Late Friday evening Steel Market Update received a number of messages from our contacts in Asia regarding the Chinese export markets and iron ore pricing. Our sources are telling us the Chinese mills have suddenly suspended providing export offers. Through contacts with a number of the largest steel mills in China the understanding is there will be an announcement some time this week of a settlement to the negotiations regarding the iron ore benchmark pricing.

Here is some of what we received from Asia:

Iron Ore Benchmark Reported to be 40-45% Increase over old Benchmark

“If you wish to make reference to the Benchmark, you could simply advise you have heard from my side that the final level leaked out is 40-45% increase and should be announced this coming week. And reiterate we hope the unofficial leaks we receive from various confidants prove to course.”

Steel Mills have “Put on the brakes” and are accepting no new export offers

“Just for your reference, as mentioned, the last few days have been hectic with enquiries, contracts etc.. and the mills have PUT ON THE BRAKES.. No more offers, review of pricing and next week we will see new levels.. Quick huh John??? Will keep you posted.”

Clarification of 57% Utilization Rate on Chinese Flat Rolled Mills

SMU questioned an earlier comment made by one of our Asian sources regarding the capacity utilization rate for the Chinese flat (flat rolled) and long products. In an earlier communiqué our source told SMU (and we advised our readers) the flat rolled mills operated at a 57% utilization rate during 2009 while long products were run at a 98% utilization rate. We wanted to make sure we understood the numbers correctly and wondered if the numbers were for one month or the entire calendar year? The reply came back from Asia:

“57% capacity rolling for Flats was all of 2009 John and yes that was official data. What I meant was if an Integrated mill is producing 6 million tons of Flats and due to a weak domestic market on Plate, HRC, CRC, GI etc.., only 3.4million tons of those products were produced by that mill. While Long products were at 98%....

John, a lot of my info comes from Chinese articles as well as direct contacts and not just reading from websites as a lot of others do….”

Steel Market Update follows the North American steel market - as well as anything which might impact North American steel prices. This means we watch the Asia markets closely for signs of a surge in pricing, exports or political events which might impact business here in North America.

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