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Top Stories

Rio Tinto hits 2016 iron ore guidance, 2017 target intact

Tue Jan 17, 2017 05:41am GMT

Global miner Rio Tinto hit its mid-point target for iron ore shipments from Australia in 2016 and kept its guidance of 330 million-340 million tonnes for this year intact.

The world's second-biggest supplier of the steel-making raw material shipped 327.6 million tonnes in 2016 against guidance of 325 million-330 million tonnes, it said.

Guidance for shipments of 330 million-340 million tonnes in 2017 was unchanged.

"Sales in the (fourth) quarter exceeded production by 2.2 million tonnes, primarily drawing down on inventories built at the ports in the third quarter due to maintenance," Rio said in a statement.

Fourth quarter iron ore shipments climbed by 1 percent to 87.7 million tonnes versus the year ago period, the company said.

Shipment levels are closely watched amid volatile global iron ore prices, with the 1.4 billion-tonne-per-year sea-traded market now in balance but threatened by a looming supply glut.

Analysts expect Australia's other major producers, BHP Billiton and Fortescue Metals Group, to report near-record quarterly production figures later this month.

The price of iron ore unexpectedly surged in 2016 by about 80 percent, fueled by strong demand in China, but forecasters expect a steep decline in the price this year to less than $60 a tonne.

The company also said its mined copper production, a key growth business, was 4 percent higher than 2015 at 523,000 tonnes, though still below full year guidance. It cited the absence of copper delivered from its Grasberg mine in Indonesia and lower than expected production at its Kennecott mine in the United States for the shortfall.

Through a joint venture agreement with Freeport-McMoRan, Rio is entitled to 40 percent of material mined only above an agreed threshold.

The company set 2017 aluminium production guidance at between 3.5 million to 3.7 million tonnes, little changed on the 3.6 million tonnes produced in 2016.

Rio Chief Executive Jean-Sebastien Jacques said 2016's overall production performance was "strong" and based on cost efficiencies and maximized cash flow.

China iron ore imports slip in Dec, but hit record for 201

Fri Jan 13, 2017 07:41am GMT

China's iron ore imports slipped 8 percent in December from a record a year earlier amid seasonal weakness in steel demand, but purchases for the full year hit an all-time high and could remain strong in 2017.

While the 2016 total reflects strong Chinese demand for the steelmaking raw material, it also shows the increased availability of seaborne supply, displacing higher-cost production at home.

Imports rose 7.5 percent to 1.024 billion tonnes in 2016, data from the General Administration of Customs showed, as economic stimulus measures sustained steel demand in the world's top consumer even as the government cracked down on excess capacity.

For December, iron ore imports reached 88.95 million tonnes, down 3.2 percent from November and from the monthly record of 96.26 million tonnes set in December 2015. Arrivals in December were still the third highest for 2016.

Steel demand typically slows in the cold winter months.

"You should see China's (annual) iron ore imports rise once more," said CLSA head of research Andrew Driscoll.

"We're forecasting crude steel production to rise about 1 percent (in 2017) and we'd expect Chinese demand for iron ore to increase at a similar level."

China's vow this week to shut low-grade steel producers which use scrap metal by the end of June should help boost demand for iron ore, he added.

Iron ore prices soared 80 percent in 2016 to end a three-year losing streak as China's infrastructure investment push helped spur steel demand.

"If iron ore supply is available then it's going to go to China," said Driscoll.

Australia sees iron ore price heading sharply lower

Mon Jan 9, 2017 10:06am GMT

Australia has forecast a steep decline in the price of iron ore, its most valuable export commodity, calling an end to an unexpected rally fueled by strong demand from China.

The forecast average price in 2017 of around $52 a tonne - down from about $80 a tonne at present - comes as big miners are set to report bumper profits in coming months, while smaller rivals are still getting back on their feet.

"If the iron ore price starts to go down the high performance of last year won't be replicated this year," said Shaw & Partners mining analyst Peter O'Connor. "It could be a trainwreck for the smaller, marginal producers."

In a closely watched release, Australia's Department of Industry, Innovation and Science on Monday predicted iron ore to average just $51.60 a tonne this year, easing further to $46.70 in 2018.

The 2017 forecast was still up from its previous estimate of $44.10, reflecting last year's rally, and broadly in line with major banks on doubts that China's industrial growth will continue to support 1 billion tonnes of annual iron ore imports.

A Reuters poll in mid-December put the average price of iron ore at $54.70 per tonne in 2017, while Barclays expects prices to tumble as low as $50 a tonne by the third quarter of 2017.

Iron ore has already recoiled by 9 percent since mid-December after rising by 81 percent over 2016.

The Australian forecast put last year's price lift down to a temporary rise in Chinese steel output and run-ups caused by speculative commodities trading in China.

"The rally reflects a combination of fundamental drivers and speculative trading," the department said in its latest commodities outlook paper, "However, with the likely moderation of these factors over the outlook period, the iron ore price is still forecast to decline."

Nev Power, chief executive of Australia's third-biggest iron ore miner Fortescue Metals Group and a vocal critic of speculative iron ore trading, said the market was largely in supply and demand balance throughout 2016.

"It is very difficult to predict the iron ore price, however it has remained in a fairly consistent band of around $40-$60 for the past 18 months," Power told Reuters.

"We expect that to continue through 2017 and remain confident in both the short and long-term fundamentals of the Chinese market," he said.

Australia also lowered its forecast for exports of iron ore by 2 percent to 832.2 million tonnes in fiscal 2016-17 from 851 million previously, although this is still a 5.9 percent rise year-on-year. Australia is the world's top supplier of iron ore.

December iron ore shipments to China from Australia's Port Hedland terminal hit a record 37.4 million tonnes in December.

Analysts expect Rio Tinto, BHP Billiton and Fortescue, which together control 70 percent of world iron ore trade, to report sharply stronger profits next month after iron ore prices raced up 80 percent in 2016.

Smaller miners such as Atlas Iron are just now recovering after iron ore fell as low as $38 a tonne last year.

Top Iron Ore Forecaster Says Prices Will Pull Back This Year

Wed Jan 4, 2017 07:59am GMT

Iron ore prices are primed for a retreat this year after surging in 2016, according to RBC Capital Markets, the most accurate forecaster for the commodity in the final quarter of last year.

“We believe iron ore prices are not sustainable at current levels and expect a pullback in 2017,” RBC analysts wrote in a report received on Wednesday. The firm placed first in predicting prices, according to data compiled by Bloomberg.

Iron ore soared 81 percent in 2016 in a rally that caught out many investors after stimulus in China helped sustain steel output, buoying demand even as mine supplies rose. RBC is more positive on the outlook for base metals, which also surged last year, as economies show signs of a pickup.

Base metals’ “price strength could continue into the first quarter of 2017 driven by improving leading economic indicators and strong seasonality, though we expect further share price upside to be limited with valuations stretched after the recent rally,” it said.

Iron ore with 62 percent content in Qingdao, which hit a two-year high of $83.58 on Dec. 12, lost 1.2 percent to $77.91 a dry metric ton on Tuesday, according to Metal Bulletin Ltd. The benchmark rallied 41 percent in the final three months of last year, supporting miners’ shares.

Signs of abundant iron ore supply are mounting. Holdings at ports in China rose 2.7 percent to 113.95 million tons in the final week of last year to the highest on record, according to Shanghai Steelhome Information Technology Co. Figures from Brazil showed the country’s exports at an all-time high in 2016.

Plenty of banks have forecast weakness in iron ore after 2016’s surprise surge. Morgan Stanley listed the steel-making commodity among its bottom three metals picks, and Barclays Plc has said it expects prices to be back below $50 by the third quarter as China’s property market cools.

Futures rose in Asia on Wednesday. On China’s Dalian Commodity Exchange, most-active prices added 2.6 percent after dropping on Tuesday to the lowest close since Nov. 8. In Singapore, the SGX AsiaClear contract gained 0.8 percent.

China iron ore, steel resume decline as smog spurs caution

Thu Dec 22, 2016 10:38am GMT

Chinese steel and iron ore futures skidded on Thursday as a smog that engulfed northern cities of the country this week slowed trading activity.

The smog has thinned in some parts including in the port city of Tianjin, but traders say many steel mills exercised caution on worries that air pollution may worsen again in the next few days.

The most-active rebar on the Shanghai Futures Exchange was down 2.4 percent at 3,083 yuan ($444) a tonne by midday break.

On the Dalian Commodity Exchange, iron ore dropped 1.7 percent to 558 yuan a tonne.

Both commodities have lost at least 13 percent since hitting nearly three-year highs last week. They gained marginally on Wednesday after a five-day slide.

Some mills were starting to purchase iron ore again with the smog easing on Thursday, but they are still cautious about the weather, said a trader based in Tianjin.

"If this weekend the smog returns then mills will stop or limit production again," he said.

Blue skies returned to Beijing on Thursday after winds dispelled dangerously high levels of air pollution that had blanketed the Chinese capital for five days prompting a pollution red alert, but large parts of northern China remain under choking smog.

The Air Quality Index in Beijing spiked to more than 400 overnight, but by morning had dropped to about 50.

Iron ore for delivery to China's Qingdao port .IO62-CNO=MB slipped 0.5 percent to $79.19 a tonne on Wednesday, according to Metal Bulletin, falling for a fourth straight day.

"Due to the air pollution in northern China, deliveries from northern mills to eastern China decreased sharply," Metal Bulletin said in a note.

China steel, iron ore sag for sixth day as smog hits demand

Wed Dec 21, 2016 11:38am GMT

Chinese steel and iron ore futures dropped for a sixth consecutive session on Wednesday as heavy smog that has enveloped most of northern China curbed demand.

Construction activity has halted and many steel mills were ordered to reduce output to help rein in emissions, traders say, as northern Chinese cities including the capital Beijing saw thick smog for a fourth day.

Tianjin port, one of China's busiest, has stopped handling coal, iron ore and other non-liquid products, traders familiar with the move said on Tuesday.

"I can't see anything from my window," said a Tianjin-based trader who has opted to stay home given the poor visibility in the city. "Our cargo agent will inform me when the port will reopen."

The most-traded iron ore on the Dalian Commodity Exchange was down 0.8 percent at 564 yuan ($81) a ton by midday break. It has lost 14 percent since hitting a nearly three-year high last week.

Due to the heavy smog, authorities have asked mills in northern China including in the top steel-producing province Hebei to restrict production, said a trader in Shanghai.

"Some mills are not running on full capacity to reduce emissions," he said, adding that steel supply was high.

Rebar on the Shanghai Futures Exchange slipped 0.7 percent to 3,135 yuan per ton, falling 12 percent since touching a 32-month peak last week.

Physical iron ore trading had a similarly bearish tone, pushing the spot price back below $80 a ton.

Iron ore for delivery to China's Qingdao port slid 2 percent to $79.62 a ton on Tuesday, according to Metal Bulletin. The spot benchmark touched a two-year high of $83.58 on Dec. 12.Chinese steel and iron ore futures dropped for a sixth consecutive session on Wednesday as heavy smog that has enveloped most of northern China curbed demand.

Construction activity has halted and many steel mills were ordered to reduce output to help rein in emissions, traders say, as northern Chinese cities including the capital Beijing saw thick smog for a fourth day.

Tianjin port, one of China's busiest, has stopped handling coal, iron ore and other non-liquid products, traders familiar with the move said on Tuesday.

"I can't see anything from my window," said a Tianjin-based trader who has opted to stay home given the poor visibility in the city. "Our cargo agent will inform me when the port will reopen."

The most-traded iron ore on the Dalian Commodity Exchange was down 0.8 percent at 564 yuan ($81) a ton by midday break. It has lost 14 percent since hitting a nearly three-year high last week.

Due to the heavy smog, authorities have asked mills in northern China including in the top steel-producing province Hebei to restrict production, said a trader in Shanghai.

"Some mills are not running on full capacity to reduce emissions," he said, adding that steel supply was high.

Rebar on the Shanghai Futures Exchange slipped 0.7 percent to 3,135 yuan per ton, falling 12 percent since touching a 32-month peak last week.

Physical iron ore trading had a similarly bearish tone, pushing the spot price back below $80 a ton.

Iron ore for delivery to China's Qingdao port slid 2 percent to $79.62 a ton on Tuesday, according to Metal Bulletin. The spot benchmark touched a two-year high of $83.58 on Dec. 12.

Vale opens huge new iron ore mine in Brazil's Amazon rainforest

Mon Dec 19, 2016 05:24am GMT

Brazil's Vale SA on Saturday inaugurated its biggest mining project ever, lowering costs in a cut-throat market and reasserting its place as the world's biggest iron ore producer.

The S11D mine in the Amazonian state of Para will add 75 million tonnes of production when it reaches peak output in four years, lifting Vale over Australia's Rio Tinto, which had rivaled its output after years of stagnation.

Vale Chief Executive Murilo Ferreira said at the inaugural ceremony that the company had staked its future on the giant mining project even as iron ore prices plunged in recent years.

"Despite the stunning drop in revenue during execution of the project ... we plowed on with S11D," Ferreira said, noting that the price of iron ore had dropped from $191 per ton in 2011 to $37 per ton in January.

Vale posted its biggest loss ever last year due to falling ore prices and the huge cost of carrying out the project.

The company invested $14.3 billion in the mine and processing facilities, along with the expansion of a rail line that will carry ore some 1,000 kilometers (621 miles) to a new port terminal for loading onto the world's largest iron ore ships.

S11D, also known as Serra Sul, will offer some of the best quality ore and lowest costs in the industry, helping Vale undercut rivals over the 30-year life span of the project.

China steel, iron ore fall for 2nd day as rally loses steam

Thu Dec 15, 2016 07:10am GMT

Chinese steel and iron ore futures dropped for a second session on Thursday as investors pared bullish bets after lifting the two commodities to multi-year highs.

Improved steel supply in parts of China prompted some traders to cut price offers, dragging down rates on raw material iron ore which had piggybacked on the strength in the steel market.

The most-active rebar on the Shanghai Futures Exchange was down 1 percent at 3,378 yuan a tonne by 0256 GMT. The construction steel product touched 3,557 yuan on Monday, its highest since April 2014.

Iron ore on the Dalian Commodity Exchange slipped 1 percent to 610 yuan per tonne. It climbed to a nearly three-year high of 657 yuan on Monday.

Both commodities fell back from Wednesday despite data suggesting that Chinese banks looked set to lend a record amount this year as Beijing boosts the economy to meet economic growth targets.

The decline indicates that "investors felt the price had surged too high, too fast," ANZ analysts said in a note.

China's efforts to curb overcapacity in its steel sector and stimulate economic growth with increased infrastructure spending had fueled an 88-percent rally in Shanghai rebar futures this year.

But data released on Tuesday showed China's crude steel output rose for a ninth straight month in November, suggesting that Beijing's closure of excess capacity has not stopped mills from producing more to chase rising prices.

The retreat in futures again pulled back spot iron ore below $80 a tonne after staying above that level for five days.

Iron ore for delivery to China's Qingdao port .IO62-CNO=MB slid 5.1 percent to $79.18 a tonne on Wednesday, according to Metal Bulletin. The spot benchmark peaked at $83.58 on Monday, its strongest since October 2014.

An increase in the supply of billet in Tangshan led to prices for the semi-finished steel product dropping late on Tuesday, said Metal Bulletin which tracks Chinese trades.

Rebar futures followed on Wednesday, which resulted in buyers delaying their procurement plans, it said.

China steel, iron ore pull back from multi-year highs

Wed Dec 14, 2016 09:12am GMT

Steel and iron ore futures in China retreated on Wednesday after a two-day run-up that lifted the industrial commodities to multi-year highs amid Beijing's efforts to address overcapacity in its steel sector.

China has cut 88 million tonnes of steel capacity this year under an economic reform to slim down its glut-hit sectors, nearly double the target of 45 million tonnes and helping spur an 86 percent rally in steel futures this year.

Beijing's environmental crackdown has also hit heavy polluters including mills, forcing them to reduce output or shut temporarily.

China has punished nearly 700 more regional officials for inadequately protecting the environment in the latest round of rolling inspections, the state news agency Xinhua reported.

The most-active rebar on the Shanghai Futures Exchange was down 2.5 percent at 3,381 yuan ($490) a tonne by midday. The construction steel product rose to its highest since April 2014 on Monday, hitting 3,557 yuan.

Iron ore on the Dalian Commodity Exchange dropped 3.4 percent to 614 yuan per tonne, after spiking to a nearly three-year high of 657 yuan on Monday.

"Since steel shutdowns have been one of the main drivers of the steel rally, in our view, we don't think iron ore rallying is fundamentally justified, though it is clear that Chinese market participants disagree," Macquarie analysts said in a note.

The retreat in steel prices also followed data on Tuesday showing that China's crude steel output rose for a ninth straight month in November, suggesting that Beijing's closure of excess capacity has not stopped mills from producing more to chase rising prices.

Iron ore for delivery to China's Qingdao port .IO62-CNO=MB slipped 0.2 percent to $83.42 a tonne on Tuesday, a day after hitting its strongest level since October 2014, according to data from Metal Bulletin.

Shanghai steel resumes rally to 32-month high, iron ore hits 3-yr top

Mon Dec 12, 2016 10:23am GMT

Chinese steel futures surged as much as 7 percent to their highest in 32 months on Monday as Beijing's resolve to tackle a glut helped tighten supply, lifting raw material iron ore to its strongest in almost three years.

The two commodities resumed their rally after Friday's pullback that followed a six-day run-up, also bolstered by signs of recovery in the world's No. 2 economy.

The most-active rebar on the Shanghai Futures Exchange touched its upside limit of 3,557 yuan ($514) a tonne, its loftiest since April 2014. It was up 5.3 percent at 3,501 yuan by 0306 GMT.

Iron ore on the Dalian Commodity Exchange was up 5.8 percent at 650 yuan per tonne after earlier peaking at 657 yuan, a level last seen on January 2014.

Steel supply is tightening as the Chinese government continues to restrict production by heavy industries including steel and cement in its fight against pollution, traders said.

"Many steel mills have lifted their offer price over the weekend amid limited supply," said a trader in Shanghai.

While seasonal steel demand is lean during winter, some traders are restocking on expectations that the market will remain strong going forward, he said.

Signs of a big revival in China's economy also continued to boost sentiment towards commodities.

China's producer prices rose at the fastest pace in more than five years in November, boosting industrial profits and giving firms more cash flow to pay off mountains of debt, data showed on Friday.

"Metals producers who are focused on smelting such as copper and aluminium and steel production will see their profit growing on the back of enlarged revenue bases," Argonaut Securities said on the impact of the surge in producer prices.

Tracking the rally in futures, iron ore spot prices also climbed above $80 a tonne last week. Iron ore for delivery to China's Qingdao port .IO62-CNI=SI stood at $81.66 a tonne on Friday, gaining 5 percent last week, according to Metal Bulletin.

The spot benchmark hit $82.25 on Wednesday, the highest since October 2014.

CISA Key mills’ daily crude steel output up in early Jan

Tue Jan 26, 2016 10:21am GMT

The China Iron and Steel Association(CISA) said that the average daily crude steel output of large and medium-sized steel mills of China (all CISA members) totaled 1.5681 million tonnes in Jan 01-Jan 10 period, up 3.47 percent from last ten days( Dec 21-31, 2015).

China's large steelmakers lost $507 mln in Jan-Feb

Thu Mar 26, 2015 10:51am GMT

China's large and medium-sized steelmakers made a combined loss of 3.15 billion yuan ($507.1 million) in the first two months of this year, an industry official said on Thursday, as a supply glut and slower demand growth dampened prices.
Apparent consumption of crude steel in China, the world's top producer and consumer of the construction material, fell 7.5 percent in January and February, Wang Liqun, vice chairman of the China Iron & Steel Association (CISA) told an industry conference.

China steel firms turn overseas as domestic woes mount

Tue Mar 24, 2015 10:20am GMT

Laden with debt and struggling to make money as the world's No.2 economy loses momentum, China's steel mills do not appear obvious candidates for overseas expansion.

But the country's crisis-hit steel sector is calling for strong government backing for plans to ramp up foreign acquisitions, as it looks to escape weak demand-growth and soaring environmental costs at home.

In a draft of a revised restructuring plan for the industry issued late last week, Beijing included a line saying it would support mills' efforts to buy assets abroad, with attention now turning to more detailed measures that could be announced later in the year.

"There is capacity that we can shift abroad, to regions that need it like Southeast Asia and Eastern Europe, as well as places like Indonesia and Africa where demand for steel is huge but production capacity is very low," said Deng Qilin, Chairman of Wuhan Iron and Steel Group, China's No.4 producer.

Foreign expansion by the world's biggest steel sector would offer some support to prices of steelmaking ingredient iron ore .IO62-CNI=SI, which plunged to record lows this month as Beijing ramps up environmental checks that could shut more mills in an industry where production capacity is 300 million tonnes above demand.

The export market offered one of the few bright spots for Chinese producers last year, but trade barriers erected amid accusations that China has been dumping products overseas mean exporting is becoming more difficult, with firms increasingly looking to shift actual output abroad.

Beijing has already rolled out measures to broadly encourage the foreign expansion of Chinese industry including simplifying currency rules and making it easier to raise money through bond markets, with sectors such as nuclear at the forefront of the drive overseas.

At this year's full session of parliament, Wuhan Iron and Steel along with another major producer, Anshan Iron and Steel Group, urged the government to provide financial and policy support for the steel sector's expansion abroad.

China's top steelmaking province of Hebei has also called for greater backing for its plan to move 20 million tonnes of capacity overseas by 2023.

Some are already making the leap, with Hebei Steel Group, China's largest steelmaker, looking to build a 5-million-tonne-per-year steel project under a joint venture in Africa.

Shougang, one of the largest mills, in February started production at a Malaysian project with an annual capacity of 3 million tonnes.

A smaller company, Bazhou New Asia Metal Products Co. Ltd, bought a stake in an Indonesian firm in 2013 to build a steel strip project, with vice-president Xing Xiuying saying it made the move as there was little room to expand in China.

"Investing abroad will help China to cut the excess capacity at home in the long run, as some companies will shift their focus to overseas markets and thus reduce output and competition domestically."

Others have found moving more tricky, with the Baosteel Group and Wuhan Iron and Steel both dropping plans to build plants in Brazil, blaming high costs.

"It will depend on how much capital is eventually engaged in helping Chinese firms go abroad, but generally speaking, the overseas expansion strategy will have a positive impact on Chinese steelmakers in seeking new growth," said Lawrence Lu, analyst at Standard & Poor's Ratings Services in Hong Kong.

Some were more sceptical, questioning whether there would be cost advantages to shifting output.

"The government should not use this as a main solution to ease domestic overcapacity as any blind push would bring consequences," said Jiang Feitao, policy researcher at the China Academy of Social Sciences.

China large steelmakers' daily output falls 5 pct in early March

Thu Mar 19, 2015 11:37am GMT

Average daily output from China's large steel producers declined 5 percent to 1.682 million tonnes in the first ten days of March from the preceding 8-day period, data from the China Iron & Steel Association (CISA) showed on Wednesday.
Harsher environmental inspections and deepening losses have forced Chinese steel mills to cut output amid lukewarm steel demand in the world's top consumer. Rebar on the Shanghai.

China's Jan-Feb crude steel output falls 1.5 pct

Sat Mar 14, 2015 02:22am GMT

China's crude steel output fell 1.5 percent to 130.5 million tonnes for the first two months of 2015, government data showed on Wednesday, as a supply glut and slower demand growth led mills to bring forward scheduled maintenance to curb output.

Average daily steel output slipped to 2.212 million tonnes, according to Reuters' calculations based on data from the National Bureau of Statistics, although the figure was up 0.7 percent from December.

China's statistics bureau releases combined output data for the first two months of the year in order to avoid monthly data being skewed by the Chinese new year holiday.

"A slower economy has hit production in power-intensive sectors such as steel. And a weak property market has also piled pressure on steel demand," said Cao Yang, an analyst with Shanghai Pudong Development Bank in Shanghai.

Steel prices lost 28 percent during 2014, due to overcapacity and the economic slowdown, and industry sources expect more inefficient steel mills to shut down this year, given tougher environmental laws.

Production by large Chinese steel mills dipped for much of January and early February but jumped 8 percent in the final 10 days of February to 1.77 million tonnes a day.

China, the world's largest steel producer and consumer, set its annual economic growth at about 7 percent this year, the lowest rate in a quarter of a century. The "new normal" is expected to weigh down demand for commodities.

Steel production grew 0.9 percent to 822.7 million tonnes in 2014, it slowest rate in more than three decades, as its cooling economy curbed demand and the government moved to tackle overcapacity and pollution.

Li Xinchuang, the vice secretary general of the China Iron & Steel Association, forecast in December that Chinese steel production would rise to 834 million tonnes in 2015.

China steel exports plunge in February after tax changes

Tue Mar 10, 2015 05:07am GMT

Steel exports from top producer China fell sharply in February, indicating that Beijing's attempt to curb surging overseas sales by cancelling tax rebates on boron-added steel may have started to bear fruit.

Preliminary Chinese customs data showed that steel product exports in February were down 24.2 percent from January at 7.8 million tonnes, though they were still up 62.5 percent from a year ago.

"Given the China New Year distortions (in February) let's wait until the March data before getting too excited, but that's a big drop nonetheless," Nomura analysts said in a note.

Last year China's steel exports rose 50.5 percent to a record 94 million tonnes, with about 40 percent of the overseas shipments containing the chemical element boron to qualify for the tax rebate.

As such, the fall in exports last month provides some hope for an oversupplied industry struggling to absorb the flood of Chinese exports and battling with steel prices ST-CRU-IDX at their lowest since 2009.

However, the China Iron and Steel Association has forecast that steel exports will remain between 80 million and 90 million tonnes this year and there are some concerns that Chinese steelmakers could exploit other tax loopholes.

Exclusive: EU set to impose duties on Chinese, Taiwan stainless steel

Mon Mar 9, 2015 04:05am GMT

The European Union will impose anti-dumping duties later this month on imports of stainless steel cold-rolled sheet from China and Taiwan, according to two sources familiar with a European Commission proposal.

The Commission plans to set tariffs of about 25 percent for imports from China and of about 12 percent for Taiwanese product, following a complaint lodged in May 2014 by the European steel producers association, Eurofer.

The Commission will present its proposal to EU member states next week and by March 26 will put in place the duties, which are provisional pending the outcome of an investigation due to end in September.

Eurofer says that China and Taiwan shipped 620 million euros ($680 million) worth of cold-rolled stainless steel into the European Union in 2013, some 17 percent of the overall market, and were guilty of dumping, or selling at unfairly low prices.

A parallel investigation into alleged illegal subsidies for Chinese producers is also due to end in September.

Europe's largest stainless steel producers are Acerinox, Outokumpu and Aperam. Chinese and Taiwanese producers include Shanxi Taigang Stainless Steel Co, Baosteel <600019.SS > and Yusco.

The Commission, prompted by Eurofer, is also investigating alleged dumping of grain-oriented flat-rolled electrical steel, typically used in transformers, by producers in China, South Korea, Japan, Russia and the United States.

Eurofer is also seeking to prolong existing duties on Chinese imports of wire rod.

Eurofer told a news conference on Thursday that, despite a lower euro and a slow pick-up of European demand, European producers were still confronted with a massive increase of imports from Asia, and from China in particular.

Total Chinese steel exports rose to a historic peak of 93 million tonnes in 2014, Eurofer said, equivalent to 60 percent of total EU steel consumption.

Chinese steel exports to the EU increased to 4.5 million tonnes last year from 1.2 million tonnes in 2009.

Eurofer believes the large expansion of China's steel industry does not reflect cost advantages but is based on state-owned enterprises raising capital on preferential terms, as well as other forms of subsidy.

It also says China's exports include not just basic products, such as hot-rolled steel, but also high-end coated sheets.

Eurofer said it was also concerned by a potential export surge from Russian producers due to the lower rouble and depressed local economy. It has urged the Commission to monitor imports closely.

China's steel capacity likely to grow this year -industry ministry

Fri Feb 6, 2015 12:20pm GMT

Crude steel capacity in China, the world's top producing country, is likely to grow this year despite difficult market conditions as new projects are coming onstream, the Ministry of Industry and Information Technology (MIIT) said on Thursday.

Long-standing overcapacity, slower growth in demand and tighter credit have forced many Chinese steel mills to produce at a loss or at low profitability.

"Generally, oversupply in the steel sector is unlikely to improve this year, exports will drop slightly, steel prices will stay at low levels and steel mills' profitability may not be positive," MIIT said in a report on its website (www.miit.gov.cn).

Investment in the ferrous metals smelting and processing industry fell 5.9 percent last year but remained at a relatively high level and there are still 2,037 new steel projects under construction.

China's crude steel capacity reached 1.16 billion tonnes at the end of 2014, with its production accounting for 49.4 percent of global output, MIIT said.

Some analysts expect capacity to increase by only about 10 million tonnes this year.

Despite the removal of an export rebate for boron-added steel products from this year, steel exports are expected to stay at elevated levels due to a continued supply glut at home and competitive prices, the ministry said.

The China Iron & Steel Association has forecast domestic crude steel output would fall 1.1 percent to 814 million tonnes this year, after rapid expansion over the past decade, as a slowing economy has hit demand for commodities.

China's apparent steel consumption fell 4 percent to 740 million tonnes last year, and steel demand is unlikely to improve much as Beijing is shifting its economic growth model and slowing fixed asset investment.

In order to minimise their risks on loans, banks have largely cut credit to Chinese steel mills since last year, leading to shutdowns and bankrupticies at some companies.

The debt-to-asset ratio for large steel mills dropped 0.8 percentage points to 68.3 percent last year but was still 11 percentage points higher than in 2007 when the industry experienced a boom.

Large Chinese steelmakers' daily output dips 5.1 pct in mid-Jan

Thu Jan 29, 2015 10:28am GMT

Production from China's large steel mills fell 5.1 percent over Jan. 11-20 to 1.694 million tonnes, data from the China Iron and Steel Association (CISA) showed, with producers responding to weak demand by cutting output.
Steel demand is traditionally weak in January, but output rose to its highest rate since October in the first 10 days of the month, adding to a supply glut that has sapped prices.

China eliminates 31.1 million tonne of steel capacity in 2014

Tue Jan 27, 2015 11:12am GMT

China has eliminated 31.1 million tonnes of steel production capacity last year, higher than expected, a senior official of the industrial ministry said on Tuesday, as Beijing seeks to ease overcapacity and improve air quality. 

China has also removed 81 million tonnes of cement production capacity, Mao Weiming, vice minister of the Ministry of Industrial and Information Technology, told at a presser in Beijing. 

China, the world's largest steel producer, earlier set the target of 27 million tonnes for the steel sector. 

Separately, Hebei province, the country's biggest steel-making region, has closed as much as 15 million tonnes of steel production capacity last year, meeting its target, but aims to shut only 5 million tonnes this year.

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BHP's copper output up 24% in September quarter

Thu Oct 18, 2012 06:53am GMT

Global resources giant BHP Billiton reported that copper output for the three months ended September 30 reached 273,900t, up 24% from the same period in the previous year, due to higher ore grades this quarter at its Escondida operation in Chile and the effects of a strike that impacted production in the year-ago quarter.

Output from Latin American operations grew by 32% to 235,700t, the company said in a statement.

The company's 57.5% share of output from Escondida amounted to 101,200t of copper in concentrate and 41,600t of cathode, representing increases of 103% and 26.4%, respectively. On a 100% basis, Escondida mined 103Mt of ore during the quarter, a 48.5% increase, with a 39.2% higher average head grade of 1.35% copper.

Escondida should see a 20% increase in copper output during fiscal 2013 after scheduled maintenance and tie-in activities were completed this quarter, according to the company.

Antamina in Peru contributed a record 40,200t of copper in concentrate in the 2012 quarter versus 30,300t in the year-ago quarter as milling rates continue exceeding nominal capacity, the company said. On a 100% basis, the mine registered throughput of 54.5Mt during the quarter, up from 44.2Mt, and an average copper head grade of 1.15% versus 1.11% year-on-year.

Antamina also contributed 14,514t zinc, up 62%, 919,000oz silver (-5.45%), 260t lead (155%) and 454t molybdenum (-23.7%). BHP Billiton holds a 33.8% stake in the mine.

The Spence and Cerro Colorado mines in Chile together produced 17,800t of copper cathode in fiscal Q1, a year-on-year decrease from 22,500t. The company also produces copper at the Olympic Dam mine in Australia and Pinto Valley in the US.

China: Inflation jumps as economy slows

Mon Sep 10, 2012 01:50am GMT

After four straight months of declines, consumer price inflation has finally edged up in China.

Chinese consumers paid 2% more in August than they did a year ago, the government's National Bureau of Statistics reported Sunday. That's up from a 1.8% increase in July -- a two-and-a-half year low.

China's annual inflation rate rose 2.0% in August, the government's National Bureau of Statistics reported Sunday, up from 1.8% in July -- a two-and-a-half year low.

Food prices, which account for more than a third of the inflation calculation, rose 3.4% during the month.

Household finances in China are especially susceptible to fluctuations in food prices, as many poor families spend large percentages of their income on food.

Still, inflation remains at very low levels. As recently as one year ago, China's consumer price index stood above 6% -- well north of the government's stated inflation rate target of 4%.

The very low rate should allow the government more flexibility in pursuing economic stimulus.

In July, officials said that annual economic growth dropped to 7.6% in the second quarter -- down from 8.1% the previous quarter.

The People's Bank of China twice lowered interest rates, and the central bank has also tried to spur growth by cutting the amount of money banks are required to hold in reserves.

But those measure seem to have fallen flat. Some analysts have recently lowered their growth forecasts for the rest of the year, while some noted that weakness is likely to extend into 2013.

On Friday, the government confirmed more action, this time in the form of a $157.7 billion investment in 55 new infrastructure products. Analysts said the move should help boost growth in the fourth quarter.

Zhiwei Zhang, and economist at Nomura, said in a research note that the projects -- which include 25 new subway lines -- are a sign that the government's policy stance "has become significantly more proactive."

China Aug official PMI hits 9-month low

Mon Sep 3, 2012 05:39am GMT

China's official factory purchasing managers' index fell to a lower-than-expected 49.2 in August from 50.1 in July, official data showed on Saturday, in a result that is likely to strengthen the case for further policy steps to bolster growth.

The official PMI dipped below 50, which demarcates expansion from contraction, for the first time since November 2011, in the latest sign that the world's second-biggest economy is struggling against global headwinds.

Economists polled by Reuters this week had expected the August official PMI to slip to 50.

China cut interest rates in June and July and has been injecting cash into money markets to ease credit conditions to support the economy that notched a sixth straight quarter of slower growth in the April-June period.

But analysts are divided over whether that will be enough to stop the slowdown extending to a seventh quarter.

The PMI's output sub-index eased to 50.9 in August from July's 51.8, the National Bureau of Statistics said.

A flash PMI published last week by HSBC plunged to a nine-month low of 47.8 in August, as new export orders slumped and inventories rose, a signal that a persistent slowdown in economic growth has extended deeper into the third quarter.

According to the latest Reuters poll, China's annual economic growth could pick up to 7.9 percent in the third quarter from a three-year low of 7.6 percent in the second quarter in response to government policy fine-tuning.

A raft of weaker-than-expected July data had cooled market expectations for any quick economic recovery, especially as the central bank sticks to its "prudent" policy stance for fear of reigniting property and inflation risks.

Still, analysts believe the central bank will continue to loosen policy further by cutting interest rates and banks' reserve requirement ratio in coming months to support growth.

The HSBC PMI has been below 50 for 10 straight months, reinforcing calls from analysts and investors for further measures from Beijing to support economic growth.

The official PMI generally paints a rosier picture of the factory sector than the HSBC PMI as the official survey focuses on big, state-owned firms, while the HSBC PMI targets smaller, private firms that have limited access to bank loans.

There are also differing approaches to seasonal adjustment in the surveys.

The final HSBC reading will be published on September 3, as will the National Bureau of Statistics' services PMI.

China threatens to burst Australia's iron ore bubble-Blog

Thu Aug 30, 2012 06:18am GMT

Marc Faber, the Swiss investor and ultra bear, says there have been four mega bubbles in the past 40 years. In the 1970s it was gold; in the 1980s it was the Nikkei, and in the 1990s it was the Nasdaq. Bigger than all of them, though, has been the iron ore bubble, a tenfold increase in prices in less than a decade.

Iron ore is the raw material for steel, production of which has rocketed as a result of China's economic boom. Consider the following facts. In the past 15 years, China has built 90 million new homes – enough to house the populations of the UK, France and Germany combined. A quarter of global steel demand is for Chinese property and Chinese infrastructure.

Commodity-rich countries, like Australia, have never had it so good. China takes 25% of Australia's exports and iron ore accounts for 60% of all the goods Australia sells to China. One reason Australia avoided recession during the global downturn of 2008-09 was that it had a well-run banking system. A much bigger reason was that the country had become a giant pit from which China could extract the minerals it needed for its industrial expansion. Money flooded into the country from sovereign wealth funds and hedge funds looking for AAA investments. The Australian dollar has soared, as have property prices.

China's economy is now slowing, and although the economic data is not particularly reliable, it seems to be slowing fast. The country has two million unsold homes, with another 30 million under construction. There is a glut of iron ore and the price is falling. Where does that leave Australia?

Horribly exposed, quite obviously. It has an over-valued currency, an over-valued property market, and its major customer is now desperately pulling every available policy lever in the hope of avoiding a hard landing. Whatever happens, the Australian dollar is a sell. Just how big a sell will depend on how successful Beijing is in reflating the Chinese economy.

China's CPI growth slows to 1.8 pct in July

Fri Aug 10, 2012 04:24am GMT

China's consumer inflation eased to its lowest rate in two and a half years in July, giving the government more leeway to loosen credit to spur the slowing economy.

The Consumer Price Index (CPI), a key gauge of inflation, grew to 1.8 percent year on year in July, the slowest rate since February 2010, the National Bureau of Statistics (NBS) announced Thursday.

The rate was 0.4 percentage points lower than the figure for June.

The Producer Price Index (PPI), a main gauge of inflation at the wholesale level, fell 2.9 percent in July from a year earlier.

The easing inflation is believed to be a result of the base effect. The CPI growth rate hit a 37-month high of 6.5 percent in July last year before gradually retreating as China's economy slowed for eight quarters in a row.

China July official factory PMI slips to 50.1, lower than expected

Wed Aug 1, 2012 03:36am GMT

China's official factory purchasing managers' index (PMI) fell to an eight-month low of 50.1 in July, suggesting the sector is barely growing, while a rival HSBC survey indicated the more market-sensitive private sector is starting to recover.

The HSBC PMI rose to a seasonally adjusted 49.3, its highest level since February and little changed from a flash, or preliminary, estimate of 49.5.

With both PMI readings around 50 -- a threshold dividing expansion from contraction -- the surveys signal that the private and state-backed parts of China's vast factory sector are stabilising - albeit at a relatively low level of growth.

"It is clear that the manufacturing sector is doing very poorly, and requires policy support," Dariusz Kowalczyk, senior economist at Credit Agricole-CIB in Hong Kong said.

"However, we want to highlight the fact that such levels of sentiment are still consistent with positive growth of industrial output," he wrote in a note to clients.

Indeed, both the official PMI and the HSBC version showed factory output at 50 or above. Government data showed industrial output in June rose 9.5 per cent from a year earlier.

Shanghai copper at lowest in over 1 mth on demand fears

Mon Jul 23, 2012 07:44am GMT

Copper prices retreated on Monday amid growing concerns of a spreading debt contagion in the euro zone as Spain risks becoming the fourth country in the bloc to seek a sovereign bailout, denting the outlook for metals demand worldwide.

Worries about the health of the global economy pushed Shanghai copper futures down more than 2.5 percent, bringing prices to their lowest since June 29. The most active November copper contract dropped as low as 54,540 yuan ($8,600) per tonne, its biggest percentage fall since June 4, before recovering some ground by the midday trading break.

Three-month copper on the London Metal Exchange had fallen 0.6 percent to $7,503.50 per tonne by 0418 GMT, extending losses after a decline of 2.4 percent in the previous session, the most since June 21.     

"Shanghai copper is mostly playing catch up with London copper, which fell steeply on Friday due to concerns about the Spanish economy," said a Shanghai-based trader. "Chinese investors are also more sensitive to bad news lately, given that China's economy is evidently slowing down while physical copper demand has been sluggish as well."

Looking forward, market players said they expected major governments to introduce more stimulus to stabilise the world economy, which has been dented by slowing growth in China, a shaky recovery in United States and mounting debt problems in the euro zone. Such policies are expected to boost metal prices, at least temporarily.

Investors grew jittery about Spain's finances after the tiny region of Murcia said it would seek financial assistance from the central government, and media reported that half a dozen local governments were ready to follow in the footsteps of Valencia, which has already requested help from the central government to stay afloat. 

Elsewhere in the euro zone, Greek Prime Minister Antonis Samaras said the country was in a "Great Depression" similar to the American one in the 1930s, two days before international lenders arrive in Athens to push for additional cuts needed for the debt-laden country to qualify for further rescue payments to keep it afloat.

Traders are awaiting manufacturing data from China and Europe, due on Tuesday, for further clues on the health of the global economy and its implications for metals demand.

"The next trading cues we are looking forward to are news of new stimulus measures in China and the United States, and concrete measures to deal with Spain's problems," said an analyst with a international trading firm. "The next stimulus measure to watch is an expected Bank reserve ratio cut by China.

But we don't think this will be rolled out in July since it would be too soon after the last interest rate cut."

The grim economic backdrop offset an International Copper Study Group report on Friday that said the global refined copper market was in a 384,000-tonne deficit from January to April 2012, up sharply from a 26,000-tonne deficit during the same period of 2011.

The report implied some support from fundamentals for copper prices at current levels, but bearish market sentiment and global economic uncertainties are weighing on the demand outlook and discouraging investors from buying.

China's Baotou plans to start rare earths trading exchange

Mon Jul 23, 2012 03:24am GMT

China's Baotou Steel Rare-Earth Hi-Tech will join six other firms to invest a total of 70 million yuan ($10.98 million) to start a rare earths trading platform in early August, the firm said in a statement late on Friday.

Each shareholder will invest 10 million yuan and hold around 14.29 percent stake in the company, said Baotou Rare Earth, China's top rare earths producer.

Baotou said the exchange will help to establish a unified physical trading platform, allowing more transparency in prices.

China is the world's top rare earth producer and accounts for more than 95 percent of the global output. The exchange will help the country exert more control over the pricing of 17 strategically important rare earth metals on the global market.

Currently, prices in China are published by several independent consultancies and most of the metals have fallen over the past few months due to weaker demand.

The exchange will be located in Baotou city in China's Inner Mongolia region, home to nearly half of the world's light rare-earths production, Baotou said.

Chinese GDP growth slows to 7.6%

Fri Jul 13, 2012 11:36am GMT

China’s growth fell to 7.6 per cent in the second quarter, its slowest since early 2009, as a property market downturn and weak exports weighed on the world’s second-biggest economy.

Over the past two months, as evidence of the slowdown has mounted, the government has shifted its policy to a pro-growth stance, which analysts say is likely to bring about a recovery in the second half of the year.

“The expectation for weakness in the second quarter was pretty strong. But the investment number is the surprise. There appears to have been a significant pick-up. That is policy beginning to work”, said Ken Peng, an economist with BNP Paribas in Beijing. “We are looking for a small rebound in the third quarter and a bigger rebound in the fourth quarter.”

The year-to-date investment figure jumped to 20.4 per cent last month from 20.1 per cent in May, an indication that the increase in investment in June alone must have been considerably stronger, following on the heels of the government’s moves to stimulate the economy.

The Chinese central bank cut interest rates last week, the second time in less than a month. Premier Wen Jiabao has also said that the government will look to increase public investment in order to stabilise the economy.

A steep drop in inflation, to just over 2 per cent from last year’s high near 7 per cent, has cleared the way for more aggressive policy easing.

The latest bank lending figures, published on Thursday, confirmed that the government is clearly trying to support growth. New loans reached Rmb920bn in June, up from Rmb793bn in May and more than expected.

Yet officials have also repeatedly vowed that they will not unleash a massive stimulus programme as they did in late 2008 when the global financial crisis erupted. That boom in spending and bank lending fuelled debt worries that China is still trying to contain as well as a property bubble that it has been trying to deflate.

Mr Wen has also been adamant that the government will not relax the measures that it has used to dampen property speculation, fearful that a big rebound in already lofty housing prices could ensue.

If the second quarter does indeed prove to be the trough of this economic cycle for China, commentators who have described the current downturn as a soft landing would have some vindication.

The peak-to-trough drop in growth would be 4.5 percentage points from 2010 to now. That contrasts with a plunge of 8 percentage points in the previous downturn, from 2007 to the start of 2009.

China's CPI hits 29-month of 2.2% in June

Mon Jul 9, 2012 11:52am GMT

Consumer price inflation in China accelerated at the slowest rate since January 2010 in June, as food costs eased, official data showed on Monday.

In a report, China’s National Bureau of Statistics said consumer price inflation rose by a seasonally adjusted 2.2% in June, slowing from 3.0% in May.

Analysts had expected Chinese CPI to rise by 2.3% in June.

Month-on-month, the consumer price index fell 0.6% in June, compared to a 0.3% drop in May.

Politically sensitive food costs decelerated to 3.8% from May's 6.4%.

The report also showed that producer price inflation fell by 2.1% in June, compared to expectations for a 1.9% decline. Producer price inflation declined 1.4% in May.


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