ISSN 0166-9645 01 THE SECRETARY GENERAL MESSAGE FROM · Celik Industry ve Ticaret A.Þ (Diler),...

Greetings from SEAISI.

At the end of November 2019, SEAISI Board of Directors approved the SEAISI Strategic Plan 2020. This plan is the result of brainstorming, analysis and discussion amongst the SEAISI Secre-tariat team during Q3 2019.

There are a few key areas that I would like to highlight to all readers.

First, how does SEAISI add value to members?

1. Monitor the Iron and Steel Industry Landscape and create awareness amongst members so that they understand the trends that impact or will impact the industry. 2. Collate, Analyse, Convert Data into Useful Information, to help members understand the implications of such information on the industry and businesses. We present our analysis, conclu-sions and analysis in our events as well as to various stakeholders. 3. Bring Knowledge and Skills to Members, through events, activities and training programs. This is to help upgrade the workforce in the steel industry to the next level. SEAISI also explores new areas impacting the industry through special projects to bring new ideas to members in the industry. 4. Support the Board, National Committees and All Other Committees, towards achieving the Vision, Mission and Objectives. SEAISI provides the platform that enables steel industry activities across the region.

Second, what is next for SEAISI? Working towards being “A World Class Steel Institute to contribute to sustainable steel value chain in ASEAN”, SEAISI will focus on the following for next year:

tee Secretary to see how you can get involved.

If you are unable to participate, and would like to give us some ideas or suggestions, please feel free to give us feedback at [email protected].

For the year that has gone by, SEAISI would like to thank our Directors, National Committees and Committee Members for all the effort and support that they have given to make all our events and activities successful. We thank all presenters, advertisers, sponsors, delegates and many others for participating in our events.

SEAISI will like to wish you and your family a Merry Christmas and a Happy New Year. Be safe and see you next year!

YEOH WEE JIN

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

NEWSLETTERISSN 0166-9645

2019DEC

MESSAGE FROM THE SECRETARY GENERAL 01

SOUTH EAST ASIA IRON AND STEEL INSTITUTE

1. Digitalisation@SEAISI. The digitalisation effort aims to expand SEAISI’s services online so that SEAISI’s contents are more easily available to members. These include an online Library system, Online Store, Directory, Statistics and other SEAISI services. The online Library system, for example, will allow to access articles, journals and other materials which are previous-ly not readily accessible. We will build our systems phase by phase to enhance our services to our members. 2. For the Conference and Exhibition, the Committee Members and SEAISI team are already working on bringing in more new and interesting content into the SEAISI Conference and Exhibition. We like to see the event being attended by more Senior Management Repre-sentatives as well as more delegates. 3. The SEAISI Forum focuses more on Steel Consuming Sectors, such as the Construction sector. The Committee Members and the SEAISI team are working on the formula make this as successful as the Conference. We will reveal more details as we firm up our plans for the Forum. So, stay tuned. 4. The Board of Directors also empowered the Committees to introduce more content, events and activities to further add value to members. Where practical, we will initiate special projects to gain insights into the regional steel industry and related matters. 5. SEAISI will continue to build and strengthen relationships with Partners such as associations, institutions and the academia, as part of our mission to educate and advocate sustainable development of the ASEAN steel value chain. 6. Lastly, but not the least, the SEAISI team will continue to improve our services and platform to be more effective and efficient.

While there are challenges to overcome, I believe SEAISI is in exciting times, that will see our services take step further.

During my past involvement in SEAISI (prior to becoming the Secretary General), it was evident to me that participating in SEAISI event and activities has given me macro understanding and knowledge of the steel industry in the region, complementing my industry experience in so many aspects. So, for those who are interested in being part of the SEAISI team, please talk to your c ountry’s National Commit-

2 SEAISI Newsletter, December 2019

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

Australia to investigate rebar imported from Turkey ..................... 2

2020 PREVIEW: Political continuity brings optimism to Indonesia’s

steel sector ......................................................................................... 2

Indonesian scrap buyers remain cautious even after inspections

resume ................................................................................................ 4

Indonesia resumes scrap imports ..................................................... 4

Nippon Steel to shutter more blast furnaces to reduce cost ........... 4

India, Japan sign high-grade steel cooperation agreement ............. 5

JFE to increase investment in China joint venture ............................ 5

Japanese exports to Asean slump ..................................................... 5

POSCO’s renewed bid for steel plant in India facing opposition

from local worker ................................................................................ 5

Lion Industries posts fourth straight quarterly loss of RM110.6m ... 6

Kinsteel gets creditors’ nod for regularisation scheme ................... 6

SteelAsia CEO asks govt to ban induction furnace ............................ 7

US duties on steel to have minor effect, minister says ..................... 7

Analysis: Thailand’s steel sector under pressure as economy

slows .................................................................................................... 8

Anti-dumping shields for steel renewed ........................................... 8

Dung Quat steel project likely change Hòa Phát’s market share ..... 9

Vietnam’s Formosa Ha Tinh raises HRC, wire rod offers for

February .............................................................................................. 9

US hits Vietnam with circumvention duties ...................................... 9

Vietnam’s Posco SS Vina sells rebar line to focus on steel

sections business ............................................................................. 10

India’s steel demand seen slowing in 2019-20 ............................... 10

JSW’s crude steel production declines 7% in November ................ 10

India’s Nov steel production falls 3% on year amid weak demand 10

ArcelorMittal says it has completed acquisition of Essar Steel ..... 11

China’s finished steel output up 10.4% in November ..................... 11

China: Steel output to taper off in 2020 .......................................... 12

ASIA HRC: Chinese products becoming more competitive .............. 12

Research body: Crude steel output in China expected to drop

next year ........................................................................................... 13

China’s construction starts see first fall since 2017 ....................... 13

More upside eyed in US ferrous scrap export market ..................... 13

US may drop antidumping duties on Japanese hot-rolled coil,

reinstate Turkish duties .................................................................... 14

Analysis: ASEAN steel demand may take 20 years to match new

capacity despite construction boom ............................................... 14

Brief on ship building industry in Indonesia .................................... 15

2020 SEAISI Conference & Exhibition: Call for papers ..................... 16

A U S T R A L I A

I N D O N E S I A

Australia to investigate rebar imported from Turkey

The Australian Anti-Dumping Commission announced on 10December that it plans to start an investigation into imports ofTurkish rebar in the coming 20 days, Kallanish notes. Theinvestigation was applied for by InfraBuild (Newcastle), whichwas formerly Liberty OneSteel (Newcastle).

This is the second time that the commission is planning toinvestigate imported rebar from Turkey. In June 2019, it decidedto not impose anti-dumping duties on Turkish rebar includingproducts from Çolakoðlu Metalurji A.Þ. (Colakoglu), Diler DemirCelik Industry ve Ticaret A.Þ (Diler), Habaþ Sinai ve Tibbi GazlarIstihsal Endüstrisi A.Þ. (Habaþ) and Kroman Çelik Sanayi A.Þ.(Kroman).

Apart from Turkish rebar, the Anti-Dumping Commission alsoannounced it would extend the investigation time for zinc coated(galvanised) steel exported to Australia from China, India, Korea,Malaysia, Taiwan and Vietnam. Meanwhile, it also extended timefor the investigation on aluminium -zinc coated steel exported toAustralia from China. The statement of essential facts will bepublished before 9 April 2020.

The goods subject to anti-dumping investigation include flat steelcoated with zinc from China’s Angang Steel or Benxi Iron andSteel (Group) International Economic & Trading, and Taiwan’sYieh Phui Enterprise. In relation to India, Malaysia and Vietnam,the goods include steel flats coated with zinc from all exporters.

In terms of the aluminum-zinc coated steel, the investigatedproducts include flat rolled products of iron and non-alloy steelof a width equal to or greater than 600mm, plated or coated withaluminium-zinc alloys, not painted whether or not including resincoating.

Kallanish, December 10, 2019

2020 PREVIEW: Political continuity brings optimism to Indonesia’ssteel sector

The re-election of incumbent Indonesian President Joko Widodofor a second five-year term has made market participantsoptimistic about an upswing in steel demand from 2020 aftermarket conditions disappointed in 2019.

“I expect steel demand to improve next year when the uncertaintyin the market fades with the resumption of existing infrastructuredevelopments and the launch of fresh projects,” an Indonesiantrader said.

The confluence of multiple headwinds including a period ofprolonged political uncertainty after April’s election andallegations of fraudulent voting and vote-counting, followed bylower demand during the Islamic holy month of Ramadan andthe subsequent rainy season had contributed to malaise in thecountry’s steel industry.

SEAISI Newsletter, December 2019 3

Sources in Indonesia told Fastmarkets the finalization of the2020 state budget in late September and the appointment ofJokowi’s cabinet ministers in October were expected to be thefinal hurdles before a recovery in steel demand from governmentinfrastructure projects.

Indonesia increased its state budget for 2020 to more than 2,500trillion rupiah ($180 billion), up 8.5% year on year, with 419.2trillion rupiah earmarked for infrastructure development, anincrease of 4.9% from 2019.

The Indonesian president, commonly known as Jokowi, haspledged continued infrastructure development with hisadministration announcing in May plans to spend close to 6,000trillion rupiah in 2020-2024 for such purposes.

But market participants were concerned the country’s wideningbudget deficit could hamper such plans because legal regulationsprohibit the deficit from exceeding 3% of the country’s grossdomestic product (GDP).

Indonesia’s fiscal deficit rose to 289.1 trillion rupiah - or 1.8%of the country’s GDP - at the end of October, with the governmentlikely to miss tax revenue objectives after collecting 70% of thetargeted amount from January-October 2019, according to thecountry’s finance ministry.

The Indonesian government anticipates the deficit to hit up to2.2% of the country’s GDP at the end of 2019.

Jokowi presided over the development of 4,700 trillion rupiah ofinfrastructure projects including new roads, airports, seaportsand the country’s first mass rapid transit system to improveconnectivity within the sprawling Indonesian archipelago ofmore than 17,000 islands during his first five-year term beginningin 2014.

The Indonesian government believes improved connectivitywithin the country will facilitate economic growth and distributewealth beyond the capital city of Jakarta and the island of Java,which houses more than half of the country’s population.

During this period, Indonesia’s steel consumption hit 15.1 milliontonnes in 2018, up 17.05% from 12.9 million tonnes in 2014,data from the Indonesian Iron & Steel Industry Association (IISIA)showed.

Despite being Southeast Asia’s largest economy, Indonesia’sfinished steel use per capita of 56kg in 2018 lagged behind thoseof regional peers Malaysia, the Philippines, Singapore, Thailandand Vietnam, which were in the range of 101-504kg, according toWorld Steel Association data.

Capital city relocationJokowi’s plan to relocate Indonesia’s capital city from Jakarta toEast Kalimantan in Borneo was viewed positively by marketparticipants for the potential growth it could spur in steel demandin the long run.

“Both flat and long steel demand will be boosted by the relocationproject because of the new infrastructure requirements as wellas land, air and sea transport that will be necessary to supportthe movement of people and goods,” a second Indonesia-basedtrader said.

The IISIA expects growth in steel demand in the country to reach22.7 million tonnes by 2024, an increase of more than 50% from2018.

Indonesia’s rebar consumption stood at 3.4 million tonnes in2018, up by 64.3% from 2014, while demand for hot-rolled coil,cold-rolled coil and plate totaled 8.38 million tonnes in 2018,rising by 5% from 2014, IISIA data showed.

“I believe it will take up to 20 years for the relocation to becompleted so improvements in steel demand will be gradual,” asource at an Indonesian long steel producer said.

The government intends to start construction of the city from2021 and begin the relocation of administrative offices by 2024.

Yet several market participants questioned the feasibility ofrelocation beyond Jokowi’s final term as president.

“The project will be very challenging to complete because thelocation of the new capital is underdeveloped and on a differentisland,” the first Indonesian trader said.

A source at a second Indonesian long steel producer said that itwill be difficult for the Jokowi government to pull off this projectwithin his final term and it will just be a waste of resources if thenext president does not support the relocation plan

Foreign investmentsInvestments made by foreign companies into Indonesia are alsoexpected to bolster steel demand, with South Korea leading theway after a trade pact was agreed between the two countries inlate November.

Known as the South Korea-Indonesia Comprehensive EconomicPartnership Agreement, the deal will see Indonesia removingtariffs on various commodities including steel, automobiles andvehicle parts.

South Korean conglomerate Hyundai Group subsequentlyannounced an $1.55 billion investment into a vehiclemanufacturing plant with capacity of up to 250,000 units peryear by 2030.

Indonesia is Southeast Asia’s second-largest motor vehiclemanufacturer. Still, production of 831,708 units in January-August 2019 was down 5.8% from the first eight months of 2018,according to data from the Association of Southeast Asian Nations(Asean) Automotive Federation.

Southeast Asia’s biggest motor vehicle manufacturer by volumeis Thailand, which produced 1,403,153 units in January-August2019, 1.3% lower year on year.

Additional steelmaking capacitySouth Korean steel major Posco also declared its interest ininvesting an additional $4 billion into PT Krakatau Posco, itsjoint venture with Indonesia’s state-owned mill PT Krakatau Steel,to increase steelmaking capacity to 10 million tonnes per yearby 2025.

PT Krakatau Posco also intends to start marketing 750,000 tpyof HRC products next year while negotiations for CRC productscontinue.


There will also be additional capacity next year for 3.5 milliontpy of steel billet, slab, rebar and wire rod from Chinese-backedPT Dexin Steel Indonesia in Central Sulawesi province, whichcould grow Indonesia’s volume of steel exports.

Finished steel exports from Indonesia rose 42% year on year to1.6 million tonnes in the first half of 2019, of which 1.5 milliontonnes were flat steel products, according to data from the SouthEast Asia Iron & Steel Institute (Seaisi).

“[PT Dexin Steel Indonesia] will be more competitive as anexporter than selling into the domestic Indonesian market becausefreight from Sulawesi to Java costs about $25-30 per tonne, whichis higher than from other sources like Malaysia and Russia,” thesource at the second long steel producer in Indonesia said.

Market sources estimate freight costs to Indonesia from Malaysiaand Russia’s Far East ports at $15-25 per tonne.

China’s state-owned Sinosteel Corp is also exploring a $2.7 billioninvestment to establish a steel plant in Tarakan, NorthKalimantan.

“The project is strategically located because it can supply newinfrastructure developments on the same island, to Java in thewest and also other parts of the country in the east while alsobeing competitive as an exporter due to its close proximity toother developing countries in Southeast Asia,” the secondIndonesian trader said.

Fastmarkets’ daily price assessment for steel billet, import, cfrSoutheast Asia was $445-446 per tonne on Monday December16. Prices had been rising steadily since October 10, when theyfell to a three-year low of $390-395 per tonne.Fastmarkets’ weekly price assessment for steel slab imports, cfrSoutheast Asia and East Asia was $395-410 per tonne onDecember 16. These compare with October 21’s $370-385 pertonne, which is also the lowest prices have fallen in three years.

Metal Bulletin, December 17, 2019

Indonesian scrap buyers remain cautious even after inspectionsresume

Indonesian ferrous scrap buyers are still cautious aboutpurchasing imported cargoes even after state-owned surveyorKSO Sucofindo resumed inspections this week.

“Some traders are rushing to buy cargoes to supply Indonesiancustomers again but not all buyers are in the market yet,” anindustry source in Singapore told Fastmarkets on TuesdayDecember 17.

Negotiations for containerized ferrous scrap into Indonesia haveresumed, with a transaction for 1,000 tonnes of plate & structural(P&S) scrap at $300-305 per tonne cfr Indonesia done this week.

“The Indonesia ministries are still meeting and there will befurther updates soon,” a seller in the United States toldFastmarkets.

Scrap shipments to Indonesia had died off in recent months afterthe Indonesian ministry of trade declared new regulations in

November seeking to regulate the inflow of waste materials,including ferrous scrap.

Market participants said any new regulations that will bepublished will probably have the impurities limited increasedto 2% from the current 0% as well as allow the transshipment offerrous scrap if the seals on the containers are not broken.

But other key restrictions such as having the exporter registeredin the country of origin of the ferrous scrap supply may remainin place.

“So the regulations remain quite unclear but, still, inspectionshave resumed and that is a key factor,” another industry sourcein Singapore told Fastmarkets.


Indonesia resumes scrap imports

Indonesia has resumed the inspection of ferrous scrap imports,allowing these to resume, Kallanish learns. The easing allows akey importer to resume scrap delivery for the first time in almosta month, but international traders still face problems.

Indonesia had imposed a ban on all waste product imports thatdid not meet very strict impurity requirements. That ban waslifted on Tuesday however.

For metal scrap, advice given by inspection companies and seenby Kallanish suggests that oxidation from normal exposure willno longer count as an impurity. The requirement for impurities isstill officially 0.5%. But barring radioactive and other non-metallic impurities, materials may be allowed to be passedoutside if this minimum.

Imports of scrap had been suspended since late November. Newregulation meant that all waste product imports across allcommodities had to meet strict purity requirements. For ferrousscrap, these were impossible to meet. A 0.5% impurity limit inparticular was a problem as rust and other minor impuritieswere not excluded.

International trading houses however may face a difficulty.Traders shipping scrap to Indonesia must be registered in thesame country as the country of origin of the scrap cargo. Thatimplies no transhipment of scrap cargoes and no shipment fromthird countries.


Nippon Steel to shutter more blast furnaces to reduce cost

Japanese steelmaking giant Nippon Steel Corporation (NSC)announced that it plans to shut more blast furnaces, in line withits strategic plan to reduce costs of operation. The companyexpressed fears that its annual profit may get impacted by hugedrop in steel demand and prices.

The company has already decided to shut two out of the totalfifteen blast furnaces in Japan by March 2024. Further closures

J A P A N


could lead to significant reduction in steel making capacity ofthe company in the Asian region. Meantime, NSC declined tocomment on potential job cuts on account of furnace closures.Commenting on the future prospects, Nippon Steel Executive VicePresident Katsuhiro Miyamoto said that the company plans toconsolidate all of its facilities including blast furnaces in orderto bring down fixed costs. The moves are an attempt to mirror thesharp decline in domestic steel demand and the constraints onexports on account of ongoing trade conflict among countriesworldwide, he noted.

Earlier in November, NSC had lowered its profit forecast for thecurrent year, mainly on account of compressed export marginsdue to falling steel process coupled with production disruptionsat its facilities as a result of strong typhoon and fire. In addition,it plans to restructure the domestic operations, by consolidatingits 16 domestic business units into six steel units.

Scrap Monster, December 10, 2019

India, Japan sign high-grade steel cooperation agreement

Prime Minister Narendra Modi has approved the signing of aMemorandum of Cooperation (MoC) between India and Japan tostrengthen cooperation in the steel sector, Kallanish learns froman Indian steel ministry statement.

“The ‘India-Japan Steel Dialogue’ envisages enhancement ofmutual understanding to secure sustainable growth in the steelsector,” the ministry says. “The Dialogue aims to examine allaspects of cooperation in steel sector including promotion ofinvestment in high grade steel making and finding new avenuesof steel usage in India.” The agreement will facilitate high-gradesteel production capacity construction in India.

During a visit to Japan in October Indian Minister of Petroleumand Natural Gas & Steel Shri Dharmendra Pradhan encouragedmajor Japanese steelmakers to invest in India (see Kallanishpassim). Last month, meanwhile, Maruti Suzuki and ToyotaTsusho Group said they plan to set up in India a vehicledismantling and recycling joint venture to support the growingrequirement for scrap from increased EAF steelmaking in thecountry.


JFE to increase investment in China joint venture

Japan’s JFE Steel plans to increase investment in and increasethe capacity of its joint venture subsidiary in Guangdongprovince, Baowu JFE Special Steel, Kallanish notes.

The steelmaker will reportedly invest JPY 12 billion ($110 million)in the auto sheet plant, according to market sources. JFE willrebuild one of the plant’s existing three production lines toincrease its production capacity from 800,000 tonnes/year to1.2 million t/y. The line’s main product is high-tensile galvanizedsteel sheet for automotive manufacturing.

Baowu JFE Special Steel was established in November. Thecompany processes semi-finished steel products imported fromJapan into products for automobiles and home appliances tosell domestically in China.

Market sources comment that although the Chinese automotivemarket is still sluggish, sales by Japanese car companies suchas Toyota remain strong, meaning some Japanese companiesremain optimistic about investment in China.


Japanese exports to Asean slump

Japanese iron and steel export volumes fell again in November,according to preliminary customs data released by the Ministryof Finance. Growth in volumes to Korea could not outweigh aslump in volumes to Asean, Kallanish notes.

In November, Japan exported 2.689 million tonnes of iron andsteel, down -8.5% year-on-year, the preliminary figures show.That would also be down from final exports of 2.866mt in October.Exports to Asia over all slumped -14% y-o-y to 2.089mt.

South Korea remained an island of growth amid a sea ofretraction. Exports there were up 3.4% y-o-y to 453,000t. Exportsto China meanwhile were down -5.6% to 441,000t. Asean was theweakest market, with volumes slumping -17.8% y-o-y to 868,000t.

Japanese iron and steel imports meanwhile were up just 0.3% y-o-y at 708,729t in November. Imports from Korea slipped -3.4%to 334,171t, while imports from China jumped 9.1% to 124,062t.

Kallanish, December 2019

POSCO’s renewed bid for steel plant in India facing oppositionfrom local workers

In September this year, POSCO officials had a meeting withmanagement of Rashtriya Ispat Nigam Ltd. (RINL), a public steelproducer based in India, with regard to its plan to set up a jointventure (JV) steel plant in India.

It was the POSCO officials’ third visit to RINL this year, whichsuggests that the Korean steel giant is keenly interested inpromoting its JV plans.

POSCO’s interest in the Indian steel market is not new. In 2005, itsigned a memorandum of understanding with the Odishagovernment to build a US$12 billion steel plant at Jagatsinghpurin Odisha that can produce 12 million tons of steel per year.

But the plan was not realized due to various obstacles, includingdifficulties in land acquisition, delay in environmentalclearances and protests by local residents. The MOU expired in2010 and was not renewed again.

POSCO has recently renewed its bid to construct a steel plant inIndia, which is an attractive market with a prosperous economy,plenty of raw materials and favorable regulatory environment.

This time, POSCO is pushing for a JV with a local steel producerinstead of building a steel mill on its own. It intends to joinhands with RINL for manufacturing of value-added special gradeof steel.

K O R E A


RINL, which is also known as Vizag Steel, operates an integratedsteel plant that can produce 7.3 million tons of steel per year.The RINL plant in Visakhapatnam approximately covers an areaof more than 22,000 acres, and POSCO envisions a JV steel plantset up on RINL’s premises.

Yet POSCO’s plans are facing stiff opposition from RINL workers.According to media reports from India, all the trade unions ofRINL called for a rally to register their protest against the proposedJV between RINL and POSCO.

The trade unions will stage a day-long dharna, a non-violent sit-in protest, on Dec. 13 at Amaravati, the new capital city of AndhraPradesh, a state in southern India. The representatives fromvarious political organizations have been invited for the protest,which coincides with the winter session of the State LegislativeAssembly.

Steel Plant Employees’ Union president J. Ayodhyaram releaseda poster on Dec. 3 for the “Chalo Amaravati” program. “Effortsare being made to allot the surplus land of the RINL to POSCO onthe pretext of the joint venture,” he was quoted as saying. “Insteadof a joint venture with a foreign company, we are in favor ofexpanding capacity on our own by engaging a foreigncollaborator.”

The trade unions are planning to mobilize around 3,000employees for the Amaravati program.

In July this year, senior POSCO officials met Indian Steel SecretaryBinoy Kumar and submitted an investment proposal. The Indiangovernment has been seeking to attract foreign direct investmentunder the “Make in India” initiative, which was launched byPrime Minister Modi.

Business Korea, December 5, 2019

Lion Industries posts fourth straight quarterly loss of RM110.6m

Lion Industries Bhd reported a net loss of RM110.62 million forthe first quarter ended Sept 30, 2019 (1QFY20) versus a net profitof RM19 million a year ago, including a lower margin of its steeldivision, and higher loss from associated companies and jointventures.

This marks its fourth consecutive quarterly loss.

As a result, it registered a loss per share of 16.25 sen from 2.79sen for 1QFY19, Lion Industries said in a filing with BursaMalaysia.

Revenue fell 29% to RM656.4 million from RM926.31 millionlast year due to lower revenue registered by its steel division.

Its steel division reported a loss from operations of RM76.6million against a profit of RM33.3 million last year, due tonarrower profit margin. Revenue for the segment declined 29%to RM580.11 million from RM818.83 million.

The building materials division posted a higher profit of RM1million from RM76,000 last year on higher revenue of RM114.74million, a 56% growth from RM73.7 million previously.

Its profit from other segments, which consists of sales oflubricants, automotive and petroleum products and theprovision of management services and property developmentprojects, reported a loss of RM1.13 million against a profit ofRM1.96 million a year ago. Revenue for the segment fell 18% toRM30.98 million from RM37.77 million a year ago.

On prospects, the group said the operating environment of thesteel industry is anticipated to face increasing challenges inview of the heightening global economic and geopoliticaluncertainties.

It added that the prices of steel products and raw materialsremain volatile while demand from the construction and propertysectors remains low.

“The group will stay vigilant and responsive to market changesand improve its operating performance for the next quarter,” itsaid.

Lion Industries’ shares closed one sen or 3.13% higher at 33 sen,bringing it a market capitalisation of RM224.67 million. It sawsome 1.2 million shares done.

The Edge, December 1, 2019

Kinsteel gets creditors’ nod for regularisation scheme

Kinsteel Group Bhd has secured creditors’ approval for its schemeof arrangement (SOA) to undertake its regularisation exercisewhich involved holders of its corporate guarantees to undertakea massive haircut.

The embattled integrated steel maker announced on Friday thescheme creditors had approved the SOA at the court-convenedmeeting.

Kinsteel said it would proceed to submit an application to thecourt for the outcome of the meeting to be sanctioned through acourt order.

However, there were variations involving the mode of settlementto the non-financial institutions cum corporate guaranteesholders.

It said RM25mil value of irredeemable convertible preferenceshares (ICPS); and RM25mil value of redeemable convertiblepreference shares (RCPS) would be issued to the two partiesinstead of RM5mil in RCPS as announced on Sept 24.

To recap, on Sept 24, Kinsteel had asked the financial institutionsand holders of corporate guarantees to take a massive haircutof its RM1.68bil in liabilities.

Kinsteel, a Practice Note 17 (PN 17) company, had proposed thesecreditors accept a proposed debt waiver amounting to RM1.6bil,representing the balance 95.5% of the scheme liabilities as atthe cut-off date of June 30,2017.

Financial institutions are owed RM815.20mil or 48.5% of theRM1.68bil in liabilities while non-financial institutions andcorporate guarantee holders are owed RM865.60mil or 51.5%.

M A L A Y S I A


The haircut is part of Kinsteel’s extensive regularisation exerciseto reduce its debts by reducing its share capital, fund raising,disposal of land and seel a compromise with its creditors overits RM1.68bil liabilities.

It proposed a reduction of its issued share capital of RM83mil –comprising 1.049 billion shares of which 7.75mil sharesamounting to RM4.20mil held as treasury shares – to RM24.9mil.

The Star, December 16, 2019

SteelAsia CEO asks govt to ban induction furnace

SteelAsia Manufacturing Corp., the country’s largest reinforcingbar producer, asked the Trade Department to impose strictstandards on steel manufacturing technologies such as thecontroversial induction furnace which was banned in China.

SteelAsia president and chief executive Benjamin Yao, thecountry’s representative in the prestigious World Entrepreneurof The Year Awards in June 2020, made the comment in responseto reports that the agency would study the new insights on thesteel-making industry after the Philippine Induction SmeltingIndustry Association presented a position in favor of inductionfurnace.

Induction furnace involves electromagnetic induction to heatand melt iron, steel, copper, aluminum and other metals.SteelAsia, on the other hand, uses modern rolling mills for rebarproduction.

Yao said that if the government would continue to make everybody“happy”, it would not help good technology to survive.

“I hope BOI [Board of Investments] will not take a stand to try tomake everybody happy. I hope they will be proactive in that. TheyYao said the Trade Department should seriously considerimposing a ban on induction furnace not only for the lack ofstandards in producing steel products, but also for the risks toconsumers using substandard rebars.

SteelAsia chief operating officer Rafael Hidalgo said there wereinduction furnace companies operating in the Philippines.

Induction furnace technologies produce 1 million metric tons ofthe total local steel requirement of 11 million MT. Two moresuch plants are under construction in Misamis Occidental andDavao.

“The government has all the facts. They don’t need more facts.They know what’s being done by induction furnace, and theyknow what’s bad about it. The government know who they areand what their violations are. It’s just up to them to act on it. We,as private entities, don’t need to tell them more,” Hidalgo said.

Yao said many operators of induction furnace were cleverentrepreneurs who knew the trade secret in putting up a steelmill without any investments.

“We don’t stand a chance against substandard steel. These IFtechnology which was banned in China and found their way here,

P H I L I P P I N E S

are mostly 10-percent to 20-percent underweight. In the provinceswhere they land, hardware stores have no idea what is standardor substandard, so how can we compete with them,” he said.

The Philippines welcomed the entry of Chinese steel inductionfurnaces despite its heavy contribution to China’s battle againstair pollution.

The Environment Department committed to look into theoperations of five steel mills which were said to be usinginduction furnace to produce rebars.The ASEAN Iron and Steel Council earlier called for the ban ofinduction furnace in the region.

Benjamin Co of Wan Chiong Steel Corp. earlier claimed that Chinadid not ban the use of induction furnace but issues ofovercapacity and regulatory concerns were among the factorswhy the induction furnaces were shut down.

Most of closed induction furnaces found their way to thePhilippines which became a concern for local steel manufacturers.Co said the equipment from these closed IF plants in China couldnot be used in the Philippines because they were not compatiblewith the existing power infrastructure. Philippine power linesrequire 60 hertz of frequency while China power lines require 50hertz.

Trade undersecretary for consumer protection Ruth Castelo saidthe new insights about induction furnace would be studied andvalidated by the Trade Department. “The department, as with allindustries, is committed in studying the steel-making industry,including all technologies at hand,” she said.

Manila Standard, December 12, 2019

US duties on steel to have minor effect, minister says

Anti-dumping duties levied by the US on Taiwanese-origin steelwould have a limited effect on the local industry, Minister ofEconomic Affairs Shen Jong-chin said yesterday.

“After discussing with China Steel Corp and other localbusinesses, we believe that the effects will be moderate,” Shentold reporters in Taipei.

The remarks came after the US Department of Commerce onMonday announced that it would be imposing duties of up to456 percent on corrosion-resistant steel and cold-rolled steel(CRS) products that are manufactured in Taiwan, China and SouthKorea, and shipped to Vietnam for minor processing before beingexported to the US.

The department imposed a 3.66 percent duty on Taiwanese-originsteel and 48.99 percent duty on South Korean-origin steel.

The highest levy of 456 percent applies only to Chinese products.

Taiwanese shipments of steel products to Vietnam have increasedmoderately over the past few years, data published yesterday bythe Bureau of Foreign Affairs showed.

T A I W A N


There is only weak evidence to support the US’ claim that Taiwan,along with its Asian peers, is seeking to evade US duties bydiverting steel shipments through Vietnam, the bureau said.

While Vietnam remains Taiwan’s biggest market for hot-rolledsteel products, shipments declined from 1.21 million tonnes in2016 to 1.18 million tonnes last year, the data showed.

Shipments of CRS products to Vietnam make up only 2.4 percentof overall CRS exports, the bureau said.

Taiwan’s total CRS exports increased from 29,900 tonnes in 2016to 32,500 tonnes last year, the data showed.

The Taiwan Steel and Iron Industries Association yesterday saidthat it would be pointless to try to avoid US duties by processingsteel products in Vietnam before shipping them to the US, asTaiwanese steelmakers would have to bear Vietnamese dutieson top of shipping costs.

China Steel Corp had previously said that its Vietnamese venture,China Steel Sumikin Vietnam Joint Stock Co, which produces CRSproducts, uses raw materials sourced in Vietnam, as it looks toavoid US duties.

Taipei Times, December 18, 2019

Analysis: Thailand’s steel sector under pressure as economy slows

Thailand’s steel sector is showing signs of slowing down in linewith the country’s weakening economy, with exports, productionand domestic consumption all posting declines in latest data.

The country’s production of finished steel fell down 18.7% yearon year over January-September to 5.74 million mt, Iron andSteel Institute of Thailand data showed.

Exports of finished steel fell 15.3% over the same period to 1.11million mt, the institute’s data showed.

Exports comprise around two-thirds of Thailand’s gross domesticproduct, and in its latest data for the third quarter, the NationalEconomic and Social Development Council said it saw drops inmajor products such as “refined fuels, passenger cars and pick-up trucks, chemicals and petrochemicals.”

Thailand’s GDP rose 2.4% in Q3, edging up from 2.3% in Q2 — thelowest since Q3 2018 — council data showed, but prompting adowngrading of its full year 2019 forecast to 2.6% from 2.7%-3.2% earlier.

Amid this, Thailand’s consumption of finished steel fell 5.1%year on year to 14.01 million mt over January-September. Notably,consumption of long finished steel fell 9.5% over the same periodto 5.22 million mt, which can be attributed to weakening demandfor steel bar and structural steel used in construction.

The Thai construction sector grew 2.8% on year in Q3, slowingfrom 3.5% growth in Q2 and 4.6% in Q3 2018.

In line with the slowing economic growth, the Federation of ThaiIndustries or FTI has revised down its projection for the country’svehicle production in 2019 to 2 million units from 2.15 millionunits earlier, citing both lower domestic sales and exports.

For vehicle exports, the FTI cut its full-year outlook to 1 millionunits from 1.1 million units.

“The US-China trade war is the main factor lowering the country’sexports, while overall economic sentiment pulled down GDPgrowth,” Mazda Sales Thailand president ChanchaiTrakarnudomsuk said.

FTI data showed vehicle production fell 2% year on year overJanuary-September to 1.57 million units, while exports fell 4.4%to 821,101 units.

Commenting on the slowdown, the Bank of Thailand’s monetarypolicy committee said in a Q4 outlook: “The Thai economy wouldface higher risks in the following period, especially external risksfrom trade tensions, the economic outlook of China and advancedeconomies that could affect domestic demand, as well asgeopolitical risks.”

“In the short term, we are ready to use monetary policy if needed.We are ready to act if growth fails to meet our expectations,” thebank’s governor, Veerathai Santiprabhob,said November 23.

Platts, December 2, 2019

Anti-dumping shields for steel renewed

The government has extended the anti-dumping duty on cold-reduced carbon steel, both coiled and uncoiled, from China,Vietnam and Taiwan for the next five years to curb supply fromthe three markets.According to Commerce Minister Jurin Laksanawisit, who chairedyesterday’s meeting of the anti-dumping and countervailingcommittee, the panel approved extending the penalties becausethe probe showed that dumping continues unabated.

Thailand has imposed anti-dumping tariffs ranging from 4.22%to 20.11% of cost, insurance and freight (CIF) prices since 2014.The penalty period expired in February 2019 but was extended toFebruary 2020. The latest approval will become effective afterFebruary’s expiry date.

In 2018, Thailand’s total import volume of cold-reduced carbonsteel totalled 1.053 million tonnes (both coiled and uncoiled), asurge from 892,529 tonnes in the previous year.

Last year, Thailand imported a combined 20,835 tonnes of cold-reduced carbon steel in coils and not in coils from the threemarkets: 7,575 tonnes from China, 3,107 tonnes from Vietnamand 10,152 tonnes from Taiwan.

The panel yesterday approved extending anti-dumping duties oncitric acid from China for another five years at a rate of 57.79%of CIF prices. Last year, Thailand imported 1,528 tonnes of citricacid from China.

Thailand’s domestic consumption for steel products is estimatedat 19.3 million tonnes a year, of which 12 million tonnes isimported.

T H A I L A N D


Last Friday, four steel associations called on the government tohelp promote the use of locally made steel products ininfrastructure development.

The groups also asked the government to come up with a policyto support the use of domestically made steel products,particularly steel wire rods and reinforced steel bars, in stateinfrastructure projects.

Megaprojects tipped to require ample steel include the high-speed rail network linking three airports, the Thai-Chinese high-speed railway project, mass transit projects, the U-tapao airportextension and the third-phase development of Laem Chabangand Map Ta Phut seaports.

Bangkok Post, December 19, 2019

Dung Quat steel project likely change Hòa Phát’s market share

Hòa Phát Group’s Dung Quat project will increase steel supply,leading to change market shares of steel firms on the domesticmarket, according to KIS Vietnam Securities Corporation (KIS).

KIS said it will also increase competition among rival steelproviders.

The Dung Qut project will begin next year and will double outputof steel products to 4.35 million tonnes per year in the firststage.

With the current domestic market demand, the increase of supply(equivalent to 18 per cent of the total domestic marketconsumption) would cause short-term oversupply.KIS estimates that Viet Nam’s long steel consumption growth willfall to 5.5 per cent because of weaker consumption comes inboth export and domestic markets.

For the export market, despite the strong growth of steel exportsto Cambodia, reduction of import demand to South Korea andThailand made Vi t Nam’s steel exports in the first 10 monthsthis year increase by 6.5 per cent year on year. Meanwhile, thisfigure in the same period of 2017 was more than 34 per cent.

For the domestic market accounting for 90 per cent of total steeldemand, authorities in some large cities like HCM City havereviewed the approval process of many real estate projects whichhas slowed down steel consumption.

This situation could continue until the end of 2020, KIS said, sosome steel producers have begun to look for new opportunitiesin other cities.

KIS expects long-term steel consumption growth will stabilise at5.5 per cent by 2020.

According to KIS’s estimates, Hòa Phát will supply 3.88 milliontonnes of steel by 2020, leading to its market share at 35 percent.

A similar situation will happen for flat steel products in thesecond phase when the Dung Qut project markets its hot-rolledcoil (HRC) steel.

V I E T N A M

When the second phase is completed midway through next year,it has a capacity of 2 million tonnes of HRC per year.

Vietnam News, December 9, 2019

Vietnam’s Formosa Ha Tinh raises HRC, wire rod offers for February

Major Vietnamese integrated steel producer Formosa Ha TinhSteel has raised the offer prices for its hot-rolled coil productsfor February shipment and delivery by $15 per tonne, trackingthe recent bullish price trend in Asia.

Steel hot-rolled coil import, cfr Vietnam, $/tonne

The steelmaker’s latest offers are as follows:

Skin-pass SAE1006 HRC: $485 per tonne cif (previously $470 pertonne cif)

SS400 and pipemaking-grade HRC: $475 per tonne cif (previously$460 per tonne cif)

SPHT3, S235JR, SG255 and SS490 HRC: $505 per tonne cif(previously $490 per tonne cif)

Non-skin-pass hot-rolled band: $480 per tonne cif (previously$465 per tonne cif).

Asian HRC prices have increased over the past few weeks onsteady demand from re-rollers who were short on materials andhad to purchase imported cargoes, market sources said.

Fastmarkets’ assessment of steel HRC, import, cfr Vietnam, whichmainly looks at Chinese 2-3mm re-rolling-grade SAE1006 HRCand equivalent products sold into Vietnam, was $465-470 pertonne cfr on December 9, up from $457-467 per tonne cfr onDecember 2.

Formosa Ha Tinh also increased its wire rod offers for cargoesto be shipped and delivered in February:Grade-2 mesh-quality mild steel wire rod: $492 per tonne cif(previously $482 per tonne cif)

Mesh-quality wire rod: $510 per tonne cif (previously $500 pertonne cif)

General-cold-work-quality wire rod: $520 (previously $510 pertonne cif)


US hits Vietnam with circumvention duties

The US Department of Commerce has hit Vietnamese-origincorrosion-resistant steel and cold-rolled sheet withcircumvention duties as high as 456.23%, Kallanish learns froma department release.

The department found evidence of duty circumvention in fiveseparate cases involving Vietnamese-origin material that usedSouth Korean and Taiwanese flat-rolled as substrate.

The US imported just $22 million in corrosion-resistant steelfrom Vietnam from September 2012 to the imposition of duties


on South Korean and Taiwanese substrate in December 2015.Subsequently, imports from Vietnam shot up to $933m in thenext 40-month period culminating in April 2019.

Cold-rolled imports likewise rose from $49m in the 38 monthsbetween January 2013 and new duties in February 2016 to $498min the subsequent 38-month period.

The petitioners in the case were AK Steel, ArcelorMittal USA,Nucor, Steel Dynamics Inc, and US Steel.


Vietnam’s Posco SS Vina sells rebar line to focus on steel sectionsbusiness

Vietnam-based Posco SS Vina, a maker of long steel products,has sold its rebar production line to focus on its steel sectionsbusiness, a source close the company said Wednesday.

The Vietnam-based company’s steel plant at Ba Ria Vung Tau,has a production capacity of 1 million mt/year, comprising steelsections and rebar.

“Posco SS Vina has sold off its rerolling facilities for rebarmaking, and going forward, Posco Yamato SS Vina will focus onthe other (remaining) production line, which does sectionproducts like H-Beams,” a source close to the company said.

On December 13, Japan’s Yamato Kogyo Group said it bought a49% stake in Posco SS Vina for about $100 million, reiteratingthat Posco SS Vina had withdrawn from the rebar market.

With the stake purchase, Posco SS Vina will be renamed PoscoYamato Vina Joint Stock Co. Previously, the company was whollyowned by Posco Specialty Steel, whose majority shareholder isPosco of South Korea.

“Any additional production from the melting capacity could thenalso be used for billet production. However, that is dependent onmarket demand,” the source said.

Yamato Kogyo said the purchase will be concluded upon obtainingapproval from relevant authorities.

The Japanese steelmaker expects demand for structural steel togrow in Vietnam and Southeast Asia amid a construction boomin the region. Yamato owns Yamato Steel Co., which makes andsells rolled steel products in Japan and overseas.

Vietnam’s construction sector is projected to grow by 8%-9%annually over 2019 to 2023, data from the South East Asia Iron &Steel Institute, or SEAISI, showed.

S&P Global, December 19, 2019

India’s steel demand seen slowing in 2019-20

India’s steel demand is forecast by some domestic analysts togrow at a slower pace of 5-6pc in the 2019-20 fiscal year ending31 March compared with 7.5pc growth in 2018-19.

Mumbai-based research firm Icra Research, a Moody’s Investorsgroup company, projected steel demand to rise by 5pc from ayear earlier in 2019-20, while Mumbai-based equities brokerageCGS CIMB Securities projected an increase of 6pc.

India’s steel demand growth was 3.9pc during April-October thisyear at 59.05mn t.

“Moderation in steel demand is largely attributable to aslowdown in demand from the automobile and constructionsectors,” said Icra.

India’s monthly steel consumption during September fell by 3pcfrom the previous year to 8.08 mn t. October increased marginallyby 2pc to 8.55mn t.

An increase in steel demand will largely depend on the scale andpace of infrastructure and construction sector spending by thegovernment for the remainder of 2019-20, Icra added.

Demand for long steel products could increase from Novemberonwards because of post-monsoon construction andinfrastructure activity, said Mumbai-based India Ratings &Research, a Fitch group company. But overall steel demand growthfor the second half of 2019-20 may still remain lower on a year-on-year basis, it said.

Argus, December 4, 2019

JSW’s crude steel production declines 7% in November

Crude steel production of JSW Steel declined 7% year-on-year to12.9 lakh tonne in November, the company said in a filing to theexchanges on Monday.

Sequentially, output grew 3%. The blast furnaces, which weretemporarily shut down in October due to a slowdown in autosales because of muted demand, resumed operations in the lastweek of November, the company said.

Production of flat rolled products declined to 9.09 lakh tonne inNovember from 9.15 lakh tonne a year ago, while output of longrolled products declined 14% to 2.99 lakh tonne during thereporting month.

In October and November this year, the steel major suppliedmore than 30,000 tonnes of JSW Neosteel TMT bars forconstruction of metro projects in various cities of the country.

JSW Steel is India’s second largest steel manufacturer with aninstalled steel-making capacity of 18 million tonne per annum.

The company had reported a 29.6% year-on-year rise in its netprofit to 2,917 crore for the September quarter. At 1412 IST, sharesof JSW Steel were up nearly 1% at 256.30 apiece.

LiveMint, December 10, 2019

India’s Nov steel production falls 3% on year amid weak demand

India’s crude steel production for November fell to 8.92 millionmt, down 2.9% year on year and 1.8% lower against October,provisional data released earlier this week by the Joint PlantCommittee showed.

I N D I A


Likewise, finished steel production in November fell to 7.80million mt, 7% lower than in November 2018 and 5.4% downfrom October 2019, JPC data showed.

“The month post festive season is historically a lean month forthe automotive industry. Consumer demand, especially forpassenger vehicles, typically picks up in the year-end that is inDecember,” Veejay Ram Nakra, chief of sales and marketing ofthe automotive division at automaker Mahindra & Mahindra,said.

India’s Diwali festival, which fell on October 27 this year, typicallysees widespread shopping in the weeks leading to the holiday.

JSW Steel said its crude steel output fell 7% on the year to 1.29million mt in November as several of its blast furnaces that wereshut in October due to a slowdown in automobile demandresumed operations in the last week of November.

Tata Motors said its vehicle production for November fell to43,394 units, down 14.5% from a year ago.

Similar declines were seen in India’s finished steel tradingactivity as November imports stood at 429,000 mt, a 37% plungeon the year and down 31.8% from October.

JSW said its November production of rolled flat and long steelproducts stood at 909,000 mt and 299,000 mt, respectively. Theformer dipped 1% while the latter sank 14% against November2018.

However, November’s steel exports rocketed to 867,000 mt, up79.9% from the corresponding month in 2018, but down 8.8%from the prior month. The spike placed India as a net exporter offinished steel products for the fourth month running.With the latest figures, India’s crude steel output from April toNovember hit 73.17 million mt, up 0.9% from the correspondingeight months of 2018.

As for finished steel production over April-November, it came to67.53 million mt, up 1.9% from the year before.

April-November exports amounted to 5.75 million mt, up 33.5%on the year, while imports stood at 5.08 million mt, down 5.3%from the previous year.

“Such trends implied that India was a net exporter of total finishedsteel in April-November 2019,” the JPC said.


ArcelorMittal says it has completed acquisition of Essar Steel

Global steel giant ArcelorMittal on Monday said it has completedacquisition of Essar Steel and formed a joint venture with NipponSteel (AM/NS India) to own and operate the debt-ridden firm.

The deck for acquisition of Essar Steel for 42,000 crore by L.N.Mittal-led company was cleared by the Supreme Court last month.

Aditya Mittal, President and CFO of ArcelorMittal, has beenappointed Chairman of AM/NS India, and Dilip Oommen hasbeen appointed as its CEO.

“ArcelorMittal announces that it has today completed theacquisition of Essar Steel India Limited (ESIL), and simultaneouslyestablished a joint venture with Nippon Steel Corporation (NipponSteel), called ArcelorMittal Nippon Steel India Limited (AM/NSIndia), which will own and operate ESIL,” ArcelorMittal said in astatement.

ArcelorMittal holds 60 per cent of AM/NS India, with NipponSteel holding the balance.

Livemint, December 17, 2019

China’s finished steel output up 10.4% in November

China’s finished steel output grew by 10.4% year-on-year inNovember as mills raised production in response to steel pricegains, according to the National Bureau of Statistics.

Finished steel production reached 104 million tonnes during themonth, which was also up 1.34% from October.

Market participants said that mills had been accelerating theirproduction amid price surges.

Hot-rolled coil prices in eastern China were 3,700-3,720 yuan($530-533) per tonne on Friday November 29, up from 3,500-3,520 yuan per tonne on Friday November 1.

In the same period, rebar prices in eastern China gained 340yuan per tonne to 4,010-4,040 yuan per tonne.

Meanwhile, output of molten iron and crude steel dipped on amonthly basis, but the daily average increased from October, aShanghai-based source said.

The profit of the steel sector as a whole rose in November onprice gains and increased output.

November output- Molten iron: 64.77 million tonnes, up 2.1% year-on-year, down1.24% month-on-month- Crude steel: 80.29 million tonnes, up 4.0% year-on-year, down1.51% month-on-month- Finished steel: 104.02 million tonnes, up 10.4% year-on-year,up 1.34% month-on-month

January-November output- Molten iron: 738.94 million tonnes, up 5.1% year-on-year- Crude steel: 904.18 million tonnes, up 7.0% year-on-year- Finished steel: 1.10 billion tonnes, up 10.0% year-on-year

October output- Molten iron: 65.58 million tonnes, down 2.7% year-on-year,down 2.6% month-on-month- Crude steel: 81.52 million tonnes, down 0.6% year-on-year, down1.5% month-on-month- Finished steel: 102.64 million tonnes, up 3.5% year-on-year,down 1.7% month-on-monthJanuary-October output- Molten iron: 675.18 million tonnes, up 5.4% year-on-year- Crude steel: 829.22 million tonnes, up 7.4% year-on-year

C H I N A


- Finished steel: 1.01 billion tonnes, up 9.8% year-on-year.Metal Bulletin, December 16, 2019

China: Steel output to taper off in 2020

China’s steel consumption is expected to hit a record in 2019,and this would then be followed by a slight decline in demand in2020, a new report by the China Metallurgical Industry Planningand Research Institute released on Thursday said. The reportadded that the country’s crude steel output is also expected tofall in 2020 from 2019.

The country’s steel consumption is estimated to hit 886 millionmetric tons this year, higher by 7.3 percent year-on-year, whiledemand is forecast for 2020 is seen at 881 million tons, down0.6 percent from the level in 2019.

Crude steel output in 2019 and 2020 are expected to reach 988million tons and 981 million tons, respectively.

“The unexpected steel consumption growth in 2019 is mainlydue to an increase in real estate and infrastructure investments,while downstream industries such as machinery, energy, andhome appliance also contributed to the growth under thebackground of a stable growing domestic economy,” said LiXinchuang, president of the institute.

In 2020, demand from some downstream industries includingconstruction, automobile and shipbuilding is seen to likely fall.Demand from the machinery sector is likely to remain stable,while demand from the energy and home appliance sectors isseen rising, he said.

The report predicted steel consumption in the constructionindustry would be 475 million tons in 2020, down 0.6 percentfrom this year. The figure for 2019 is seen hitting 478 milliontons, up 11.2 percent year-on-year.

The automobile industry is expected to consume 50 million tonsof steel in 2019, down 7.4 percent from 2018. Demand in 2020 isseen slipping further to 48.2 million tons, down 3.6 percent year-on-year.

Demand from the shipbuilding sector is expected to see thesharpest year-on-year decline of 11.5 percent. The industry isexpected to consume 11.3 million tons of steel this year, up 3.7from last year, but the figure is expected to slide to 10 milliontons in the following year due to the impact of trade disputesand geopolitical uncertainty.

The machinery industry is estimated to consume 142 milliontons of steel in 2019, an increase of 1.4 percent year-on-year,and is forecast to maintain that demand in 2020.

The home appliance sector’s demand for steel, however, isestimated to climb 3.7 percent year-on-year to reach 14 milliontons next year. Consumption this year is estimated to increase 8percent from last year to stand at 13.5 million tons.

Demand from the energy industry is also forecast to grow about1.5 percent year-on-year to reach 34.5 million tons in 2020. The

estimated consumption of the sector in 2019 is 34 million tons,higher by 3 percent year-on-year.

The report predicted iron ore demand in China at 1.225 billiontons in 2020, compared to 1.264 billion tons in 2019. Pig ironoutput in 2020 and 2019 is seen at 775 million tons and 800million tons, respectively.

Qu Xiuli, deputy head of the China Iron and Steel Association,said at an industry forum in November that China will continueto rein in unwanted steel capacity, especially metal that issubstandard and contributes to pollution.

China Daily, December 16, 2019

ASIA HRC: Chinese products becoming more competitive

Chinese products have become more competitive in the Asianhot-rolled coil market in recent weeks due to cargoes from otherparts of the world being offered into the region at higher prices.

Fastmarkets’ assessment for steel HRC import, cfr Vietnam, whichmainly looks at Chinese 2-3mm re-rolling-grade SAE1006 HRCand equivalent products sold into Vietnam, was $480-485 pertonne cfr Vietnam for the week ending Monday December 16, up$15 per tonne from $465-470 per tonne cfr a week earlier.

Vietnamese buyers booked about 30,000 tonnes of Indian andChinese HRC in the past week at $480-485 per tonne cfr Vietnam.

“There’s no way anyone can get imported HRC below $480 pertonne cfr Vietnam from now on,” a major seller in China toldFastmarkets last Friday.

Offers for Indian, Chinese, Japanese, South Korean and TaiwaneseHRC were all at $485-490 per tonne cfr Vietnam last week, up $5per tonne from the preceding week.

Buyers were bidding at $475-480 per tonne cfr Vietnam.

A price increase by Vietnam’s Formosa Ha Tinh Steel Corp alsosupported market sentiment. The major producer last week raisedits offers for cargoes to be shipped and delivered in February by$15 per tonne.

“Formosa Ha T inh Steel Corp’s price is quite competitivecompared with imported cargoes. It’s quite a good deal especiallywhen it’s delivered to end users directly and is of good quality,”an industry source in Vietnam said.

ChinaSentiment in China remained bullish, especially amid restrictionsimposed on blast furnaces in Tangshan.

Major exporters continued to offer their products at $470-475per tonne fob China.

Fastmarkets’ price assessment for steel HRC domestic, ex-whsEastern China was at 3,880-3,890 yuan ($556-558) per tonnelast Friday, up 120 yuan per tonne from 3,760-3,770 yuan pertonne a week earlier.


Fastmarkets’ steel HRC index export, fob main port China was at$472.84 per tonne on the same day, up $12.20 per tonne week onweek.


Research body: Crude steel output in China expected to dropnext year

China’s crude steel output in 2020 is expected to ease from arecord high this year to 981 million tonnes, a governmentconsultancy said.

The 2019 output for the world’s top steel producer is seen at 988million tonnes, according to Li Xinchuang, president of the ChinaMetallurgical Industry Planning and Research Institute. In thefirst 10 months of the year, China has churned out 829.22 milliontonnes of crude steel, up 7.4% from a year earlier.

Meanwhile, demand is seen rising 7.3% to 886 million tonnes in2019, but was expected to drop from that level by 0.6% in 2020,a report released by the research body showed.

“Steel consumption in 2019 is better than expected mainly dueto rapidly growing infrastructure investment and real estatedevelopment, while industrial production is also generallystable, “ Li said.

Demand for steel in the construction industry is expected to rise11.2% this year to 478 million tonnes, but is seen slipping 0.6%in 2020.Meanwhile, a rapid growth in output this year has stokedworries about China’s years of efforts to cut over-capacity, leadingto a joint probe on production capacity at its steel mills by theNational Development and Reform Commission and othergovernment entities in November.

Reuters, December 16, 2019

China’s construction starts see first fall since 2017

China’s real estate sector data for November suggest steadydemand next year even as the sector shifts into a new phase. Aslowdown in new starts and spreading price weakness helpedfeed into lower futures prices however, Kallanish notes.

China’s completed real estate investment was up 10.2% year-on-year over January-November at CNY 12.127 trillion ($1.736trillion). That was only slightly slower than the 10.3% growthover the first ten months. Real estate sales meanwhile were up7.3% at CNY 13.9 billion. The slow growth of the sector this yearcan be seen in sales by area, which have fluctuated around zerogrowth. Over January-November, 1.489 billion square metres ofreal estate were sold, up just 0.2% y-o-y.

So far this year, developers have sustained their heavy debtburdens by boosting new starts and presales, but that trend isbeginning to reverse. New starts were up 8.6% to 2.052 billion m²over January-November. That implies a -2.88% y-o-y decline inNovember however, the first since 2017.

Completions meanwhile are down -4.5% at 638.46 million m²over eleven months, but November marked the fourth straightmonth of y-o-y increase. Growing completions are better news

for copper than steel, but as long as new starts do not fall rapidly,steel demand could be sustained next year.

The fall in new starts did feed into concerns that steel pricescannot be sustained however. Futures prices slipped as a resulton Monday.


More upside eyed in US ferrous scrap export market

The United States’ ferrous scrap export market has reboundeddue to short supply and increased competition on the domesticand international fronts, with more upside said to be in store.

Turkey continues to source from the US at a slow pace andexporters are taking their time in striking deals, knowing thatsupply is tight and domestic mills are paying a premium pricefor obsolete grades like No1 heavy melt and shredded scrap.

The generous prices being paid are supply driven and not due toTurkish rebar prices, an East Coast exporter said.

Turkish producers increased rebar prices to $445-450 per tonnefob, this source said, adding that the price paid for scrap shouldideally be $275-280 per tonne in order to maintain the $170-per-tonne spread between scrap and finished product.

In the latest US ferrous scrap export sale to Turkey on MondayDecember 9, an East Coast exporter sold an unspecified amountof an 80:20 mix of No1 and No2 heavy melting scrap (HMS) at$295 per tonne and shredded scrap at $300 per tonne. That salewas up by $23 per tonne from the previous sale.

The East Coast exporter did note that this recent sale was forJanuary delivery and Turkish producers were hoping to capturehigher prices on finished steel rebar when they melt this cargo.A second East Coast source that sells to the docks said he expectsthe HMS export price to hit the $300-per-tonne threshold withinthe next week.

The stronger selling price to Turkey has raised dock pricing.Fastmarkets’ assessment of the steel scrap, No1 HMS, exportyard buying price, delivered to yard Boston was at $200 pergross ton on December 11, up by $10 per ton from the previousweek. The same grade was at $210 per ton in New York and inPhiladelphia, both up by $15 per ton.

The No1 HMS export yard buying price in Philadelphia hit a lowof $165 per ton in September and a high of $275 per ton in March,according to Fastmarkets’ pricing records.The new cargo sale to Turkey put Fastmarkets’ steel scrap HMS1&2 (80:20), export index, fob New York at $265 per tonne onDecember 11 and the shredded index at $270 per tonne, both upby $23 per tonne from the previous week.

The HMS 1&2 (80:20) export index, fob New York, has nearlyreturned to the $269-per-tonne level recorded in August. Thelowest point thus far this year was reached in early October, at$190.67 per tonne, while the high was $315 per tonne in mid-February, according to Fastmarkets pricing data.

W O R L D


The West Coast cargo and container market remained quiet. Withno sales, Fastmarkets’ steel scrap HMS 1&2 (80:20), export index,fob Los Angeles held at $255 per tonne on December 11. Theindex’s highest point this year was $326 per tonne in late Marchand the low was $214.50 per ton in early October, according toFastmarkets data.


US may drop antidumping duties on Japanese hot-rolled coil,reinstate Turkish duties

The US may eliminate the antidumping duty order on certain hot-rolled coil exports from Japan as the Department of Commercefound examined companies from the country did not make salesin the US at less than normal value during a period of review,according to a preliminary determination published Wednesday.

Commerce found that Nippon Steel and Tokyo Steel did not makesales in the US below normal value during the 2017 calendaryear. As a result, those companies and other producers andexporters from Japan were assigned a preliminary dumpingmargin of zero.

If finalized, this would be down from current final antidumpingduties of 2.06%-7.64%. These rates were set in June 2019following an earlier review.

Meanwhile in a second preliminary administrative reviewdecision notice published Wednesday, Commerce said Turkey’sColakoglu sold HRC in the US at prices below normal value duringthe period spanning October 1, 2017 through September 30, 2018.

As a result, Colakoglu and other Turkish HRC producers wereassigned a preliminary weighted-average dumping margin of2.55%, up from a current rate of zero assigned in June 2019 in anearlier review.

Turkey’s Erdemir Group was found to have made no shipmentsduring the review period.


Analysis: ASEAN steel demand may take 20 years to match newcapacity despite construction boom

Steel consumption in Southeast Asia could take as long as 20years to catch up with projected capacity hikes in the region, theSouth East Asia Iron & Steel Institute, or SEAISI, said during its2019 ASEAN Iron and Steel Sustainability Forum held in Jakartaearly this week, despite a growing construction sector.

Yeoh Wee Jin, SEAISI’s secretary general was concerned over thecontinuously rising capacity addition in ASEAN without acommensurate uptick in demand.

Apparent steel consumption rose 5.9% year on year duringJanuary-June 2019 “touching 39 million mt,” Yeoh said asconsumption in flat steel increased 8.7%, while long steelconsumption lagged behind with a 3% growth. However, for theyear as a whole, consumption is expected to grow at 4% in 2019to about 80 million mt against 5% growth in 2018.

SEAISI forecasts that ASEAN’s current steel production capacityof 83.7 million mt/year will increase to 144.2 million mt/year by2026, assuming “all integrated mill capacities come on stream.”

Assuming a 4 million mt annual increase in steel consumption,it would take about 18.6-20.1 years to absorb the overcapacity,SEAISI said.

“Many huge integrated mills are starting up in Malaysia,Indonesia, Philippines and Vietnam, with most of the investorsbeing Chinese steel mills,” SEAISI said, noting Chinese steelinvestments in ASEAN started from 2017 onwards.

Chinese steelmakers have sped up their plans for overseascapacity expansion since 2017 in tandem with largely improvedsteel profit margins as a result of overcapacity elimination inChina, S&P Global Platts analysis had showed.

Also, Platts estimates show that about 42.7 million mt/year ofnew overseas crude steel capacity, involving nine projects thatare fully or partly-owned by Chinese companies, are in thepipeline. Five of the nine projects, comprising about 35.5 millionmt/year of capacity, will be built in Southeast Asia.

Among the anticipated new projects are mega-mills withproduction capacities of up to 10 million mt/year.

In the Philippines, China’s HBIS Group plans to build a $4.4 billionintegrated steel plant at Misamis Oriental in northern Mindanaowith a total production capacity of 8 million mt/year. Philippine


steelmaker SteelAsia will partner HBIS for the project. SEAISI datashowed the joint-venture plant could see 4.5 million mt/year ofcapacity coming online as early as 2023.

Another Chinese steelmaker, the Panhua Group, plans to set up a10 million mt/year integrated steel manufacturing plant in thePhividec Industrial Estate of the Misamis Oriental-SpecialEconomic Zone. The Panhua mill could be operational in 2022.Elsewhere, in Malaysia, Hebei-based Wen’an Iron & Steel hasplans for a 10 million mt/year integrated steel mill in Sarawak,which could be ready over 2021-22.

BOOMING ASEAN CONSTRUCTION SECTORSEAISI said the production capacity for long steel products inASEAN is “way above consumption” while “the flat productsmarket is mostly served by imports, hence there appears to beroom for new capacities.”

The construction sectors in Indonesia, Philippines, Thailand andVietnam are expected to support most of the demand for bothflat and long steel products in 2019 and beyond.

SEAISI expects Vietnam’s construction sector to grow by 8%-9%annually over 2019 to 2023 while it foresees Thailand expandingover 3.5%-5% in 2019 to about 5.7% in 2020.

Although Indonesia’s construction sector is expected to slow to5.72% in 2020 from an anticipated 6.82% in 2019, SEAISI said,“2020 is continuation of infrastructure development that hasbeen carried out to support economic expansion and inclusivegrowth in Indonesia.”The Philippines’ construction sector is expected to grow 10.9%in 2019 and the Philippine Iron and Steel Institute reiterated itsforecast for steel demand in 2019 and 2020 to grow at 6% foreach of those years, SEAISI said.

Apart from supporting ASEAN’s demand for steel, the new Chinesemills will increase demand for raw materials as the mills will beblast/basic oxygen furnaces. Also, the fresh production capacitiescould create potential for steel exports.

Platts, November 29, 2019

Brief on ship building industry in Indonesia

The shipping and marine industry in Indonesia is amongst thestrategic industries and is a key steel consuming sector in thecountry. The Indonesian archipelagos, one of the world’s largest,comprises over 17,500 islands, and marine transportationbetween islands is becoming increasingly important. TheGovernment’s mega projects, therefore, must include theexpansion of ports and sea transportation to facilitate tradeand commerce across the geographic landscape of the country.

One of the medium-term national development as stipulated inthe Medium-Term Development Plan for the period 2015-2019was to bring Indonesia to an independent, strong and nationallyinterest-based archipelagic state.

H E A D L I N E S

The mission is realized through the improvement of maritimeperspective and the development of shipbuilding industry in thecountry.

The new government continues its strategic plan to makeIndonesia as the World Maritime Axis with projects to build newports and to accelerate demand for ships in the country.

Ship demand in Indonesia is mainly for small to medium sizeships, namely, passenger ships, coastal ships, petrol vessels,tanker, military ships, container ships etc.

Demand for ships in the country increased significantly to atleast double in volume when compared to the last 4-5 years,along with the requirements from government’s projects and thenew ports in some islands in the country and export to somecountries, such as Philippines.

Surprisingly, ship demand for fishing is not significant. A bulk ofthe demand for fishing ships is for small size ships or boats andmost of them are made from wood.

Although there is a significant increase in ships in the country,domestic shipyards still face the problem from import of secondhand ships, especially from Japan and Korea. There is not muchdemand for imported ships from China due to concern overquality. However, there are some joint venture companies betweenJapan and China which could be a new competitor with cheaperprice and good quality.

State-owned shipyards basically look for domestic steel supply,especially hot rolled plate. However, there is still an import ofother steel materials or parts such as profiles, flat bars, ankle

bars since the volume is too small.

SEAISI, December 2019

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“Steel in ASEAN: New Possibilities, New Challenges and New Approaches”

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ISSN 0166-9645 01 THE SECRETARY GENERAL MESSAGE FROM · Celik Industry ve Ticaret A.Þ (Diler),...

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