ArcelorMittal

gui yong nian/Adobe Stock

This morning in metals news, senior executives at Kobe Steel were aware of the company’s data tampering, copper drops from its two-month and a subsidiary of ArcelorMittal is paying $1.5 million to settle a lawsuit regarding pollution from its western Pennsylvania coke plant.

Two-Month Trial: Metal Buying Outlook

Kobe Admits Executives Knew Abut Data Cheating

Kobe Steel admitted for the first time that senior level executives were aware of the data falsification going on at the company, Reuters reported.

As a result, three executives were “reassigned,” according to the report — in other words, demoted.

According to the steelmaker, about 500 customers received products with falsified specifications.

Copper Falls Off Two-Month High

After approaching a two-month high in the previous session, copper dropped Thursday, Reuters reported.

LME copper closed at $6,924 per ton on Wednesday.

ArcelorMittal Subsidiary Pays $1.5M in Pollution Suit

A subsidiary of ArcelorMittal is paying $1.5 million to settle a suit that its western Pennsylvania coke plant “showered the area with soot and other pollutants almost daily,” the Associated Press reported.

PennEnvironment, the environmental advocacy group behind the suit, said it believes the penalty is the largest secured by a citizen lawsuit in Pennsylvania history under the federal Clean Air Act, according to the Associated Press report.

Free Sample Report: Our Annual Metal Buying Outlook

natali_mis/Adobe Stock

ArcelorMittal’s proposed purchase of Italy’s troubled Ilva steel plant was hailed by nearly all parties as a successful solution to one of Italy’s thorniest and longest-running industrial and environmental problems.

Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up

The Ilva steel plant has been dogged for years by under-investment, losses and, most seriously, repeated toxic emissions linked to high cancer and respiratory disease rates in the area.

ArcelorMittal had undertaken to clean up the plant and tackle open-air mineral waste deposits that, according to the Financial Times, spew such serious pollution into the air that the local Taranto authorities have to declare periodic “wind days” (on which schools near the plant are forced to close to avoid dust exposure).

ArcelorMittal’s €1.8 billion (U.S. $2.15 billion) purchase of the plant from the Italian owners would have saved Italy’s largest steel works from insolvency, securing some 20,000 jobs at the plant and supply chain but also, according to pledges made by the firm, would clean up the environmental problems.

Yet politicians in the Taranto and wider Puglia area have mounted a legal challenge to the takeover on the grounds that it does not tackle pollution from the plant quickly enough.

No one said doing business in Italy was easy — but many fear ArcelorMittal could walk from the deal if local politicians continue to obstruct the process.

The European competition authorities in Brussels have already raised objections to the deal on the grounds that ArcelorMittal would control more than half the European market in premium galvanized steel should the purchase go through without divestments in other areas.

Fortunately for the local community that desperately needs the deal to ensure employment while addressing the environmental catastrophic they find themselves in the European steel market is doing rather well at the moment and it remains in ArcelorMittal’s interests to secure the plant if the local communities interests can be shown to be taking precedence.

Free Sample Report: Our Annual Metal Buying Outlook

For the time being though the combination of EU and local opposition means the fate of one of Europe’s largest steel plants remains in the balance.

Zerophoto/Adobe Stock

This morning in metals news, ArcelorMittal and the state-run Steel Authority of India Ltd. (SAIL) are reportedly close to a joint-venture deal, officials in a northwest Indian town are threatening to sue U.S. Steel after a recent Lake Michigan toxic chemical spill, and despite the start of the winter season, Chinese steel mill profits have gone up.

Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up

ArcelorMittal, SAIL Close to Deal

ArcelorMittal and India’s state-run SAIL have been in talks regarding a potential joint venture; according to Bloomberg, the two are expected to ink a deal soon.

According to Bloomberg, the two have agreed to terms on the deal, which features a $60 billion automotive plant.

Portage Officials Threaten to Sue U.S. Steel

After a second incident of dumping toxic chromium into Lake Michigan, U.S. Steel is facing lawsuit threats from a northwest Indiana town, not long after the City of Chicago said it would file suit.

Officials from Portage, Indiana, recently threatened to sue the company after the second spill, which occurred in October.

According to the Northwest Indiana Times, the Portage City Council approved a resolution Tuesday night demanding the steelmaker report any environmental spill or discharge to the city as it would to the Environmental Protection Agency or Indiana Department of Environmental Management.

Chinese Mills’ Profits Up

Profits by Chinese mills continue to rise after a warm start to the winter season, Reuters reported.

Warmer weather has allowed steel operations to continue when they would ordinarily be shut down by the colder winter weather.

Free Sample Report: Our Annual Metal Buying Outlook

According to the report, physical spot prices for steel rebar for immediate delivery rose to 5,210 yuan ($787.72) a ton on Tuesday — its highest since August 2008.

We have written before about the principal of unintended consequences. Governments, companies and people do things often for the best reasons, but do not foresee occasionally tragic — but more often unfortunate — consequences.

Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up

Well, India’s recent amendments to the Insolvency and Bankruptcy Code (IBC) have not only practically debarred promoters from reacquiring their own assets – the intended action, but have also put the world’s largest steelmaker ArcelorMittal’s prospective bid for stressed steel assets (namely Bhushan Steel, Bhushan Power & Steel, and Essar Steel), in jeopardy, the Indian Business Standard reports last week.

Firstly, the act — as the paper explains, a new Section 29A of the IBC rules that a person and therefore company in which they are involved shall not be eligible to submit a bid for a distressed company if they are an undischarged insolvent. This prohibits promoters or sister concerns of companies with non-performing assets (NPAs) of more than a year from bidding for these companies. This quite rightly stops the practice of putting an asset into insolvency to lose its debts only to pick it up for a song from the administrators and start again without the debt.

The problem for ArcelorMittal is that in 2009 the firm picked up a stake in Uttam Galva Steels. The idea was to pave the way for the global major’s entry into India. The glitch is that last September, according to the report, Uttam Galva Steels was classified as an NPA, which means that it’s been more than a year since the account became an NPA and bars ArcelorMittal from participation in the auction.

Of the 12 companies that the Reserve Bank of India mandated India’s commercial banks to refer to bankruptcy courts the first batch include Essar Steel, Monnet Ispat, Bhushan Power & Steel, Bhushan Steel, Electrosteel Steels, Alok Industries, Amtek Auto, Jaypee Infratech, Lanco Infratech, Jyoti Structures, ABG Shipyard, and Era Infra, the Economic Times reports.

Steelmakers are likely only interested in the three steel producers: Bhushan Steel, Bhushan Power & Steel, and Essar Steel.

With steel demand rising rapidly, Indian assets should have potential, and with ArcelorMittal’s experience, deep pockets and technology, the firm makes a natural buyer, significantly better to have a trade buyer than private equity or a conglomerate – of which India has many – without the deep subject matter experience in turning around steel plants.

Free Sample Report: Our Annual Metal Buying Outlook

The authorities no doubt realize this and will be working behind the scenes to find a solution.

One option suggested is that a resolution is found to the bankrupt firm Uttam Galva Steels that is the cause of the firm’s debarring.

Ironically, Uttam Galva Steels is on the list for the second round of forced auction. However, some are asking if Arcelor couldn’t, or wouldn’t, turn around Uttam Galva Steels, then why should they be given the chance to bid to do the same for this new batch of assets?

A fair question, indeed.

Zerophoto/Adobe Stock

It’s a proposal that’s been up in the air for some time now — but those connected with it are positive of it coming to fruition.

A proposed joint venture (JV) between India’s state-owned Steel Authority of India Limited (SAIL) and the world’s largest steel producer ArcelorMittal for an automotive steel plant in India may be sealed within the next two months.

Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up

The new plant, when set up, will provide support to India’s automobile sector, and also offer specialized technologies to SAIL. It will focus on producing specialized grade steel products for defense, space and automobiles.

Reports in the media here talk of the agreement being signed soon, perhaps in the next 60 days. Incidentally, the deadline for sealing the deal had ended in May this year.

A report in the Sunday Guardian, too, said the deal was in its “final stages.”

Read more

Pavel Ignatov/Adobe Stock

This morning in metals news, U.S. imports of steel are up 19.4% through the first 10 months of the year, the European Union’s antitrust watchdog is eyeing ArcelorMittal’s bid to buy Ilva and London copper posted little movement Thursday.

Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up

Steel Import Market Share Hits 26% in October

According to data released by the American Iron and Steel Institute (AISI), for the first 10 months of 2017, total and finished steel imports were 32,841,000 net tons (NT) and 25,375,000 NT, up 19.4% and 15.1%, respectively, from the same period in 2016.

In addition, the estimated finished steel import market share in October was 26% and is 27% for the year to date. 

EU to Look at ArcelorMittal’s Ilva Takeover Bid

The EU’s antitrust watchdog is taking a look at ArcelorMittal’s bid to buy Ilva, amid concerns that the purchase could stifle competition and lead to rising prices, the Associated Press reported.

According to the report, the EU Commission said Wednesday that it fears “the merger may reduce competition for a number of flat carbon steel products.”

London Copper Doesn’t Budge

It was a quiet Thursday for LME copper, as the metal traded just above the previous one-month low, Reuters reported.

Free Sample Report: Our Annual Metal Buying Outlook

With light volumes, LME copper held at $6,856 a ton by 1:27 GMT, marking a 0.4% gain from the previous session, per the report.

gui yong nian/Adobe Stock

This morning in metals news, the Kobe Steel saga continues, an Indian steel firm’s stock is up amid acquisition buzz and London copper holds steady.

Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up

Kobe Steel Faces Another Test

The fallout from Kobe Steel’s quality data falsification scandal continues, and according to Reuters there are concerns about the Japanese firm’s outstanding liabilities.

According to the Reuters report, the third-largest Japanese steelmaker has $3.3 billion cash in hand and $7.01 billion in debts as of the end of March.

Bhushan Steel Stock Surges

Indian firm Bhushan Steel saw its stock rise after news of a potential acquisition by ArcelorMittal, according to the Economic Times.

The Indian company’s stock rose 20% Monday amid buzz that ArcelorMittal joined the bidding, according to the report.

Copper Trades Steady

Copper has experienced a significant upward trend in October, rising from $6,518 on Sept. 20 to $7,008 on Oct. 20.

The metal did experience a dip last week, however, falling from $7,061 last Monday to $7,008 on Friday.

Free Download: The October 2017 MMI Report

On Monday, copper held steady, according to Reuters, trading at $6,950.

Unlike the steel mergers of the mid-noughties, the mergers currently in the news are born out of weakness, not strength, a recent Financial Times article suggests.

Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up

According to the piece, profitability among the continent’s steelmakers plunged from a peak in the third quarter of 2008 — when each ton shipped delivered on average €215 in earnings before interest, tax, depreciation and amortization — to just €46/tonne in the first quarter of 2016, according to calculations by UBS.

The figure has recovered since to about €83/tonne in the first quarter of 2017, but at the cost of 86,000 job losses since the financial crisis and years of losses contributing to the bankruptcy of the continent’s largest steel production plant, Ilva, in Italy.

Source Financial Times

Despite years of suboptimal capacity utilization, there has been limited rationalization of production continentwide, with governments fiercly opposing job losses in their backyard and steelmakers hoping the other guy will make the cuts. Even Ilva is now being taken over by ArcelorMittal rather than closing completely, and following a major investment will be back in production next year.

Source Financial Times

Although the industry acknowledges Europe will never need as much steel as it once did, ArcelorMittal is quoted as saying the industry is looking to governments to do more to stem imports from Russia and China, and facilitate the planned and phased closure of persistently loss-making plants. Less foreign competition and more consolidation is the agenda in the hope fewer more-consolidated steelmakers can achieve greater clout with buyers in a more constrained market, forcing through higher prices.

Source Financial Times

When ArcelorMittal’s takeover of Ilva is complete, the combined entity will control some 30% of European flat-rolled steel production, up from 26.5% for ArcelorMittal now. While Tata Steel’s proposed and much-delayed merger with ThyssenKrupp’s steel division — currently Europe’s second-largest steel producer — would raise their combined market share for hot-rolled flat products to over 20%.

Steel prices are already up nearly 60% from the bottom in 2015 on the back of improved recovery in steel demand and a gradual increase in anti-dumping legislation restricting some types of steel imports into Europe. Producers would like to see this go a lot further, of course, but consumers are fighting to keep the import market open, fearing — with some justification — that more action will reduce competition and result in significantly higher prices.

Free Download: The July 2017 MMI Report

For the first time in years, steelmakers at least seem to have a plan and are actively pursuing it. Whether that plan is to the eventual benefit or detriment of consumers remains to be seen — but a healthier domestic steel industry must certainly be advantageous to all.

ft2010/Adobe Stock

Two significant developments on the steel front took place last week that will ensure that India continued on its chalked-out path of global dominance in steel production.

Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up

Jindal Steel and Power Limited (JSPL) launched its 6 million ton per annum (MTPA) integrated steel plant at Angul in the Odisha province. The plant, one of the biggest in India, was dedicated to the nation on May 27, 2017. Naveen Patnaik, the chief minister of Odisha, said the plant would lead to an addition of 20% of steel to India’s ultimate goal of steel manufacturing capacity of 300 MTPA by 2030.

For JSPL, this was a major milestone, too. According to Chairman Naveen Jindal, the 6 MTPA steel plant at Angul was a major landmark in defining the future growth trajectory of JSPL. The latter is part of US $18 billion diversified O.P. Jindal Group.

Spread over 3,500 acres, JSPL’s integrated steel plant at Angul will provide direct employment opportunities to over 30,000 people and indirect employment to over 100,000 individuals.

JSPL’s capacity addition would further enhance the cost efficiencies of steelmaking — a continuous focus area of JSPL’s business philosophy, adding to its overall plan of debt reduction, said some of its top honchos.

In another development on the steel front, ArcelorMittal, the world’s largest steel producer, said it has agreed to make concessions to Steel Authority of India Ltd (SAIL) to jumpstart a delayed US $897 million automotive joint venture.

ArcelorMittal and SAIL, according to a report by news agency Reuters, had agreed to a proposal to export a fifth of the auto-grade steel they aimed to make as part of the joint venture.

Incidentally, the proposal was one of several made by Indian government think tank NITI Aayog, which is mediating talks on commercial terms for the delayed venture.

At present, a bulk of the high-grade steel used by India’s vehicle industry was imported from countries such as Japan. With this new joint venture all set to take off, reliance on such imported steel would fall drastically, experts say.

The Reuters report quoted a company spokesperson as saying that in the interest of the strategic partnership, some concession from ArcelorMittal on technology had been extended.

Experts believe if the deal does come to fruition, it would help SAIL compete with local rivals, such as JSW Steel and Tata Steel, which have foreign partnerships to make steel for the car industry.

Much to the delight of not only its executives and employees but both the global steel sector and even stock markets, the Luxembourg-based steel giant ArcelorMittal has posted its first annual profit in more than five years, registering the biggest jump in earnings in the same period.

MetalMiner Benchmarking: Click Here for Current Metal Prices

The world’s largest steelmaker by output swung from a $7.9 billion net loss in 2015 to a net profit of $1.8 billion last year. Read more