December, 18 2005
TATA Steel on expansion mode
With the recent acquisition of stake in Thai Millennium Steel and rumors of interest in South African Highveld Steel, TATA Steel seems to be on track to achieve its plans for global expansion. In order to increase the production capacity to 15 million tonnes by 2010 and be a global player simultaneously, Tata Steel has undertaken a number of green field projects both in India and abroad. After reaching the first production target of 15 million tonnes from the present 8.7 million tonnes within the next five years, TATA Steel is reported to be committed to increasing capacity to 30 million tonnes by 2030
TATA Steel MD Mr B Muthuraman said their plan to set up a number of green field projects in Orissa, Chattisgarh and Jharkhand within India and in Bangladesh and in South Africa to further increase the production capacity of TATA Steel was "very much on schedule". TATA Steel MD informed media that plans for Greenfield facility in Orissa for 6 million tonnes is progressing as per schedule, TATA Steel has already acquired land in Chattisgarh for a 5 million tonne Greenfield project, have identified areas in Jharkhand for third Greenfield project of 6 million tonnes. Moreover plans for adding 1.8 million tonne capacity to its 5 million tonne plant at Jamshedpur are also on
It is reported that Tata Steel MD ruled out that Bangladesh project was on hold and did not rule out some more overseas acquisitions in the coming years.
Indian steel major propose JVs with BCCL
TATA Steel plans to set up a JV with Bharat Coking Coal Ltd BCCL, a subsidiary of CIL for developing the Kapuria block in Orissa, in which 100% of the investment would be made by the TATA Steel and BCCL would provide the coal block for development and the profits would be shared on 50% each
CIL has also received similar proposals from SAIL & JSW Limited. It is reported that while TATA Steel has given a detailed plan on how they want to go about it, SAIL and JSW have provided certain broad specifications only and it will be difficult to compare the merits of the three proposals
According to Coal Ministry sources, CIL has submitted the appraisal of the three proposals and it is up to the Ministry to decide on the future course of action. The Ministry is likely to ask the other two companies to submit detailed proposals.
Officials, however, pointed out that as a public sector CIL would prefer to go along with SAIL and the two companies had several meetings on the issue and it is reported that BCCL has agreed to augment coking coal production capacity at its Monidihi underground mine by at least 4 million tonnes a year exclusively for SAIL The capacity will be created in two phases by replacing the existing long-wall equipment at the mine with the latest long wall technology. Global tenders have been floated inviting bids for such technology. Almost the entire cost of capacity addition will be borne by SAIL.
Jharkhand, Orissa and Chattisgarh politicians against coal E Auction
It is reported that the CMs of all three coal rich states Jharkhand, Orissa and Chhattisgarh are opposing the Centers decision to e-auction coal blocks and are planning to oppose the decision. I have already spoken to the Prime Minister on this issue and discussed it with the chief ministers of both Orissa and Chhattisgarh, said Mr Munda, who claims that all the chief ministers are convinced that it is the inept handling of the coal sector by the Coal India Ltd that has resulted in coal shortages in the three states.
It appears that the politicians are confused between e-auction of coal and e-auction of new coal blocks as less than 10% of the coal mined in the country are being put up for e-auction currently
Coal India executives pointed out that e-auction is hailed throughout the world as the cleanest, the most transparent and the fastest procedure of holding an auction. By allowing everybody, companies and individuals, the option of bidding from their own home and offices, e-auction has actually eliminated the possibility of foul play, they point out. The executives claimed that politicians want to interfere in the distribution of coal so that they themselves can oblige favorites and also make money. The premium which legitimately should go to the coal companies, they felt, is being sought to be usurped by the industrial cartels backed by politicians who are opposing e-auction.
All industries desirous of mining new coal blocks, the executives said, can easily participate in the e-auction and depending upon their required bid for coal blocks. Since there is a demand-supply mismatch in coal supply, the executives argued, e-auction is the best and most transparent exercise at distribution.
PSL to raise money for expansion
PSL Ltd has decided to raise additional funds up to $5 million from the International Finance Corporation IFC as a part of fund raising program for financing its expansion. PSL Ltd is also expected to enter the capital market shortly to raise up to Rs 150 crore to fund its expansion program and retire its debt.
PSL, as steel pipe major in India, is in the process of expanding its capacity to 1.25 million tonnes. It has plans to install a two-step spiral welded pipe mill at Kandla, Gujarat. With this Kandla expansion, PSL would have a total of 10 pipe mills installed at different strategic locations.
Steel Strips bags export order for wheels
Steel Strips Wheels Ltd has signed an agreement with KROMAG Metallindustrie GmbH, Austria for the export of 12,000 wheels for Daewoo / Chevrolet / Matiz car.
Initially the order is for one year beginning January 1, 2006.
Mormugao port to hike charges
Mormugao Port Trust proposes to enhance port related charges. The upward revision in vessel related charges at 20% has been proposed as against the asking rate of 28%, which is worked out based on the recent guidelines issued by the Tariff Authority for Major Ports (TAMP). The proposal has been forwarded to TAMP following the approval of the board of Mormugao Port.
However, to boost container traffic at the port, the authorities have decided to reduce container handling charges. It has been decided to charge Rs 1, 800 per container of 40 feet against the existing Rs 2,000 and Rs 1,350 per container of 20 feet against Rs 1,500.
IISI releases global steel production for October 2005
World crude steel production for the 61 countries reporting to the International Iron and Steel Institute was estimated to be 96.6 million tonnes in October. This is 4.6% higher than for the same month of 2004.
Total world production for the first ten months of 2005 is 915.4 million tonnes. This is an increase of 6.2% compared to the first ten months of last year. Excluding China, world crude steel production is 628.6 million tonnes, 1.1% lower than for the same period of 2004.
Chinese production was 31.7 million tonnes in October, a rise of 18.9% compared to the same month in 2004. Total crude steel production in China was 286.8 million tonnes for the first ten months of 2005. This is a rise of 26.5% on the same period of 2004.
Total production in the Asia region was 50.6 million tonnes in October, an increase of 12.1% on October 2004.
European (25) production in October shows a decrease of 2.5% over the same period last year. France produced 1.7 million tonnes of crude steel in October, 0.6% higher than in October 2004. Crude steel production in Germany was 4.1 million tonnes in October, an increase of 5.6% compared to the same month of 2004. The United Kingdom produced 1.1 million tonnes of crude steel in October, 8.8% lower than for October 2004.
Preliminary crude steel production in the United States was 8.0 million tonnes in October, a decrease of 7.6% compared to October 2004. Production in Canada was 1.3 million tonnes, 5.0% lower than in October 2004.
China faces overproduction in 11 sectors
China has witnessed over 20% YOY growth rate infixed assets investment for consecutive three years. Overproduction and declining domestic demand have piled up products, reduced market prices and cut profit margins in some industries.
Cement, aluminium, ferroalloy, calcium carbide, steel, auto, power, coal, copper, charcoal and textile industries are facing or will face surplus in production capacity soon, said Mr Cao Yushu, deputy secretary general with the State Development and Reform Commission.
The National Development and Reform Commission (NDRC), China's top economic planning body, said it will issue a monthly report on the restructuring of sectors suffering from overcapacity. The NDRC said on its website that the move is aimed at speeding up the restructuring of troubled sectors such as steel and electrolyte aluminum.
The China Iron and Steel Association is also planning to monitor capacity in the steel sector and will release information on national steel output every 10 days, the NDRC said.
US Senate stands up for Byrd Amendment
US Senate's vote of 72-19 on Thursday to retain the Continued Dumping and Subsidy Offset Act also known as the Byrd Amendment has brought cheers from Mr Mark Glyptis, president of the Independent Steelworkers Union. "I knew we had greater support in the Senate,'' Mr Glyptis said.These senators are well aware of the state of the domestic steel industry today.'' "There is no question, Senator Byrd is one of the greatest legislators this country has ever seen,'' Mr Glyptis said.
Recently, the US House of Representatives approved language calling for the elimination of the law by just two votes. But Thursday's vote by the Senate instructs the negotiators from the Senate to argue to maintain the law when they meet with negotiators from the House of Representatives.
The bill, created by US Senator Mr Robert Byrd in 2000, gives financial assistance to companies that can prove they were affected financially by illegal steel dumping.
The Byrd Amendment has been under attack from the World Trade Organization and the European Union since it was passed by Congress more than five years ago.
Taiwan Steel Union suspected of causing high dioxin levels
Pollutants from Taiwan Steel Union Co Ltd were the most likely cause of the high levels of dioxin found in duck eggs in Changhua County, according to a report published by the Environmental Protection Administration EPA.
"Because of the similarity in characteristics between the dioxin found in duck eggs at Huang's farm and emission gases from Taiwan Steel Union Co, the same is an obvious source of pollution," the EPA's deputy director Mr Lin Da-hsiung said.
Italian Iveco and Chinese form JV for heavy trucks unit
Iveco Corp, a subsidiary of Fiat Automobile Group Corp, will team up with two leading domestic automakers to start making heavy trucks in China. Iveco, a global specialist in cargo trucks, has signed an operational agreement with Shanghai Automotive Industry Corp to form a 50-50 JV, SAIC Iveco Commercial Vehicles Co Ltd. The new firm will produce transport vehicles using Iveco's technology.
The joint venture bought a 67% stake in Chongqing Hongyan Automobile Group Corp in central China, a subsidiary of Chongqing Heavy-duty Automobile Group Co Ltd, one of China's leading trucks makers, to establish another company making diesel engines. After the acquisition, SAIC Iveco will be able to produce 40,000 trucks and 30,000 engines annually by the end of 2008.
The average growth rate for heavy duty trucks was 47% in China from 1999 to 2004, more than double the pace of passenger car growth.
Russian railway facing winter congestion
In Russia, where the congestion of railway system is a common matter in winter, because of the poor weather conditions, insufficient mechanization at the ports and the lack of responsibility of consigners, the situation is reported to be as usual resulting in slowing down of movement and losses to carriers
Russian Railways RZhD blames the delay on consigners and ports and imposes temporarily shipping bans in problem directions. But as per RZhD forecasts the extent of delays will be much less this year. There are no jams in the main lines as per an RZhD representative. He added that the The situation is much better than in the previous year. We have managed to improve cooperation with sailors.
Another reason is the change in metal market opportunities. Last year, the growth in steel prices in the world boomed metal export from Russia RZhD representatives said. But the situation changed during 2005, cutting down the cargo flow.
Nevertheless, the problem is far from final solution. The contracts on delimitation of responsibility for cargo delay that were made with the ports have failed to produce the effect counted on in the company, RZhD representatives specified.
Stelco announces court approval of AltaSteel sale
Stelco Inc announced that during a hearing the Superior Court of Justice (Ontario) approved the previously announced sale of AltaSteel Ltd to Moly Cop Steel Inc an affiliate of Scaw International Sarl.
As in past non-core asset sale transactions during Stelco's restructuring process, the Court agreed to seal certain terms of the sale agreement until the transaction closes or until further order of the Court.
Russia makes low import duties for car components permanent
Russia is introducing discounted import duties on car components for industrial assembly projects in the automotive sector. The Cabinet press service reported that Prime Minister Mikhail Fradkov signed resolution No. 757 that applies special import duty rates to commodities listed in resolution No. 166 approved in March. The new rule, which comes into force on January 15, 2006, has no expiration date.
Resolution No. 166 introduced as of April 15, 2005 for nine months eliminated or significantly reduced duties on car components imported to Russia for industrial assembly.
To enjoy this favored status an automotive company has to sign an agreement with the Economic Development Ministry for seven years if it is an operating facility or for eight years if it is a beginner. The agreement lists the components imported at discounted rates.
