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STEEL NEWS: Pakistan: 15 pct regulatory duty may be imposed on steel product imports

Tezcan orders continuous pickling line from SMS Siemag
Turkey

The Turkish steel service center Tezcan has placed an order with SMS Siemag (www.sms-siemag.com) for the supply of a continuous pickling line. Tezcan will install the line at its Kartepe location near Izmir to improve the economy of its hot strip pickling operations and achieve an increase in output. Especially the high efficiency of the equipment was reason for Tezcan to decide in favor of a continuous pickling line and the turbulence pickling process from SMS Siemag, complete with a connected acid regeneration plant. Starting at the end of 2015, the line will pickle a yearly throughput of 1.3 million tons of hot strip, as a preparatory treatment for the downstream cold rolling and coating processes. Most of the material will be used in the construction industry as galvanized and/or color-coated cold strip.

SMS Siemag will supply the line and its numerous high-capacity components all from a single source, including the mechanical equipment, the process technology as well as the electrical and automation systems. In addition to the design and manufacture of the plant equipment, the supply will also include support during installation and commissioning. This comprehensive service package was a decisive reason for Tezcan to choose SMS Siemag as supplier.

The turbulence pickling technology provides a high-quality descaling result without overpickling. The process is characterized by low energy and acid consumption, low maintenance and operating costs, and long service life of the equipment. These economic, ecological and process-technological benefits convinced Tezcan about the quality of this system.

Hot-rolled low-carbon steel strips will be processed at speeds of up to 220 meters per minute. Strip thicknesses will range between 600 and 1,550 millimeters, strip widths between 1.5 and 5.0 millimeters.

The line will incorporate numerous high-capacity components with convincing performance features in terms of eco-friendliness, economic efficiency, process reliability, flexibility and product quality. A stretch leveler will prepare the strip for the pickling operation in the three downstream pickling tanks. The tanks will be made of plastic materials, facilitating a light-weight design. Each tank will have its own circulation system. A side trimmer with integrated scrap chopper will adjust the desired strip width and straighten the strip edges. In a DUMA-BANDZINK oiling machine, an oil film will be applied to the strip surface in an electrostatic process. A total of three horizontal strip accumulators will be integrated into the line in order to guarantee a continuous strip run.

The pickling acid will be directly processed in the fluidized-bed-type acid regeneration plant supplied by SMS Siemag. The plant will have a capacity to regenerate 7,500 liters hydrochloric acid per hour, enough to cover the line’s complete turnover of pickling liquor. Within a closed circuit, the regenerated liquor will be directly returned to the process and reused for pickling. Additionally, iron oxide will arise as a valuable by-product. This extremely energy-efficient regeneration plant, which complies with all applicable environmental regulations, is an excellent example of a technology effectively combining eco-friendliness and economic efficiency.

The turbulence pickling line achieves optimum descaling results with low consumption of energy and pickling liquor, while keeping maintenance and operating costs low.

The new line will be used to pickle 1.3 million tons per year of hot strip as a preparation for its future application in the building sector.

Import duties raised against steel dumping from China, Russia and Turkey
Iran

Iran has raised duties on certain steel imports to between 10 and 20 percent as protectionism in the global steel sector gathers pace amid a flood of sales from top producer China.

China's steel exports rose 50.5 percent last year to a record 94 million tons, or about a quarter of world exports. The increase has sparked a chorus of calls around the globe for action to protect local steel industries.

This year alone, measures taken to protect steelmakers have been taken in the European Union, Indonesia, India, Turkey, and now Iran.

"A steel import tax has been imposed to protect local steel mills against dumping of China, Russia and Turkey," said Keyvan Ja'fari Tehrani, head of international affairs at the Iranian Iron Ore Producers and Exporters Association (IRIOPEX).

The duties, which will apply to products such as billet, hot rolled coil, wire rod and rebar, are in line with Iran's ambitious 2025 vision plan to quadruple its steel output.

They are also in line with a bid to diversify the country's economy away from oil, make it more self-sufficient, and shield it better from Western sanctions over Tehran's disputed nuclear programme.

"Some believe that duties of 20 percent on rebar and 10 percent on billets cannot stop the tide of subsidized Chinese steel exports, and higher tariffs are required," said Bahador Ahramian, a board member of IRIOPEX and the Iran Steel Producers Association.

Tehran is anxious to protect its steel and iron ore sector. It is seen as strategic in that it supplies dozens of related industries, including construction and oil.

In addition to raising steel import duties, Iran has banned importers from buying foreign currency at the official exchange rate, usually about 20 percent below the market rate.

Drydocks World awarded contract to fabricate components for a riser platform jacket
UAE

Dubai-based Drydocks World has been awarded by Norway's Kvaerner a contract to fabricate components for Statoil's Johan Sverdrup riser platform jacket located in the Norwegian North Sea.

Johan Sverdrup is on the Utsira High in the Norwegian sector of the North Sea, 155km west of Stavanger.

The UAE firm will carry out the fabrication of pile clusters and floatation tanks including surface protection for the Johan Sverdrup Riser platform jacket. The pile clusters will form the base of the jacket where the structure is piled to the seabed, and the tanks will be used for launching and installation of the jackets on site.

Drydocks World says it will be fabricating to the stringent NORSOK safety and quality standards.

Kvaerner won the USD261 million contract from Statoil in January. The riser platform jacket is due to be delivered in summer 2017.

Drydocks World is currently fabricating a 2000-ton jacket and wellhead platform for the Technip Rashid C Platform.

15 pct regulatory duty may be imposed on steel product imports
Pakistan

The Federal Board of Revenue (FBR) has endorsed the proposal of Ministry of Industries and Production to impose 15 percent regulatory duty on import of Hot Rolled (HR) products and pipes and fixed sales tax of Rs5,600 per metric ton (USD55) on supply of billets and import of re-rollable scrap to provide a level playing field to the local industry.

The FBR has examined new proposals regarding imposition of RD on some items and agreed to generate additional revenue in 2014-15 through the duty.

Details revealed that a Restructuring Package of Rs.18.5 billion for Pakistan Steel Mills (PSM) was approved by the Economic Co-ordination Committee (ECC) of the Cabinet in April, 2014, which again approved Rs.1.0 billion for the payment of salaries to the employees of PSM in February, 2015. The targets as envisaged to achieve Capacity Utilisation were not achieved due to number of reasons including Duty/Taxes regime on the PSM products.

Levy of 15 percent Regulatory Duty on Import of Hot Rolled Products & Pipes: Among Steel Products, except Hot Rolled, federal government has recently imposed regulatory duty on billets, bars and wire Rods @ 15 percent and 5 percent on cold rolled coils and galvanised platted sheets to protect manufacturing industry vide SRO 18(1)/2015 dated 14-01-2015 which has created disparity with PSM’s HR products. At this juncture of PSM’s revival, it is seriously affecting sales of HR produced by PSM, the only producer of HR in the country. Pakistan Steel is seriously affected due to massive cheap imports from China. Several countries including Turkey, EU, USA, Philippines, Viet Nam, Malaysia, affected by Chinese exports, have levied special duty/cess up to 40 percent of the value to protect their industry whereas, some of the countries have put in place non-tariff barriers to protect their steel industry.

Following that principle, due consideration to impose 15 percent regulatory duty must also be given to Hot Rolled (HR) products (Pakistan Customs Tariff Heading No.7208) and pipes. The Hot Rolled sheets/coils are used for making seam welded pipes for gas/water/oil, storage tanks, vessels, containers, ships, barges, launches & floating structures, fabricated sections/structures, and used as raw material for manufacturing of Cold Rolled flat products.

Sources said that the PSM can meet 72 percent of HR demand with 500,000 tons of Hot Rolled (HR) product against the annual estimated requirement of 700,000 tons of local industries, which shows that PSM can substantially meet the requirement. PSM is now running at 50 percent production capacity and committed to attain 77 percent breakeven production capacity by April 2015. At this juncture, the above disparity in tariff is seriously affecting main sales revenue of HR produced by PSM and hence its GoP funded revival Business Plan.

If 15 percent RD is imposed on HR and pipes, following benefits will accrue not only to PSM but also to the country: Firstly, the revival of PSM which largely depends upon the sale of HR. secondly, annual saving of Foreign Exchange amounting to Rs.40 billion.

Rationalise the sales tax rate on billets (long products): The higher rate of Sales Tax on Billets of Pakistan Steel has forced Pak Steel, totally out of long product market, resulting in less sales tax revenue generated to exchequer on PSM products. Analytically, it may be noted that PSM is subjected to a high rate of fixed sales tax @ Rs.8,092 PMT (USD79), which is mother industry of prime products with inevitable major production cost, contrary to the small units having marginal cost of production with low fixed sales tax rate of Rs.5,600 PMT (USD55). The current imbalance in rate of sales tax of Rs.2, 4927 PMT between the competitors warrants rationalisation.

On the other hand under the SRO 421 of 2014 dated 4.6.2014, a General Sales Tax @17 percent on sale value has been levied on local sales of re-meltable scraps, whereas under Sales Tax Special Procedures Rule 2007 58 H(2) upon the imports of such scrap a fix sales tax of Rs.5,600 PMT has been levied. This has also affected PSM sales.

The proposal is the imposition of regulatory duty of 15 percent on import of Hot Rolled (HR) products (PCT No 7208) and pipes in line with the regulatory duty imposed in case of billets, bars and wire rods @ 15 percent and 5 percent on cold rolled coils and galvanised platted sheets. The second proposal is to impose a fixed sales tax of Rs.5,600 PMT be imposed at par for billet supplied by PSM, steel melters re-rollers and on import of re-rollable scrap to provide a level playing field to the local industry.

Stockists concerned on dramatic drop in steel prices
UAE

UAE-based steel and building material suppliers are seeing a dramatic drop in prices due to low oil price, Abdullah Al Gurg, Group General Manager of Easa Saleh Al Gurg Group (ESAG) told.

“We have a large stock of steel and building material stored in the warehouses and showrooms which we bought at a higher price before the drop in oil price,” he said.

“We have serious concerns about the stock of steel and other building materials as the prices are continuing to drop due to the low oil price,” he said.

Oil was selling for more than USD115 [Dh422] a barrel in June of last year. Today it is selling below USD60 a barrel.

The price of steel has fallen by more than 30 per cent since the oil price dropped last year and it is expected to continue to remain volatile, according to Al Gurg.

The slide of the oil price impairs the business environment surrounding the oil and gas petroleum-based industries, which include cement, asphalt, roofing materials, insulation, plastic and others materials, he said.

While there is no indication for an imminent rebound, Al Gurg said suppliers need to adopt new strategies to survive.

He said that businesses not adding value in the steel supply chain are in danger of going out of business.

ESAG Group made a conscious decision to shift from a stockholding model to a manufacturing model to protect this business segment and to prepare the Group’s steel division for growth in the coming years.

Steel pipe exports drop 4 pct during Jan-Feb 2015: CEBID
Turkey

The recent data released by the Turkish Steel Pipe Manufacturers Association (CEBID) shows that Turkish steel pipe exports declined during the initial two-month period in 2015.

The pipe exports during January to February this year totaled 285,900 tons, down 3.6% when compared with the exports during the corresponding two-month period in 2014. The country had exported 296,600 tons of pipes during the first two months in 2014.

The largest importer of Turkish steel pipes was the US. The US imports during Jan-Feb ’15 totaled 53,588 tons, accounting for almost one-fifth of the total Turkish exports during this period. The US pipe imports from Turkey surged higher by 84.5% during the two-month period year-on-year. The second largest destination of Turkish steel pipes was Iraq. The imports by Iraq totaled 50,224 tons, down 20.3% when matched with the imports during the previous year.

The drop in exports during the first two months of the year leaves the industry skeptical about the earlier export forecasts announced by the Turkish Steel Pipe Manufacturers Association (CEBID). The association had earlier predicted that the pipe exports for 2015 are likely to cross the target of 2 million tons in 2015, even higher when compared with the 2014 export of 1.95 million tons. The exports which dropped significantly during the second half of 2014 had shown signs of recovery during November and December.

Qatar Steel and Algerian Sider start construction of USD2 bln plant
Algeria

The Qatar Steel Company and the Algerian public group Sider launched on the 9th March in Jijel, a town located at about 300 km east of Algiers, the construction of a steel plant for a total investment of USD 2 billion, reports the Algerian news agency, APS.

The main products will be manufactured from 2017 including flat steel and special steels for, among others, the rail industry in Algeria. Eventually, the new complex will reduce the Algerian steel importation, estimated at USD 10 billion per year.

Owned 51% by the Algerian State and 49% by Arcelor Mittal, the group Sider will produce 600,000 tons of steel per year.

The production capacity of the project will be 4.2 million tons / year.

DSI, Habtoor launch USD108m EPC venture
UAE

Dubai's Drake & Scull International (DSI) has formed a Dh395 million (USD107.55 million) joint venture with Habtoor Leighton Speco, it said on Sunday.

The firm will provide mechanical, electrical and plumbing (EPC) services for part of the USD1.1 billion Jewel of the Creek project, it added.

Scrap import prices dip to USD257 ton WoW
Turkey

Turkish scrap import prices declined sharply by USD10 a ton week-on-week to USD247 a ton in the week ended.

Trade was light during the week as mills and yards appeared again to be at loggerheads over pricing. A scrap tender from a mill was heard to lapse as no acceptable offers were made and scrap traders stood their ground.

Despite reports of a trade being completed significantly below USD245/t, the USD245-250/t level seems to be the level at which scrap yards are pushing back for now – time will tell if this holds, with participants already looking to the next round of US domestic sales for prompts on Turkish import pricing.

PSM achieves 60 percent capacity utilisation
Pakistan

Owing to the current management planning, farsightedness and continuous struggle, Pakistan Steel has achieved 60 percent capacity utilization of its 1.1 million tons per annum capacity. After necessary repair and maintenance of Thermal Power Plant (TPP-TBS) was undertaken, currently it is generating 50 MW of electricity.

It is imperative to mention here that in April, 2014 when, Major General Zaheer Ahmed Khan (Retd) joined PSM as Chief Executive Officer, the Production Capacity (CAPU) of the mill was running as low as 1.4 percent, and only 18 MW electricity was generated.

Furthermore the stocks of raw material were almost depleted. It is a delightful to quote that after six years 60 percent of Capacity Utilization (CAPU) has been attained. It took great effort and continuous hard work to undertake necessary repair and maintenance of this vintage plant which was neglected over the years on one hand and to motivate the demoralised and disheartened workforce of Pakistan Steel on the other, and was made capable of reaching the current production level which was only possible under the sincere leadership of Zaheer Ahmed Khan.

Backed with the help of recent bailout package of Rs 18.5 billion from government, Pakistan Steel now has huge quantities of raw material in its stockyard. Furthermore, two more ships carrying raw material will arrive at PSM jetty replenishing the stockyards. It is said that the revival of this national asset (Pakistan Steel) has started and its moving towards the path of success and growth and will soon be a success story for other corporations.

Russia ready to help upgrade PSM
Pakistan

Russian Ambassador Alexey Yurivich Dedov says his country is ready to provide assistance to Pakistan to overcome its energy crisis and upgrade steel mills.

Talking to members of Multan Chamber of Commerce and Industry here on Wednesday, he said his government would not only provide experts for the up-gradation of steel mills and thermal power stations of Jamshoro and Muzaffargarh but would also transfer technology.

Kahramaa awards USD4.66 bln mega water reservoir deals
Qatar

Qatar General Electricity & Water Corporation ( Kahramaa ) announced that it has started awarding contracts for the QR17bn (USD4,665,800,000) worth strategic mega reservoirs project and the accompanying pipelines at a total capacity of 2300 MIG.

The strategic project of the mega reservoirs is considered as the largest expansion of Qatar water storage ever. In the first phase, it aims to increase the country's strategic storage of water till 2026 . The projects consist of 24 reservoirs at a total capacity of 2300 Million Gallons.

Each reservoir will have a total capacity of about 100 MIG and is considered as the largest concrete reservoir in the world. The reservoirs will be constructed in five locations including Um Baraka, Um Salal, Rawdat Rashid, Abu Nakhla, and Al-Thumama. The first phase also covers the installation of 650 km pipelines with large diameters. The space of each reservoir location is 1 km2. The reservoirs are unique in design.

The locations of the mega reservoirs are selected near to desalination facilities at Ras Lafan to the north and Ras Abo Fontas to the south. They are also connected to the existing water network to meet the rapid population increase. Of the total QR17bn contract works, 55 percent of works will be awarded to Qatari companies. Contracts include excavation and landscape, main pipelines and accompanying pipelines installation, and reservoirs construction.

On the other hand, the designs of the second phase have been developed to meet Qatar requirements up to 2036. It includes 40 reservoirs with a total capacity of 3800 MIG. The mega reservoir is one of the vital strategic projects. It aims to increase Qatar water strategic storage to meet the future needs in order to improve water security and Kahramaa services.

The Qatar General Electricity and Water Corporation is the sole transmission and distribution system owner and operator (TDSOO) for the electricity and water sector in Qatar.

TANAP to create huge market for steel pipe manufacturers
Turkey

The ground-breaking ceremony of the Trans Anatolian Natural Gas Pipeline (TANAP) is planned to take place on March 17 in the eastern province of Kars, with the participation of presidents from Turkey and Azerbaijan, Turkish Energy Minister Taner Yıldız said on March 9.

“The ceremony will be held on March 17 in Kars at the level of presidents, barring a last minute cancelation,” Yıldız said during a meeting with the representatives from the Steel Pipe Manufacturers’ Association (ÇEBİD).

The TANAP project envisages gas transportation from Azerbaijan’s Shah Deniz II field through Turkey and up to the country’s border with Europe.

Some 1.3 million tons of steel pipes will be used for around USD1.5 billion, Yıldız said.

“Only 200,000 tons of these pipes will be produced abroad, while 1.1 million tons will be produced in Turkey. This is of great importance for us. We’ll ensure several anti-damping probes will not have an adverse effect on the TANAP,” he added.

Many other potential pipelines in the region will create a huge market, of which Turkey will take a big share, Yıldız stated.

Turkey’s steel industry produces 2 million tons of steel pipes worth over USD1.5 billion per year, said ÇEBİD head Ahmet Kamil Erciyas, adding that the annual production capacity of the sector is around 6 million tons.

He said the Turkish sector had been encouraged to provide locally produced steel for the TANAP, but this was not economical.

“We needed to import the raw material from the countries which offer the cheapest prices. We can complete the whole production before the deadline comes,” Erciyas said.

He also asked for the exclusion of the TANAP from the anti-damping initiatives of the steel sector.

Anticipating the initiatives, which cover seven steel exporting countries, the Turkish sector is preparing to close its doors to steel from these countries.

Global Steel News

China opens steel sector for foreign investment, analysts say move came too late
China

China will end a ban on foreign majority control of its steel companies, a long-touted overhaul widely seen by analysts as coming too late to revive the nation's beleaguered industry.

The country's top economic planning agency, the National Development & Reform Commission, said in a statement on Friday that steel would be among 349 industries designated under a policy category it called "foreign investment encouraged," which opens the sector to foreign control.

The change would be effective April 10, the agency said.

State industry officials a year ago had told reporters the nine-year-old ban was under review. Beijing previously viewed steel as a strategic sector, supplying some of its most crucial industries, and was reluctant to allow outside control -- though it allowed minority stakes under certain conditions.

The Chinese government in July 2005 blocked foreign investors from taking controlling stakes in domestic steel companies, thwarting a bid by Mittal Steel Co. to acquire control of Shenzhen-listed Hunan Valin Iron & Steel Co. Mittal was one of the companies that merged to become the world's largest steelmaker, ArcelorMittal SA, the following year.

Since then, proposals to lift the ban have periodically surfaced from Chinese steelmakers hopeful for injections of foreign capital. Last year, the commission deregulated foreign participation in previously closed infrastructure projects including railways, gas pipelines, telecommunications and clean energy, setting the stage for a wider liberalisation.

The latest move comes at a time when China's economic slowdown has taken a heavy toll on steelmakers. Pressure to cut environmental pollution and slowing demand from big-ticket construction have sent Shanghai steel prices plummeting 41 per cent over the past two years to 2,146 yuan (USDUS343) a metric ton. The latest move isn't likely to spark a flurry of bids from foreign companies, analysts say.

"You're looking at an industry that has huge overcapacity and declining demand -- by and large, it's not the most attractive sector," said Oliver Barron, head of Beijing research for investment bank North Square Blue Oak. The Chinese government has focused too much on opening up unprofitable sectors, such as upstream oil exploration and coal-to-chemical businesses, rather than more-attractive mainstream industries such as telecommunications, Mr Barron said.

The state-backed China Iron & Steel Association has for more than a year publicly supported opening up the steel sector. Part of the pressure to do so, its officials say, comes from mounting concern from export destinations over allegations of dumping of steel products from Chinese mills seeking a way out of the economic doldrums at home.

China's steel-product exports last year rose to a record 94 million tons, customs data showed.

"One reason why trade friction has been rising is that foreign investment isn't allowed," Zhang Changfu, the association's secretary-general, said last year. "This has to change. if you don't let people in, how do you go out?"

Govt. to implement AD duties on stainless steel from China, others
India

India’s trade ministry has recommended anti-dumping duties ranging from USD180 to USD306 per ton for some industrial-grade stainless steel imported from China, Malaysia and South Korea in a bid to protect local industry.

After a year-long investigation based on complaints from Jindal Stainless Ltd, the trade ministry said it found that the domestic industry was suffering “material injury due to such dumped imports” and that a definitive measure was required to stop it.

The recommendations, made public on Wednesday, are expected to be implemented by the finance ministry within three weeks and will stem the flow of surging imports, N.C. Mathur, president of the Indian Stainless Steel Development Association, said.

Mathur said the grades subject to the dumping duty can cost USD1,270-USD2,070 per ton and are used mainly to make equipment for industries like dairy, oil refinery and railways.

India consumes about 1 million ton of this type of stainless steel and more than 40 percent of that is imported, mainly from China, a trade which is growing at up to 15 percent a year.

China’s annual stainless steel surplus is more than 4 million tons, compared with India’s annual demand of about 2.6 million tons and which leads to cheap supplies coming in from China, Mathur said.

Steelmakers from Asia to Europe are facing increasing pressure from a rise in cheap imports as Russia and Ukraine, armed with weaker currencies, join China in pushing surplus output on to world markets.

Many steel companies in India, such as Tata Steel, JSW Steel and Kalyani Steels, have seen profits come under pressure.

Mathur said the steel industry also welcomed the government’s decision to provide for an increase in the import duty on steel to 15 percent without any major procedural delays. Earlier, the government had set a limit of 10 percent while the actual duties are below that.

The provision will allow the government to raise the duty whenever it wants just with a notification, Mathur said.

Zaporizhstal output up in January-February 2015
Ukraine

In January-February Zaporizhstal produced 640.8 thousand tons of steel, up by 2.1% YoY. Pig iron output increased by 14.4%, to 605.7 thousand tons, that of rolled metal – by 1.4%, to 563,7 thousand tons.

In particular, in February the works produced 279 thousand tons of pig iron, 294.8 thousand tons of steel and 264.8 thousand tons of rolled metal.

MMK sets all-time records in polymer-coated steel sheet production
Russia

OJSC Magnitogorsk Iron and Steel Works ("MMK" or “the Company”) produced 36,500 tons of polymer-coated steel at its two polymer coating plants in January 2015 – an all-time record for monthly output in MMK’s history. The previous monthly record of over 36,200 tons was set in May 2014.

The second polymer coating plant also set a record, producing 17,700 tons of metal in January 2015, exceeding the previous record of 17,500 tons, which was set in December 2014.

MMK started producing colour-coated steel in 2004, when the first plant, designed by Voest-Alpine, was commissioned. The plant has an annual capacity of 200,000 tons, and covers cold-rolled sheet or galvanised steel with layers of plastisol, polyvinylidene fluoride and polyester.

The second polymer coating plant, also with an annual capacity of 200,000 tons, was commissioned in 2009, thus doubling MMK’s production capacity for colour-coated metal. The equipment was supplied by Italy’s FATAHUNTER. The new plant includes hot and cold laminators and can produce metal with texturized polymer coatings. The new plant’s blast furnace design makes it possible to produce metal for the “white goods” – home appliances such as fridges, washing machines, etc.

Coated steel is highly resistant to corrosion, and boasts advanced consumer properties. The key markets for coated metal include the construction industry and home appliances manufacturing.