Platts Sbb Steel Daily

www.platts.com SBB STEEL MARKETS DAILYCOVERING THE RAW MATERIALS INPUTS TO STEELMAKING

Volume 7 / Issue 135 / July 16, 2013

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Today in raw materials

Iron ore market

Iron ore prices edge up as mills restock, doubts emerge 3

Coking coal market

Australian miners make aggressive coal offers into EU 4

Scrap market

Ukraines scrap price steady, seen rising in Aug on exports 7

Exchanges

Volume and prices recede in iron ore swaps market 7

Ferroalloys market

Manganese ore soft, buyers hold back from purchasing 8

Other News

Glencore Xstrata to halt Queensland magnetite output 8

Marketplace

11

Platts raw material assessments, July 16

Close/Midpoint Change % ChgIODEX Iron ore fines 62% Fe ($/dmt)

CFR North China 128.75-129.75 129.25 0.25 0.19Please see Platts complete iron price/netbacks table, p.3

Coking coal, premium low vol ($/mt)

FOB Australia 129.50 129.50 0.50 0.39CFR China 142.50 142.50 0.50 0.35Please see full metallurgical coal price/freight table, p.4

Ferrous scrap ($/mt)

HMS FOB Rotterdam 334.00-338.00 336.00 0.00 0.00A3, FOB Black Sea 332.00-338.00 335.00 0.00 0.00HMS CFR Turkey 364.00-368.00 366.00 0.00 0.00

Ferrous scrap ($/lt)

Shredded del Midwest US 390.00-395.00 392.50 0.00 0.00Shredded del dock East Coast 290.00-300.00 295.00 0.00 0.00HMS del dock East Coast 280.00-290.00 285.00 0.00 0.00

TSI raw material indices, July 16

Frequency Change % ChgIron ore fines 62% Fe

Chinese imports (CFR North China port), $/dmt 129.00 Daily 2.10 1.65Please see TSIs complete iron ore price table, p.2

Ferrous scrap

HMS 1&2 80:20, Turkish imports (CFR port), $/mt 364.00 Daily 0.00 0.00Shredded, US domestic (del Midwest mill)*, $/lt 384.00 Weekly (Fri) 4.00 1.05Shredded, Indian imports (CFR port)*, $/mt 372.00 Weekly (Fri) 4.00 1.09* Latest index July 12

MelbourneRio Tinto could potentially extract additional iron ore capacity from its existing Western Australian mines rather than developing more expensive greenfield pro-jects, which would likely delay planned expan-sion there to 360 million mt/year.

The Anglo-Australian miner said Tuesday work was under way to expand port, rail and power infrastructure in the Pilbara to handle 360 million mt/year, but noted a number of options for mine capacity growth were under evaluation.

Rios board has yet to sign off on the addi-tional 70 million mt/year of capacity required to reach 360 million mt/year and is expected to make a decision by the end of this year. Some of the miners large shareholders have been putting pressure on Chief Executive Sam Walsh to delay the expansion, given the weaker longer-term outlook for iron ore and slowing Chinese economy. Were keeping our options open, a Rio spokesman said.

Rio Tinto could slow Pilbara expansionThe potential for a more phased expan-

sion had been flagged by some analysts, including JP Morgan, who said in a July 10 research note that Rio will likely reach 360 million mt/year in 2019 rather than in 2015 as originally planned. This suggests the mar-ket is overestimating Rios iron ore supply over the next five years, JP Morgan said.

The delay would also support the views of those analysts who believe the iron ore mar-ket will stay stronger for longer, on the basis that new supply will not come online in the expected timeframe.

Rio said it remained on track to reach annu-alized production capacity of 290 million mt/year in Western Australia in the September quarter, from around 237 million mt/year cur-rently. This is despite heavy rain in the Pilbara in June and a conveyor belt breakage in May that resulted in one of the shiploaders at Cape

Iron ore market

Iron ore prices firm, views mixed on uptrend duration

SingaporeSeaborne iron ore prices continued to rise Tuesday on limited supply of mainstream cargoes and stronger offers.

Demand for mainstream material remained good and there was little on offer, leading sev-eral participants to believe the uptick would last for a few days as end-users were willing to pay higher prices to restock. There are mills who would pay high prices for mainstream ore cargoes, as there is a very evident shortage of mainstream material available both in the seaborne and port stock markets, a source at a state-owned Chinese trading house said. Sentiment is quite positive and there looks to be more room for improvement to both iron ore and steel prices.

(continued on page 2)(continued on page 2)

SBB Steel MarketS Daily July 16, 2013

2 Copyright 2013 McGraw Hill Financial

TSI DaIly Iron ore PrIce InDIceS

TSIs indices reflect average daily iron ore spot prices. Full price histories are available to TSI subscribers on its website. Details of TSIs methodology and product specifications, together with general information about TSI and its full range of steel indices and subscription services, can also be found on its website: www.thesteelindex.com

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Volume 7 / Issue 135 / July 16, 2013

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General Manager, MetalsAndrew Goodwin

SBB Steel MarketS Daily

TSI daily iron ore indices, July 16

$/dmt Change % Chg Low* High*62% Fe fines, 3.5% Al, CFR Tianjin port 129.00 2.10 1.65 86.70 158.9058% Fe fines, 3.5% Al, CFR Tianjin port 118.90 1.00 0.85 79.30 146.6062% Fe fines, 2% Al, CFR Qingdao port 130.10 2.10 1.64 88.50 160.0063.5/63% Fe fines, 3.5% Al, CFR Qingdao port 131.50 2.10 1.62 88.90 161.70* Past 12 months

Per 1% Fe differentials, $/dmt

$/dmt ChangeRange: 61-64% Fe 2.25 0.00Range: 56-59% Fe 3.00 0.00

FOB netback per route / basis TSI 62% Fe, 3.5% Al fines

Origin Vessel Type FOB ($/dmt) Change % ChgW.Australia Capesize 121.24 2.12 1.78India Supramax 114.90 2.10 1.86Brazil Capesize 108.53 2.10 1.97

Rolling Averages, $/dmt

5-day Monthly Quarterly62% Fe fines, 3.5% Al, CFR Tianjin port 126.36 123.23 123.2358% Fe fines, 3.5% Al, CFR Tianjin port 116.82 114.29 114.2962% Fe fines, 2% Al, CFR Qingdao port 127.46 124.30 124.3063.5/63% Fe fines, 3.5% Al, CFR Qingdao port 128.86 125.71 125.71

One Singapore-based trader said mills were maintaining high capacity utili-zation given the recent improvement in steel, thus needed to buy. Some of my mill customers have been asking the major miners to increase their term allo-cations of iron ore for the month of August because steel is doing very well, the trader said. There are some mills

Rio Tinto could slow Pilbara expansion ... from page 1Lambert port being sidelined for almost three weeks. Rio operates 14 iron ore mines in Western Australia, some 12 of which can contribute to the Pilbara Blend product.

Rio produced 66 million mt of iron ore from its global operations in April-June, up 7% on the same period a year earlier and up 8% on the January-March quarter, but shipped just 61.3 million mt due to the Pilbara disruptions. Total production in January-June was 127.2 million mt, up 6% on the first half of 2012, with shipments of 118.6 million mt 4% higher than the same period last year. Rio expects to produce 265 million mt of iron ore in calendar 2013.

Meanwhile, Rio produced 1.9 million mt of hard coking coal in April-May, down 5% on the same period in 2012, but up 15% on the previous quarter. It produced 7.1 million mt of semi-soft and thermal coal in the quarter, up 23% on last year and up 17% on January-March.

Paul Bartholomew

Iron ore market

...from page 1



Platts Daily iron ore Price assessments

Platts daily iron ore assessments, July 16 $/dmt Midpoint Change % ChgIODEX 62% Fe CFR North China 128.75-129.75 129.25 0.25 0.1963.5/63% Fe CFR North China 130.00-131.00 130.50 0.25 0.1965% Fe CFR North China 136.00-137.00 136.50 0.25 0.1858% Fe* CFR North China 114.50-115.50 115.00 0.25 0.2252% Fe CFR North China 88.00-89.00 88.50 0.25 0.28*Al = 4.0% max

Per 1% Fe differential (Range 60-63.5% Fe), $/dmt

$/dmt ChangeRange 60-63.5% Fe 2.20 0.00

Platts weekly iron ore lump premium spot assessment, July 10 $/dmtu Midpoint ChangeSpot lump premium assessment 0.1350-0.1450 0.1400 NA

FOB netbacks per route / basis IODEX 62% Fe

Route Vessel Type Freight rate ($/wmt) Moisture (%) IODEX ($/dmt)Australia Capesize 7.60 8.03 120.99India West Panamax 12.00 8.11 116.19India West Handymax 14.00 8.11 114.01India East Handymax* 15.00 8.00 112.95Brazil Capesize 20.50 9.00 106.72South Africa Capesize 13.50 3.00 115.33* Typical two-port co-loadings from Haldia and Paradip

Freight differentials to major import ports, $/wmt

From Qingdao on a Free Out basisTo North China: Caofeidian, Tianjin & Xingang 0.30To East China: Beilun -0.30To South China: Zhanjiang & Fangcheng -0.80

Rolling monthly average, $/dmt

IODEX 62% Fe 123.88

IODEX 62% Fe CFR North China OTC swaps assessment, July 16 switchIODEX 62% $/dmt Change % Chg TSI 62Aug 13 126.750 -0.500 -0.39 0.500Sep 13 123.750 -0.500 -0.40 0.500Oct 13 122.750 -0.750 -0.61 0.500Q4 2013 121.500 0.000 0.00 0.500Q1 2014 121.500 0.000 0.00 0.500Q2 2014 116.500 0.000 0.00 0.500Calendar 2014 115.500 0.500 0.43 0.500Detailed methodology and specifications are found here: www.platts.com/IM.Platts.Content/MethodologyReferences/MethodologySpecs/ironore.pdf

that are ramping up their crude steel pro-duction levels because steel demand is doing well, and mills have a need to buy more iron ore for steelmaking.

A Hunan-based steelmaker said there was a definite need for Chinese mills to replenish iron ore and many were looking for spot cargoes.

However, some believed mill inquiries were beginning to slow given the quick increase in ore prices, which they said had outpaced steel. There needed to be more balance between the steel and iron ore markets, which could lead to a weakening in the latter, they said.

Mixed market sentiment was evi-dent in the rebar futures market with the most active January rebar futures contract in Shanghai trading Yuan 16 higher from Monday at Yuan 3,677/mt ($596/mt), while settling Yuan 5/mt lower at Yuan 3,670/mt. The spot price of square billet in Tangshan was down Yuan 10/mt from Monday at Yuan 3,120/mt ex-stock, according to a Shandong-based mill source.

Melvin Yeoand Celestyn Wong

Iron ore prices edge up as mills restock, doubts emerge

SingaporeSpot prices of seaborne iron ore edged higher Tuesday as some mills were still seeking material, but there was growing skepticism over whether steel fundamentals supported a continued uptrend. Platts assessed the 62% Fe Iron Ore Index up 25 cents at $129.25/dry mt CFR North China.

Many sources noted resilience in buy-ing appetite as Chinese mills were still replenishing stocks after destocking in late May/June when the market view on steel prices was bearish. You do not see the mills scrambling for cargoes today, but spot supply is limited and you are not able to buy a PB cargo with a price tag of $128/dmt, said a Shandong-based mill source.

However, some mills were heard to be retreating from the spot market because they were not confident cur-rent steel prices were able to support iron ore. There are at least three mills who approached me for seaborne iron ore yesterday, but not a single one wanted to buy iron ore from me today, said a Hebei trader source. The mills told me that in comparison to steel, ore prices are too expensive, and they are not confident that the price of iron ore will be supported.

Another Jiangsu-based mill source, who also saw demand for iron ore

weakening, said a price correction was inevitable as prices needed to come off some dollars before mills would be comfortable to buy. When the price of iron ore is hovering near $130/dmt level you need more than positive senti-

ment to motivate the mills to buy iron ore, said a Singapore-based trader. It doesnt help much when steel prices are not moving up much these days and that explained why buyers are put-ting on hold their spot purchases.



Platts daily metallurgical coal assessments, July 16

Asia-Pacific coking coal ($/mt)

FOB CFR CFR Change Australia China India Australia China IndiaHCC Peak Downs Region 131.00 144.00 147.50 +0.50 +0.50 +0.50Premium Low Vol 129.50 142.50 146.00 +0.50 +0.50 +0.50HCC 64 Mid Vol 117.00 130.00 133.50 +2.00 +2.00 +2.00Low Vol PCI 105.50 118.50 122.00 +0.50 +0.50 +0.50Low Vol 12 Ash PCI 95.50 108.50 112.00 0.00 0.00 0.00Semi Soft 88.50 101.50 105.00 0.00 0.00 0.00Met Coke - - 250.00 - - -1.00

North China prompt port stock prices

Ex-stock Jingtang CFR Jingtang (Yuan/mt, incl VAT) equivalent ($/mt)**Premium Low Vol* 1070.00 143.52HCC 64 Mid Vol* 965.00 128.96

*weekly (assessed July 12), 20-day delivery from date.**ex-stock price, net of VAT and port charges.

Atlantic coking coal ($/mt)

FOB US East Coast Change VM Ash SLow Vol HCC 132.00 0.00 19% 8% 0.80%High Vol A 127.00 0.00 32% 7% 0.85%High Vol B 115.00 0.00 34% 8% 0.95%

Detailed methodology and specifications are found here:http://platts.com/IM.Platts.Content/MethodologyReferences/MethodologySpecs/metcoalmethod.pdf

Dry bulk freight assessments

Route Vessel Class Freight rate ($/mt) Moisture (%)Australia-China Panamax 13.00 9.50Australia-India Panamax 16.50 9.50USEC-China Panamax 35.00 8.00USEC-India Panamax 34.00 8.00USEC-Rotterdam Panamax 12.90 8.00USEC-Brazil Panamax 15.00 8.00

East Australia: basis Hay Point port. USEC: basis Hampton Roads. See methodology for further details.

HCC assessed specifications

CSR VM Ash S P TM FluidityPremium Low Vol 71% 21.5% 9.3% 0.50% 0.045% 9.7% 500HCC Peak Downs Region 74% 20.7% 10.5% 0.60% 0.030% 9.5% 400HCC 64 Mid Vol 64% 25.5% 9.0% 0.60% 0.050% 9.5% 1,700

Penalties & Premia: Differentials ($/mt)

Within % of Premium Low Vol FOB Net value Min-Max Australia assessment price ($/mt)Per 1% CSR 60-71% 0.50% 0.65Per 1% VM (air dried) 18-27% 0.50% 0.65Per 1% TM (as received) 8-11% 1.00% 1.30Per 1% Ash (air dried) 7-10.5% 1.25% 1.62Per 0.1%S (air dried) 0.3-1% 1.00% 1.30

The assessed price of HCC Peak Downs originates with Platts and is based on price information for a range of HCCs with a CSR> 67% normalized to the standard of HCC Peak Downs (CSR 74%). Peak Downs is a registered trade mark of BM Alliance Coal Operations Pty Limited BMA. This price assessment is not affiliated with or sponsored by BMA in any way.

Source: Platts

There were few spot bids and offers, but most market participants said the repeatable price of 61% Fe Australian Pilbara fines was in the $128-128.50/dmt CFR China range, up from $128/dmt CFR China the day before.

Sources said a Newman 90,000 mt cargo was sold on a 62% Fe basis on glob-alOre, at $128.50/dmt for delivery in August. There were no details on either the buyer or seller of this cargo.

Elsewhere, Australian miner BHP Billiton was heard to be inviting bids pri-vately for 63.5% Fe Australian Newman lump Tuesday, according to traders who received the invitation to bid. The 90,000 mt shipment will load over July 26-August 4.

Two traders, one based in Shanghai and the other in Hong Kong, said there was healthy demand for lump cargoes now as there was a shortage of domestic pellet cargoes in the market. Weve been seeing stronger demand for pellet from mills in the past two weeks and there isnt much supply available, so this will drive up the buying appetite for lump cargoes, the trader in Hong Kong said. Lump and pellet cargoes are mutual sub-stitutes, with the latter processed in a plant from concentrate material.

Melvin Yeoand Celestyn Wong

with Annalisa Jeffries in London

Coking coal market

Australian miners make aggressive coal offers into EU

LondonEuropean mills are seeing some offers closer to their expecta-tions from Australian producers follow-ing recent low-priced deals from the US into Brazil.

One European mill source said he was offered this week a low-volatile blend from Australia at $130/mt for material with 19-21% volatile matter (VM), 100-120 fluidity, reflectance of 1.35, vitrinite at 72.5 and CSR at 58-60. He described the offer as aggressive and said costs are currently more impor-tant than 3 or 4 CSR points, with mills running at below full capacity.

He said the Australian offer was lower than anything he has seen from the US. He had seen one US offer of low-vol coal in the low $130s/mt FOB US, which with freight to Hamburg of around $15-16 would result in around $150/mt delivery into Europe.

The offer for Australian low-vol blend at $130/mt was below the deals seen from the US last week for straight run coals at



Metallurgical Coke 62% CSR

$/mt Change % ChgCFR India 250.00 -1.00 -0.40FOB North China* 231.00 -5.00 -2.12 Yuan/mtDDP North China* 1330.00 0.00 0.00*weekly

SBB-SMD raw materials reference prices

$/mt Change % Chg

Coke and coal

Charcoal - Brazil domestic 222.81 0.00 0.00

Iron

SGX 62% Fe Iron Ore cash-settled swaps (dry mt) - front month 126.08 10.14 8.04Iron ore concentrate 66% Fe wet - China domestic 145.01 4.07 2.89Atlantic Basin iron ore pellets* FOB Basis (cents/dmtu) 200.61 -16.45 -8.20Pig iron - FOB - Black sea export 382.50 2.50 0.65Pig iron - FOB Ponta da Madeira - Brazil export 385.00 -2.50 -0.65Pig iron - Hebei - China domestic 411.40 -8.15 -1.94HBI - Venezuela export 275.00 -12.50 -4.55*Reflects estimated monthly price term contract delivery

SBB-SMD ferrous scrap reference prices

Price Change % Chg

Scrap, Europe/Turkey ($/mt)

OA (plate & structural) - UK domestic, delivered 314.38 0.00 0.00Shredded - delivered - N. Europe domestic, delivered 344.99 -4.90 -1.40Shredded - delivered - S. Europe domestic, delivered 339.79 -6.44 -1.86

Scrap, Asia* ($/mt)

H2 - del Okayama - Tokyo Steel purchase price, at works gate 313.38 -10.11 -3.13H2 - del Utsunomiya - Tokyo Steel purchase price, at works gate 323.49 -5.05 -1.54Heavy - Shanghai - China domestic 379.18 0.00 0.00HMS 1/2 80:20 CFR - East Asia import (WEEKLY) 365.00 0.00 0.00

Shindachi Bara - del Okayama -Tokyo Steel purchase (list) price 333.60 -10.11 -2.94

Shindachi Bara - del Utsunomiya -Tokyo Steel purchase (list) price 343.71 -5.05 -1.45

Shredded scrap A (auto) - del Okayama -Tokyo Steel purchase (list) price 321.47 -10.11 -3.05

Shredded scrap A (auto) - del Utsunomiya -Tokyo Steel purchase (list) price 331.57 -5.05 -1.50

Scrap, Americas ($/lt)

#1 Busheling - N. America domestic, del, Midwest US 415.00 0.00 0.00HMS 1/2 - N. America domestic, del Midwest US 347.50 0.00 0.00Plate & Structural - N. America domestic, del Midwest US 377.50 0.00 0.00

($/mt)

HMS 1/2 - Brazil S.E. domestic 210.53 0.00 0.00*Monthly unless otherwise noted

$131/mt FOB USEC. However, the offer from Australia is for a blended coal, indi-cating that coking prices are relatively sta-ble in the Atlantic.

Platts assessed US low-vol hard coking coal flat at $132/mt FOB USEC Tuesday. US high-vol A remained at $127/mt FOB USEC and high-vol B also remained at $115/mt FOB USEC.

However, suppliers were becoming more competitive. One trader said he had July deals all in place, with prices around the levels of $132/mt FOB USEC for low-vol and high-vol B at around $115/mt FOB USEC. He also said he was talking with the Australians and said they had a very good grasp of the current market and that he had seen competitive offers.

Canadian producers also understood realities now, despite saying they are close to costs, he said, adding I dont think theyre making money, but if they are covering costs they should be happy.

Elsewhere, a source at another European mill said although prices were quite low, it was not enough to bring them back into the spot market. He had room for maybe an extra 50,000-100,000 mt but this was an option within his contract deals. He believed the coking coal market would remain flat this year and was unlike-ly to fall further.

David Braid

Spot met coal rangebound as traders take positions

SingaporeSpot coking coal prices in Asia were assessed slightly higher Tuesday, though the market was yet to see any sustained upward movement after an extended period of price stability.

Premium hard coking coals coals (HCCs) gained 50 cents on the day, to $142.50/mt CFR China and $129.50/mt FOB Australia.

Higher offers were heard for prestig-ious Australian brands with low-volatile matter, typically in the $147-148/mt CFR China range, up from $145-148/mt last week. Perhaps in reaction to these higher offers, price opinions from large Chinese steelmakers were also observed to have risen marginally.

Meanwhile, premium mid-vol HCCs were seen tradeable at a wider-than-usual discount to premium low-vols, with firm offers heard around $139/mt CFR China for August loadings. The spread was reportedly causing Chinese mills to shun higher-priced low-vol. Big mills are refusing premium low-vol because of the high price, a Beijing trader said.

There was some market talk of a spot

deal done in the northeast Asian market for premium mid-vol HCC last week. It was understood to be a Panamax cargo and its offer price reported earlier was around $127/mt FOB Australia.

Meanwhile, second-tier HCC was

assessed $2/mt higher on the day, revers-ing a $1.50/mt drop Monday. There was a lack of consensus on this market seg-ment, where recent volatility could be a reflection of the wider tradeable range cur-rently prevailing.


6 Copyright 2013 McGraw Hill Financial6

Steel Mill Economics: Global Spreads, July 16, 2013

Change % changeChina Flat Steel Spread (CFSS using IODEX)* 302.81 $/mt -1.77 -0.58China Flat Steel Spread (CFSS using TSI)* 303.21 $/mt -4.73 -1.54China Long Steel Spread (CLSS using IODEX) 279.31 $/mt -3.38 -1.20China Long Steel Spread (CLSS using TSI) 279.71 $/mt -6.34 -2.22China Hot Metal Spread (CHMS using IODEX)* 291.06 $/mt -2.58 -0.88China Hot Metal Spread (CHMS using TSI)* 291.46 $/mt -5.54 -1.86China Coking Margin (CCM)** 365.00 RMB/mt 0.00 0.00China Billet-Rebar Spread (CBRS) 320.00 RMB/mt 0.00 0.00Turkey Scrap-Rebar Spread (TSRS: Platts) 217.00 $/mt 1.00 0.46Turkey Scrap-Rebar Spread (TSRS: TSI) 219.00 $/mt 1.00 0.46Turkey Scrap-Black Sea Billet Spread (TSBS: Platts) 142.00 $/mt 0.00 0.00Turkey Scrap-Black Sea Billet Spread (TSBS: TSI) 144.00 $/mt 0.00 0.00US Scrap-HRC Spread (US SHRC) 294.58 $/st 0.00 0.00US Scrap-HRC Futures Spread (US SHRCF) 284.58 $/st 0.00 0.00US Scrap-Rebar Spread (US SRS) 279.58 $/st 0.00 0.00*Weekly, assessed on Mondays. **Weekly, assessed on Fridays.

For spreads calculation and assessment methodology, please go to:http://platts.com/IM.Platts.Content/MethodologyReferences/MethodologySpecs/steel.pdf

Several traders expressed interest in purchasing typical Rangals with 60-63% coke strength after reaction (CSR) at $115-116/mt FOB Australia, or $125-130/mt CFR China, even for a Panamax-size cargo, contradicting claims from two sell-side sources Monday they would happily sell at $125-127/mt CFR.

Most sources described the market as steady, and all agreed there was only very little room for prices to drop further.

Meanwhile, three end-users from north China expressed a cautious atti-tude toward current prices, suggesting any price rebound cannot last for long and [has] little [leeway]. Highlighting a pick-up in trader activity, out of 15 reported hard coking coal and PCI trans-actions concluded last week, nine were sold to traders.

With regards to domestic coking coal prices, a Tangshan-based coke plant said he thought Chinese miners had become more determined in negotiations with mills since steel prices had picked up.

On metallurgical coke, several mar-ket participants were said to be prepar-ing documents for a coke procurement tender floated by a west Indian mill last week. The tender called for 40,000 mt of blast furnace coke with specifica-tions of 62/60% CSR for August load-

News in Brief

The direct reduced iron (DRI) plant to be built by Austrian steel-maker Voestalpine in the US will be the worlds largest when it is completed in 2015. Plantmaker Siemens, which Voestalpine has contracted to build the facility in Texas together with Midrex Technologies, confirmed Tuesday the plant will be the largest single module of this type worldwide. The plant has a design capacity of 2 million mt/year of hot briquetted iron (HBI), which will be produced from iron ore pellets using natural gas as the reducing agent. Voestalpine will use half the HBI for its own steelmaking opera-tions and plans to sell the remainder.

Nikopol Ferroalloy Plant (NFP), Ukraines biggest ferroalloy smelter, saw June output fall 0.3% month on month to 33,600 mt, producers association UkrFa said Tuesday. NFP produced 32,700 mt of silicomanga-nese and 900 mt of ferromanganese. Junes total output was down 45.1% year on year, UkrFa said. NFP produced 250,300 mt of ferroalloys in the first half of the year, down 20.7%. That was made up of 228,800 mt of silicomanganese, down 12.5%, and 21,500 mt of ferromanganese, down 60.4%. NFP, one of the worlds biggest producers of ferromanganese and silicomanganese, is capable of produc-ing about 1.2 million mt/year of ferroalloy. In 2012 NFP produced 657,800 mt of ferroalloy, down 14.6%.

AIM-listed South Africa-focused miner and developer Ironveld has upgraded the iron ore resource at its Lapon properties in South Africa, it said in a statement. The company is developing a pig iron project on the northern limb of the Bushveld minerals complex in Limpopo, South Africa, for which these mines will provide the feedstock. According to the statement, the company has doubled its tonnage in the Indicated category to 27.26 million mt at a cut off (minimum grade) of 20% Fe. The ore in the Measured category is now at 1.58 million mt, also at 20% Fe cut-off. Also, the deposits main magnetite layer has seen a grade increase from 46.7% to 48% Fe. The total mineral resource now sits at 32 million mt at 20% Fe cut-off and there is sufficient recoverable iron ore in situ to produce [its previously declared figure of] 1 million mt of pig iron/year for 25 years, the company said. The company joined Londons Alternative Investment Market (AIM) in July last year.

In the face of a declining metallurgical coal prices, US miner Alpha Natural Resources announced layoffs at various mining operations in West Virginia as well as the idling of its Pocahontas met coal mine. The mine is operated by White Buck Coal Co. Generally speaking, met coal is in an over-supply situation right now, a company spokesperson told Platts. And prices for the mid-vol spec that Pocahontas produces, have dropped considerably.

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Platts steel industry assessments, July 16

Close/Midpoint Change % ChgAsia

Hot-rolled coil $/mtFOB Shanghai* 505.00-515.00 510.00 7.50 1.49

Reinforcing bar $/mtFOB China* 500.00-505.00 502.50 5.00 1.01* Assessed July 11, 2013

Europe

Hot-rolled coil Eur/mtEx-works, Ruhr 415.00-420.00 417.50 0.00 0.00CIF Antwerp 425.00-431.00 428.00 0.00 0.00DDP NW Europe (Accessible to SBB Briefing subscribers at sbb.com)

$/mtFOB Black Sea 505.00-515.00 510.00 0.00 0.00

Plate Eur/mtEx-works, Ruhr 495.00-505.00 500.00 0.00 0.00CIF Antwerp 425.00-435.00 430.00 0.00 0.00

Reinforcing bar Eur/mtEx-works, NW Eur 450.00-455.00 452.50 0.50 0.11

$/mtFOB basis Turkey 580.00-586.00 583.00 1.00 0.17

Billet $/mtFOB Black Sea 508.00 508.00 0.00 0.00

North America

Hot-rolled coil $/stEx-works, Indiana 640.00-650.00 645.00 0.00 0.00CIF, Houston 580.00-600.00 590.00 0.00 0.00

Plate $/stEx-works, US SE 680.00-700.00 690.00 0.00 0.00CIF, Houston 640.00-660.00 650.00 0.00 0.00

Reinforcing bar $/stEx-works, US SE 620.00-640.00 630.00 0.00 0.00

CIF, Houston 535.00-540.00 537.50 0.00 0.00

Europe and US cold-rolled coil assessments, July 16

Eur/mt Close/Midpoint Change % ChgEx-works, Ruhr 515.00-520.00 517.50 0.00 0.00CIF Antwerp 495.00-502.00 498.50 0.00 0.00DDP NW Europe (Accessible to SBB Briefing subscribers at sbb.com)

$/mtFOB Black Sea 580.00-590.00 585.00 0.00 0.00

$/stEx-works, Indiana 740.00-750.00 745.00 0.00 0.00

CIF, Houston 620.00-640.00 630.00 0.00 0.00

ing. There was also talk of a coke pro-curement tender in Brazil for 40-100 mm sized coke with 66/64% CSR for August laycan. The volume requested was 50,000 mt.

Helena Shengwith Julien Halland Edwin Yeo

Scrap market

Ukraines scrap price steady, seen rising in Aug on exports

LondonDomestic scrap prices in Ukraine remain unchanged Tuesday from two weeks earlier, but several trad-ers said the resumption of exports may result in a Hryvnia 200-250/mt or 10% price increase in August.

Scrap continued to sell for Hryvnia 2,050-2,150/mt ($251-263) ex-yard for A3 grade (HMS I/II 80/20). At the same time, port buyers were paying Hryvnia 2,200/mt for A3, merchants in eastern Ukraine said.

As soon as exports resumed this month, it affected scrap flow. It was direct-ed overseas to the detriment of steelworks in close proximity to ports particularly Kryviy Rih, Ilyich and Zaporizhstal, a mer-chant said.

Deliveries to Ukrainian mills fell from nearly 110,000 mt/week in mid-June to 90,000 mt/week in mid-July, which cov-ers only 80% of the mills combined scrap needs.

Although mills have sufficient stocks, roughly 270,000 mt in all, their suppliers are running out of stock, meaning shipments to mills can only fall unless the mills raise bids, accord-ing to Kiev-based industry analysts UkrPromZovnishEkspertiza.

Katya Bouckley

Exchanges

Volume and prices recede in iron ore swaps market

LiverpoolThe iron ore swaps mar-ket was quieter again Tuesday as a lack of activity in the physical market and growing concern over the longev-ity of recent increases saw prices soften marginally throughout the curve. The Singapore Exchange cleared just 444,000 mt of swaps.

July traded at $126.50/dry mt and $126.25/dmt, while August printed down from $126.50/dmt to $126/dmt during Asian trading. September was done at $124.25/

dmt, $124/dmt and $123/dmt, while Q4 printed at $120/dmt. The August-September timespread, which had been the focus of much liquidity over the past two days, traded at $2.50/dmt, after trading at $2.50-3/dmt Monday.

Prices were down around 25 cents-

$1/dmt across the curve from the pre-vious session. Brokers said liquidity had thinned and one quipped that peo-ple should sell the curve, given high steel production relative to sales in China. He said iron ore swaps have felt overvalued compared to the physical market for some time.



The Steel Indexs 62% Fe CFR North China reference price rose $2.10/dmt to $129/dmt on the back of limited supply of mainstream material. Platts 62% Fe Iron Ore Index, however, crept up just 25 cents as some sources doubted the longevity of increases given lagging steel fundamentals.

European steel and scrap contracts were quiet, but a US hot-rolled coil trade was done for the 2014 calendar year at $610/short ton, at 500 st/month, bro-kers said.

Colin Richardson

Ferroalloys market

Manganese ore soft, buyers hold back from purchasing

LondonManganese ore prices moved down Tuesday, with sources reporting weak buying activity and softer offers from suppliers. Platts assessed its 44% manganese ore price at $5.51/dry mt unit, two cents lower from the previous day.

A Chinese trader said Gabon ore was being offered at $5.40/dmtu CIF China and that market sentiment was weak, but he thought manganese ore prices were near the bottom and could not fall further.

A trader selling into China said pric-es had softened over the week and he was hearing Gabon ore being offered below $5.40/dmtu. He said sellers reporting high offer levels in May and June were not able to sell ore without discounting. Chinese prices are all coming down even though some people are still talking high prices. They can-not sell at these prices, the trader said. The Chinese dont need ore and they are not looking to buy very much.

A Chinese purchasing source said she had also seen soft prices for manganese ore. However, she was not yet in the mar-ket to import.

Jitendra Gilland Clement Kwok

Molybdenum oxide prices stable, pressure remains: trade

LondonMolybdenum oxide prices took a breather from the losses seen over the past seven days and were unchanged at $9.30-9.40/lb Tuesday.

Theres no change in prices, it seems to be holding a little bit now, one produc-er said. He said the market was nervous as people were not expecting prices to fall as quickly as they did from the $10/lb mark seen six days ago.

A Europe-based trader said: Bids are lower today at $9.20/lb but nobody wants to buy anyway. They dont want to get their finger burnt.

He said prices were under pressure

because of poor sentiment and declines would not stop until consumers return to the market. It cant stabilize because there are no deals, he said.

A source reported a deal at $9.30/lb CIF Busan. Sources agreed buying sig-nals were not yet seen from China. We may see resistance if Chinese decide to come in and start to buy and this will help stabilize prices, a European con-sumer source said.

A second Europe-based trader said the market was lacking activity. Anyone who wants to put a bid on it now is going to go lower.

Jitendra Gill

Other News

Glencore Xstrata to halt Queensland magnetite output

MelbourneGlencore Xstrata will stop producing magnetite concentrate at its Ernest Henry Mining operation in

Platts proposes to assess Australia-China Capesize coal freight

Platts is seeking feedback on a proposal to enhance its suite of metallurgical coal freight assessments by adding a new daily assessment for spot Capesize cargoes.

The assessment would reflect cargoes of 140,000 mt loading 7-45 days forward from the day of assessment, between Hay Point, eastern Australia and Qingdao, north China.

The assessment would reflect well approved modern tonnage only, not exceeding 10 years of age. Platts invites feedback about this proposal by July 29, please con-tact: [email protected], and copy [email protected]

Platts clarifies freight netback for metallurgical coal FOB Australia

Platts clarifies its procedures for calculating freight netbacks for metallurgical coal assessments on an FOB Australia basis. When deals, bids/offers are observed to be illiquid, inconsistent and non-repeatable, spot price bids/offers or trades in key consumer markets basis CFR China, India, Europe, Japan or South Korea Taiwan may be netted back to FOB Australia. Freight netbacks from China will be calculated using assessed Panamax spot freight rates for dry bulk carriers on the day of assessment, while from other regions, the prevailing vessel size on the given route will be used.

Platts clarifies standard specifications for Asia coal & coke assessments

Platts clarifies its standard specifications by adding new quality parameters for several Asian metallurgical coal and coke assess-ments. Standard vitrinite percentage will be 71% for HCC Peak Downs Region (FOB Australia, CFR India and CFR China), 65% for Premium Low Vol (FOB Australia, CFR India and CFR China), and 55% for HCC 64 Mid Vol (FOB Australia, CFR India and CFR China).

Total Moisture (as received) will be 10% for Low Vol PCI (FOB Australia, CFR India and CFR China), and 10% for Low Vol 12 Ash PCI (FOB Australia, CFR India and CFR China).

Standard Hardgrove Grindability Index (or HGI) will be 80 for Low Vol 12 Ash PCI (FOB Australia, CFR India and CFR China). Crucible Swelling Number (or CSN) will be 1 for Low Vol 12 Ash PCI (FOB Australia, CFR India and CFR China). Maximum fluidity will be 200 dial divisions per minute (or ddpm) for Semi Soft (FOB Australia, CFR India and CFR China). Standard sulfur (air-dried basis) will be 0.65% for Met Coke (CFR East India, DDP North China and FOB North China).

Platts clarifies loading ports considered for metallurgical coal FOB Australia

Platts clarifies the ports considered in its metallurgical coal FOB Australia assessments. These include Dalrymple Bay, Hay Point, Gladstone and Abbot Point; and in New South Wales: Newcastle and Port Kembla. Freight rates for hard coking coal from any of these ports are normalized to Hay Point port for assessment purposes. For PCI and Semi Soft assessments, freight rates from any of these ports are normalized to Dalrymple Bay.



Queensland, Australia, from mid-August due to weaker iron ore prices and high logistics costs making exports uneconom-ic, the company said late Monday.

The Switzerland-based commodity group said a 30% drop in iron ore prices over the past two years and higher costs for produc-tion and transportation have eroded margins, prompting the decision to suspend magnet-ite output. The magnetite has to be trans-ported some 780 km by rail from Ernest Henry mine, east of Mount Isa, to a port facility at Townsville for export to China.

Parts of the magnetite circuit at Ernest Henry will be placed on care and mainte-nance, with the regrinding circuit reconfig-ured to produce copper concentrate.

Exports of magnetite concentrate start-ed from Ernest Henry in 2011 and produc-tion capacity had been ramping up towards an ultimate target of 1.2 million mt/year of magnetite concentrate. An Ernest Henry Mining spokeswoman said the mine pro-duced about 500,000 mt of magnetite concentrate in 2012. Our magnetite con-centrate went predominantly to the Chinese market, with a very small amount for domestic use, she told Platts.

The mine had been earmarked for clo-sure in 2012. But in late 2009, the com-pany decided to invest US$542 million to extend the life of the mine until 2024. This followed a feasibility study into construct-ing a magnetite processing facility and building full-scale underground mining oper-ations at Ernest Henry.

Last month, Glencore-Xstrata said it would cut 450 jobs from its Newlands and Oaky Creek coal mines in Queensland, cit-ing weaker coal prices and the high Australian dollar.

Paul Bartholomew

S&P downgrades NWR on lower coal prices

LondonCentral European coal and coke producer New World Resources (NWR) has been given a lower credit rating by Standard & Poors on the back of the negative coal price outlook for 2013-2014 and uncertainty related to NWRs ability to limit negative cashflow, S&P stated in a press release.

According to S&P like Platts, part of McGraw Hill Financial the business risk represented by the Amsterdam-based NWR has slipped from weak to vulnerable (from B to B-) reflecting its high cost profile and need to downscale its operations. At the same time NWRs liquidity was termed less than adequate from adequate.

The downgrade is also based on the newly adjusted coal price assumptions by S&P for 2013-2014, to $140-150/mt from previous level of $150-160/mt. This results in NWR

generating more negative free cash flow in the second half of 2013 and 2014 than we previ-ously assumed, S&P explained.

The agency also made clear that further downgrading is possible in the coming quar-ters if coal prices keep softening, and NWR fails to fully meet its cost-cutting targets and sell its 800,000 mt/year coke facility OKK Koksovny in the Ostrava region of the Czech Republic. The miner was in talks with poten-tial buyers, it said earlier this month.

NWR was also planning to divest its Czech Paskov mine but recently said the

sale was unlikely to materialize and other scenarios were under evaluation including a potential temporary or permanent shut-down of the mine.

Wojtek Laskowski

Equatorial to apply for Congo mining license immediately

MelbourneAustralias Equatorial Resources has completed the scoping study for its Mayoko-Moussondji iron ore

Steel headlines

Chinese HRC export prices rise, Korean buyers hold offKorean buyers of Chinese hot-rolled coil are holding back on bookings amid a

surge in Chinese export prices and persisting weak demand in Korea. Recent export offer prices from major Chinese mills to Korean buyers were at $540-545/mt CFR for SS400B 3mm thick HRC, up $20/mt or more compared with prices late last month, Platts was told Monday.

For more steel news, please visit: www.sbb.com Marcegaglia raises sheet, plate prices by around Eur30/mt Keystone raises wire rod prices $15/st for August shipments Shanghai HDG market sees modest price increase Turkish flats prices firm with improving market sentiment Legal battle over UK hot strip mill to be settled in 2014 HRC level at $640-650/st CRC stays at $740-750/st Severstal, USS dissolve Double Eagle galvanizing JV US sheet pricing steady, import concerns linger Southern European HR coil price up; US price rise continues - TSI Indias Sail dispatches first switch rail consignment Taiwan rebar makers lift prices on better demand, scrap rise Northern Chinas rebar price still rising on better sentiment Vietnams sales of longs for first-half 2013 rise by 1.5% Rebar mini-mill in southwest Russia may start up by August New Russian bar mill aims to start rolling before year-end Nucor: Long product prices unchanged until further notice Fullacero sole distributor of Deacero rebar in Chile Ezz Steel raises rebar exports to fund raw materials imports Chinese company to complete new Iranian steelworks Jordanian re-roller seeks investor to help in restructuring Low demand, over-capacity depress OCTG sales for Tianda Seamless pipe prices stable in eastern China US to conduct full sunset reviews of rectangular P&T Saudi pipemaker secures $67 million OCTG supply contract Chinese stainless export prices show signs of stabilizing Turkish stainless coil import prices steady in July Carpenter gets new leader for distribution businesses Chinas GDP growth betters target, achieving 7.6% for H1 Special Report: Chinas auto output dips again in June Chinas crude steel output dips in June, up 4.6% on year Klckner not expected to break even this year Tata Steel made operating loss of GPB354 million in EU in 2012/13 Mexicos industrial output flat in May US steel industry capability utilization at 78%: AISI Special Report: Colombia steelworkers to fight outsourcing Brazils crude steel production falls 6% on month in June Egypts Misr Ataqa approves debt payments for Suez DRI plant Egypt mills operating despite social unrest, but market slow Saudi state spending reduction to hit infrastructure growth Qatars $200 billion construction boom to kick off in 2014



Australia lump premium contract price settlements with China mills

$/dmtuQ2 2013 0.1350-0.1450Lump premiums vary from company to company, depending on when agreements are reached, brands, volumes, and whether they are negotiated as a package with other products like fines. Platts has been reporting on the settlements in the form of news articles, and is publishing them more regularly for easier access by subscribers. The published lump premium represents what Platts understands most Chinese mills have agreed to. Premiums that are settled under known, special circumstances, would be reported about in news articles, but would be excluded from the published premium. For further details, see http://www.platts.com/MethodologyAndSpecifications/Metals.

Platts steel assessments currency and unit comparisons, July 16

Prior assessment Eur/mt $/mt $/st $/CWT $/mt $ change % changeHot-rolled coil

Ex-works, Ruhr* 417.50*** 548.80 497.87 24.90 544.38 4.42 0.81%FOB Black Sea* 387.98 510.00*** 462.67 23.14 510.00 0.00 0.00%CIF Antwerp* 428.00*** 562.61 510.40 25.53 558.07 4.54 0.81%Ex-works, Indiana** 540.27 710.98 645.00*** 32.25 710.98 0.00 0.00%CIF, US Gulf states, basis Houston** 494.20 650.35 590.00*** 29.50 650.35 0.00 0.00%

Cold-rolled coil

Ex-works, Ruhr* 517.50*** 680.25 617.13 30.86 674.77 5.48 0.81%FOB Black Sea* 445.04 585.00*** 530.71 26.54 585.00 0.00 0.00%CIF Antwerp* 498.50*** 655.28 594.47 29.73 649.99 5.29 0.81%Ex-works, Indiana** 624.04 821.21 745.00*** 37.25 821.21 0.00 0.00%CIF, US Gulf states, basis Houston** 527.71 694.44 630.00*** 31.50 694.44 0.00 0.00%

Plate

Ex-works, Ruhr* 500.00*** 657.25 596.26 29.82 651.95 5.30 0.81%CIF Antwerp* 430.00*** 565.24 512.78 25.65 560.68 4.56 0.81%Ex-works, US Southeast** 577.97 760.58 690.00*** 34.50 760.58 0.00 0.00%CIF, US Gulf states, basis Houston** 544.46 716.49 650.00*** 32.50 716.49 0.00 0.00%

Reinforcing bar

Ex-works, Northwest Europe* 452.50*** 594.81 539.61 26.99 589.36 5.45 0.92%East Mediterranean, basis Turkey* 443.51 583.00*** 528.90 26.45 582.00 1.00 0.17%Ex-works, US Southeast** 527.71 694.44 630.00*** 31.50 694.44 0.00 0.00%CIF, US Gulf states, basis Houston** 450.23 592.48 537.50*** 26.88 592.48 0.00 0.00%

*LN 16:30 Eur/$ ex rate = 1.3145; **NY 16:30 $/Eur ex rate = 0.7599. ***the primary assessments and have not been converted

project in the Republic of Congo and plans to apply for a mining license immediate-ly, the company said Tuesday.

The scoping study has identified an immediate pathway to a 2 million mt/year hematite mining operation producing a premium product transported by the existing railway and port facilities, Equatorials Managing Director John Wellborn said in a statement.

The Perth-based company plans to pro-duce a Mayoko premium fines iron ore of grading 64.1% Fe from the project at a rate of 500,000 mt/year during stage 1, ramping up to 2 million mt/year within 18 months.

Initial capex required for first produc-tion has been estimated at $114 million with total capital costs to achieve the 2 million mt/year rate estimated at $231 million. Operating cash costs for the mine are expected to average $41/mt FOB Pointe-Noire over the life of the mine, which is expected to be 23 years.

Equatorial plans to reduce some of the costs for Mayoko-Moussondji through part-nership opportunities in rail and port infra-structure with Exxaro Resources, whose project Mayoko-Lekoumo is adjacent to Equatorials.

Equatorial said Tuesday it expects ini-tial production from its mine to start 15 months from when investment decisions have been satisfied.

Marnie Hobson

Asia

Posco scraps Karnataka plan, some point to ore supply

SingaporeSouth Koreas Posco has abandoned plans to build a 6 million mt/year integrated steelworks in the south Indian state of Karnataka and agreed with the state government to stop work on the project, it said Tuesday.

In a disclosure to the Korea Stock Exchange, Posco cited delays in gaining approvals to mine along with persisting problems with land acquisitions. It had signed a Memorandum of Understanding with Karnataka in June 2010.

There was not much expectation of success in this project [from the planning

stage], a source from Posco told Platts. For its own political purposes, the state government had initially intended to lure several steelmakers, he added. Political uncertainty in the state was also a major reason behind the companys decision, he added.

Meanwhile, Posco has been struggling with a much delayed 8 million mt/year pro-ject in eastern Indias Odisha, he noted, adding that there has been some progress with that project though at a slow pace.

Poscos decision is hardly surprising, a Mumbai-based analyst said. Even exist-ing [steel] mills in Karnataka dont know where they will source iron ore for the next few years or even decades. It just doesnt make sense to pump in more investments there, he said.

Most other Indian steelmakers have



Marketplace

Iron ore: 63.5% Fe Australian Newman lump BHP Billiton heard inviting bids pri-vately for 90,000 mt, loading July 26-August 4, according to traders who received the invitation to bid Iron ore: freight Shanghai-based trader heard Capesize freight from W. Australia to Qingdao fixed at $7.60/wmt Iron ore: freight Shanghai-based trader indicated Capesize freight from W. Australia to Beilun at $7.30/wmt Iron ore: freight Shanghai-based trader heard Capesize freight from Brazil to Qingdao fixed at $20.40-20.50/wmt Iron ore: freight Shanghai-based trader heard Capesize freight from S. Africa to Qingdao fixed at $13.50/wmt Iron ore: freight Shanghai-based trader heard Capesize freight differential from Qingdao to Beilun at $0.30/wmt Iron ore: spot lump premium Hong Kong-based trader estimated tradeable value at IODEX +$0.16/dmtu Met coal, freight: Hong Kong trader estimated Panamax DBCT to Jingtang at $12-13/mt Met coal, HCC: Hong Kong trader would consider buying Jellinbah Lake Vermont at $115-116/mt FOB Australia Met coal, PCI: Hong Kong trader would consider buying Yancoal Yarrabee 12% ash at $110/mt CFR China

(This is a sample of trade and market information gathered by Platts editors as they assessed the daily , coking coal, steel, scrap and freight prices. They were first pub-lished on Platts Metals Alert earlier in the day as part of the market-testing process with market participants. For more related information about that process and our realtime news and price services, please request a trial to Platts Metals Alert or learn more about the product offering by visiting http //www.platts.com/Products/metalsalert)

also put their plans for setting up integrat-ed steelworks in Karnataka on hold until there is more clarity on the iron ore mining scenario in the state. No investor in their right mind will dream of setting up a steel plant in India now unless they have captive iron ore mines under their belt first, a Mumbai-based mill official said.

Anitha Krishnanand Hera Oh

Chinese mills conflicted on scrap price development

SingaporeMajor mills from eastern China expressed caution in changing their scrap purchasing prices at a regu-lar gathering of important consumers in northern Chinas Tianjin on Friday, July 12. Heavy scrap over 6mm was assessed by Platts at Yuan 2,320/mt ($377/mt) delivered including VAT on a delivered basis on Friday, stable week on week as market participants held con-flicting views on the market.

The meeting of 8-10 steelmakers plus other participants was hosted by Tianjin Pipe Group Corporation, Chinas third larg-est consumer of ferrous scrap. The next meeting is due to be held at Zenith Steel in Jiangsu in early August.

Baosteel said some mills at the event believed prices should go up in July following prices of finished steel. Platts assessed 18-25mm HRB400 rebar in Shanghai at Yuan 3,415/mt Friday, up from Yuan 3,210/mt on July 1, an increase of Yuan 205/mt during two weeks.

However, Baosteel was not sure the increase was sustainable in July and August and other mills also argued that the price increase was temporary. It there-fore did not want to increase its scrap buy-ing prices, especially since it had ample and relatively cheap hot metal supply. Baosteel believed scrap prices would be stable in July.

As to the long-term, Baosteel believed the price trend would likely depend on gov-ernment policies in areas such as urbani-zation or high-speed rail projects. But stim-ulus on the scale seen in 2009, when Yuan 4 trillion was injected into the econo-my, was very unlikely, it affirmed.

Shagang was also uncertain about the price trend going forward. Meanwhile, Nanjing Iron & Steel Corporation believed scrap prices might be stable or drop slightly. Blast furnaces are expensive to stop and it is easier to keep producing steel from hot metal and reduce scrap use, it noted.

One independent Beijing analyst believed scrap prices would increase fol-

lowing the uptick of iron ore and finished steel prices, furthermore, smaller mills have raised their scrap purchasing prices because they could make profits and plan to keep production high.

Bryan Gao

Analysis

Take-or-pay deals supporting Australian coal output

LiverpoolOnly 4 million mt of Australian coal production will close this year, despite 32 million mt currently being produced at negative margins, Wood Mackenzie said in a release Tuesday.

The decision to continue production instead of shutting it down can mainly be attributed to transport and port contracts in Australia, otherwise known as take-or-pay contracts, WoodMac said. Take-or-pay means miners pay for capacity regard-less of the tons they ship.

WoodMac said just over 1% of Australias coal exports in 2013 (4 million mt) is at risk of closure based on hard cok-ing coal prices of $171/mt and thermal coal prices of $92/mt. This is not a sig-nificant volume of output; however the amount at risk increases significantly under a lower price scenario, the compa-ny said. Platts assessed premium hard coking coal at $142.50/mt CFR China Tuesday, or $129.50/mt FOB Australia.

If average HCC prices fall to $122/mt, however, WoodMac said 13% of Australias coal exports in 2013 (45 million mt) will be at risk of closure. At that price 204 million mt of production will be suffering negative margins, the company said.

There have only been two mine clo-sures so far in 2013 compared to seven in 2012, said Viktor Tanevski, coal cost analyst at Wood Mackenzie. Despite the low coal price environment and current margin squeeze, take-or-pay contracts are incentivising coal producers to increase rather than reduce production, even if additional production is generat-ing negative cash margins.

The impact of weak met coal prices on margins, at a time of high costs, has forced some companies in Australia to mothball mines or consider asset sales. Earlier this year Anglo American said it would place its Aquila mine in the Bowen Basin on care and maintenance from July 30. It has also been suggested that Rio Tinto would sell 29% of its 80% stake in Coal & Allied, as well as stakes in two thermal coal mines.

Last month Sydney-based CLSA ana-lyst Dylan Kelly told Platts Australian min-ers were struggling to reduce costs on an operational basis and were seeing record cost levels. Around half of all open-cut mines in Australia are believed to be selling coal below their production costs, he said.

Colin Richardson

Iron ore marketIron ore prices edge up as mills restock, doubts emergeCoking coal marketAustralian miners make aggressive coal offers into EUScrap marketUkraines scrap price steady, seen rising in Aug on exportsExchangesVolume and prices recede in iron ore swaps marketFerroalloys marketManganese ore soft, buyers hold back from purchasingOther NewsGlencore Xstrata to halt Queensland magnetite output

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