WSA Short Range Outlook Born Into Uncertainty

STEEL MARKET SUMMARY - July

WSA Short Range Outlook ndash Born Into Uncertainty

In early June when the World Steel Association (WSA) released its Short Range Outlook it said the forecast

was being presented at a ldquotime of great uncertaintyrdquo Indeed the WSA warned its figures didnacutet include the

effects a second wave of the COVID-19 pandemic might have upon the economies of major steelmaking

countries In short the Association believes steel demand will contract by 64 in 2020 dropping to 1654 Mt

(million metric tonnes) In 2021 it expects steel demand will recover to 1717 Mt an increase of 38 over 2020

ldquoIn this minus 64 figure we have some growth from China of around 1 (in 2020) so the picture for the rest of

the world is not actually as beautiful as minus 64 It is more likely minus 14rdquo said Nae Hee Han the WSAacutes

Director of Economic Studies at the Southeast Asia Iron and Steel Instituteacutes e-conference held in late June In

more detail the WSAacutes Short Range Outlook says the recovery of steel demand in China will be more visible in

the second half 2020 and will be driven by construction especially infrastructure investment Meanwhile steel

demand specifically in developed economies will decline by 171 this year and will see only a partial recovery

of 78 next year Japanese steel demand is expected to contract by double digits in 2020 while Koreaacutes major

steel-using sectors are also likely to see a double digit decline due to falling export markets Ship building will be

the countryacutes hardest hit sector The WSA further believes the collapse in world economic activity means India is

likely to face an 18 decline in steel demand in 2020 but will rebound by 15 in 2021

Although Australia has thus far mercifully escaped the worst of the human impact of the coronavirus the

economic toll is starting to produce some bleak figures with grave implications for the steel industry Last week

the Australian Bureau of Statistics (ABS) said the number of dwellings approved in May fell by 164 in

seasonally adjusted terms The decline was driven by apartment approvals which were down by 345 month

on month a drop of 422 since February The ABS said the value of total building approved fell 135 in May

in seasonally adjusted terms Such figures will add to the nervousness at InfraBuild the Australian operations of

Sanjeev Guptaacutes international GFG Alliance Mr Gupta recently said he wants an across-the-board cut of 30 in

costs at his Australian interests After rolling back plans last year for a partial float of InfraBuild Mr Gupta has

reiterated to the Australian Financial Review that an IPO remains on the backburner but is not ruled out from

the near future Hence the desire to make InfraBuild a leaner and thus more attractive operation Trade union

officials have been told that job losses wonacutet occur at the Whyalla steelworks which is not scheduled to be part

of any float Gupta has earmarked Whyalla for a $1 billion upgrade replacing its blast furnace which was built in

1965 with an electric arc furnace by 2024 as part of its transformation to a ldquogreenerrdquo steel facility

In the context of COVID-19 supply chain disruptions BlueScope Steelacutes CEO Mark Vassella recently said

ldquoThe risk of a COVID-induced surge in dumped steel from our region is very real and would be disastrous for

Australian industry and jobsrdquo In his comments posted on BlueScopeacutes website in June Mr Vassella said an

indefensible trend made worse by the coronavirus outbreak was a surge in tariffs and trade barriers used by

countries as political weapons He said all countries should practice free and fair trade In condemning dumping

he reiterated BlueScopeacutes full support for the Australian Governmentacutes Anti-Dumping Commission (ADC)

Australian Steel News also applauds the existence of and work done by the ADC whose transparency complies

with WTO requirements However the balancing act between the competitive interests of domestic producers

and importers is not easy for any market and is made more difficult in Australia where the domestic producers

are domestic monopolies with the only alternative being imports While ever the temptation exists to have a tariff

handicap imposed upon your competitors which can work even during the investigation process before final

duties are imposed the call will be heard for greater scrutiny in the application so the process is not abused A

case in point is ADC action 495A against four independent Turkish rebar manufacturers recently terminated

after more than 18 months A battle against predatory pricing or dumping against one manufacturer can be

understood as the manifestation of a companyrsquos desire to buy market regardless of cost and as such a genuine

case for an anti-dumping action However as the number of independent exporters being attacked for dumping

increases the anti-dumping actions begin to smell more like deriving commercial advantage by imposing

penalties on the competition rather than legitimate trade action to defend aggressive under-priced and targeted

imports Importers would argue that since anti-dumping actions have been brought against rebar imports from

Singapore Indonesia Malaysia Thailand Spain Korea China Taiwan and now four from Turkey the so-called

smell has become a stench

CURRENCY CHANGES

Movement since June 1st 2020

AUD is up 30 against USD

AUD is up 17 against the Euro

ASNVolume 3 Issue 11

Issue Date July 6 2020

Prices Effective July 1 2020

Australian Steel NewsldquoKey Indicators Pricing and News

for the Australian Steel Industryrdquo

July 1 2020

2149

996

1105

18100

ANTI-DUMPING NEWS

Measures already in place

ADC ndash Measures

Updates to the public record

ADC ndash Updates

Recent anti-dumping actions

ADC ndash Actions

Request a weekly update from the AustralianGovernment ADC website here

STEEL NEWS HEADLINES

July 3 ndash ReutersChina copper stocks up as steel inventories also rise

July 2 ndash PlattsChina to continue to release import quotas for scrap metal

July 1 - SEAISIKorean steelmakers hit by double whammy

July 1 ndash PlattsSteel markets and manufacturing strengthen in China

July 1 ndash SEAISIEU safeguard system changes come into effect

July 1 ndash PlattsEuropean steel demand slump ndash here to stay Podcast

June 30 ndash MEPSUS steel price recovery comes to a halt

June 30 ndash ReutersEU rejects calls by steel industry to cut import quotas

June 29 ndash PlattsIron ore and steel Q3 China outlook

June 29 ndash ReutersBHP completes first iron ore blockchain trade with Baosteel

June 26 ndash SEAISICrude steel production in Germany falls by 27 in May

June 24 ndash SEAISIChinese steel giant eyes Simandou iron ore mine

June 22 ndash World Steel AssociationMay 2020 crude steel production

For more steel news headlines click here

STEEL COST INDEX (Cost of scrap iron ore and coal in one tonne of steel)

Blast Furnace Index in USD 1

Blast Furnace Index in AUD 1

EAFScrap Index in USD 2

EAFScrap Index in AUD 2

For a detailed explanation of ASNacutes unique Steel and Stainless Steel Cost Indices click here

STEEL AND RAW MATERIALS PRICES (USD per tonne)

Iron Ore 7

Coking Coal 8

Steel Scrap Turkey 9

Steel Rebar Turkey 4

Steel Rebar China 10

Rebar-CFR S-E Asia 11

HRC-CFR S-E Asia 11

USD Change AUD Change

PRICING MOVEMENTS - Since June 1st 2020

STEEL RAW MATERIAL

- Blast Furnace costs 1

- EAFScrap costs 2

STEEL FINISHED PRODUCT

- China Rebar pricing 3

- Turkey Rebar pricing 4

- Non-Ferrous Metals (CuAlNiZn) 5

NON-FERROUS METALS PRICES (USD per tonne Key to Prices 5 + 12)

Copper

Aluminium

Nickel

Zinc

Vanadium FeV80 China (USDkg)

June 1 2020

288

431

297

444

May 1 2020

262

410

273

427

April 1 2020

295

492

253

422

July 1 2020

6016

1593

12555

2007

3000

June 1 2020

5376

1511

12418

1987

2750

May 1 2020

5061

1440

11853

1899

2750

April 1 2020

4772

1463

11220

1843

2650

+ 44

+ 01

+ 40

- 16

+ 41

+ 14

- 29

+ 10

- 46

+ 11

July 1 2020

98

116

263

418

520

423

440

June 1 2020

96

106

263

425

500

414

432

May 1 2020

80

109

242

399

503

402

396

April 1 2020

82

145

224

372

479

395

405

July 1 2020

301

436

297

431

STAINLESS STEEL COST INDEX (Cost of iron ore chromium and nickel in one tonne of stainless steel)

EAF Index in USD 6

EAF Index in AUD 6

July 1 2020

1716

2493

June 1 2020

1645

2418

May 1 2020

1601

2449

April 1 2020

1489

2441

FERRO ALLOY PRICES (USD per tonne Key to Prices 13)

FeCr HC basis 60 Cr 6-8 C ddp NWE

FeMn HC Mn 78 ddp Europe Works

FeSi 75 Si fob China

FeMo 65-70 Mo dp Rotterdam

June 1 2020

1951

1065

1045

20050

May 1 2020

1918

1139

1020

21500

April 1 2020

1786

1083

1055

20975

Australiaacutes leading stockist and supplier of ferro alloys wear plate and accessories

David Osbornedosbornesanwacomau

Tristan Millstmillssanwacomau

FX RATES (Source wwwx-ratescom)

USD AUD

Euro AUD

NZD AUD

FUTURE FX RATES (Banksrsquo estimate of AUD value by the end of Q3 2020)

USD AUD

Euro AUD

NZD AUD

June 1 2020

067

060

107

May 1 2020

064

058

106

April 1 2020

060

055

102

NAB

070

062

109

ANZ

070

060

108

WESTPAC

070

061

108

July 1 2020

069

061

106

CBA

070

061

107

COMPANY SHARE PRICES (In AUD Key to Prices 14)

BHP Group

Bisalloy Steel

BlueScope Steel

May 1 2020

2984

098

960

July 1 2020

3582

095

1154

June 1 2020

3571

088

1122

April 1 2020

3023

075

913

Fletcher Building

Rio Tinto

Sims Ltd

347

9715

797

355

9723

781

332

8259

653

339

8840

617

OFFCUTShelliphellipSteel Around The World

bull GFG Alliance plans to float its subsidiaries Liberty Steel Group and Alvance

Aluminium using their ldquogreenrdquo credentials to attract investors according to GFGacutes

executive chairman Sanjeev Gupta The IPO may take place next year (Platts)

bull Chinese steel company Baowu is seeking to develop the massive Simandou iron

ore mine in Guinea widely considered to be the largest high-grade iron ore deposit

in the world China is the worldacutes largest consumer of iron ore (Miningcom)

bull ArcelorMittal is believed to be one of six bidders in line to purchase the French rail

producer Hayange which was formerly part of the British Steel group Other bids

include UK-based Liberty House and French steel producer Ascoval (Platts)

Telephone (02) 93624088

SANWA CONTACTS

Reinforcing Steels David Roberts drobertssanwacomau

Structural Steel PC Strand Mark Horwitz mhorwitzsanwacomau

Special Steels Tube and Pipe Matt Gilpin mgilpinsanwacomau

Stainless Steel Howard Seligsohn hseligsohnsanwacomau

Flat Products Stuart Robertson srobertsonsanwacomau

Rural Products Liubov Morozova-Sogrine lmorozovasogrinesanwacomau

Wire and Aluminium Steve Wade swadesanwacomau

Ariston Wire Contacts

Wire and Reinforcing Accessories

Fran Liebovitz franaristonwirecomau

Galvanised Mesh and Fencing Products

Ian Jones ianaristonwirecomau

Telephone (02) 93874188

Website wwwaristonwirecomau

Promote Your Business

Advertise In This Space

Contact Mark Maccallum

markmcaletablancacom

Top 10 Steel Producing Countries

Rank Country 2019 Mt 2018 Mt

1 China 9963 9200

2 India 1112 1093

3 Japan 993 1043

4 USA 879 866

5 Russia (e) 716 720

6 South Korea 714 725

7 Germany (e) 397 424

8 Turkey 337 373

9 Brazil 322 354

10 Iran (e) 319 245

Source World Steel Association Million tonnes of crude steel

(e) Annual figure estimated on partial data or non-WSA resource

Dwelling Approvals - May

The Australian Bureau of Statistics has announced

that the number of dwellings approved in May fell

by 164 in seasonally adjusted terms

ldquoThe decline was driven by private sector dwellings

excluding houses which fell 349 in seasonally

adjusted terms The number of dwellings approved

in apartment buildings fell sharply to an 11-year

lowrdquo said Daniel Rossi Director of Construction

Statistics at the ABS

Falls in dwelling approvals were Tasmania 233

Victoria 143 NSW 113 SA 93 WA 89

and Queensland 74 The value of total building

approved fell 135 in May in seasonally adjusted

terms The value of residential building fell 173

KEY TO PRICES

1 Blast Furnace Index is Iron Ore16 mt + Coking Coal09 mt + Scrap015 mt in USD

or converted to AUD Cost BOF

2 EAFScrap Index Steel Scrap113 mt in USD or converted to AUD Cost EAF

3 China Rebar Shanghai Futures Exchange (SHFE) converted to USD at 70 YuanUSD HERE

4 Turkey Steel Rebar Turkey exports FOB Turkish Port ndash One Month USD mt from LME HERE

5 London Metal Exchange (LME) average pricemt for non-ferrous metals CuAlNiZn HERE

6 EAF Index is 70 iron ore 18 chromium and 8 nickel aggregate cost in USD and AUD

7 Iron Ore Fines Bloomberg indicative USD CFR prices for 62 Fe shipping to Qingdao NAB sourced

8 HCC Australian premium low-volume coking coal USD per tonne SampP Global Platts sourced

9 Steel Scrap (Turkey CFR) USD pricing per tonne from LME closing contract price HERE

10 China Steel Rebar SHFE Forward one month converted to USD at 70 YuanUSD HERE

11 SampP Global Platts daily Rebar CFR and HRC CFR to S E Asia in USDtonne

12 Ferro Vanadium 80 China from Vanadiumprice website Figures are USDkilo HERE

13 Mid point price of range on date indicated in USDtonne Source Argus Metals International

14 Australian Stock Exchange end of day quote in Australian dollars HERE

Prices and figures quoted should be taken as indicative numbers only While all care has been taken in

compiling this newsletter readers acting upon the information herein do so entirely at their own risk The

publisher accepts no responsibility for any consequences arising from commercial decisions made by

readers Most of the numeric information in this newsletter is freely available at the sources quoted

Readers are urged to check figures against the original source All comments expressed are the opinion

of the publisher unless otherwise stated Copyright is reserved for the full contents of the newsletter

Australian Steel News particularly acknowledges two of its principal sources of information NationalAustralia Bank (NAB) and South East Asia Iron and Steel Institute (SEAISI)

Australian Steel News (ASN) is a wholly independent monthly newsletter owned and published by

Caletablanca Media ASN and Caletablanca Media are not connected to any steel industry association

company or any other entity in Australia To suggest information you would like to see included in ASN

email asncaletablancacom To add yourself to ASNacutes mailing list email asncaletablancacom with

the word ADD in the subject line To remove yourself from the list email asncaletablancacom with theword REMOVE in the subject line The Caletablanca Media website is wwwcaletablancacom

DISCLAIMER and CREDIT

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