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Tuesday, January 19, 2021

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Middle East Steel News

Saudi Arabia: Watani Iron Steel posts 135pct pct profit growth in H1 2020 YoY
Egypt: Al Gioshy Steel urges govt to reconsider import tariffs on billet amid limited local supply
Pakistan: VIS maintains equity rating of Aisha Steel with stable outlook
Pakistan: FF Steel modernizes rebar manufacturing process

Global Steel News

General News: Chinese HRC prices weaken but Indian and CIS suppliers maintain prices at higher level
China: Iron ore futures drop as steel mills' margins weaken; rebar and HRC futures down
China: Hebei's fresh virus curbs will not affect steel industry - Fitch Ratings
India: Two workers hurt in explosion at Tata Steel plant in Jamshedpur
Thailand: FTI expects steel consumption to grew by 8 pct in 2021
United States of America: U.S. Steel commissions chemical energy package at its plant in Fairfield
Germany: Thyssenkrupp considers spin-off of its steel unit
General News: EU initiates review of AD tariffs on HRC imports from Severstal


New (Renewed) Steel Companies on MEsteel
Company Country Steel tons handled per year (kt) Brief Description
PEB STEEL BUILDINGS CO. LTD. Vietnam 100-500 Manufacturer of pre engineered steel buildings and erection contractors.

Middle East Steel News

Watani Iron Steel posts 135pct pct profit growth in H1 2020 YoY
Saudi Arabia

Watani Iron Steel Co., which is set to list on Nomu, Tadawul's parallel equity market, posted SAR 18.32 mln net profit for H1 2020, an increase of 135pct YoY.

The rise in profits in H1 2020 was attributed to the increase in profit margin to 13.8pct, compared to 9pct in the same period last year, driven by a 5pct fall in cost of sales.

It was also attributed to 19pct drop in finance charges to SAR 4.95 mln (USD 1.3 mln), compared to SAR 6.13 mln in the same period a year ago.

Watani Iron Steel's annual production capacity stands at 280,000 tons of billet and 320,000 tons of rebars.

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Al Gioshy Steel urges govt to reconsider import tariffs on billet amid limited local supply

Rolling mills in Egypt are currently suffering from low availability of billets production locally.

The restricted supply has forced factory closures due to their commitment to workers, as well as their bank obligations that require them to fulfil a guarantee of factory operations.

Tarek El-Gioushy, member of the Chamber of Metallurgical Industries at the Federation of Egyptian Industries (FEI), and Chairperson of Al Gioshy Steel, called for urgent intervention by all government agencies and ministries.

El-Gioushy said that the government involvement would help save rolling mills that have been suffering since the issuance of the decision to impose custom duties on billet imports.

He demanded that the government reconsider that decision, particularly since the circumstances the decision was based on have since changed. The most important of these changes is the significant increase in global billet prices, from USD 270 per ton at the time the decision was made, to the current price of USD 550 per ton.

In October 2019, Egypt's Ministry of Trade and Industry imposed protective duties on Egypt's imports of billet crude, which will continue until April 2022. This has been put in place at a decreasing rate, starting from 16pct on every ton of billet imported from abroad.

El-Gioushy accused integrated steel producers of unfair treatment by restricting billet availability to the domestic rolling mills.

Moreover, domestic integrated steel mills require advance payment to sell billets, while rolling mills sell rebar to their customers on credit, which affected their cashflow and created an unfair environment for healthy and fair competition, El-Gioshy added.

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VIS maintains equity rating of Aisha Steel with stable outlook

VIS Credit Rating Company Limited (VIS) has maintained entity ratings of 'A-/A-2' to Aisha Steel Mills Limited (ASL). Outlook on the assigned ratings has been revised from 'Negative' to 'Stable'.

Long term entity rating of 'A-' reflects good credit quality, adequate protection factors. Risk factors may vary with possible changes in the economy. Short Term Rating of 'A-2' indicates good certainty of timely payment, sound liquidity factors and company fundamentals. Access to capital markets is good.

Previous rating action was announced on October 31, 2019.

The assigned ratings to ASL are underpinned by demonstrated support of the company's major sponsor, Arif Habib Group, while also incorporating the company's market positioning as one of the only two local players in the flat steel industry.

ASL's rating factors in the business risk of the flat steel industry, which is considered high, given the sensitivity to changes in exchange rate, interest rate and commodity prices. Nevertheless, on a timeline basis, given the reduction in benchmark rates and improved demand outlook - as the government enters its final 2 years, wherein infrastructure spending is likely to pick up - sector dynamics have posted improvement.

In view of the aforementioned factors, along with improvement in ASL's operating performance and sharp pickup in off-take in Q1FY21, the outlook on the rating has been revised.

The company enhanced its market share in the flat steel segment from 17pct in FY19 to 30pct in FY20. The growth in market share is mainly attributable to galvanized steel capacity enhancement.

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FF Steel modernizes rebar manufacturing process

Chief Executive Officer (CEO), Frontier Foundry (FF Steel), Zarak Khan, has said that despite odds, Pakistan's Iron and Steel industry has shown a consistent growth, adding an increase in public spending on infrastructure projects has pushed the industry to adopt automation to keep up with the demand, resulting in the promising growth pattern.

FF Steel has adopted the Supervisory Control and Data Acquisition system (SCADA Level-2) instrumentation with the latest Human/ Machine interface to ensure high productivity rebars that meet the international standards.

A vast team of engineers controls the manufacturing process through the world's latest available technology, the Supervisory Control and Data Acquisition system (SCADA). The main feature of the SCADA system is its ability to perform a supervisory operation over a variety of other propriety devices. The software processes, distributes and displays the data, helping operators and other employees analyze the data and make important decisions.

This coexists with labor intensive processes in certain departments where quality or productivity are not affected by retaining the workforce.

FF Steel is a billet and rebar manufacturer with plants present in the cities of Peshawar and Lahore.

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Global Steel News

Chinese HRC prices weaken but Indian and CIS suppliers maintain prices at higher level
General News

HRC prices in major exporting countries remained higher due to the limited allocation as well as pickup in demand in their domestic markets.

Chinese HRC export prices have softened this week after a sharp spike in prices last month. Chinese HRC offers are in the range of USD 670-690 per ton FOB.

Indian origin HRC export prices are in the range of USD 800-810 per ton FOB. Indian steel firms seemingly have shifted their strategy to maximize profits with limited export allocation and thus not interested in markets like Vietnam, where they have sold in bulk volumes last year, instead the focus is now EU markets where they can get better margins. Local steel demand has been also growing steadily driven by govt spending on major infrastructure projects.

CIS origin HRC offers are at about USD 770-780 per ton FOB.

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Iron ore futures drop as steel mills' margins weaken; rebar and HRC futures down

Benchmark iron ore futures pulled back on Tuesday after hitting four-week highs in the previous session, as weakening steel margins in top steel producer China weighed on raw material prices.

Iron ore on China's Dalian Commodity Exchange ended 1.4pct lower at 1,046 yuan (USD 161.26) a ton.

"Steel margins have been falling quickly in recent days. This would motivate some high-cost steelmakers to conduct maintenance and consequently reduce iron ore consumption," said Richard Lu, a senior analyst at a consultancy firm in Beijing.

However, restocking demand ahead of the Lunar New Year holidays is likely to provide some support to prices, along with heavy port congestions in China that have slowed unloading activity, he said.

These "near-term upside risks" helped prop up spot iron ore prices in China, which hit USD 174.50 a ton on Monday, close to the nine-year high hit last month.

Miner Rio Tinto reported a 2.4pct rise in fourth-quarter iron ore shipments, helped by industrial activity in China, where it said demand remains robust despite fresh COVID-19-induced lockdowns locally.

The sell-off in steelmaking inputs pulled down coking coal by 3.9pct and coke by 4pct, with restrictions in coronavirus-hit areas in China hampering shipments and adding downward pressure.

Falling prices of construction steel rebar are squeezing margins, said Howie Lee, economist at OCBC Bank in Singapore.

"The recent rise in coronavirus cases in Asia is not helping risk sentiment and commodities are feeling the cold at present," he said. "But we see this as a near-term dislocation and expect prices of commodities to continue rallying through 2021."

Rebar on the Shanghai Futures Exchange fell 1.9pct, while hot-rolled coil slumped 2.4pct. Stainless steel outperformed with a gain of 0.9pct.

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Hebei's fresh virus curbs will not affect steel industry - Fitch Ratings

The recent Covid-19 outbreak in the steel producing hub Hebei will not have material impact on China's steel industry, Fitch Ratings said.

The most significant effect from the recent outbreak is the closure of certain transportation routes, which could delay raw material and product deliveries. However, we think steel production will be only minimally affected in the short term because the current restrictions are implemented in only some cities in the province, Fitch said in a report.

In addition, demand for steel products is generally weaker during winter when there is less construction activity. In the past few years (excluding exceptions caused by Covid-19), the new fixed-asset investment growth rate was in the low single digits in winter and in the mid to high single digits during the rest of the year.

Most steel plants maintain sufficient raw materials for operation in the short term, and steel plants usually plan for maintenance during the winter. Steel production in winter (November to February) during the last three years (excluding exceptions caused by Covid-19) was, on average, around 90pct of the output for the rest of the year.

The closure of certain transportation routes began on 5 January 2021, and China's steel product inventory level has increased by around 6pct week on week since then. This increase is in line with that seen in previous years around the same time. Therefore, we think inventory build-up from the latest measures to curb the Covid-19 outbreak should not be significant.

However, prolonged restrictions or wider implementation of the measures could have a considerable impact on the steel industry. Extended logistics restrictions could mean insufficient raw materials for steel plants to continue production and delivery delays that could lead to inventory build-up. Construction around restricted areas may also be dampened, which will reduce demand for steel products, Fitch Ratings concluded. 

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Two workers hurt in explosion at Tata Steel plant in Jamshedpur

Two employees were hurt after a minor explosion at Tata Steel's Jamshedpur plant.

The blast occurred during slag pooling operations at the company's hot metal pooling pit near the Slag Road gate. Initial investigations by the company revealed that the blast occurred as hot slag was poured on to moisture on the ground.

"There was spattering of fire in the vicinity of the blast which was immediately controlled as per established fire control and safety procedures," said Kulvin Suri, the company spokesperson.

Unfortunately, an attending foreman and an employee on contract sustained burn injuries. Necessary first aid was administered to both the employees and they got back to work.

"There has been no damage to any operating plant or equipment and normal operations have commenced. The incident will be further investigated to ensure such incidents do not recur," Suri said adding that the company was committed to the safety and security of its steel plant.

This was the second mishap that took place inside the company's Jamshedpur plant within four months.

A 27-year-old senior manager (operations), posted at the cold rolling mill, had died in a mishap that took place inside the plant on September 22, last year. The senior manager was trapped in the galvanising line, probably while attending to a fault.

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FTI expects steel consumption to grew by 8 pct in 2021

Domestic steel consumption is estimated to grow 5-8pct this year, supported by the government's infrastructure investment projects, says the Iron and Steel Industry Club under the Federation of Thai Industries (FTI).

The club expects the government will support local steel producers through the Made in Thailand policy and the local content scheme to help the industry.

Nava Chantanasurakon, chairman of the Steel Industry Club, said government construction projects in the Eastern Economic Corridor (EEC), electric trains in Bangkok and other metropolitan areas as well as high-speed trains will benefit the steel industry.

Last year, Thailand consumed 17-18 mln tons of steel.

The FTI has raised concerns about global steel price changes due to demand growing from China, boosted by the pandemic and seeing China to import various types of steel to support economic growth.

Pravit Horrungruang, chief executive of Millcon Steel, said revenue is expected to rise this year and the company will profit despite the Thai economy being gutted by the pandemic.

Construction of high-speed rail projects will start this year, which will increase demand for high-quality steel products.

"Steel demand will be higher than last year as delayed construction projects will resume this year and we have seen indications of rising demand," he said.

Millcon expects demand for steel products this year to reach 3.5 mln tons.

Prices in global markets are expected to rise after the pandemic delayed construction projects and disrupted iron ore production last year, resulting in higher raw material costs.

Exports and imports were affected and logistics were also disrupted last year. These factors will push up prices of steel products this year.

"The company has focused on producing high-quality products that deliver a fat margin. We expect our performance will continue to be positive," Mr Pravit said.

Millcon has an edge over other manufacturers as the company has a comprehensive integrated operation with steel rolling mills, furnaces and steel scrap recycling facilities, he said. Most local steel manufacturers have steel rolling factories only.

Millcon can also produce steel bars to meet the high expectations of large construction firms, affording a competitive advantage.

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U.S. Steel commissions chemical energy package at its plant in Fairfield
United States of America

More, leading manufacturer of process technology packages, has successfully commissioned our Chemical Energy Package in the new 170 ton electric arc furnace of US Steel Fairfield. When up and running at full capacity, the furnace will be able to produce 1.6 mln tons of steel per year.

We have supplied the complete package, which includes the following: M-ONE injectors, machined copper bulged blocks (which are equipped with the Flash Stop System) and also oxygen/natural gas valve stands. Dedicated dispersers have been supplied for the pneumatic injection of carbon and lime.

This ranges from the external storage silos to the electric arc furnace side-wall injectors. All of the equipment is controlled by a dedicated automation system, making it a fully automated control.

More's Chemical Energy Package allows operation with the latest technology, ensuring precise process control, while at the same time minimizing transformation cost.

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Thyssenkrupp considers spin-off of its steel unit

The former conglomerate, which still employs more than 100,000 people, has been trying to carve out a future for the unit since EU competition regulators blocked a tie-up with India's Tata in 2019.

Potential mergers with Sweden's SSAB and domestic rival Salzgitter have been mooted, though neither company has expressed an interest. UK industrial tycoon Sanjeev Gupta has launched a bid, which the company is assessing. Workers' representatives have objected to the approach from Mr Gupta's Liberty Steel, fearing job losses.

Thyssenkrupp's willingness to explore spinning off the business comes as the outlook for the steel industry shows tentative signs of brightening. Global carmakers, the division's biggest customers, are enjoying a rebound, while steel prices have shot higher in recent weeks.

Having an independently listed steel unit would make it easier for potential suitors to buy into the business in the event that a sustained recovery made the division more attractive, people familiar with the matter said.

Thyssenkrupp said that independently developing the steel business, which lost almost Euro 1bln last year, "remained an option".

After selling its prized lift and escalators business last year for Euro 17.2bln, Thyssenkrupp is not strapped for cash. But the group lost more than Euro 5.5bln in the last financial year, and its chief executive, Martina Merz, has promised to "stop the bleeding".

A decision on the steel division, which employs roughly 27,000 people, is expected in the spring. Its future is likely to become a political lightning rod in an election year in Germany.

Thyssenkrupp said last month that it would no longer pursue the option of Germany taking a stake in the division, which operates the largest steel manufacturing site in Europe. However, it did not rule out the prospect of other forms of financing from Berlin.

According to the company, keeping the steel unit competitive requires investments of approximately Euro 570mln a year, and a further Euro 800mln is needed over the next five years to modernise its facilities.

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EU initiates review of AD tariffs on HRC imports from Severstal
General News

The European Commission, has started an investigation review of existing anti-dumping measures for hot rolled coil produced by the major Russian steel producer, Severstal.

The request for review was lodged by Eurofer, on behalf of EU steel producers.

The product subject to this review is certain flat rolled products of iron, non-alloy steel or other alloy steel, whether or not in coils, including 'cut-to-length' and 'narrow strip' products, not further worked than hot rolled, not clad, plated or coated, originating in Russia the product under review, currently falling under CN codes 7208 10 00, 7208 25 00, 7208 26 00, 7208 27 00, 7208 36 00, 7208 37 00, 7208 38 00, 7208 39 00, 7208 40 00, 7208 52 10, 7208 52 99, 7208 53 10, 7208 53 90, 7208 54 00, 7211 13 00, 7211 14 00, 7211 19 00, 7225 30 90, 7225 40 90, 7226 91 91 and 7226 91 99.

The products not covered by this investigation including stainless steel and grain-oriented silicon electrical steel, tool steel and high-speed steel, HR sheets without patterns in relief, of a thickness exceeding 10 mm and of a width of 600 mm or more, HR Sheets without patterns in relief, of a thickness of 4.75 mm or more but not exceeding 10 mm and of a width of 2 050 mm or more.

The investigation period will cover from 1 January 2020 to 31 December 2020.

On 5 October 2017, European Commission had imposed a definitive anti-dumping duty, ranging from Euro 17.6-96.5, on imports of hot-rolled flat products of iron, non-alloy or other alloy steel from Brazil, Iran, Ukraine and Russia. Duties set for the material produced by Russian steelmaker Severstal were the lowest at EUR 17.60 per ton

Russia exported 1.27 mln tons of HRC to the European Union in the first 11 months of 2020, according to the Eurofer data.

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