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Steel and Stainless Steel Industries

A giant of the past [U.S. Steel] resurrected as newest Wall Street hot stock – by Tim Shufelt (Globe and Mail – September 15, 2014)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

After years of despair that left shareholders reeling, United States Steel Corp. is regaining at least some of its former might.

Once a pillar of the American economy, the company’s long-slumping stock has been one of the hottest large caps over the past three months. That could be just the beginning of a return to form for a stock riding an organizational and industry transformation.

“The potential for transformational change at U.S. Steel is one of the most intriguing stories in the U.S. steel sector at the moment,” Credit Suisse analyst Nathan Littlewood said in a recent note. “The company’s raw material cost advantages as well as privileged steel price environment should position U.S. Steel as one of the most profitable steel makers in the world.”

A century ago, U.S. Steel was known on Wall Street simply as “The Corporation” by virtue of its size alone. More recently, the company benefited from the demand for resources fuelled by China’s rise. The vast quantities of steel required for the building of cities and infrastructure kept prices high through the early 2000s.

The financial crisis snuffed out the global growth needed for a buoyant steel market. And with China consuming half of the world’s steel, a slowdown in Chinese growth over the past couple of years has extended price weakness.

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Half a Loaf? Getting maximum value from the Ring of Fire – by Rick Millette (Northern Policy Institute – August 8, 2014)

http://northernpolicy.wordpress.com/

When I was a youngster, we had a neighbour who kept a jar of coins. When kids would visit, he’d offer the jar and say, “take as many as you like”. If you grabbed too many, your bulging fist wouldn’t make it through the neck of the jar. Lesson learned.

As the development of the Ring of Fire moves ahead, those involved will need to make complicated decisions on how much of the Ring’s wealth to keep in Ontario and how much to let go.

At this point, there are many scenarios of where the North’s chromite might end up. It’s certain that the raw ore will be reduced to concentrate at the mine sites, but after that, it’s a guess. When Cliffs Natural Resources was grabbing the headlines, the plan was to have the concentrate shipped to Sudbury to be turned into ferro chrome at a new smelter they would build in Capreol.

Right now, it’s debatable whether the Ring’s chromite will ever see an Ontario smelter due to provincial electrical costs. Quebec and Manitoba sell their power to industries for less than three cents per kilowatt hour (KWH), while Ontario’s rates are based on a spot market that is often double that.

Other than government intervention, there is nothing that would stop a company from shipping the chromite directly to another province or to another country. At the very least, northerners want the chromite smelted into ferro chrome in the North.

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Essar Steel Algoma staves off third round of bankruptcy protection – by Greg Keenan (Globe and Mail – July 23, 2014)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

Essar Steel Algoma Inc., considered making its third trip through bankruptcy protection in a quarter-century before reaching a preliminary deal last week with a group of creditors to restructure its debt.

“The company’s current debt obligations of over $1.2-billion and annual interest expense of $113-million are unsustainable,” Algoma’s general counsel, Robert Sandoval, revealed in a court filing that said the steel maker rejected a proposal by one group of creditors that it file for protection under the Companies’ Creditors Arrangement Act (CCAA).

Such a move would have followed court-supervised restructurings in 1991 and 2001, which came before Algoma was bought in 2007 by India-based Essar Global Fund Ltd., in the global steel industry consolidation that led to the purchase of all of Canada’s major steel makers by foreign-based giants.

The court filings said Algoma – once Canada’s third-largest steel maker – plans to reach a final deal with holders of its 9.875 per cent unsecured notes by Sept. 30. The preliminary deal calls for holders of about $385-million worth of debt to receive 32 per cent of the value of their notes in cash and another 55 per cent in new notes.

Instead of using the CCAA to restructure, Algoma has filed a restructuring proposal under the Canada Business Corporations Act (CBCA) and has been granted protection from creditors in the United States under chapter 15 of the U.S. bankruptcy code.

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Editorial: The NDP – for now – by Brian MacLeod (Sudbury Star – June 11, 2014)

The Sudbury Star is the City of Greater Sudbury’s daily newspaper.

“The NDP’s intention to force companies to process more minerals in Ontario is dubious, but
it hasn’t really been tried. The party wants to establish a stainless steel industry in the
province, something advocated by mining analyst Stan Sudol. It would be interesting to watch
them try, rather than allowing so much unprocessed material from the Ring of Fire to leave
the country.” Sudbury Star Editor – Brian MacLeod

Northern Ontario has factored large in both the Liberal and NDP campaigns.

Unfortunately, the Progressive Conservatives have ignored the region. Party Leader Tim Hudak never once ventured north, he skipped the leadership debate in Thunder Bay, and has taken no time to explain his party’s policies to northerners. There is a sense that the party’s policy of eliminating 100,000 civil servants jobs will hit some northern ridings hard – especially Sudbury and Nickel Belt’s health and education sectors. And Hudak has not properly explained what the party would do with the $100 million Northern Ontario Heritage Fund.

The Tories say they would finish four-laning Highway 69 – sometime. That doesn’t cut it.

Hudak’s focus on the deficit is commendable, but the speed at which he wants to eliminate it – one year faster than the other two major parties – is bound to have a significant impact on the North. A Hudak government would suppress Northern priorities to debt reduction.

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Canada needs a steel strategy – by Marty Warren and Leo W. Gerard (National Post – November 5, 2014)

The National Post is Canada’s second largest national paper.

Although steel consumption and imports are on the rise, Canadian steel production and exports have not kept pace since the recession — far from it

Last week, U.S. Steel announced that it will permanently end steel production at its Hamilton plant. Is steelmaking a “smokestack industry” suffering from inevitable decline, or a strategic industry that Canada should seek to defend and develop?

Steel is an indispensable material for every aspect of our traditional economy, including bridges, buildings and cars, but also our growing sustainable economy, from transit vehicles to wind turbines.

Canada needs steel and we have been importing more of it. Last year, our steel imports rose to $12.2-billion — the highest level in Canadian history except for $12.4-billion in 2008, at the height of the commodity boom.

Although steel consumption and imports are on the rise, Canadian steel production and exports have not kept pace since the recession — far from it. We imported $4.6-billion more steel than we exported last year, tying 2006 for the largest steel trade deficit in Canadian history.

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Stainless-Steel Sales Jump as Nickel Costs Spur Stockpile – Maria Kolesnikova (Bloomberg News – May 27, 2014)

http://www.bloomberg.com/

Mining companies aren’t the only ones benefiting from this year’s nickel rally. Stainless-steel makers in Europe, who use the metal, are seeing a surge in sales as customers stock up to avoid higher raw-material surcharges.

Finland’s Outokumpu OYJ (OUT1V) reported a 9.1 percent jump in stainless-steel deliveries from the fourth quarter, orders at Madrid-based Acerinox SA are “the highest in at least three years,” and Germany’s ThyssenKrupp AG, says customers are adding to inventories. The sales jolt is reviving prospects for in an industry mired in losses since the financial crisis.

While nickel accounts for half the cost of stainless steel, mills impose surcharges to cover any increase in the expense. Nickel surged 41 percent this year after Indonesia, the largest supplier to China, banned ore exports to spur investment in domestic smelters. The supply halt is boosting profit for mining companies including Glencore Plc and may help create what Credit Suisse Group AG called a “supercycle” in prices.

“The biggest winners are nickel producers, and the second-biggest are the producers of stainless steel,” said Markus Moll, the founder of Reutte, Austria-based Steel & Metals Market Research GmbH who has studied the industry for three decades. “Usually such a surge in nickel prices triggers a strong speculative buying wave. The biggest loser is the end user, who has to pay higher price for stainless.”

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China’s steel meltdown will ripple around the world – by Carl Mortished (Globe and Mail – March 27, 2014)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

LONDON — There’s too much mining, and too much iron ore. Overproduction will take the price of steel’s raw material down by almost a third over the next few years, says Australia’s official forecaster. A supply glut could be just part of the problem, because a swathe of Chinese steel makers are burdened with too much debt – and Beijing is not keen on bailouts.

Australia’s iron triumvirate – Rio Tinto Group, BHP Billiton Ltd. and Fortescue Metals Group Ltd. – are ramping up production, and chasing market share at the expense of prices. The frenzied digging means that the country’s exports of ore are expected to rise by almost a fifth to 680 million tonnes this year.

Australia’s Bureau of Resource and Energy Economics is predicting that by 2019, the iron ore price will fall from last year’s average of $126 (U.S.) per tonne to $87.

The price has already declined by a fifth since the beginning of this year, moving close to $100 per tonne, amid concerns that China’s export engine is slowing.

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NEWS RELEASE: Royal Nickel Welcomes Construction of World’s First Processing Plant Capable of Producing Stainless Steel Directly Utilizing Nickel Sulphide Concentrate

Leading Chinese Stainless Steel Producer Tsingshan Expects to Bring Plant into Operation in 2014

Follows Strategic Alliance between Tsingshan and Royal Nickel

TORONTO, March 24, 2014 /CNW/ – Royal Nickel Corporation (TSX: RNX) (“RNC”) is pleased to report that Tsingshan Holding Group (“Tsingshan”), a party with whom RNC entered a strategic alliance in March 2013, is currently constructing the world’s first integrated nickel pig iron (“NPI”) plant to utilize nickel sulphide concentrate as part of the stainless steel production process. The plant is expected to begin operation within this year.

This significant innovation represents the first time that nickel sulphide concentrate will be directly used to create stainless steel. This innovation offers significant potential benefits to the producers of suitable nickel sulphide concentrate feed including lower costs due to simpler processing compared to traditional smelting and refining, and greater flexibility for more potential partners and customers. This plant is also expected to be possibly capable of handling nickel sulphide concentrate anticipated to be produced from RNC’s Dumont Nickel Project (“Dumont”).

Mark Selby, Interim President and CEO, commented, “The Tsingshan plant in China is an industry first and a positive development for projects such as Dumont.

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POSCO to revamp non-steel ops, shun major steel investment – new CEO – by Hyunjoo Jin (Reuters India – March 14, 2014)

http://in.reuters.com/

SEOUL – (Reuters) – POSCO’s (005940.KS) new chief executive said the South Korean steelmaker will restructure non-steel businesses and not make any major investment in increasing steelmaking capacity, in a marked break from the strategy of his predecessor.

Incoming CEO Kwon Oh-joon, a former POSCO chief technology officer, will sell non-core assets and list affiliates after a wave of investment and acquisitions left the world’s fifth-biggest steelmaker with high debt and credit-rating downgrades.

POSCO, once one of the industry’s star performers, posted its third straight year of profit decline last year as it continued to grapple with steel oversupply and reduced customer demand brought about by recent global economic downturn.

“POSCO’s biggest task is to improve its financial structure,” Kwon said at a news briefing after starting a three-year term as chief executive and chairman. “First of all, we have to improve our core competitiveness in steel and generate profit.”

To that end, POSCO will restructure its materials and energy businesses, and focus on lithium, nickel, fuel cells and clean coal, Kwon said.

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UPDATE 1-India PM: POSCO to start work on steel plant in coming weeks – by Krishna N Das (Reuters India – January 16, 2014)

http://in.reuters.com/

NEW DELHI, Jan 16 (Reuters) – South Korea’s POSCO will be able to start work on its planned $12-billion Indian steel plant over the coming weeks, India’s prime minister said on Thursday, ending an eight year delay for environmental and legal clearances.

Manmohan Singh said the firm’s request for an iron ore mining licence – the final regulatory hurdle for the project which would be the biggest foreign direct investment in India – was at an “advanced stage of processing”.

The 12 million-tonnes-per-year plant in the eastern state of Odisha, formerly Orissa, will help world No.4 steel producer India to expand output.

India produced 77.6 million tonnes of crude steel in the past fiscal year, a fraction of top producer China’s nearly 800 million last year. India’s total iron ore reserve was estimated at 28 billion tonnes as of 2010 by the Indian Bureau of Mines.

India’s new Environment and Forest Minister Veerappa Moily last week gave approval to the plant but asked POSCO to spend 5 percent of the total investment on social commitments, which would raise the project’s cost to $12.6 billion.

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Japan nickel users face higher costs, supply hunt after Indonesia ban – by Yuka Obayashi (Reuters U.S. – January 13, 2014)

http://www.reuters.com/

TOKYO – Jan 13 (Reuters) – Japan, home to some of the world’s biggest stainless steel producers, will face higher costs and a scramble to find new nickel supply after Indonesia enforced an export ban on the raw material.

Global nickel prices and mining shares rallied a day after Indonesia banned unprocessed exports of nickel and bauxite, in a move aimed at getting higher returns for its resources by forcing companies to refine the minerals on Indonesian soil.

The law was first announced in 2009 but only a handful of firms made the downstream investments needed, betting on Indonesia backing down on the policy. Jakarta tweaked its rules on Saturday to allow copper, zinc, lead, manganese and iron ore concentrate shipments to continue.

Japan’s biggest nickel smelter, Sumitomo Metal Mining Co Ltd (SCM), said it had enough nickel ore to maintain its current production level of ferro-nickel only till May.

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Return of fourth player shakes EU stainless steel recovery hopes – by Silvia Antonioli, Maytaal Angel and Tom Käckenhoff (Reuters U.S. – December 11, 2013)

http://www.reuters.com/

LONDON/DUESSELDORF, Dec 11 (Reuters) – Just as long-awaited consolidation in Europe’s stainless steel sector seemed to offer hope of recovery in prices and profits, Finnish producer Outokumpu’s surprise sale of two plants back to ThyssenKrupp threatens to undo such gains.

Outokumpu last month announced the sale of large Italian stainless steel mill Acciai Speciali Terni and of specialty high-performance alloy unit VDM to ThyssenKrupp , their previous owner.

The deal, part of a package of measures dictated mostly by Outokumpu’s financial needs, partially reverses its acquisition of Thyssenkrupp’s stainless steel business Inoxum in 2012, a move that gave a fillip to all major European producers’ shares.

It raises the number of major European players in the loss-making industry back to four from three, which is likely to create an even tougher market environment for them as they face low prices, heavy overcapacity and competition from determined Asian exporters.

While a big player like Outokumpu can cut capacity or mothball the least efficient of several operations, ThyssenKrupp, with only two plants in the stainless sector, is likely to make use of them to keep its foothold in the market.

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UPDATE 2-Finland’s Outokumpu announces major financing plan, divests assets – by Jussi Rosendahl (Reuters India – November 30, 2013)

http://in.reuters.com/

HELSINKI/FRANKFURT, Nov 30 (Reuters) – The world’s No. 1 stainless steel maker Outokumpu said it planned to raise 650 million euros through a rights issue and divest assets back to ThyssenKrupp in an unexpected package of steps aimed at shoring up its finances.

The move will partly reverse Finnish Outokumpu’s 2012 acquisition of Thyssenkrupp’s stainless steel business Inoxum as it transfers a large steel plant in Terni, Italy, and high-performance alloy unit VDM back to the German group.

Outokumpu has been hit hard by Europe’s economic slowdown and by overcapacity in the industry, pushing up its debt and leading to speculation that it may need more cash from its shareholders.

The assets will be transferred to ThyssenKrupp in exchange for the cancellation of a 1.25 billion euro ($1.7 billion) loan note that Thyssen granted to Outokumpu when their original deal was done in 2012.

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Mittal’s Aperam ups bid for Outokumpu’s Italian steel mill – by Silvia Antonioli (Reuters U.K.- November 21, 2013)

http://uk.reuters.com/

LONDON – (Reuters) – A consortium led by stainless steelmaker Aperam APAM.L has raised its bid for Italian steel plant Terni that its competitor Outokumpu has to sell, a deal that would reshape the European stainless steel industry.

The consortium, including Italian steelmakers Arvedi and Marcegaglia, submitted the higher bid last week – because Outokumpu sees all bids so far as too low – and it is valid until Friday, two sources with knowledge of the situation said.

Finland’s Outokumpu (OUT1V.HE) agreed to sell the Acciai Speciali Terni plant more than a year ago to gain approval for its purchase of ThyssenKrupp’s (TKAG.DE) Inoxum unit.

The plant – considered one of Europe’s most advanced stainless steel mills – is of strategic importance due to its vicinity to steel buyers in Italy, a major steel market, but its profitability has been hard hit by a slump in the steel market.

Loss-making Outokumpu faces a massive writedown on Terni, which is valued at more than 560 million euros ($750 million) on its book but is expected to sell for a fraction of that.

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PRESS RELEASE: Outokumpu Chief Medical Officer Markku Huvinen’s long-term study published in British Medical Journal

OUTOKUMPU OYJ

November 21, 2013 at 3.30 pm EET

British Medical Journal has published an article by Outokumpu’s Chief Medical Officer Markku Huvinen. The article is based on his 30-year study and reports its findings on cancer incidence among ferrochrome and stainless steel production workers in Kemi and Tornio, Finland. The study shows that there is no added risk of cancer to individuals working in steel mills and living nearby.

Says Outokumpu CEO Mika Seitovirta: “We are extremely proud of Markku’s research and the work done by our health and safety team. Markku initiated the first systematic measurement in the world on the exposure to chromium and other compounds connected with stainless steel production. Safety comes first in all our operations – we want our employees to return home safely at the end of their working day. If we cannot remove all risks, we make every effort to control them.”

The study assesses the risk of cancer, especially cancers of the lung and nose, since the start of the production in 1967 until 2011. The overall cancer incidence was similar as in general in the same region, and the lung cancer risk was actually lower.

Says Markku Huvinen: “When I started as doctor at Outokumpu in 1970s, one of the ferrochrome smelter workers came to my office, blew his nose and asked me, ‘What does this dust do to my health?’

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