Joint venture for steel wire rod processing to be established in Mexico

TOKYO, September 3, 2014 — Shinsho Corporation and Kobe Steel, Ltd. have agreed with Metal One Corporation; Osaka Seiko Ltd; Mexico’s Grupo Simec, S.A.B. de C.V.; and O&k American Corporation in the United States to establish a joint venture in Mexico to produce steel wire of cold heading (CH) quality.

Called Kobelco CH Wire Mexicana, S.A. de C.V. (or KCHM), the new joint venture will process steel wire rod into CH steel wire for sale to automotive parts manufacturers in Mexico. CH steel wire is used to make automotive fasteners and cold-forged products

KCHM will be headed by President Mitsufumi Konishi, who will come from Shinsho. The company will be established in the Santa Fe Industrial Park in Silao, state of Guanajuato, Mexico. Total investment is anticipated to reach approximately US$41 million (4.3 billion yen). KCHM will be capitalized at US$11.9 million (1.2 billion yen).

Shinsho is anticipated to hold 40 percent of KCHM; Metal One, 25 percent; Kobe Steel, 10 percent; Osaka Seiko, 10 percent; Simec, 10 percent, and O&k American, 5 percent.

The joint venture will employee about 80 people when it reaches full production. Operations are to start at the end of 2015. The new plant, with a production capacity of 40,000 tons per year, will have wire drawing machines, pickling equipment and heat treatment furnaces.

Mexico’s auto production of 1.5 million cars in 2009 rose to 2.93 million units in 2013, and solid growth is anticipated in the coming years. Many Japanese auto parts manufacturers are setting up operations in Mexico. This is anticipated to create substantial demand for CH steel wire, as well as a growing need for a local source of this material. By producing in an area of increasing demand, KCHM will be able to quickly supply CH steel wire of outstanding surface quality and contribute to expanding the business of its customers.

Source: KOBELCO is not responsible for the content of third party sites.


According to the latest report by MEPS, there are competitive offers, for hot rolled coil, from Russian suppliers in the Italian market. Domestic basis numbers fell to €400 per tonne in mid-July but have revived since then.

Hot rolled plate rerollers are attempting to lift basis values by €30/50 per tonne as their slab supplies have been curtailed, with a consequent increase in costs. However, freight rates to Germany, their target market, are sufficiently high to make their offers uncompetitive in that country. Domestic demand is stagnant. Nevertheless, we have noted a modest advance during recent negotiations.

Local steelmakers have secured a marginal rise for cold rolled coil during recent transactions, mainly due to a reduction in import competition.

The auto sector shows no real signs of improvement. The purchase of consumer goods is low due to the deflationary nature of the economy. Despite poor demand and fierce internal competition, buyers of coated coil have agreed to a very small advance.

Low carbon wire rod prices are static. A poorly performing construction sector continues to create lacklustre demand for recoil. Steelmakers have kept effective figures steady, after offering a small discount in July to try to stimulate sales.

Effective structural section prices continue to suffer from the state of the ailing building sector. Despite more expensive scrap, suppliers have been unable to persuade customers to pay more for steel products. Recent forecasts for investment in construction are quite pessimistic

Sales of rebar are at a very low level. The recent increase in September is likely to be short-lived. Merchant bar basis figures continue on a downward trajectory. The outlook remains bleak due to a lack of building activity.

Source: MEPS – European Steel Review – September Issue


German hot rolled coil basis values remained unchanged month-on-month in September, according to MEPS. Although the pipemakers have satisfactory order books, general demand in the market is flat. During the summer, some business was concluded as low as €400 per tonne but, now, figures have recovered to the early July level. A number of big users have still not finalised fourth quarter negotiations.

We have noted a small upward price correction for commodity plate. Stock levels are stable. Activity in market is low as the economy slows. However, the higher specifications are performing better as the global linepipe market picks up, with several big projects already running and new ones to come.

There has been no significant improvement in demand for cold rolled coil since the summer vacation. Despite announcements to the contrary, domestic suppliers have maintained basis figures at the July level.

The German automakers are struggling with declining export sales. They continue to try to reduce their steel costs wherever possible. Construction-related sales of hot dipped galvanised coil are static. In the general market, basis numbers have not recovered, due to oversupply.

Low carbon wire rod mills have held on to selling figures for the sixth consecutive month. There is little activity in the recoil market, where values are unchanged, despite the producers’ desire to lift them.

In the structural sections market there is strong competition amidst subdued sales. Suppliers have, so far, failed to implement their proposed increase.

Inventories of rebar are low. Order intake at the mills is poor. Prices have increased by €10 per tonne on the back of escalating raw material costs.

The mills have, so far, resisted customers’ demands for further basis price cuts to merchant bar. Purchasing activity remains cautious after the holidays as buyers are unsure of future price movements. There has been no improvement in business levels.

Source: MEPS – European Steel Review – September Issue


The mills have struggled to implement advances for strip mill products across the Nordic region. Nevertheless, small increments were achieved in some countries, according to MEPS.

Hot rolled coil producers are likely to seek further advances before the end of the year. However, market participants do not anticipate any significant change in the short term. Consumption in the cold rolled coil market is weak. Supply of this product remains plentiful in Western Europe. Sales of galvanised material to the automotive and equipment manufacturers are healthy. A lack of third country imports has helped to maintain price levels.

Commodity plate re-rollers, selling in northern Europe, are having difficulty sourcing slab feedstock from Ukraine, due to the unrest in the region. With supply tightened, demand has been sufficient to sustain an increase in most of the countries surveyed. In Norway, investment in the offshore oil and gas industries has slowed, for the moment.

The market for drawing quality wire rod has been subdued since the summer vacation period. There has been no seasonal upturn in sales tonnages. Selling figures remain flat. Consumption of structural sections by the building industry is good. Moreover, scrap values strengthened, during the summer, and this is now being passed on to customers.

Demand for rebar remains average for this time of year. However, increased input costs enabled the mills to achieve small advances in some countries. Infrastructure investment in Finland and Norway is upbeat. Sales volumes of merchant bar are below expectations. An increase in size extras, initiated by Beltrame, then followed by other producers, has resulted in a rise of around €10 per tonne in transaction values.

Source: European Steel Review Supplement  – September Edition

Nucor To Acquire Gallatin Steel

CHARLOTTE, N.C., Sept. 15, 2014 /PRNewswire/ — Nucor Corporation (NYSE: NUE) is pleased to announce that it has entered into an agreement to purchase all the equity of Gallatin Steel Company for a cash purchase price of approximately $770 million.  Adjusting for the net present value of the anticipated tax benefits, the realized effective purchase price for Nucor is approximately $630 million.

“Our agreement to purchase Gallatin Steel is a significant step forward in the execution of Nucor’s strategy for profitable growth.  Importantly, Gallatin will enhance Nucor’s current position serving flat-rolled customers in the growing pipe and tube segment.  We believe this transaction will create excellent value for our shareholders, as the purchase price represents a multiple of approximately 6.4 times estimated 2015 EBITDA before synergies and approximately 5.3 times estimated 2015 EBITDA before synergies net of anticipated tax benefits,” said John Ferriola, Chairman, CEO and President of Nucor.  “We are both excited and proud to have the men and women of the Gallatin team join our Nucor family.”

Strategically located on the Ohio River in Ghent, Kentucky, the flat-rolled products mill, with an annual capacity of approximately 1,800,000 tons, broadens Nucor’s footprint in the important Midwest region.  Adding Gallatin to Nucor’s four existing flat-rolled mills will increase Nucor’s total flat-rolled product annual capacity by 16% – to approximately 13 million tons.

“Gallatin is a great fit for Nucor and our sheet mill group.  Our two companies have a strong cultural compatibility, particularly the importance and focus we each put on safety, quality and productivity,” said Ladd Hall, Executive Vice President of Flat-Rolled Products. “The acquisition will further strengthen our ability to meet the needs of all of our flat-rolled product customers.”

Nucor anticipates that this transaction will close promptly after the satisfaction of all closing conditions and the receipt of required regulatory approvals.  It is expected to be immediately accretive to cash flow and accretive to earnings after working through purchase accounting-valued finished goods inventories.  The acquisition will be funded with available cash and commercial paper borrowings.  With its strong balance sheet and healthy cash flow generation, Nucor does not anticipate issuing either long-term debt or equity as result of this purchase.

Nucor and affiliates are manufacturers of steel products, with operating facilities primarily in the U.S. and Canada. Products produced include: carbon and alloy steel — in bars, beams, sheet and plate; steel piling; steel joists and joist girders; steel deck; fabricated concrete reinforcing steel; cold finished steel; steel fasteners; metal building systems; steel grating and expanded metal; and wire and wire mesh. Nucor, through The David J. Joseph Company, also brokers ferrous and nonferrous metals, pig iron and HBI/DRI; supplies ferro-alloys; and processes ferrous and nonferrous scrap.  Nucor is North America’s largest recycler.

Certain statements contained in this news release are “forward-looking statements” that involve risks and uncertainties.  The words “believe,” “expect,” “project,” “will,” “should,” “could” and similar expressions are intended to identify those forward-looking statements.  Factors that might cause the Company’s actual results to differ materially from those anticipated in forward-looking statements include, but are not limited to: (1) the sensitivity of the results of our operations to prevailing steel prices and the changes in the supply and cost of raw materials, including scrap steel; (2) market demand for steel products; (3) energy costs and availability; and (4) competitive pressure on sales and pricing, including competition from imports and substitute materials.  These and other factors are discussed in Nucor’s regulatory filings with the Securities and Exchange Commission, including those in Nucor’s December 31, 2013 Annual Report on Form 10-K, Item 1A. Risk Factors.  The forward-looking statements contained in this news release speak only as of this date, and Nucor does not assume any obligation to update them.

SOURCE: Nucor Corporation is not responsible for the content of third party sites.


The European holiday season in late July and August led to a significant slowdown in strip mill market activity. Generally, prices have held steady through the summer. More recently, ArcelorMittal announced the intention to raise product values by €20 per tonne, for all new business to be delivered in the final trimester. The initiative is mainly driven by better mill order books and declining competition from third country importers, as a result of the weaker euro. Most October business has already been settled at the old prices. It remains to be seen whether the increase can be imposed for the remainder of the quarter. Most buyers believe that current consumption is not strong enough to support an advance, particularly as the producers’ raw material costs are reducing.

There has been no real change in German market prices over the last two months. The mills are targeting a €20 per tonne rise but this has, so far, proved unsuccessful. However, the downward trend has been halted. There is very little interest from third country suppliers because domestic values are comparatively low. Moreover, the exchange rate is now working in favour of local steelmakers.

French demand remains very modest in early September. With end-users still ordering on a day-to-day basis, distributors have been reluctant to place new business. In addition, some are still receiving material ordered in July. Meanwhile, European mills have been pushing for price rises but buyers remain sceptical.

At the beginning of September, Italian producers, Ilva and Marcegaglia, announced an official increase of €20 per tonne for October. We have noted little effect on market selling values so far, apart from a halt to the recent price slide. This has been helped by the decrease in import competition. There are few enquiries from end-users, who appear to have sufficient stock for today’s low level of demand.

A number of UK distributors reported reasonable demand in August, despite seasonal factors. September has also started well. Nevertheless, basis figures dropped below the level published in our July issue, due to intense import competition. The recent weakening of sterling is an interesting development, which could affect forward orders for Chinese and even mainland European material. The announced price increases have not been applied for October business and November is still to be agreed. This may help to arrest the downward tendency.

Despite reasonable economic forecasts, activity in the Belgian market is very slow. Basis figures are stable, even though all the major mills are claiming increases of €10/15 per tonne. Third country imports look less attractive because of currency movements.

The likelihood of limited import competition, together with supply issues that could result from the Ukrainian crisis, have given the mills confidence to push for higher prices in Spain. October business is already settled at the figures agreed before the holidays but some buyers feel that €10 per tonne may be achievable for November.

Source: MEPS – European Steel Review

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