World crude steel output in October rose 4.6% from September

The latest crude steel statistics from the World Steel Association indicated global output in October rose 4.6% from September to 118 million tonnes and rose 2.4% from a year earlier. Production in China rose 4.9% from last month to 50.3 million tonnes which 43% of the global output, but it decreased 3.8% from a year earlier. Germany, Italy, Turkey, Ukraine, Canada and South Korea output increased 10% or over, compared to last year.




In the first ten months of this year, production rose 2.4% from 2008 was 1,165 million tonnes and rose 17.5% from 2009. In Europe and North America, crude steel production was still 17.4% and 16.8% respectively less than in 2008, while Asian output was 14.7% higher. Global capacity utilization in October rose to 75.4% from 74.8% in September. The earlier report from World Steel Association posted 74.4% rate for the month before last.

Crude oil price to fall the biggest weekly as concern in China bank reserve and Irish bailout

Bloomberg




Crude oil price for December delivery drop by 34 cents to 81.51 USD a barrel on NYMEX last Friday trading, 4% drop since Nov. 12, the most since the week ended Aug. 13. In addition, January contract price also slipped 44 cents, or 0.5%, to 81.98 USD a barrel. Brent crude for January settlement fell 71 cents, or 0.8%, to 84.34 USD a barrel on the ICE Futures Europe exchange in London.



Analysts from many research institutes commented to the same direction that China move on inflation curbing is weighing on this crude market. The People’s Bank of China announced it will raise the reserve ratio requirement for the nation’s banks by 50 basis points starting Nov. 29. Beyond of oil price drop, this announcement induced the biggest selloff in China’ stock index since May over the past two weeks. In addition, analysts also said that oil price drop this week amid concern Europe’s credit crisis would deepen because of mounting debt at Irish banks. Oil in NYMEX may increase next week amid speculation Ireland will accept a bailout, a Bloomberg News survey showed. Eighteen of 38 analysts and traders, or 47 percent, forecast crude will climb. Ten respondents, or 26 percent, predicted prices will fall and 10 estimated there would be little change.

G Steel expects return to profit in fourth quarter 2010

G Steel expects return to profits G Steel Plc, the debt-ridden hot-rolled steel manufacturer, hopes to return to the black in the fourth quarter on higher capacity use and foreign-exchange gains, especially once its US$170-million debt restructuring plan wins approval from bondholders.

The listed company's revised bond exchange programme failed to be endorsed at yesterday's bondholders' meeting, as attendance was insufficient for a quorum.

Attendees had to represent at least 90% of the total outstanding principal to approve the plan, but failing that, only 50% will be required for the next meeting expected on Nov 22 or later.

A G Steel executive said capacity use at the company's plant has increased to 60% in this fourth quarter, up from 40% in the third, as customers are placing more orders.

The factory produces 60,000 tonnes of steel per month, less than the profitable minimum of 100,000 tonnes, due to working capital constraints.

But G Steel has recorded foreign exchange gains, as up to 70% of the raw materials, mainly steel scraps, are imported and have thus become cheaper thanks to the stronger baht.

"We're hoping the company can register a profit from operations and possibly a net profit with some forex gains," said one executive.

"If the debt restructuring plan wins approval from the bondholders, the net profit will be significantly higher."

The plan is projected to result in a profit of two billion baht, as interest and debt principals will be reduced. Total debt amount would decline by 5 billion baht, said the executive.

G Steel earlier proposed amending the bond exchange programme to where only 40% of the outstanding principal would be converted into the company's equity, down from 60% previously, with the balance rescheduled for repayment.

Bondholders also proposed waiving all accrued and unpaid interest from three times the payment defaults totalling $26.8 million. The plan calls for the release of negative pledges currently inhibiting the company's ability to use its fixed assets as collateral for new credit facilities.

"We're optimistic that the bondholders will vote to support the plan in order to allow G Steel to resume normal operations so they can gain when our share price rises. This is a win-win solution for both sides instead of getting nothing if our restructuring becomes bogged down," said the executive.

"Once the plan is endorsed, our new strategic partners will be willing to inject fresh capital into the company. We're now in close talks with two potential foreign investors."

Apart from $170 million worth of overdue bonds, G Steel also owes more than $200 million to trade creditors, with talks underway to restructure that debt.

Sluggish rebar demand in Taiwan result volatile price

Due to weak rebar demand in Taiwan, major rebar producer Feng Hsin Iron & Steel decided to maintain stable rebar prices for the second week in a row at 19,200 TWD per tonne (634 USD per tonne). Meanwhile, Hai Kwang Enterprise Corp decided to cut price from 18,700 to 18,500 TWD per tonne. Rebar producer cut the product price, though scrap price is picking up because steel mill believe that buyers will accept with this price as similar to spot price last week.