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Industrial, Industrial Goods, Industrial Supplies, Materials, Metals, Steel

Balli Steel Reports European Steel Markets Cushioned From Price Correction By Weak Euro

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Balli Steel, one of the world’s largest privately owned independent commodity traders, highlights that European steel markets have been cushioned from the effects of the recent downturn in global steel prices due to the weakening Euro. Balli Steel’s research shows that steel prices in US Dollars fell by approximately 20% between their peak in mid April and May 2010. However, the weakening of the Euro against the Dollar over the same period meant that the relative decline in steel prices was only 3.3% in the Eurozone.

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The weakening of the Euro against the dollar has enabled steel producers in Eurozone markets to continue exporting steel for a longer period of time as well as discouraging domestic consumers from importing steel from elsewhere.

However, Balli Steel pointed out that the real demand for steel across the European market remains sluggish. With government spending both directly and indirectly impacting on steel demand, the widespread budget cuts and austerity measures being taken in countries such as Spain, Italy, Germany, France and the UK has led to a significant reduction in demand.

Nasser Alaghband, CEO of Balli Steel commented: “The weakening Euro has acted as a lifeline to European steel producers, making them more competitive to importers whilst being able to fight off competition from overseas. This trend may continue for some time, however, with falling demand there is a real need for production to be checked if prices are to be maintained. We have already seen a number of producers idle their mills in recent weeks and we expect this to pick up momentum, especially as the traditional summer holiday season approaches.”

Via EPR Network
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Industrial, Industrial Goods, Industrial Supplies, Materials, Metals, Steel

Balli Steel Reports Surge In Production Leads To Dramatic Fall In Chinese Steel Prices

Balli Steel, one of the world’s largest privately owned independent commodity traders, has highlighted that a surge in Chinese steel production since the beginning of 2010 has led to the recent dramatic decline in steel prices from their peak in early April.

Figures from the World Steel Association show that approximately 158 million tonnes of steel were produced in China during the first quarter of the year. In addition, steel production peaked at 55.4 million tonnes in April 2010, a 27% increase on April 2009, representing the highest amount of crude steel that China has ever produced in a single month.

This dramatic surge in production has led to a corresponding decline in steel prices over the past six weeks. In January 2010, Chinese steel prices were approximately $500 per tonne, rising to a peak of $700 per tonne in early April. However, overproduction has led to prices falling back to $550 per tonne by mid-May.

As China is by far the single largest steel producer in the world, accounting for approximately 47% of global production in 2009, this overproduction of steel and the corresponding decline in prices have had a significant effect on the global market.

Balli Steel emphasised that what happens next to the area’s steel prices will be dependant on how quickly China can cut its production and estimates that the country needs to reduce its output to approximately 40-45 million tonnes per month by July in order to maintain stable pricing.

Gianpiero Repole, Business Development Director of Balli Steel comments: “The Chinese steel market remains a strong prospect for the medium and long term with the country’s growing economic dominance in the region ensuring that there will be an ongoing demand for steel. What we are currently experiencing is short term timing difficulties with sharply rising prices at the beginning of the year leading to a surge in production, ultimately resulting in over production and falling prices.

Via EPR Network
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Balli Steel Warns Russian Steel Market Continuing To Face Challenging Conditions

Balli Steel, one of the world’s largest privately owned independent commodity traders, has warned that despite the bottoming out of the global steel market, the Russian market will continue to face challenging conditions for the next 12 to 18 months. Speaking at Metal Bulletin’s 7th Russian Steel Summit in Moscow, Nasser Alaghband, Director of Balli Steel, outlined that the strengthening Rouble and the impact of the annual Iron Ore negotiations could weaken the competitiveness of Russian producers.

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According to Balli Steel, the Russian Steel market has undergone considerable growth and wide scale transformation over the past decade with gradual modernisation of plants and production facilities. Russia is able to take advantage of abundant natural resources and competitive labour costs to produce steel on the lower side of the cost curve and has established a strong position as the 4th largest producer of steel in the world.

Balli Steel highlighted that the downturn in global steel prices has not been easy for the majority of Russian producers to absorb, with many in the midst of extensive capital investment initiatives on plant modernisations and new acquisitions.

Steel consumption appears to be down by 40% year-on-year, with Russia’s largest steel company, Severstal, expecting domestic demand to fall by 25% in 2009. Balli Steel anticipates that domestic demand will remain low as the country heads towards its first recession for 10 years.

However until very recently the decline in domestic steel demand was offset by export growth, with the weak Rouble, which had declined by as much as 36% against the Dollar in the previous year, making Russian Steel an attractive proposition to importers. However, in the last month, the Rouble has undergone a substantial appreciation which has put considerable pressure on the export prices. The profit margins for many of the Russian Mills have begun to shrink, with most producers now operating at close to cost. As a result, any further strengthening of the Rouble would put increasing pressure on Russian steel exports.

Nasser Alaghband, Director of Balli Steel commented: “Global steel prices have shown signs of recovery in recent months. However, whilst price improvements have been promising, steel has not recovered as well as some precious metals or energy commodities. We believe that steel prices will increase further amidst the global economic revival, although the recovery will not be smooth or uniform and individual markets, such as Russia, will continue to react differently to both domestic and international factors.”

About Balli:
Balli Steel is part of Balli Holdings, is a large private, multi-national corporation, chaired by Vahid Alaghband. The company is headquartered in London, but has offices in Dubai and other key business hubs around the world.

Balli was established in 1982 and operates a number of affiliated companies specialising in commodity trading, industrial, real estate and private equity with operations in over 20 countries. Together with its affiliated companies, Balli employs over 2,000 people worldwide.

Balli Steel is the company’s principal operating subsidiary, and is one of the largest independent traders of steel in the world. Balli Steel provides raw materials and steel to a number of market segments including steel mills, steel service centres, pipe and tube makers, the oil and gas industry and other designated end-user segments such as the packaging products industry.

The company’s real estate operations currently have are invested in a significant property portfolio comprised of over 900,000 sq ft of property under development with a Gross Development Value of some $800 million, and an additional 2 million sq ft and a GDV of almost $2.5 billion in the pipeline.

Via EPR Network
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