Tag Archives: steel trading

Balli Steel Reports BRIC Countries Driving Global Steel Market

Balli Steel, one of the world’s largest privately owned independent commodity traders, has reported that the BRIC countries (Brazil, Russia, India and China) are the driving force in the global steel market, thriving whilst more established markets and newer emerging economies struggle.

Balli Steel’s analysis of the World Steel Association’s crude steel production statistics demonstrates that the BRIC countries accounted for 58% of global steel production in 2009, with their market share more than doubling over a decade from 28% in 1999. In contrast, the established major economies of the USA and Japan saw their crude steel production levels decline by 40% and 7% respectively over the same ten year period.

Balli Steel highlighted that China is by far the single largest producer in the world, accounting for approximately 47% of global production in 2009, increasing from only 16% in 1999. However, this is not to underestimate the contribution of the other BRIC nations with Russia and India both contributing 5% each to global production and Brazil contributing 2%.

Balli Steel believes that this explosion in production has been triggered by significant industrialisation and economic growth in each of these countries. As one of the less mature BRIC economies, currently undertaking extensive infrastructure projects, India is still a net importer of steel, whilst the more developed Chinese and Russian economies are now net exporters. Brazil’s balance of steel trading is approximately equal.

Whilst the BRIC countries continue to grow, each overshadows its geographical neighbours. Struggling economies like Vietnam, South Korea and Thailand do not have the critical mass or capital required for significant internal investment projects which generate the need for raw materials and other commodities.

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Balli Steel Reports Global Steel Market Experiencing Sharp Rises Since Chinese New Year

Balli Steel, one of the world’s largest privately owned independent commodity traders, highlights that steel markets across the globe have experienced sharp price rises since mid- February 2010. The first six weeks of the year had seen a flat market with the majority of commentators believing that prices would most likely fall back to November 2009 levels, however conversely, prices started to rise sharply coinciding with Chinese New Year (14th February).

Balli Steel reports that the price has largely been driven upwards by restrictions in the availability of raw materials and by steel mills maintaining a tighter control over supply. Balli Steel anticipates that prices are likely to continue to rise in the short term, however, there is the possibility that the market may start to show signs of fatigue in the third quarter, especially if the steel mills fail to retain supply restrictions.

Balli Steel reports that prices have risen by approximately US $200 per tonne since the start of the year regardless of their base level, equating to increases of approximately 35-40%.

Nasser Alaghband, CEO of Balli Steel commented: “Contrary to the views of most commentators at the beginning of the year, we have seen a strong rally in steel prices over the past six weeks, albeit based on relatively thin trading volumes. We anticipate that prices are likely to grow more conservatively over the rest of the year, although prices may come under pressure in the third and fourth quarters if steel mills decide to increase production.”

Although steel prices have risen across the board, there remain significant regional market variations. The Chinese market remains key, accounting for significant global demand and over 50% of worldwide production, however despite surpluses, China has not been an aggressive exporter. Elsewhere in the Asian market, demand from India has also remained very strong with significant imports made in the first quarter of 2010.

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Global Steel Recovery To Continue Into 2010

Balli Steel, one of the world’s largest privately owned independent commodity traders, anticipates that the global steel market will continue its recovery during 2010. Following a fall in apparent steel usage of approximately 15% in 2009, Balli Steel believes that usage could increase by up to 9% next year. However, consumption levels are unlikely to reach their 2007 peak until 2012 and recovery is liable to be driven by the Far Eastern markets, especially China, as European markets continue struggling.

Nasser Alaghband, Director of Balli Steel commented: “We are anticipating that the steel market will continue its recovery next year but growth is expected to be moderate and driven by emerging economies, with China’s influence continuing to be critical. There is a danger that consumption growth will not match the increased production capacity which has been created in recent years, which could lead to the possibility of oversupply.”

The economic downturn has severely affected demand for steel with apparent usage expected to fall by -32.6% in 2009 to 122 million metric tonnes*. This fall in consumption has led to a slowdown in production and Balli Steel estimates that many of the mills across Europe are operating at between 40% and 60% capacity.

The global recession has led to property downturns across the European Union resulting in an oversupply of both residential and commercial property which in turn has led to a significant slow down in construction. With the construction accounting for approximately 50% of global requirement, the property downturn has had a significant impact on the steel industry across Europe, particularly in Portugal, Italy, Ireland, Greece and Spain.

Projections from the World Steel Association suggest that steel usage across Europe could grow by up to 12.4% in 2010. However, Balli Steel believes the industry still faces a number of challenges with governments cutting spending on public sector and infrastructure projects.

Steel consumption in the Middle East has fallen at a slower rate than in Europe with usage falling by -9.8% in 2009 to 38,834 million metric tonnes*. The demand for construction steel has fallen across the UAE, but Dubai has been hit particularly hard due to a decline in the demand for property in the first quarter of the year. Balli Steel reports that construction steel demand in Saudi Arabia is likely to remain strong in the medium term as the country looks to develop good employment prospects for its population.

China continues to dominate both the Far Eastern and global steel trading markets accounting for almost 49% of world steel production as well as approximately 50% of global consumption equating to 1.5 million tonnes per day. There are signs of over production, but the Chinese government appears reluctant to instruct the steel mills to reduce supply. The result may be an increase in exports, despite existing trade tariffs, especially for galvanised steel.

India, has been largely sheltered from the global economic crisis but its steel market has remained relatively subdued. The country’s continuing economic expansion, combined with growth in domestic consumer demand and infrastructure projects should ensure that demand for steel in India will increase in the medium term.

Other smaller Asian markets are also showing signs of growth and recovery.

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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.

balli

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.

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Balli Steel Reports Enhanced Role For Steel In Construction Industry Despite Slowdown

Balli Steel, a leading international steel trader, has reported that despite the slowdown in the global economy, the role of steel in construction industry markets across the world will grow. Balli Steel highlight that this growth is due to a range of factors including environmental and recycling benefits, urbanisation, technological advances and the load bearing, high rise opportunities, safety and speed of construction benefits that steel provides.

balli

Company forecasts indicate that global annualised steel production this year is to be 1.1 billion tonnes, with the construction industry being the largest end-user of steel, accounting for over 40% of total steel consumption.

Balli Steel calculate that the competitive cost gap between steel and concrete building frames is widening. A recent report by the British Constructional Steel Association (Q4 2008) showed a £22.22 per sqm advantage for steel frames over concrete, up from £12.10 per sqm in 1995.

Another advantage is that whilst steel has a higher embodied carbon value per tonne than concrete, a tonne of steel goes a lot further so steel structures generally have a lower carbon footprint than concrete ones.

Vahid Alaghband, Group Chairman of Balli Steel, said: “Whilst many people may often equate steel buildings and infrastructure schemes with super-high rise and large span structures, steel is also used extensively in small scale and low rise buildings. Steel is used throughout the construction industry and the building process, not just on mega projects.”

Balli Steel points to the global process of urbanisation as another factor driving the demand for new buildings, and therefore a demand for construction steel. The United Nation’s (UN) latest figures show that 50% of the world’s population live in urban areas. Over 3.2 billion people now live in cities, up from 732 million in 1950. The UN calculates that by 2050, over 6 billion people, 75% of humanity, will be living in towns and cities.

In the current ecologically aware times, steel is often favoured over other materials like wood and plastic. Nasser Alaghband, Managing Director of Balli steel commented: “The advantages of steel in the building construction process include strength, energy efficiency, design flexibility, fire resistance, speed of assembly, material cost advantage and less maintenance. The steel industry has been actively recycling for more than 150 years and it is becoming increasingly financially and environmentally advantageous to continue with this approach. It is cheaper to recycle steel than to mine iron ore and manipulate it through the production process to form new steel.”

Over 95% of structural steel beams and plates, used in building manufacture, are recycled, and similarly, other construction industry elements such as reinforced bars are recycled at a rate of around 65%. Balli highlight that the energy saved by recycling these large amounts of steel globally is enough to power 18 million homes around the world for one year.

About Balli Holdings
Balli Holdings, is a large private, multi-national corporation, headquartered in London, but with 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 employ over 2,000 people worldwide.

Balli Steel is the company’s principal operating subsidiary, and is one of the largest independent steel trading companies 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.

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International Steel Returns To Normal Trading Levels Reports Balli Group

Balli Group Chairman, Vahid Alaghband, reports international steel market bottoms out and returns to normal trading levels.

Vahid Alaghband, Group Chairman of Balli Group, one of the world’s largest privately owned independent commodity traders, has stated that he believes the indications are that the international steel market has now bottomed out and is once again experiencing a normal trading environment, albeit at reduced volumes.

The return to regular steel trading confirms that the market has now recovered from the state of paralysis it found itself in last year.

Vahid Alaghband commented: “The international steel trading market is no longer frozen and we expect further stabilisation over the next 6-12 months. The return of normal trading and the relative stability of prices is an important milestone in the recovery of the construction industry and for the global economy.”

Nasser Alaghband, director at Balli Steel, added: “The bottoming out of the market for steel follows a cut in capacity by producers in response to the global downturn in construction and the seasonal fall in demand for the northern hemisphere. The growth of the steel futures markets for construction steel in London and Dubai since 2007 has helped increase price transparency and has enabled decision making on capital investment.”

Major steel consumers – property developers, construction firms and ship builders – welcomed the growth of the futures market for steel as it provides them with a means of controlling risk by enabling users and suppliers to lock in prices and avoid losses.

Balli Steel experienced good trading levels in Q4 (2008) and expects Q1 to be slower, partially due to seasonal variations in the market. Near normal market conditions are predicted for the second half of the year.

Nasser Alaghband observed: “The market became incredibly difficult and almost non-existent early in 2008 as demand, principally from the construction industry evaporated in response to the global financial crisis. The situation eased during the third quarter and by Q4 the market began to trade again in a normal fashion.”

“One major obstacle to European trade is the loss of access to credit insurance as insurers such as Euler Hermes and Atradius re-evaluate their exposures in deteriorating economic conditions”, Nasser concluded.

About Balli Group plc

Balli Holdings, is a large private, multi-national corporation, headquartered in London, but with 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 employ 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 a property portfolio of over $3billion, comprised of over 900,000 sq ft of property under development with a Gross Development Value of some $800million, and an additional 2million sq ft and a GDV of almost $2.5billion in the pipeline.

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