Rio, Vale output soars as big miners grow share

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The world’s biggest iron ore miner has flagged plans to grow production by 18 per cent over the next six months, continuing a year of strong supply and market share growth at the big end of the sector.

Brazilian miner Vale’s vow to build on its record output over the past six months came as Rio Tinto vowed to achieve the higher end of its target range for iron ore exports in 2018, and as BHP prepares to report on Wednesday what many believe will be its strongest-ever quarterly iron ore export statistics.

Vale produced 96.8 million tonnes and sold 86.5 million tonnes during the three months to June 30, and said it would further grow production in order to meet its target of producing 390 million tonnes of iron ore in 2018.

“In [the second half of 2018] Vale’s production profile indicates volumes over 100 million tonnes per quarter, supporting the production guidance for 2018 … of around 390 million tonnes,” said Vale in a statement.

That production target should not be confused with a sales or export target; Vale has not provided guidance on 2018 exports and has vowed to prioritise profit margins rather than production or export volumes. But the target highlights the rapid growth in output from the company’s high-grade S11D mine in the Carajas region of Brazil.

Rio also reported a strong first half of 2018, confirming it exported 9.4 per cent more iron ore from Western Australia than it did in the first half of 2017.

That result represented Rio’s fastest sequential growth rate for a first half since 2014, when iron ore exports were 22.3 per cent higher than the first half of 2013.

Rio has vowed to ship between 330 million and 340 million tonnes of iron ore from Western Australia in 2018, and is on track to achieve that goal at the half way mark, having shipped 168.8 million tonnes since January 1.

The three months to December 31 are traditionally the most productive for Western Australian iron ore exports, meaning Rio could yet beat its export target, but in keeping with its “value over volume” mantra, the company indicated its second half exports would roughly match its first half exports.

“Shipments are expected to be more evenly distributed between the first and second halves compared to prior years when shipments have typically been skewed to the second half,” said Rio in a statement.

“Shipments in 2018 are expected to be at the upper end of the existing guidance range.”

The extra supply from the big miners may explain why iron ore prices have averaged 8.5 per cent lower over the past six months than in the first half of 2017, but UBS analyst Lachlan Shaw said he did not believe the big miners were flooding the market with supply.

“I would characterise the market as one where the big producers are perhaps gaining a bit of share, I don’t think they are pushing the market into oversupply, ” he said.

“You need to balance out the fact there is more production coming from the big guys against the fact there is less tonnes coming out of other producers. The Indian state of Goa is out of the trade, Samarco is out, Anglo American’s Minas Rio in Brazil is also out, Chinese domestic supply has been trending down and there are a bunch of other small producers in the trade that have racheted tonnes back, or left the trade entirely due to economics.”

US miner Cliffs recently announced plans to close its low-grade iron ore operations in WA, while Atlas Iron has also announced plans to suspend or reduce production at two of its low-grade iron mines in WA.

Rio’s Canadian iron ore operations have also underwhelmed, with labour disputes forcing a guidance downgrade to between 9 million and 10 million tonnes; the company had previously expected to ship up to 11.3 million tonnes from the business in 2018.

The world’s fourth-biggest iron ore exporter, Fortescue Metals Group, is scheduled to publish full-year production data on July 26.

Rio sold record amounts of lump iron ore from WA in recent months in a bid to access the price premiums applied to that product. Rio said it received an average of about $US63 per tonne for its iron ore in the first half of 2018.

Rio’s copper division is also on track to achieve the top end of its guidance range after a stronger than expected start to 2018, but the production of aluminium was slightly weaker than expected, putting Rio behind the pace required to achieve full year guidance.

Rio also warned that cost inflation had risen faster in the aluminium sector over the past six months than it did in all of 2017, and was expected to continue rising.

Rio downgraded production guidance for its titanium dioxide business for the second time this year on the back of strikes and operational disruptions in South Africa.

Rio had previously expected to produce up to 1.4 million tonnes of titanium dioxide in 2018, but now expects to produce between 1.1 million to 1.2 million tonnes.

Source: FINANCIAL REVIEW

NINL begins process to choose MDO for iron ore mines

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MMTC promoted steel PSU Neelachal Ispat Nigam Ltd has set off the process to chose a Mine Developer cum Operator for its captive iron ore mines at Koira. The lease is endowed with 110 million tonnes of iron ore deposits and its operations hold the key to prune production costs of the NINL plant at Kalinganagar, touted as the steel hub.

Since the restart of its full fledged blast furnace operations, NINL has stepped up the production tempo. The steelmaker has set an ambitious target to produce 3500 tonnes of hot metal each day. It has also chalked out plans to diversify into branded steel billets, TMT bars and wire rods in this fiscal. The diversification of its product portfolio is expected to shore up NINL’s financial health.

The company’s focus now is to maximise output of steel billets to cater to special applications. NINL, already a dominant player in pig iron trade, intends to tap the export market for billets.

NINL’s production figures in the months of May and June have shown a tendency to inch closer to realising its full rated capacity. In this period, the steel company has logged 29.65 % growth over the corresponding period of last fiscal.

NINL recorded the highest ever monthly production at its Kalinga Nagar plant since inception in June 2018.

The company registered 74960 tonnes of hot metal and 69780 tonnes pig iron which is best monthly production figures of the company since its inception in 2002. The company’s earlier best hot metal production was 70330 tonnes achieved in March, 2010 whereas best pig iron production was 64513 tonnes achieved in December, 2009.

Apart from MMTC which owns 49.78 per cent equity in NINL, two Odisha government PSUs- Odisha Mining Corporation and Industrial Promotion & Investment Corporation of Odisha Ltd have stakes in the steel project. NINL’s current product portfolio comprises steel billets, pig iron and LAM coke along with nut coke, coke breeze, crude tar, ammonium sulphate and granulated slag.

Source: BUSINESS STANDARD

Steel ministry proposes to bring royalty, auction money under GST ambit

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In a move that could make accounting simple for calculating royalties and auction prices of mines, the ministry of steel has made a case for subsuming both in the goods and services tax (GST).

“Royalty is a big concern (for industry) and we need to rationalise royalty and auction money, which can then become part of input credit,” Union Steel Secretary Aruna Sharma said on Friday at the National Conclave on Mines and Minerals.

Currently, minerals like iron ore and manganese, used to make steel, are taxed at 5 per cent under GST, while finished steel is in the 18 per cent bracket.

There is a need to rationalise auction prices and royalties paid on minerals, and to subsume royalties, auction prices and the district mineral fund to ease the mining business, she said.

The ministry is preparing a draft proposal on this and, once done, will be sent to the Department of Revenue in the Ministry of Finance. Satish Pai, managing director, Hindalco, said: “Many tax and duties are charged (on mining). It is a better idea that all of them are subsumed under one umbrella tax.” Currently, royalty on iron ore in India is levied at 15 per cent ad valorem.

According to Pratik Jain, partner, indirect tax, PwC, India, reduction in the GST rate on steel per se from 18 per cent to 12 per cent is feasible. “Mining royalty comes under the purview of states and they will have to come on board if it is to be subsumed in the GST. They might ask the Centre to compensate them for this loss as well. Therefore, this would need a detailed deliberation and consensus building, which is likely to take time.”

States received Rs 148.95 billion in 2017-18 as royalty revenue. “We have won three limestone blocks in the past two years and are looking for more to meet our cement expansion plan but the government needs to resolve issues of high transfer charges and forest clearances for mines,” said Mahendra Singhi, group chief executive officer, Dalmia Bharat Cement.

In his address, Union Mines Minister Narendra Singh Tomar said 45 mineral blocks auctioned earned Rs 1.55 trillion, and work on 11 of those blocks would commence soon. He added 102 fresh mineral blocks were ready for auction. The mines ministry has asked states to approach potential investors.

Source: BUSINESS STANDARD

India’s largest iron ore handling complex in Vizag

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Nitin Gadkari, Minister for Road Transport and Highways, Shipping and Water Resources, will inaugurate India’s largest 24 MTPA iron ore handling complex, which has been built by Essar Vizag Terminal Limited (EVTL) at a cost of Rs.830 crore, and dedicates the state-of-the-art facility to the nation.

With its advanced cargo handling equipment, the iron ore handling complex will have the fastest vessel turnaround time of 120,000 tonnes per day for iron ore among Indian ports. Following the project completion, the cargo loading capacity of the facility has been upgraded to 24 MTPA. The iron ore handling complex, which has a berth length of 325 metres, can now berth Super Capesize vessels up to 200,000 DWT, with a depth of 20 metres, on the outer harbour of Vizag Port.

EVTL has made investments in ramping up capacity and installing the latest cargo handling equipment at the complex, which including,  a 27 tips/hour Twin-tippler, a 30 tips/hour Rotary Tippler, two 2,700 TPH (tonnes per hour) stackers, two 4,000 TPH Reclaimers, and a 8,000 TPH Ship-Loader.

Source: THE HANS INDIA

Tata Steel update on Indian iron ore output

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Dry Bulk Magazine reported that Tata, India’s largest private sector iron ore producer, meets the entire iron ore requirements for its two steel plants from captive mines. All four mines are in east India’s Odisha and Jharkhand states.

State controlled NMDC and Sail are the other two major Indian iron ore producers. NMDC increased iron ore production by around 4% to 35 million tonne in 2017 2018. Sail has not yet published its production figures for 2017 2018.

Tata is currently expanding the capacity of its steel operations in India. The 3 million tonne per year Kalinganagar steel plant in Odisha is being expanded to 8 million tonne per year of capacity. Tata also acquired the 5 million tonne per year Bhushan Steel this year. Its flagship Indian steel mill is the 9.6 million tonne per year Jamshedpur plant in Jharkhand.

TATA met 29% of its coking coal requirements through its captive mines but imported the rest of its requirements. The company imported 8.3 million tonne of coal in 2017 – 2018 from Australia, New Zealand, Canada and the US, but did not provide any further details or comparative figures.

Source: DRY BULK MAGAZINE

Trump’s tariffs revive Illinois steel plant

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A steel mill in a western Illinois community is back up and running, and the owner said it’s because of President Donald Trump’s steel tariffs.

Production from the two blast furnaces at U.S. Steel’s Granite City Works screeched to a stop two and a half years ago, sending many of the former steel workers packing.

“A lot of the people who worked for the mill moved away because they needed to find work somewhere else,” Granite City resident Diane Wingerter said. “It didn’t look like it was coming back.”

Tom Ryan, grievance chairman at United Steelworker Local 1899, said this isn’t the first time the furnaces were shut down, but it was the longest.

“People were leaving,” steelmaker Aron Gobble said. “We heard they were done, done for good.”

To the surprise of some in Granite City, U.S. Steel decided to restart the furnaces, but Ryan said it was only a matter of time.

“I’ve been here for 39 years,” Ryan said. “Steels always been kind of a pendulum industry.”

U.S. Steel President and CEO David Burritt said President Trump’s steel tariff was the catalyst behind their decision.

“After careful consideration of market conditions and customer demand, including the impact of Section 232[, which is the tariff], the restart of the two blast furnaces at Granite City Works will allow us to serve our customers’ growing demand for high quality products melted and poured in the United States,” Burritt said.

“While we’re not always supportive of everything that President Trump does, you’ve got to give credit where credit is due,” Ryan said. “I don’t think any other politician would have done this. It is an unprecedented step, so I’m sure it will help.”

U.S. Steel is currently in the process of getting the equipment back up and running.

“I’m sure it will help domestic steel across the country, but it sure did help get us going,” Ryan said. “If nothing more than just the impression that it made on management of US Steel to what they believe the future will bring.”

800 jobs are being added to get the furnaces back online.

Some positions are filled by new employees, like Aron Gobble.

“I’m glad they’re open,” Gobble said. “A lot of people needed jobs. A lot of people rely on [the mill]. A lot of businesses rely on it around here. It’s a good thing, good for the community.”

Other positions are filled with familiar faces.

“I’ve got family that the husband and wife both lost their jobs and one has been asked to come back, so they’re pretty excited about that,” Wingerter said.

While Diana Wingerter works in town and not at the mill, she’s happy the clanks and clamors of steel-making will be returning to her hometown.

“Granite City was always a steel city, so it makes us have our mascot back,” Wingerter said.

According to U.S. Steel, both furnaces are expected to be fully operational by Oct. 1.

Source: FOX ILLINOIS

China’s top steel city curbs heavy industry output for five days on smog alert

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China’s top steelmaking city, Tangshan, has ordered steel mills to shut sintering plants and asked that coke and cement factories curb output for five days due to forecasts of heavy smog over the weekend, two sources familiar with the plan said on Friday.

The measures came into force at noon on Friday and will last until noon on July 18, the sources said. They declined to be identified as they are not authorized to speak to the media.

The Tangshan government could not be reached for comment.

Sintering plants, where iron ore is heated into a mass as a precursor to making hot metal, along with coke and cement factories, have been major targets this year in Beijing’s push to curb pollution.

Source: REUTERS

Chinese steel exports recommence year-on-year growth

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Chinese steel export levels exceeded expectations in June, recording their first year-on-year increase since July 2016. That still left exports over the first half of 2018 down heavily from 2017 however, Kallanish notes.

In June China exported 6.94 million tonnes of finished steel, 2% more than in June 2017 and the highest level since July 2017, according to the General Administration of Customs. That left Chinese exports over January-June down -13.2% y-o-y at 35.43mt.

June exports were also up 0.9% month-on-month. Increasing steel prices and falling domestic inventory levels had suggested June could see a slight decline in volumes, and that is now expected to be seen in the July data.

Volumes are likely to drop at least through July-August, with a possible up-tick in September-October. A dip in prices two weeks ago gave exporters some short lived opportunities to book volumes to spot customers in Southeast Asia. Those opportunities appeared to be closing up again over the last week however.

Firm steel prices in the second half are likely to have a negative impact on export volumes. Over the second half of the year monthly export volumes are expected to average around 5.5m tonnes/month, leaving total exports for the year at around 65-70mt.

China also imported 1.04mt of steel, down -8.3% m-o-m and -8% y-o-y. Over the first half Chinese steel imports were down -1.9% at 6.67mt.

Source: KALLANISH

China sets record daily steel output for third month in a row

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China’s steel mills churned out record amounts of the construction material in June as producers rushed to cash in on hefty margins, even as a trade spat between Beijing and Washington intensified.

China, which accounts for half the world’s capacity, produced 80.2 million tonnes of crude steel last month, National Bureau of Statistics data showed on Friday. That’s just shy of the 81.6 million tonnes the United States produced in the whole of 2017, according to World Steel Association data.

June output was below May’s record 81.13 million tonnes, but June has one less day, setting a new daily average production record for a third month in a row at 2.67 million tonnes, according to Reuters’ calculations.

“Steel mills were dashing to reap as much of the bumper profits as they could despite environmental checks,” said Richard Lu, analyst at CRU in Beijing.

The data may further inflame a bitter Sino-U.S. trade row. The United States and Europe have accused China of exporting its surplus metal cheap, hurting international rivals.

China’s steel exports rose last month to 6.94 million tonnes, their highest since July 2017, even after Washington imposed import duties to protect U.S. industries.

The production increase also comes as China has shuttered some mills to help curb choking pollution and ramped up environmental inspections, suggesting that newer mills have ramped up operations to cash in on fat margins.

China’s steel output in the first half rose 6 percent to 451.2 million tonnes.

BUMPER MARGINS

Steel prices have soared over the past year due to firm demand and on concerns about tightening supplies of metal, used in construction and automotives, as Beijing seeks to close inefficient mills and clamps down on smoke-stack industries to clean the nation’s skies.

Lu estimated that mills were earning a profit margin of about 800 yuan ($119.50) per tonne of steel, while analysts at Huatai Futures put profit margins for mills in northern China at over 1,000 yuan a tonne, one of the highest on record.

Monthly utilisation rates at mills reached 71.6 percent in June, the highest since October before winter production curbs had taken effect, according to Reuters calculation based on data from Mysteel consultancy.

Analysts say it’s not clear if China will continue its record-setting run.

Some particularly smoggy cities and provinces are also implementing ad hoc measures to beat bouts of pollution. Last week, top steelmaking city Tangshan ordered mills to cut production for 6 weeks over summer.

“Steel output may not necessarily go down even though stricter restrictions are on the way,” said Lu. “Steel mills in Xuzhou city could reopen soon, which will to some extent offset the production curbs in Tangshan.”

Producers are also racing to make as much metal as possible before a new round of production curbs are imposed in November ahead of China’s winter, when pollution is at its worst.

Last winter, government forced mills and heavy industry in 28 of the most polluted northern cities to shut up to half of their capacity between November and March. More are expected to adopt similar curbs this winter.

Source: REUTERS

India’s JSW Steel revamps acquisition strategy after recent setbacks: executive

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India’s JSW Steel is looking to acquire smaller steel plants in India and overseas that produce specialized products, a top executive said on Tuesday, as it tweaks its acquisition strategy after missing out on some recent deals.

JSW Steel, India’s biggest steelmaker in terms of domestic capacity, failed to outbid rival Tata Steel (TISC.NS) in March for bankrupt steelmaker Bhushan Steel. The company also lost out to UK-based steel manufacturer Liberty House for Bhushan Power following a bankruptcy resolution process for both companies in April.

Earlier this year, JSW was beaten out by ArcelorMittal SA (MT.AS), the world’s largest steelmaker, for Italian steel major Ilva SpA.

After the recent setbacks, JSW Steel is now looking to focus on buying more niche, lower capacity plants which do not require huge investments to turn around, said Seshagiri Rao, joint managing director and the group financial head of JSW Steel.

“In the next round, our strategic thinking is to now focus on special product units that generally have a capacity of about a million tonnes,” said Rao, referring to an upcoming round of auctions under India’s new bankruptcy law, during which a second wave of steel assets will be up for grabs.

India’s steel demand has been growing at over 8 percent for the last few months. The growth is being led by higher motorcycle and automobile sales and government-sponsored infrastructure projects.

Rao said that JSW Steel is scouting for opportunities in the specialized steel segment that are dedicated to meeting specific customer demands. He did not name the prospective targets.

INTERNATIONAL PLANS

JSW has steelmaking capacity of 18 million tonnes per year, around 13 percent of India’s installed capacity. It is investing 268 billion rupees ($3.9 billion) over the next three years to expand to 24 million tonnes.

By 20230, JSW plans to increase its capacity to 40 million tonnes in India and 10 million tonnes overseas.

Buoyed by its two recent acquisitions of relatively smaller steel plants in the United States and Italy, the company is now looking for similar-sized plants elsewhere in Europe.

“There are five or six mainly downstream projects that we’re evaluating,” said Rao, adding the strategy would be similar to its acquisition plans in India.

In March, JSW bought Acero Junction Holdings for $80.85 million in the United States and Italy’s Aferpi for 55 million euros in May.

Together, along with its plate and pipe mill in the U.S., it now has a total overseas capacity of 4 million tonnes per year.

“I think both the acquisitions we’ve announced fit well with our strategy,” Rao said.

Source: REUTERS