furnace ............................ 8

China Steel plant to be affected by India’s import tariff hike ........... 8

Tata Steel subsidiary to revamp EAF in Thailand ............................... 9

Siam Steel mulling over joint venture with 2 Japanese companies . 9

SSI results worsen under pressure from Chinese exports ................ 9

Vietnam’s HRC import prices strengthen after two months of falls . 9

Chinese steel may flood VN market ................................................. 10

Russia’s scrap export tax cut to affect price, not volume ............... 10

US dumping charges against Brazil over HRC is a ‘surprise’ ........... 11

Indian steel producers seek safeguarding duty on HRC imports .... 11

India’s Shree Uttam Steel, Posco to build plant in Maharashtra ... 12

Chinese crude steel output dropped 4.6% in July ........................... 12

Yuan devaluation adds to metals-export competition ................... 12

US DOC to cancel of China’s stainless steel sinks countervailing

duty administrative review .............................................................. 13

China begins construction of coastal steel project ........................ 13

Suzuki’s Myanmar plant using steel body parts from Japan, India . 14

US mills file AD, CVD petitions against HRC imports ....................... 14

MEPS expects global Steel production to decline this year ............ 14

The 2015 Seminar for ASEAN Senior Management Personnel of

Iron and Steel Enterprises in China .................................................. 15

Shipbuilding and repair industry in the Philippines ........................ 15

2015 ASEAN Iron and Steel Sustainability Forum ............................. 16

A U S T R A L I A

Strong construction a boon for Australian steelmakers

Australian long steel producer Arrium will be buoyed by the latestreport on the country’s property construction sector, less than afortnight before it reports its fiscal 2015 results.

Australian Industry Group/Housing Industry Association’sperformance of construction index (PCI) found apartmentbuilding activity lifted strongly in July. The sub-index for thesteel-intensive segment jumped 9.0 points to 62, the fastest paceof expansion since August 2014.

Australia’s two largest cities Sydney and Melbourne have beenundergoing an apartment construction boom in recent years,boosted in part by relatively high immigration and Asianinvestment.

Less positively for Arrium, however, was the ongoing downturnin commercial construction, which contracted for the ninthconsecutive month, falling 3.7 points in July to 45.2. The Sydney-based company needs domestic steel demand to stay strong tooffset its struggling iron ore division, which was forced to cut 4million metric tons/year of higher cost output last year.

BlueScope Steel’s building products rely more on demand fromindividual houses and renovations, a segment of the market thatslipped 1.7 points to 50 in July in the PCI. AI Group described thehouse building segment as “patchy”, having expanded in three ofthe past six months.

BlueScope will announce its results for the year to June 30, 2015on August 24. On Wednesday the community close to thecompany’s Port Kembla steelworks held a meeting to voiceconcerns that BlueScope may cease producing steel at the worksdue to low flat steel prices.

The company has been helped by the Australian dollar losing20% of its value in the past year, along with significantly cheaperiron ore and coking coal prices. But these gains have been offsetby plunging Asian hot rolled coil prices.

Platts, August 10, 2015

BlueScope may close Australia steel business

Collapsing steel prices have prompted BlueScope Steel Ltd. tobegin an urgent review of its Australian and New Zealandoperations that could see the company end production in thosecountries.

Australia’s biggest steelmaker said it would update investors onthe progress of the review by November, in time for its next annualshareholder meeting.

A global glut has driven the spot price of Chinese hot-rolled coilsteel exports down by about 40% over the past year, according toThe Steel Index, a data provider. A surge in cheaper Chineseexports of steel, in particular, are making life harder for producersin countries such as Australia, South Korea and Japan.

SEAISI Newsletter, August 2015 3

“We have to address the major challenge of losses in commoditysteelmaking in Australia and New Zealand,” BlueScope ChairmanGraham Kraehe said on Monday, even as the company reportedits best earnings result since before the global financial crisisafter a broad restructuring of its global business.

Steel producers everywhere are being squeezed by the oversupply,at a time when China’s demand for the building material—usedin everything from skyscrapers to bridges—is also slowing. Chinaproduces roughly half of the world’s steel, and the sharpslowdown in its economy recently drove a surge in exports bymore than a quarter in the first seven months of 2015.

“There had been extensive changes recently in the global steelindustry,” BlueScope Chief Executive Paul O’Malley said in astatement. “China’s finished steel exports have doubled to a run-rate this year of over 100 million [metric] tons per annum—anincrease equivalent to the output of 20 Port Kembla steelworks.”

Port Kembla is BlueScope’s flagship mill and Australia’s biggeststeelmaking operation, supporting some 5,000 workers. Severalmarket analysts have said they expect the Port Kembla steelworks,south of Sydney, to be shut given the weakness in global steelprices.

“At these prices, it would be more competitive to externally sourcesteel substrate than to continue to operate our Australian andNew Zealand steelmaking operations,” said Mr. O’Malley. “Unlesswe deliver a game-changing approach to costs to improve theircompetitiveness.”

BlueScope also has a steelworks in New Zealand, as well asfactories in the U.S. and Thailand. The steelmaker said it wantsto cut annual costs in Australia by more than 200 millionAustralian dollars (US$146 million), and in New Zealand by 50million New Zealand dollars (US$33 million), by mid-2017. OnMonday, Mr. O’Malley said BlueScope was looking to reducespending on everything from the raw materials to the propertiesit uses.

Other major steelmakers, including South Korea’s Posco, havefaced similar problems in recent years. In some cases, prolongedstrength in local currencies has added to the headache of aweakening steel price. Some desperate producers have soughtgovernment protection from falling prices, such as import dutiesfor cheaper foreign steel.

On Monday, BlueScope urged Australia’s federal and stategovernments to help the company by easing taxes. The companyhas already overhauled operations in recent times: laying offstaff, lowering output, and merging several business units. It hasalso looked to growth elsewhere, such as through a tie-up withJapan’s Nippon Steel Corp.

BlueScope reported net profit of A$136.3 million for the yearthrough June, compared with a loss of A$82.4 million a yearearlier.

The Wall Street Journal, August 23, 2015

Indonesia imposes safeguard duties on wire rod imports

The Indonesian government is implementing safeguard dutieson imports of alloy and non-alloy steel wire rod productsclassified under seven different HS codes for a period of threeyears.

The duties were set at 14.5% for the first year, 10% for the second,and 5.5% for the third, according to regulations published by thecountry’s finance ministry dated August 11, which came intoeffect last week.

The products affected by these duties are classified under HScodes 7213.91.10.00, 7213.91.20.00, 7213.91.90.00,7213.99.10.00, 7213.99.20.00 and 7213.99.90.00 in the case ofnon-alloy steel, and under 7227.90.00.00 for alloy steel.

Duties will be applied on non-alloy products with a carboncontent of 0.15% or below. In the case of products classifiedunder HS code 7227.90.00.00, duties will be imposed on productswith 0.10-0.15% carbon content and a minimum boron contentof 0.0008%, though there was no mention of chromium content.The Indonesian Safeguards Committee started an investigationin January 2014 following an application by Ispat Indo andKrakatau Steel.

The committee recommended that safeguard duties be imposedafter it found that the domestic industry had suffered seriousinjury caused mainly by a significant increase in the volume ofwire rod imports.

Products from 121 territories – including India, the Philippines,Taiwan, Thailand, Turkey and Vietnam – are exempted from theduty, according to a copy of the document detailing theregulations on the ministry’s website.

Steel First, August 25, 2015

PT Krakatau Steel’s to launch its automotive sheet jv

Indonesia’s Krakatau Steel is about to start constructing itsIndonesian automotive sheet joint venture, marking its entry intothe sector dominated by Japanese companies.

A groundbreaking ceremony for PT Krakatau Nippon Steel Sumikinwill be held on August 25, Jakarta-based Krakatau sources toldPlatts Tuesday. The Indonesian steelmaker will hold a minority20% share, while Nippon Steel & Sumitomo Metal Corp (NSSMC)will take up the remaining 80%.

The $400 million, 480,000 metric tons/year galvanizing,annealing and processing line will be commissioned inAugust2017 and is situated within the vicinity of Krakatau Steel’sintegrated steel works site in Krakatau Industrial Estate, Cilegon,Banten, in West Java. The plant would be processing HRC feedfrom NSSMC (80%) and from Kratakau (20%).

The Indonesian state-owned steel company is also in the processof constructing its new 1.2 million blast furnace plant within thesame premises. The hot metal output was planned to be used forits mothballed 2.1 million mt/year slab plant.

I N D O N E S I A


Commissioning of the blast furnace plant is scheduled for H2this year, a company official said. “We still use imported slabsfor HRC production,” Platts was told. Slab is sourced from Russia,Brazil and elsewhere. Brazilian slab was last week offered at$290/mt CFR Indonesia, Jakarta-based trading sources reported.

Krakatau’s No.1 hot strip mill has a capacity of 2.4 million mt/year and it expected to produce around 2-2.1 million mt of HRCthis year.

Krakatau Steel also plans to execute the development of a newhot strip mill of 1.5 million mt/year at an investment of $460million. A groundbreaking ceremony for No.2 HSM, due forcommissioning in second-half 2017, “will be held soon,” anotherofficial said.


Slab prices drop further in Asia after Indonesian tender

Import prices for slab have dropped further in Southeast andEast Asia following the conclusion of a tender by a plate re-roller in Indonesia and news of lower Russia-origin offers intoTaiwan.

The international procurement tender in Indonesia was reportedto have concluded with a cargo of about 60,000 tonnes of plate-making slab sold by a Brazilian supplier at $295-300 per tonnecfr, sources told Steel First.

The shipment will be made in October, with the cargo expected toreach Indonesia the following month.

The same re-roller would also have booked as much as 45,000tonnes of slabs from an Indonesian producer, at $310 per tonnedelivered, for shipments in September and October.

In Taiwan, there was news that the latest prices from a producerin Russia’s Far East province were about $280 per tonne cfr forhot rolled coil-making slab, with no transactions heard.

This would compare to a deal said to have been concluded inIndonesia last month as low as $300-305 per tonne cfr, for35,000-45,000 tonnes, also from Brazil, and to offers previouslyheard as low as $285 per tonne cfr in Taiwan.

“Generally, the market in Asia is on a downtrend,” one sourcesaid on Tuesday August 11. “However, there might be a reboundafter the summer vacation season ends.”

There has been no booking activity heard in other countries inthe region, such as South Korea, Thailand and Malaysia.Steel First last assessed import prices for slab in Southeast Asiaand East Asia at $285-305 per tonne cfr, in the week of August 4-10. This price was unchanged from the two previous weeks.

The weekly export price assessment for CIS-origin slab was $270-280 per tonne fob Black Sea in the same week, down by $5-10 pertonne amid tough competition.


Indonesia conducts interim review of AD duty on Korean HRCThe Indonesian Anti-Dumping Committee (Kadi) has started aninterim review of anti-dumping duties imposed in 2011 on importsof hot rolled coil from South Korea.

The review – which was started on August 13 following a requestfrom Indonesia’s state-owned steelmaker Krakatau Steel – willlook into HRC imports from all South Korean companies excludingPosco, Hyundai Steel, Hyundai Hysco and Dongkuk Steel, theIndonesian trade ministry said on Wednesday August 19.

“Kadi found initial evidence […] that there are still indications ofdumping practice [in HRC imports from South Korea],” agency’schairman Ernawati, who goes by one name, said in the samestatement.

In February 2011, Indonesia started imposing duties at rates of3.8% on HRC from South Korea classified under tariff codes7208.10.00.00, 7208.25.00.00, 7208.26.00.00, 7208.27.10.00,7208.27.90.00, 7208.36.00.00, 7208.37.00.00, 7208.38.00.00,7208.39.00.00 and 7208.90.00.00.

The duties are in force for a period of five years.

Companies interested in taking part in the investigation need tosubmit a request to Kadi within 14 days from the date of theinitiation of the review, the trade ministry said.

Overlapping investigationsIn April, Kadi initiated a sunset review on the same duties,following a request also made by Krakatau Steel.

“That investigation was a sunset review, and it’s still ongoing,” aKadi official told Steel First on Thursday August 20. “This newone is an interim review, which is different.”

According to World Trade Organization (WTO) rules, sunsetreviews, also known as expiry reviews, look at whether the expiryof existing anti-dumping duties would likely lead to thecontinuation of dumping and injury.

Interim reviews, on the other hand, can be requested by anyparty interested to know whether the continued imposition of aduty is necessary to offset dumping, and/or whether the injurywould be likely to continue if the duty was removed or changed.

Under interim reviews, existing duties can be adjusted dependingon the results of the investigation.


Marubeni-Itochu, Sumitomo to merge construction steel units

Japanese trading companies Marubeni-Itochu Steel (MISI) andSumitomo Corp have announced plans to integrate their domesticsteel building material businesses.

The resulting entity will have combined sales of about ¥420billion ($3.4 billion).

J A P A N


The integration will be achieved through a merger scheduled forcompletion on January 1 next year, with approval from authoritiesin Japan and elsewhere, MISI and Sumitomo said in a jointstatement on Monday August 3.

“While demand for domestic construction in Japan is currentlygrowing – due to infrastructure building in preparation for the2020 Tokyo Olympic and Paralympic Games, as well as urbanredevelopment projects – it is recognised that the constructionmarket will eventually become mature over the long term,” thetrading firms said.

“Against such a background, MISI and Sumitomo Corp havereached an agreement to integrate their domestic steelconstruction material businesses with the aim of expandingservice functionality for manufacturers and users,” they added.

Under the agreement, MISI’s 100%-owned Marubeni-ItochuTechno Steel (MITS) will merge with Sumitomo’s wholly ownedSumisho Tekko Hanbai.

The steel building material businesses of three other companiesfully owned by Sumitomo – Sumitomo Corp Hokkaido, SumitomoCorp Tohoku and Sumitomo Corp Kyushu – will be spun off andintegrated into MITS, which will be the survivor company afterthe merger is completed.MITS will then be renamed Marubeni Itochu Sumisho TechnoSteel, with MISI holding a 66.7% stake and Sumitomo theremaining 33.3%.

According to MISI’s website, MITS supplies several constructionsteel products to Japan’s domestic market, from long steel goodssuch as H-beams, rebars, angles and channels to flat steel itemslike medium plates and hot rolled sheets.

Sumitomo Corp and MISI said that the integrated company willalso direct its efforts toward leveraging the networks of all threeof the Japanese trading houses involved – namely Sumitomo,Marubeni Corp and Itochu Corp.

MISI is a 50:50 joint venture between Marubeni Corp and ItochuCorp.


South Korea’s steel exports reach year-high in Jul

According to statistics released by the Korean Ministry of Trade,Industry & Energy (MOTIE), the country’s steel export valuestotaled US$19.8 billion in the first seven months, decreasing by3.6% year on year.

In July alone, steel exports amounted to US$3.4 billion, reachinga new high this year and an increase of 16.4% from the sameperiod of last year. The main reason is driven by higher exportsof structural steel.

In July, South Korea exports to China and Japan saw an increaseof 24% and 29.4% compared to last year respectively. However,steel exports to Southeast Asia and the North American free tradearea have increased slightly.

Yieh, August 11, 2015

South Korea’s steel imports dip 4% during January-July

South Korea’s total steel imports in July increased by 10% fromthe previous month and by 2% from the same month a year ago to1.96 million metric tons, according to the Korea Iron and SteelAssociation Monday which cited a surge in arrivals from China.

China-origin steel imports jumped by 23% from June and by 21%from July last year to 1.35 million mt, while imports from Japanat 509,000 mt were up 7% on month and by a huge 18% y-o-y,Kosa data showed.

However, slower arrivals earlier in the year meant thataccumulated steel imports from all sources in the first sevenmonths fell by 4% from January-July last year to 12.79 millionmt.

Most deliveries of major steel products such as heavy plate, hotrolled coil, wire rod, galvanized sheet, cold rolled coil and othersfrom overseas decreased by 1~23% on year.

Imports of HRC and plate from China between January and Julystood at 2.03 million mt, down 1% on year, and 1.04 million mt,down 13% on year respectively. Those from Japan dropped to1.44 million mt, down 4% on year, and to 519,000 mt, down 27%on year, respectively.

But robust demand for China-origin longs including rebar andbeams from South Korean end users led to arrivals from Chinaover the same period to increase to 2.63 million mt, up 12% onyear.


Malaysia imposes mill certification rule on tinplate imports

The Malaysian government has recently implemented mandatorycertification for the import of tinplate into the country.

The measure took effect on August 1, and requires that tinplateimports have a Certificate of Approval (CoA), Malaysia’s ministryof international trade & industry (MITI) said.

“The imposition of CoA on this product is to ensure that importedmaterials meet established quality and safety requirements,”MITI said. “The new requirement was made in consultation withthe industry.”

Trading sources told Steel First that CoA works as a mill certificate,whereby foreign steelmakers willing to export must pass througha certification process for their products.

K O R E A M A L A Y S I A


The process is carried out by SIRIM QAS International, aMalaysia-based certification, inspection and testing body.

Tinplate is mainly used in packaging materials, especially in thefood and beverage industries.

Perusahaan Sadur Timah Malaysia Berhad (Perstima), in whichJapan’s JFE Shoji Trade Corp owns a 13.95% stake, is the largesttinplate supplier in Malaysia.


Malaysian flat steel mills will face ‘tough time’ securing orders

Flat steel market participants in Malaysia are expected to face“a tough time” securing sales orders over the next few monthsbecause of intensified competition, CSC Steel Holdings has said.

The added pressure is coming from both imports and localcompetitors, it added.

The prediction came amid expectations of depressed iron oreprices during the second half of the year, the cold rolling andcoating subsidiary of Taiwan’s China Steel Corp (CSC) said in itssecond-quarter financial results report, published on FridayAugust 14.

“This scenario is expected to further drive steel prices downwardfor the rest of the year, and there is no sign of improvement indemand in the local steel market,” CSC Steel said.

The company reported a 1.9% year-on-year drop in its salesrevenues in the second quarter this year, to 258.3 million ringgit($63 million).

“The decrease in revenue is primarily due to decreases in sellingprices of all our steel products, and marginally lower salesvolume,” it said.

Pre-tax profit, however, came to 13.8 million ringgit ($3.4 million),up from a pre-tax loss of 11.2 million ringgit ($2.7 million) in thesecond quarter of 2014. The improvement came on lowerproduction costs resulting from cheaper hot rolled coil (HRC)purchase prices.

CSC Steel operates a 600,000-tpy cold rolling and coating facilityin Malacca state, in southern Malaysia.


Philippines extends safeguard duty on steel angle bar imports

A safeguard measure in the Philippines against imports of steelangle bars has been extended by another four years following arecommendation from the country’s tariff commission.

The tax, starting at 3,345 pesos ($73) per tonne on the first yearof imposition, will be reduced by 5% annually over the next fouryears, according to local reports over the weekend, citing anorder issued on July 16 by the country’s Department of Trade andIndustry (DTI).

The DTI could not be reached to confirm the details, but RobertoCola, president of the Philippine Iron and Steel Institute,confirmed the ruling to Steel First on Monday August 3.

The safeguarding measure was first implemented in 2009 andexpired in March 2015. The duty was meant to give more time tothe local steel industry to put in place its adjustment plan inorder to effectively face import competition.

The tariff commission’s recommendation followed aninvestigation covering the period from 2011 into the first half of2014 on the back of a petition lodged by the Steel Angles, Shapes& Section Manufacturers Assn of the Philippines (SASSMAPI).

The products affected are those classified under AHTN 2012/2007 heading numbers 7216.21.00 and 7216.50.10.


Philippines budgets more for public infrastructure spending

Philippine steelmakers have welcomed proposed increases inpublic infrastructure spending in the country. “This is welcomenews as it will address some of the hindrances in attaining higherGDP growth (such as) infrastructure, connectivity and mobility,”according to Philippine Iron & Steel Institute (PISI) presidentRoberto Cola.

In Philippine president Benigno Aquino’s July 28 national budgetmessage for fiscal 2016 to Congress, the budgeted outlay forinfrastructure is about 5% of the country’s GDP, up from thecurrent year’s 4% and from 3% in 2014.

Manila aims to spend P766.5 billion ($16.76 billion) during thefiscal year commencing July 2016 on public infrastructure, nearly35% higher than this year’s allocation of P569.9 billion, accordingto Department of Budget & Management data.

The Department of Public Works & Highways has been allocatedP268.4 billion to pave national roads and construct access roadsto airports, seaports, and tourist destinations. The Departmentof Transportation & Communications was assigned P10.2 billionto construct or improve airports and seaports, as well as P15.7billion to rehabilitate railway systems.

Government spending will be affected from the last week of March2016 to mid-May 2016, Cola explained, given the ban on awardinggovernment projects during elections. But the spending targetfor the whole year can be attained if the present administration“front-loads” big-ticket government infrastructure projects, hesaid.

But the budget hinges on the incumbent administration’spresidential candidate (and party) winning the 2016 elections.“A change in administration will affect the entire governmentbureaucracy,” said Cola. “It’s an election year.

Politicians display their plumage,” a Manila-based steelmakersaid.

Based on his experience, implementation of public infrastructureprojects has been slower than expected but he remained hopefulabout the planned disbursements. “It would be great if the goodies

P H I L I P P I N E S


are released and we do a good job of fixing things,” he said. PISIprojects steel demand to grow by 6-7% annually in 2015 and2016, said Cola.


Singapore will become Asia’s financial, commodity trading hub by2025, CLSA says

Singapore is set to become the leading financial and commoditytrading hub in Asia over the next decade, according to independentbrokerage and investment bank CLSA.

Singapore will regain its position as the region’s largest wealthmanagement hub by 2025, after it was surpassed by Hong Kongin 2015, to become again the world’s third-largest financialcentre, behind New York and London, CLSA said in a special reportmarking the city-state’s 50th anniversary.

In a back-to-the-future scenario, CLSA outlined its vision ofdevelopments in Singapore over the next ten years.In the commodities sector, CLSA envisages Singapore’s share inglobal agricultural commodity trade to increase to 30% in 2025from today’s 20%.

The bank attributed the predicted future success to Singapore’spreferential tax regime for commodity traders, being the home tothe Asian headquarters of major global banks, and successfullycreating the region’s legal hub.

While competition from exchanges in China is growing, this willnot hinder Singapore’s growth in the near and medium terms,CLSA said.

“In the next ten years, Singapore will continue to developalongside the economic growth in the region,” Daniel Meng,equity analyst at CLSA Materials Research, told Steel First.

“In the long run, Singapore may have to face competition fromChina. Once its legal and administrative system has developed,it is possible that more talented people and trading companiesmay choose to go to China. However, it would be unlikely tohappen in the near term,” he added.

In the iron ore market, for example, Singapore has become thecentre of derivatives trading.

The Singapore Exchange (SGX) cleared 80.5 million tonnes ofiron ore swaps and futures last month, up from 29.4 milliontonnes a year earlier.

In the first seven months of 2015, SGX cleared a total of 546.2million tonnes of iron ore derivatives, compared with 582.33million tonnes recorded in the whole year of 2014. Last year’sfigure, in turn, was more than double the volume reported in2013.

China’s Dalian Commodity Exchange (DCE), launched its yuan-based iron ore futures contracts in October 2013, has beengrowing fast, and has attracted a lot of attention, Meng admits.However, he does not believe that the SGX’s position in the

S I N G A P O R E

international iron ore market is under threat in the short andmedium terms.

“International trading companies, particularly those from theAsia-Pacific region, will still rely on the Singapore Exchange tohedge their pricing risk or do arbitrage trading, due to theconvenience of financial settlement and a better legal system,”Meng said. “In the long term, growing pressure will come fromChina”.


Singapore rebar import prices largely flat despite China’s yuandevaluation

Rebar import prices in Singapore remained largely unchangedthis week despite news that China’s central bank devalued itscurrency for a second day on Wednesday August 12.

Chinese mills were offering rebar this week at $310-315 per tonnecfr on a theoretical-weight basis, a price unchanged from a weekago, market participants said.

It may be premature to make any adjustment on offer prices atthis point, a Singapore-based official with a Chinese mill said.

“It has only been a day [since the policy move was announced].We still have to see how the situation will unfold,” he said.

A weaker yuan would make the price of Chinese exports relativelyless expensive on a US-dollar basis in overseas markets.

Offers from traders – which were conspicuously absent last weekwhen prices started to move up – surfaced again this week, withprices now heard at $300-305 per tonne cfr on a theoretical-weight basis.

These traders, mostly short-sellers betting on a price decline,would hope to entice customers with low offers in an attempt togather enough bids and present them as one big order to theChinese mills.

These mills may start to consider lower prices if they become“too hungry” for orders, a market participant in Singapore said.

China surprised the global markets on Tuesday by devaluatingits yuan, a move that many analysts said was aimed at shoringup the Chinese economy. The move resulted in the biggest one-day drop in the value of the Chinese currency against the USdollar in 20 years.

The Singapore dollar hit a fresh five-year low on Wednesdayagainst the US dollar after China reduced the value of the yuanagainst the dollar for the second consecutive day. The Singaporedollar was trading at S$1.41 to US$1 during Asian trading.

This has helped to discourage people from making any buyingdecisions for now, the Singapore-based market participant said.

“Purchases will continue at a normal pace. It’s mainly a timingissue,” he said. “Those who need to buy will buy. Buyers here donot speculate much.”


Singapore rebar prices are considered a good gauge of regionalmarkets because the country is a significant consumer and hasno trade restrictions on imports.

Steel First assessed Southeast Asia import rebar prices at $300-310 per tonne cfr on August 10, widening upward from $300-305per tonne cfr a week ago.


Taiwan’s Feng Hsin to replace rebar mill

Feng Hsin Iron & Steel, a major Taiwanese mini-mill, will startbuilding a new rebar rolling mill later this year at its works incentral-west Taichung to replace an existing mill.

The aim is to lower production costs and reduce carbonemissions, a company official confirmed Wednesday.

The investment, estimated at TWD 2.3 billion ($73.8 million),was approved by Feng Hsin’s board of directors in June.Construction on the mill, which will have a design capacity of60,000 mt/month or around 700,000 mt/year, will commencewithin this year and should be completed by 2017.

“The new rebar mill will just replace the existing rolling capacityso we are not considering any expansion – certainly not with thealready fierce competition in this market,” the officialemphasized. Japanese news reports said that by replacing therebar mill, Feng Hsin will have an additional 600,000 mt/yearrebar capacity.

The new mill will incorporate direct rolling, thus improving rebarquality by reducing oxidation during the rolling process. FengHsin also expects production costs will be lowered by TWD 500/mt thanks to the elimination of the reheating process, the officialexplained.

Also in June, Feng Hsin’s directors decided to upgrade some otherrebar/wire rod facilities and install a vacuumdegassing unit atthe steelmaking plant for a cost of TWD 1.2 billion. It aims tobegin producing spring steel and so broaden its productcatalogue.

Feng Hsin hosts 1.8 million mt/year crude steel capacity, and ismainly producing rebar, wire rod, and beams.


Taiwan’s CSC to invest $23m in new ladle furnace

China Steel Corp (CSC), Taiwan’s largest steelmaker, will investNT$736 million ($23.6 million) to install a new ladle furnace atits steelworks as it continues to diversify its product mix andraise its output of high-grade steel.

The investment decision for the project, which will start inOctober this year and be completed in June 2018, was takenduring a board meeting on Wednesday August 12.

The ladle furnace will be the third in the company’s No1 basicoxygen furnace (BOF) plant.

T A I W A N

“Reasons for investing in this project are to move steel productiontoward various items at small volumes, and continuing toincrease the percentage of high-grade steel products,” thecompany said.

“More liquid steel must pass through the refining compoundprocess, so the current two ladle furnaces have insufficientcapacity,” it added.

CSC produced 9.61 million tonnes of crude steel in 2014, up from9.07 million tonnes in the previous year.

Together with fully owned subsidiary Dragon Steel, it produced15.40 million tonnes of crude steel last year, ranking at No23 inSteel First/Metal Bulletin’s list of Top Steelmakers 2015.


China Steel plant to be affected by India’s import tariff hike

A decision by the Indian government to increase import dutieson certain steel products is expected to adversely affect theoperations of the Taiwan-based China Steel Corp’s plant in India,Taiwan’s Ministry of Economic Affairs said Saturday.

The company’s production base in the western state of Gujarat isexpected suffer higher operating costs as imported steel productswill become more expensive after the tariff hike, the ministrysaid.

Effective Aug. 12, India’s import duties on steel bars and certainhot-rolled steel plates were increased 2.5 percentage points to12.5% and 10%, respectively, the minstry said.

It was the country’s second tariff hike on steel products sincemid-June, as it has been trying to protect its steel industry bypreventing foreign exporters from undercutting local businesses,the ministry said.

In addition to the tariff hikes on steel bars and hot-rolled steelplates, the Indian government has raised import duties 2.5percentage points on a wide range of metal products such ascopper, nickel, lead, zinc, aluminum and tin.

China Steel’s plant in Gujarat launched commercial productionon Jan. 12, featuring an annealing and coating line, and is aimingto roll out an annual 200,000 tonnes of electrical steel, a type ofvalue added cold-rolled steel.

Described as the first stage of China Steel’s investment in India,the project was launched in July 2012 and construction startedin August 2013, with an investment of US$237 million.

The ministry said other Taiwanese steel exporters in India arealso expected to feel the pinch of India’s higher tariffs, whichwill erode their competitive edge.

In 2014, Taiwan sold US$176.08 million worth of steel productsto India, a 1.43% annual drop, while its market share fell to1.54% from 1.73% the previous year.

The ministry said it will continue to voice its concerns to the theIndian government about the higher import duties and will push


for a bilateral free trade agreement to eliminate such tradebarriers.Currently, China, South Korea and Japan are three largest steelexporters to India, with a combined 46.77% share of the market.Since South Korea and Japan have comprehensive tradeagreements with India, they will not be affected by the tariffhikes, the ministry said.

WantChinaTimes, August 23, 2015

Tata Steel subsidiary to revamp EAF in Thailand

NTS Steel Group, a subsidiary of Tata Steel Thailand, hascommissioned the UK’s Primetals Technologies to modernise itselectric arc furnace (EAF) in the country’s Chonburi province.

The revamp, which is scheduled to be completed in Decemberthis year, will reduce both the EAF’s electricity and electrodeconsumption, Primetals Technologies said on Thursday August13.

Consumption of electricity per tonne of steel will be cut by 4%and electrode use by 17%, the engineering company said.

“At the same time, reduced tapping times will increase theproductivity of the EAF by 5%,” Primetals Technologies added.

With 76 tonnes of tapping weight, NTS Steel’s EAF is able to producemore than 600,000 tpy of crude steel.

It is the largest of the three subsidiaries of Tata Steel Thailand,and its rolling mills manufacture 450,000 tpy of rebar and350,000 tpy of wire rod.

Besides the EAF, it also owns a 500,000-tpy mini blast furnacethat has been mothballed since August 2011.

In its business year to March 2015, Tata Steel Thailand produced1.10 million tonnes of finished steel at a capacity utilisationrate of 65%.

It has an installed capacity of 1.7 million tpy.Steel First, August 13, 2015

Siam Steel mulling over joint venture with 2 Japanese companies

Siam Steel International has signed a preliminary memorandumof understanding with two Japanese companies to study thepossibility of entering into a joint venture to produce civilengineering products.

The Thai company together with its Japan-based counterparts –Nippon Steel & Sumikin Metal Products and Hanwa – are eyeinginvestment opportunities in several mega-projects, according toa filing to the Stock Exchange of Thailand on Monday August 17.These projects, to be carried out by the Thai government, includesky train, high-speed train and expressway systems betweencities, it said.

If the study progresses and leads to a joint venture, the companywill disclose more details such as proportion of investment andfunding sources in due course, it said.Siam Steel International – an affiliate of the Siam Steel Group –manufactures and sells steel office equipment and furniture,and furniture parts in Thailand. It is also involved inconstruction.


SSI results worsen under pressure from Chinese exports

Thai flats producer Sahaviriya Steel Industries (SSI) enduredanother difficult quarter and expects to “continue to struggle forthe time being” despite noting improved hot rolled coil salevolumes. In its Q2 operating results statement group CEO andpresident Win Viriyaprapaikit admitted the steel industry “is inturmoil” but highlighted his belief in a need to focus on innovationand integration to add value and cut costs.

The group saw sales and service revenues fall 4% quarter-on-quarter and 39% year-on-year to 5,252 million Baht ($150million). HRC sales volume rose 11% q-o-q to 307,000 metrictons and premium value products boosted their proportion ofthe volume to 44%. The company recorded EBITDA of 334 millionBaht ($9.4 million) and a net loss of 222 million Baht ($6.3million). This marked an improvement from net losses of 865million Baht in Q1, but was down on the net profit of 27 millionBaht achieved the previous year.

Win highlighted the flood of Chinese exports as a particularcause for concern; “this is causing problems to the steel industryglobally and depressing margins everywhere. The compressingmargins are significantly bigger than the gains from our costreduction effort, therefore we will unfortunately continue tostruggle for the time being.”

The company’s slab plant in the UK experienced “extremelychallenging” market conditions. Sales and service revenues atthe slabmaker were down 11% q-o-q and 31% y-o-y at 7,780million Baht while EBITDA was negative 2,177 million Baht, worsethan the negative 1,252 million Baht in Q1 and negative 531million Baht the previous year.


Vietnam’s HRC import prices strengthen after two months offalls

Vietnam’s import prices for re-rolling-grade hot rolled coil (HRC)have seen a small uptick for the first time in more than twomonths, as Chinese mills looked to capitalise abroad on recentprice gains in their domestic market.

Steel First’s assessment for HRC imports in Southeast Asia – whichtakes into account Chinese 2-3mm SAE1006-grade HRC in Vietnam– was $315-325 per tonne cfr in the week to Monday August 3,widening upwards from the previous $310-325 per tonne.“Prices [have] stopped dropping and are increasing now, as thereseems to be no more [widespread] attempt of short-selling bytraders,” one Ho Chi Minh-based trader said late on Monday.

V I E T N A M

T H A I L A N D


At least one deal was heard concluded last week at $315 pertonne cfr for a 2-3mm HRC cargo comprising material fromJiangxi-based Xinyu Iron & Steel and other Chinese mills.

Bookings were also understood to have been finalised atapproximately $322-323 per tonne cfr for 2-3mm HRC cargoesfrom Liaoning-based Benxi Iron & Steel and at around $325 pertonne cfr for material from Baosteel, sources told Steel First.On Friday July 31 and Monday August 3, most re-rolling HRCoffers in Vietnam were heard above $320 per tonne cfr, withprices for cargoes produced by Benxi as high as $330 per tonnecfr, one Chinese trader said on Tuesday August 4.

Cargoes are now mainly scheduled for October shipment, eventhough there is still availability for September dispatch, sourcessaid.

The higher export offer prices come amid an improved marketsentiment for HRC in China, which has been driven by continuousgains in rebar.

Some market participants were unsure about the sustainabilityof the rebound, however, and highlighted the difficulty of closingsales at the moment.

“It’s hard to make any deals these days, as we have seen many‘false’ price increases in recent weeks, so customers just keepwaiting now,” a second trader in Ho Chi Minh said on Tuesday.


Chinese steel may flood VN market

After the strong depreciation of the Chinese yuan, steel industryinsiders have warned local steel producers that Chinese steelproducts could flood the Vietnamese market, causing difficultiesfor them.

Vice-Chairman of the Viet Nam Steel Association Nguyen Van Suasaid although in recent years, the local steel industry hasdeveloped very fast, local importers still had to import a largevolume of steel products and semi-finished products every year.Chinese steel products account for 60 per cent of the total steelimports.

Sua said China’s yuan devaluation would have both negativeand positive effects. Local importers will be able to import steelat reasonably competitive prices. On the other hand, the yuandevaluation will lead to a flood of imported steel products fromChina such as construction steel, cold-rolled steel and corrugatedsteel, thus affecting the local market.

Sua said the most effective measure to counter Chinese steelimports was to make Vietnamese steel firms enhance theircompetitiveness by changing their technology and buildingtrademarks to secure the domestic market. They must know howto lower their production costs so as to increase their pricecompetitiveness, while ensuring product quality and salespolicies.

Sharing Sua’s view, Pham Chi Cuong, chairman of the Viet NamFoundry and Metallurgy Association, said China was one of thelargest steel exporters in the world. Every year, it exports about

60 million to 70 million tonnes of steel products of all kinds.Recently, the Chinese economy showed signs of instability, thuscausing a redundant volume of steel. They have sought to takepositive measures by enhancing exports and devaluating theChinese yuan.Cuong said the devaluation of the yuan would help reduce pricesof Chinese steel products and give them the advantage in termsof price. Possibly, in the time to come, Chinese steel would floodViet Nam markets in large quantities. Meanwhile, measures toprevent trade fraud in steel products are still not effective.

To cope with this situation and to protect local producers, theindustry and trade ministry and customs and tax agencies needto work closely to implement the joint decree No 44/2013/TTLT-BCT-BKHCN, tightening the quality of domestic products andimported steel that caused difficulties in consumption.

At the same time, local enterprises are being asked to promotetheir hot and cold rolled steel products at competitive pricesand with good quality standards to compete with cheap Chineseimports. According to statistics from the Viet Nam SteelAssociation, in the first six months of this year, more than 6.9million tonnes of steel were imported, posting an import turnoverof US$3.82 billion, increasing 37 per cent in volume and 13 percent in value over the same period last year.

Of this figure, steel imports from China accounted for more thanfour million tonnes, worth $2.1 billion, and accounted for nearly60 per cent of the country’s total imports. It was followed byJapan and South Korea with 1.2 million tonnes and 830,000tonnes respectively.

Viet Nam News, August 24, 2015

Russia’s scrap export tax cut to affect price, not volume

Russia will reduce its customs duty on ferrous scrap exportsfrom 10% to 7.5% (to a minimum of €7.5/metric ton) effectiveSeptember 1 as part of an overall gradual reduction to 5%. Themove is in line with Russia’s obligations following its accessionto the WTO in 2012, Platts learnt from a government decree.

Prior to the accession, the country’s export tax on scrap was 15%but from H2 2012 it started to fall by 2.5% per annum. The fullreduction to 5% is due to be achieved by 2017 and will be phasedover five years as reported.

“Any increase in profit margin that this duty curtailment impliesis being eroded by the price hikes already taking place in scrapprocurement,” one Black Sea-region merchant told Platts. “Port-based scrap buyers whose profits may rise in September arealready passing these extra gains on to collectors to encouragethem to fetch more, as the scramble for scrap is getting worse.This only adds fuel to the price wars between exporters andmakes scrap pricier for those mills situated in close proximityto scrap ferrying ports,” he concluded.

Oleg Maslennikov, the director at Istok consultancy said that thefact that Russian merchants have now gained an advantage inthe form of lower export costs will not lead to an increase in thevolume of scrap exports. “Export volumes are shaped by demand.

R U S S I A


Scrap requirements from our main buyer Turkey has fallen bydouble digits this year,” he added.

In H1 Turkish mills imported 8.5 million mt of scrap, 13% lessthan the same period in 2014, as reported. This matches the fallin Russia’s seaborne scrap exports in the same period. Accordingto ports association Morcenter TEC, the throughput of ferrousscrap in Russia’s ports (almost entirely comprised of exports)fell to 2.5 million mt in H1, down 13% year-on-year. This is despiteRussia’s scrap exports being supported by the weak roublepractically all this year so far.


US dumping charges against Brazil over HRC is a ‘surprise’

Brazil’s Aco Brazil steel institute is surprised and concerned thatUS producers are seeking antidumping and countervailing dutieson imports of hot-rolled coil, Aco Brazil’s president said Friday.“Each country tries to defend its own market,” said Marco Polode Mello Lopes. “The world is being precautious and the US is inthe same path. The placement of this petition will demand workfrom the companies in their defense.

Regarding the CVD in both cold and hot-rolled products, it hasabsolutely no pertinence.” This petitions allege that HRC fromBrazil, along with Australia, Japan, South Korea, The Netherlands,Turkey and the UK, is “being, or is likely to be, sold in the US atless than fair value” and should be remedied by anti-dumpingduties. In addition, “petitioners further allege that the governmentof Brazil [is] providing countervailable subsidies.”

For Brazil, the alleged dumping rate is 21.80%. The petitions saidproducers in Brazil benefit from numerous government subsidiessubject to countervailing duties and identify 33 subsidy programsin the country. Lopes also highlighted that Brazil does not grantany specific benefit for its steel companies. “The surprise wasbecause these volumes [alleged in the filing] were very small,” hesaid. “They really represent no threat [to the US market].

The concern was because the US is an important market,especially in this difficult moment that [Brazilian] companiesneed to pursue the international market.” According to the filing,between June 2014 and May 2015, the seven cited countriesaccounted for 54.2% of all the 7.37 million st of HRC imports intothe US. Brazil was responsible for 6.3% of this total.

In a statement, Gerdau said it exported small volumes of hot-rolled coils from Brazil to the US and “is waiting the analysis ofthe petition by the US Department of Commerce.”


Indian steel producers seek safeguarding duty on HRC imports

Steel producers in India have filed a petition with the country’sdirectorate general of safeguards for the imposition of asafeguarding duty on imports of hot rolled coil (HRC).

I N D I A

Three major steel producers – Sail, the country’s largest steelproducer, plus JSW Steel and Essar Steel, which together producemore than 50% of India’s domestic HRC output – filed the petition,a senior official from one of the mills said.

The petition was supported by Bhushan Steel and Tata Steel, butthey were not included in the list of petitioners, the official toldSteel First.

The process for the imposition of safeguarding duty can beinitiated only if more than 50% of producers are affected bycheaper imports.

A senior official from the directorate general of safeguards hasconfirmed the filing of the petition.

The petitioners claim that a surge in HRC imports has causedinjury to domestic producers.

“Countries such as China, Japan, South Korea and many othersare exporting HRC to India at prices which are far below theirdomestic sales prices,” the mill official said.

“There have been HRC imports even from countries such as Brazilat $330 per tonne cfr western Indian ports. Assuming that freightis $50 per tonne, the fob price for these coils would work out at$270 per tonne. These prices are way below the manufacturingcost and domestic sales prices of the exporting mill,” the officialsaid.

Safeguarding measures, in contrast to anti-dumping duties orcountervailing measures, are applied uniformly on all importsirrespective of their point of origin, so they are not source-specificand do not vary by source.Market sources were divided on whether shipments from SouthKorea and Japan would be affected by any potential safeguardingduty. HRC shipments from both countries attract about 1% importduty in India as result of trade agreements signed with the twocountries.

Safeguarding duty on HRC will be levied only if the investigationby the directorate general of safeguards finds the existence of“serious injury”, and that “market disruption” to the domesticindustry has been caused as a result of increased import volumesof HRC into India.

The findings of the investigation will be presented to the centralgovernment together with a recommendation for the amount andduration of any proposed levy.

If provisional findings are submitted, the government couldintroduce a provisional safeguarding duty for not more than200 days. This provisional duty would be refundable if the finalinvestigations showed that no injury had been caused.

There is no appellate remedy available under the safeguard dutyrules against the findings of the director general of safeguards,nor is there a fixed timeframe for the conclusion of hisinvestigations.


B R A Z I L


India’s Shree Uttam Steel, Posco to build plant in Maharashtra

India’s Shree Uttam Steel and Power Ltd., a subsidiary of theUttam Galva Group, said it signed an agreement with SouthKorea’s biggest steelmaker Posco to build a steel plant inMaharashtra state.Under the proposed joint venture, the two companies would setup the plant, producing 3 million metric tons a year, in the westernIndian state in two phases, Shree Uttam said in a statement.

The company has land, rail and water resources in place for theproject and hopes to start work on the site probably a year fromnow, Ankit Miglani, a non-executive director at another UttamGalva Group company, Uttam Galva Steels Ltd., told BloombergTV India in an interview.

The proposed venture would help Posco’s expansion in Indiaafter a decade long-delay to its $12 billion investment in a steel,port and mine project in the eastern Indian state of Odisha. Thesteelmaker “tentatively postponed” the project, touted as India’sbiggest foreign investment, due to the lack of an iron ore mine tofeed the plant.

Shree Uttam Steel is owned by the Miglani family. They are alsoco-owners of Uttam Galva Steels, with ArcelorMittal holding 29percent of the company.

Uttam Galva Steels surged as much as 18 percent, the biggestjump since Jan. 2012. As of 12:45 p.m. in Mumbai, it was up 9.9.percent at 41.50 rupees.

Bloomberg, August 18, 2015

Chinese crude steel output dropped 4.6% in July

The latest data released by the National Statistics Bureauindicates that Chinese crude steel output declined further by4.6% during the month of July this year, when compared with theprevious year. The country had recorded its first half-yearlydecline in crude steel production during Jan-June ’15 in nearly20 years.

The drop in crude steel production is mainly attributed todeclining demand from property sector and weakening economicgrowth.

The Chinese crude steel production in July ’15 totaled 65.84million tonnes. The cumulative crude steel output by the countryduring the initial five-month period from January to July thisyear totaled 476.04 million tonnes, down 1.8% when matchedwith the corresponding seven-month period in 2014. Also, averagedaily crude steel output dropped by 7.59% to 2.123 million tonnesin July when compared with the previous month.

According to industry participants, Chinese steel mills hadramped up steel output during early-May this year, in anticipationof seasonal demand growth. However, recovery in iron-ore prices,weak demand and widening supply-demand gap has later onprompted mills to cut their production. The sharp drop indomestic steel demand has resulted in sudden surge in steelexports by China during the recent months.

Meantime, customs data indicate that Chinese iron ore importspeaked during the month of July. The imports totaled 86.10 milliontons in July this year, significantly higher when compared with74.96 million tons in June ’15 and 82.52 million tons in July lastyear. The cumulative iron ore imports by the country totaled 539million tons during the initial seven-month period of the year.

Shanghai Metals Market, August 17, 2015

Yuan devaluation adds to metals-export competition

China, the world’s biggest producer of aluminum and steel, hassharply increased exports of the metals this year in response toproduction overcapacity and the country’s slowing economy.

Now, following Beijing’s devaluation of the yuan, markets arebracing for possibly more-aggressive exports in the price-sensitive metals industry. How much more market share Chineseproducers might grab—exports have already risen more than25% this year—will depend on whether the yuan falls fartherthan the initial drop.

By itself, a 3% shave in the yuan’s value against the U.S. dollarmay not spur more overseas sales, analysts said, although thecurrency’s drop adds a new sprinkle of competitiveness to Chineseproducers, whose exports are already sparking calls frompoliticians in the U.S., Europe and India to take punitive tradeaction.

Global commodity prices dropped sharply after the People’s Bankof China reset the yuan’s exchange rate early last week. Tradersand analysts say that was a reflection of concerns over a slowingChinese economy—China is a huge consumer of raw materials—and the higher cost of imports in yuan terms.

Weakened by the devaluation, crude oil prices on the New YorkMercantile Exchange fell to a more than six-year-year low of$41.35 a barrel last week. Copper and aluminum futures on theLondon Metal Exchange also tripped to six-year lows of $5,062 ametric ton and $1,553.50 a ton, respectively, leaving them down19% and 15%, respectively, in 2015.

After allowing the yuan to fall around 3% against the dollar,China’s central bank said the currency should stabilize and thatthere was no basis for further weakness. Global steel prices maydip as a result of China’s move, said Ivan Szpakowski, Hong Kong-based analyst with Citi Research.

Economists said China’s exchange-rate realignment is designedin part to spur the country’s exports. The metals industry is onesector where China’s exports were already sizzling. Its aluminumexports in the first seven months of the year have climbed 28.3%to 2.87 million metric tons, while exports of steel products wereahead 26.6% to 62.13 million tons, according figures from CitiResearch.

Market analysts said they doubt that the immediate currencychanges will have an impact on trade trends in industrial metals.“I don’t think the yuan devaluation is significant enough by itselfto sharply increase exports of steel and aluminum,” said IlyaFeygin, managing director at Wallachbeth Capital. “I think theyuan devaluation will be more controlled from this point andChina will step in to meet the threat to financial stability.”

C H I N A


The metals markets globally are feeling the impact of significantproduction capacity increases by China’s big metals makers inrecent years, moves that have left many with too much capacityjust as the domestic economy slows and demand falls awayfrom sectors like the home building industry. The result has beena flood of cheap Chinese steel onto world markets.

That in turn has riled steel producers in many nations. India, forexample, increased the import tax on some steel products lastweek for the second time in as many months.

“Particularly for steel, the situation has been that the relativelycheap Chinese exports going into Europe and North America havebeen getting a lot of resistance from these countries,” said DanielHynes, an analyst at Australia and New Zealand Banking GroupLtd. “Even if Chinese exports are cheaper, their ability to benefitfrom a weaker renminbi may be negated by World TradeOrganization-type action.”

The U.S. steel industry has also been stepping up efforts tochallenge Chinese imports. Major U.S. producers say cheapimports have undercut their prices, forcing them to idle plantsand eliminate thousands of jobs. China’s exports are also puttingpressure on producers in nations such as Japan and South Koreathat rely on the U.S. market, where the economy is growing andthe U.S. dollar is high.

A group of major U.S. steelmakers, including United States SteelCorp. , Nucor Corp. , Steel Dynamics Inc., ArcelorMittal USA, AKSteel Corp.and California Steel Industries, has filed tradecomplaints with U.S. International Trade Commission and U.S.Department of Commerce, seeking punitive tariffs on cheapChinese steel.

In May, the European Commission levied provisional tariffs onsome steel products from China, Russia, the U.S., Japan and SouthKorea. Earlier in the year, the commission took similar action onother steel products from China and Taiwan, in one case, andChina specifically on two others.

Increasingly, complaints of selling below costs, or dumping, arebeing made to the Geneva-based World Trade Organization. Therewere 89 cases filed last year alleging that China or other tradingpartners sold products including steel and aluminum below cost.That was more than double the 43 cases filed in 2010.

“Obviously, the situation with Chinese exports is ever-evolvingand something we’re watching carefully,” said Matt Meenan,director of communications at the U.S.-based AluminumAssociation, which represents primary aluminum producers inthe U.S. and other countries.

But while the yuan is one more challenge for the global metalsmarket, it would take a considerable fall in the currency to createa new tidal wave of Chinese exports that some predictedimmediately after the devaluation hit markets, analysts at ANZsaid.

It is worth remembering that the yuan has already been“incredibly strong” against most global currencies, notes BluPutnam, the chief economist at the CME Group, the Chicago-basedexchange where several metals futures contracts trade. Mr.Putnam said the small reduction in the yuan’s value was unlikely

to stir significant activity, such as with large importers like Brazilthat face their own economic weakness.

Another spike in exports, however, would ripple across the globe.

Australia’s BlueScope Steel Ltd. said it was already struggling tokeep its Port Kembla operation, that country’s largest steelworks,competitive against cheap steel from elsewhere and is trying tocome up with “a game-changing approach” to reduce costs andkeep the mill running.

Wall Street Journal, August 17, 2015

US DOC to cancel of China’s stainless steel sinks countervailingduty administrative review

It is reported that US DOC announced to withdraw the request ofthe countervailing duty administrative review on China’sstainless steel sinks imports from Guang dong Dong yuanKitchenware Industrial on August 14.Therefore, US DOC decided to cancel the countervailing dutyadministrative review of China’s stainless steel sinks.

In the meantime, US DOC reviewed on China’s stainless steelsinks for countervailing duty administrative review investigation,the investigation period is from January 1, 2014 to December 31,2014, the product code is involved with 73241000.00.

Yieh, August 18, 2015

China begins construction of coastal steel project

China has begun construction of a large 9.4 million tonne a yearsteel project in northern Hebei province, pushing on with plansto build newer, more efficient plants in coastal regions despite asupply glut and shrinking demand.

The project, the second phase of the Shougang Jingtang steelcomplex at Caofeidian, one of China's largest ports, is one ofseveral integrated steel projects planned by top steel mills thatwere approved during the commodity boom.

The plant, which will help cut shipping costs for imported ironore and coal, will involve a total investment of 43.55 billionyuan ($6.79 billion), the National Development and ReformCommission (NDRC) said on Tuesday.

The project start comes as the steel sector struggles with weakdemand and chronic overcapacity that has pushed prices to morethan 20 year lows, plunging many small mills into the red.

Total investment in the steel and processing sector fell 12.3percent in the seven months to end-July from a year ago, theNDRC said.

However, big state owned firms suffer fewer restrictions on creditthan their smaller rivals, while lower shipping costs will alsohelp them gain competitiveness.

China aims to build three to five giant steel mills and boost thecrude steel output of its top 10 steelmakers to more than 60percent of the country's total by 2025.


Baoshan Iron & Steel and Wuhan Iron & Steel plan about 10million tonnes a year of new steel capacity in coastal areas inorder to take advantage of their proximity to southeastern Asianbuyers and ore importers.

Baosteel will launch first phase operations at the 10-milliontonne per annum Zhanjiang project in Guangdong province inSeptember, while Wuhan has already commissined part of itsproject at Fangchenggang port in the southwestern region ofGuangxi in June.

China's total steel production capacity stood at 1.16 billiontonnes by the end of 2014, according to official industry ministryfigures. Output last year reached 822 million tonnes.

Reuters, August 25, 2015

Suzuki’s Myanmar plant using steel body parts from Japan, India

Japanese automaker Suzuki Motor has been using body partsfrom Japan and India to assemble cars at its plant in Myanmar,the company told Steel First

“The body parts made of steel are exported from Japan and Indiato Myanmar, for the time being,” a company official said in anemailed reply to Steel First on Thursday August 6.

Last week, Suzuki’s local subsidiary, Suzuki (Myamar) Motor Co(SMMC), started to produce the seven-seater passenger car modelErtiga at the plant, located in South Dagon, in Myanmar’s capitalYangon.

It plans to produce 100 units per month.

In its 2014 financial year ending in March this year, Suzukiproduced 1,350 units of its Carry mini-truck model at the plant.

“As far as we know, our factory is the only car plant in Myanmar,among Japanese car manufacturers,” the official said onThursday.

Japan’s second-largest carmaker Nissan Motor, however,announced plans two years ago to build a car assembly plant inMyanmar in a joint venture with Malaysia’s Tan Chong Group.

The plant was scheduled to come online in 2015, with capacityto produce over 10,000 units per year.

Political and economic reforms over the past few years haveopened Myanmar to foreign investment, with several companieslooking to invest more in the Southeast Asian nation.


US mills file AD, CVD petitions against HRC imports

Six US producers filed petitions after close of business Mondayfor the imposition of antidumping and countervailing duties onhot-rolled coil imports from Australia, Brazil, Japan, The Republicof Korea, the Netherlands, Turkey and the UK.

According to a filing with the US Department of Commerce, thepetitioners allege that HRC from the named countries is “being,or is likely to be, sold in the United States at less than fair value”and should be remedied by AD duties. In addition, “petitionersfurther allege that the governments of Brazil, Korea and Turkeyare providing countervailable subsidies.”

The complaints filed by AK Steel, ArcelorMittal USA, Nucor, SSABAmericas, Steel Dynamics Inc. and US Steel allege dumpingmargins of roughly 19-200%, depending on the country of origin,according to an announcement by the King & Spalding LLC lawfirm, which is representing AK Steel. Several other law firmsrepresenting other US mills are signed on to the news releaseannouncing the trade cases yesterday.

The alleged dumping rates are 99.20% for Australia; 21.80% forBrazil; 19.53-30.90% for Japan; 86.96-158.93% for South Korea;55.21-173.17% for the Netherlands; 96.44-200.78% for Turkey,and 50.63-161.75% for the UK.

“The petitions also allege that foreign producers in Brazil, SouthKorea, and Turkey benefit from numerous government subsidiessubject to countervailing duties. The petitions identify 33 subsidyprograms in Brazil, 41 in South Korea and 17 in Turkey,” therelease stated, adding that China is not one of the countriescited because US imports of its HRC are already subject to an ADduty order.

The petitions were filed concurrently with Commerce and the USInternational Trade Commission.

According to the filing, between June 2014 and May 2015 theseven cited countries accounted for 54.2% of all the 7.37 millionst of hot-rolled flat steel imports into the US. Korea wasresponsible for 18.9%; Turkey, 7.5%; the Netherlands, 6.6%; Japan,6.3%, Brazil, 6.1%; Australia, 4.7% and the UK, 4.0%.

If excluding the USA’s NAFTA partners, Canada and Mexico, theseven countries named accounted for 80.1% of hot-rolled sheetimports.

This is the third sheet trade case filed by US mills in the past twoand a half months, as US producers filed petitions againstcorrosion-resistant sheet imports at the start of June andfollowed up with petitions against cold-rolled coil imports atthe end of July.

Commerce will determine whether to initiate the AD and CVDinvestigations within 20 days of the petition’s filing and the ITCwill reach a preliminary determination of material injury or threatof material injury within 45 days of the filing.The entire investigative process will take approximately one year,with final determinations of dumping, subsidization, and injurylikely occurring in the summer of 2016.


MEPS expects global Steel production to decline this year

MEPS International believes that worldwide crude steel outputwill be reported at 1.65 billion tons, this year. This equates to adecrease of 1 percent, compared with 2014.

W O R L D


It is the first fall since 2009 - in the wake of the financial crash.Production gains in India and the European Union are likely tobe outweighed by reductions in China, Japan, Ukraine and theUnited States.

Blast furnace iron making is forecast at 1175 million tons in2015 - down 0.5 percent on the year earlier figure. Direct reducediron production is also expected to slip marginally in the currenttwelve month period.

Shanghai Metals Market, August 18, 2015

The 2015 Seminar for ASEAN Senior Management Personnel of

Iron and Steel Enterprises in China

The 2015 Seminar for Senior Management Personnel of Iron andSteel Enterprises from ASEAN Countries was held in China from22th July 2015 to 11th August 2015. This seminar was organizedby Ministry of Commerce, People’s Republic of China (MOFCOM),Academy for International Business Officials (AIBO) and ChinaIron and Steel Association (CISA). It was attended by 38participants from Indonesia (4), Thailand (13), Malaysia (11)and Vietnam (10). The seminar was conducted in Beijing, China.At the opening ceremony on 23rd July 2015, the participants werewarmly welcomed by Mr Liu Zhenjiang, Secretary General of CISAand Mr Zhu Liugui, vice president of AIBO.

In this 3-week programme, the participants were lectured on awide spectrum of topics covering such areas as introduction ofChina, the development of China’s iron and steel industry,advanced technologies used in China’s iron and steel industry,China’s futures market for steel products and so on. The detailsof the programme are as follows:

In addition, participants were provided the opportunities to visitseveral cultural sites in Beijing, Guiyang and Shanghai. In thesecond week, the participants also visited one of the largeststeel enterprises in China, Baosteel in Shanghai.

SEAISI, August 2015

Shipbuilding and repair industry in the Philippines

The shipbuilding industry in the Philippines is ranked the fourthlargest in the world. However, in terms of the gross deadweightton ship completion, its market share in the world in 2014 wasonly 2.9% (2014 World Shipbuilding Statistics). In comparison,China, the largest country for gross deadweight ton shipcompletion in the world has a share 35.2%, followed by SouthKorea (34.8%) and Japan (20.8%).

The Philippine government has a policy to make the country amarine hub and for that it welcomes foreign companies to investin the country. This is supported by its excellent location at acenter of all ship routes, from south to north, from east to west.Philippines shipbuilding industry, therefore, has good potentialto grow significantly in the near future.

Shipyards established in the Philippines are now building moreships of larger tonnage capacities like bulk carriers, containerships and passenger ferries.

There are more than 150 shipyards and ship repairing companies

in the Philippines. Major shipyards in the country include:

Hanjin Shipyard, Subic (Korean owned)

Keppel Subic Shipyard and Keppel Batangas Shipyard

(Singaporean owned)

Subic Drydock (Philippines owned)

Herma Shipyard, Bantaan(Philippines owned)

Tsuneishi Shipyard, Cebu (Japanese owned)

Mactan Shipyard Corp., Cebuangas

The country has adequate supply of skilled manpower forshipbuilding and ship repair. Aware of the increasing number ofworkers required to be employed in the shipyards, the Philippinegovernment has laid out a Manpower Development Plan for thesector in coordination with the Technical Skills DevelopmentAuthority (TESDA). To date, TESDA has about 95,000 certifiedwelders in its registry.

Filipino workers are trainable for the skills that would fitshipbuilders’ requirements; hence, they can be sourced withinthe city or municipality where shipyards are located.

Existing shipbuilders also invest in additional technical trainingfor their prospective and existing employees to improve their

level of competencies.

SEAISI, August 2015

H E A D L I N E S

2015 ASEAN Iron and Steel Sustainability Forum

30 Nov - 2 Dec 2015 Hotel Istana, Kuala Lumpur City Centre

I will present a paper, please send “Guide to Authors”

I will attend the Forum, please send “Registration form”

I need further information on advertising, exhibition and sponsorship

Please fill in your details clearly for us to contact you.

Name (Dr/ Mr/ Mrs/ Ms)

Company:

Position:

Address:

Phone: + Fax: +

Email:

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IMPORTANT DATES:

Deadline for paper synopsis submission: 23 September 2015Deadline for full paper submission: 19 October 2015

For more information and to register please

www.seaisi.org

Paper Presentation: Ms. Pichsini Tepa-Apirak, [email protected]

Exhibition, Advertising & Sponsorship: Mr. Eric Lee, [email protected]

Forum Registration: Ms. Josephine Fong, [email protected]

Tel: +603 5519 1102 Fax: +603 5519 1159

contact SEAISI team

*Acceptance of papers will be on a first-come, first-served basis. Please note that to achieve a balanced programme, SEAISI reserves the right to accept or reject papers. Presenters will be charged registration fee and the papers must be presented in English.

SEAISISOUTH EAST ASIA IRON AND STEEL INSTITUTE

CALL FOR PAPERS

Steel Market Developments

1. Steel trade and market developments in ASEAN2. Development of trade and trade related measures for steel industry3. Future direction of China's steel export

Construction Sector

1. Construction sector as a key steel consuming sector2. Development of steel business model for construction sector3. Building construction system4. Design and technology for steel structure5. Civil and assembly works for construction

Environment, Health & Safety

1. Environmental policies and perspectives2. Safety management3. Waste management4. Cost and energy savings5. Emissions control6. Operation management for environmental improvement

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