ArcelorMittal surprises on debt despite bearish outlook

ArcelorMittal, the world's largest producer of steel, warned on Friday of lower profits this year but surprised the market by managing to cut its debt to the lowest level since the company was created in 2006.

The company, which produces about 6 percent of the world's steel, said it expected core profits to drop to between $6.5 and $7 billion in 2015, from $7.2 billion in 2014, as iron ore prices sapped earnings in its mining business and steel market growth cooled from last year. To read more, visit https://uk.finance.yahoo.com/news/arcelormittal-sees-iron-ore-hit-065351709.html

European coke prices

We now show European blast furnace coke prices on our website. The data indicate recent and historic metallurgical coke prices [f.o.b. export prices] in Euro per metric tonne. Visitors should go to http://www.steelonthenet.com/files/blast-furnace-coke.html.

 

blogger@steelonthenet.com

Eurofer disappointment over Copenhagen

Eurofer today issued a press release, expressing its disappointment over the outcome of the Copenhagen talks. “The Copenhagen deal is a disappointment. We had hoped that an agreement in Copenhagen would have resulted in a global level playing field between industrial competitors worldwide”, said a EUROFER press release issued earlier today.

Eurofer suggests that a number of EU responses would now be appropriate. These include (amongst other suggestions)

• no European financial support for climate change mitigation and adaptation measures to countries which do not agree to international monitoring of all their industrial GHG emissions,
• increases of financial support for R&D of carbon lean technologies in the EU.

blogger@steelonthenet.com

Steelmaking energy costs

For those steelmakers not watching their energy prices, here is a quick reminder of the changes in recent months.

Looking at steam coal prices [and we use the Australian Port Kembla f.o.b. thermal coal cost benchmark] these costs have risen from ~$72/tonne last summer to $193/t today, which is a 168% rise.

Looking at gas prices [and we use Russian natural gas as our cost benchmark, based on the German border price] these costs have risen from $280 per 1000 m3 last summer to $517 per 1000 m3 today, which is an 85% cost increase.

For regular monthly updates on these prices, visit www.steelonthenet.com/commodity_prices.html.

blogger@steelonthenet.com

Strategy and plant closures - Corus tinplate

This week saw an announcement from Corus concerning the possible reduction of capacity in Wales with the loss of up to 300 jobs at the steelmaker's tinplate operation in Llanelli [see http://icwales.icnetwork.co.uk/news/wales-news/2008/04/18/corus-to-lose-300-jobs-at-trostre-llanelli-91466-20784231/]. The planned reduction in capacity and headcount at Trostre it seems, is in response to overcapacity in global demand for tinplate.

The team at http://www.steelonthenet.com/ have for some time considered that - with no iron ore, a dependence on imported coal, high energy costs and expensive labour - there was little chance that UK iron and steelmaking would survive long-term. This view was reinforced by recent EU legislation concerning CO2 emissions, which can only result in further shifts of steelmaking from Western Europe to countries such as Brazil, Russia, India and China.

However, we always beleived that the future of UK steelmaking was in downstream steel products, where know-how, high value added, closeness to markets etc offset some of the economic disadvantages of making steel in the UK. The acquisition of Corus by Tata was, we also thought, a confirmation of our belief in the future of the UK steel sector downstream.

So this week's announcement about closure of downstream capacity at Corus comes as a bit of a surprise. With contraction of tinplate markets, and progressive relocation of automotive production and white goods manufacture to Central and Eastern Europe, it raises the question: what actually will Corus' new owners be left with in the UK, ten years down the line?

All clarifications / readers' comments concerning the strategic options for UK steelmaking welcomed!

blogger@steelonthenet.com

Steelmaking costs 2008

With all the talk of the impending 2008 iron ore price increase, industry observers might be forgiven for taking their eye off other steelmaking costs. But ferrous scrap prices also rocketed in January [see http://www.steelonthenet.com/commodity_prices.html], rising a massive $90/tonne to ~$385-$400 fob Rotterdam for HMS1. Just to add to the misery, natural gas prices also jumped 20% in January [http://www.steelonthenet.com/commodity_prices.html], to reach record levels ...

Anyone betting on a 2008 steel price fall ?

blogger@steelonthenet.com

2008 steelmaking costs rise steeply

As discussions centre on crude oil prices hitting $100 a barrel this week, steel portal www.steelonthenet.com has recalculated current steelmaking costs with the latest inputs prices for scrap, electricity, coal etc.

Even before the expected 2008 price increase for iron ore, steelmaking costs for a typical West European steelmaker have risen some 35-40% in the 12 months since January 2007. Electric arc furnace steelmaking currently costs approx $447 per tonne of liquid steel. BOF steelmaking currently costs $353 per tonne. The figures compare to costs of $321 and $262 respectively exactly one year ago.

The summary cost calculations behind the current figures are shown online at www.steelonthenet.com/steel_cost_eaf.html and www.steelonthenet.com/steel_cost_bof.html. Interestingly, the cost differential between BOF and electric steelmaking has swung towards integrated steelmaking, which is now $94/tonne cheaper [at liquid steel level] than scrap-based steelmaking.

It remains to be seen how this differential will be affected by the current round of negotiations about 2008 iron ore prices. The expected iron ore price rises seem very likely to push mid-2008 BOF steelmaking costs towards $400/tonne liquid steel, and EAF steelmaking towards $500/t meaning that these costs will more than 50% above end-2006 price levels.

It certainly seems like a good time to be selling scrap ...

blogger@steelonthenet.com