December, 22 2005
Orissa government bows down to sponge iron makers
State owned Orissa Mining Corporation OMC has decided to effect a downward revision of prices of iron ore and other minerals for the captive use of steel and sponge iron industries of the state. Orissas steel and mines minister Mr Padmanabha Behera said that the chrome ore price have been revised from Rs 5300 to Rs 3200 per ton and that the iron ore price would also be revised.
Sponge iron industries in Orissa had threatened to stop their production from 25 December and close down their units from 10 January if the iron ore and other minerals were not supplied by the OMC at competitive price. Presently, as many as 79 sponge iron industries are operating in the state while another 30 units are under construction.
CIL may cut output as stocks pile up at power plants
Coal India Ltd is likely to cut down production following piling up of stocks at the thermal power plants as well as the pitheads of several mines. This is because hydel power generation has increased due to the heavy rains in southern India and as a result, the share of thermal power in the total power generation has come down.
CIL sources said that while the standing stocks in the plants usually remains at 9-10 million tonnes, the stock currently lying at the plants amount to around 15 million tonnes. "As a result, these plants are not lifting the coal they are allotted, following which the stock at pitheads too have jumped up from 12-13 million tonnes to 17 million tonnes," officials said. "If the stocks are not cleared, it will eventually affect output and may be there would be forced production cuts," they added.
The officials also said that mainly, the power plants under the Tamil Nadu Electricity Board TNEB and APGENCO are reluctant to draw coal as per their linkages. Even the plants at Farakka in West Bengal and Kahalgaon in Bihar are not drawing the coal allotted to them.
TATA Steel deal rocks Chhattisgarh assembly
Congress legislators staged a walkout from the Chhattisgarh assembly on Wednesday accusing the ruling Bharatiya Janata Party BJP of "relaxing industrial policy provisions" in the Rs.100 billion deal with Tata Steel.
"The government inked the deal with Tata relaxing the state industrial policy. The company will not offer employment in the plant, the government should either go for a revised MoU with Tata with special mention of jobs for locals or scrap the deal," a congress MLA said.
BJP leaders assured the Congress legislators that the company would offer jobs to the local population but said the government would not go in for a revised MoU. Not satisfied with the minister's reply, the Congress MLA's staged a walkout.
Tata steel, one of India's largest private sector steel makers, inked a MoU with the state government on June this year for setting up a five million tonne per annum capacity plant in tribal dominated Bastar district in the southern part of the state.
VISA acquires a coalmine in Australia
It is reported that Visa group has acquired a coal mine at Queensland in Australia through Visa Comtrade AG, the groups Swiss outfit. Visa Steel, which is setting up a 1.5-million-tonne steel and stainless steel plant in Orissa, will source its coking coal from the Australian mine at a competitive price.
VISA Chairman Mr Vishambhar Saran said the long-term agreement with the Australian miner would not only guarantee secured supply of coal but also at a cheaper price. He, however, declined to reveal the investments made in the venture.
Byrd Amendment dies in US Senate
US VP Mr Dick Cheney cast a tie breaking vote on Wednesday that killed the "Byrd Amendment", a law which puts taxes on dumped foreign steel and gave that money to struggling American steel companies. The senate was deadlocked on the spending bill which contained the language to abolish the Byrd Bill. Mr Cheney who is also the president of the Senate cast the tie-breaking vote.
Independent Steelworkers Union President Mr Mark Glyptis calls it a "chilling message" from the White House. Mr Glyptis said "It is despicable that the Vice President and the President support this type of action. Mr Cheney came here and stood up in front of the people and supported and was supporting steel in this country. Today is a clear signal that neither Mr Cheney nor the President supports us. In this country, eventually, if we keep on this track we will become the third world country. It's a sad day for not only the steel workers of this country but it's a sad day for America."
Opponents of the Byrd Bill say it unfairly benefits just a few companies while hurting other "consuming industries."
The Byrd Bill won't officially be repealed until 2007.
Import threats hindering steel price increase in EU MEPS
European steel buyers remain very much in the driving seat when it comes to negotiating prices for new orders of flat rolled products. Mills are not able to enforce the price increases of 20-30 per tonne that some of them but by no means all have announced for the first quarter of 2006. As we reported last month, mills made few gains in prices during the final quarter of this year. Prices in period four are virtually unchanged from the previous quarter, and December has seen no upward movement month-on-month. Going into the end-of-year holiday season, many buyers are content to sit on the sidelines.
Real consumption of steel in Europe has improved from the position earlier this year when negative growth was recorded. But it remains far from buoyant. Reduced production has improved the balance between supply and demand. Stock levels have come down, and some producers are saying apparent demand for steel increased in the final quarter.
Import tonnages have fallen significantly since the early part of this year. Weakening of the euro against the dollar has made Europe a less attractive market for steel exporters. Imports still have a presence: even though their prices are not generally very low, availability is adding to the supply-side of the equation.
Mills had hoped that their production cuts, along with the reduced supply of imports, would force customers back into the market. They clearly believed buyers would have to re-order significant tonnages before the end of the year.
However, they appear to have misread the signals from the marketplace. It is now clear many users are content to live off the inventory they already have in hand. As the year-end stock-take approaches, they do not want to hold more steel than they need for their immediate requirements for financial reasons.
This means the mills have had to be more flexible than they would like over prices in recent discussions, and probably in the first trimester 2006 as well. This might involve accepting only half or less of the increase they have said they want. For some big orders, they might even have to offer small rebates. Arcelors chief executive was recently quoted as saying his European customers are holding back on placing orders, waiting to see how the market will develop. His caution seems justified.
A few weeks ago, many buyers believed they would have to pay higher prices for deliveries in January. But now sentiment has changed. Several customers are still preparing to pay perhaps 10 per tonne more for cold rolled coil but most say they expect to get away with no price increase at all. There may also be regional variations in the amounts mills can achieve, as markets in northern Europe are definitely firmer than those in the south. New quotas of coil from Russia will become available in January, and some tonnages are already being booked. This will help keep a lid on price levels.
There are signs of a possible tightening in the market as the first quarter progresses. After running down their stocks at the year-end, distributors and end-users will be looking to replenish inventories in January. Prospects for stronger general economic growth despite high energy prices should also aid market sentiment. However, import volumes will almost certainly rise. It remains to be seen whether the mills will achieve any more than a token price increase in the New Year.
Bolivian government extends bidding for El Mutn
It is reported that Bolivian government has extended the date to receive bids to develop the El Mutn iron ore deposit in Santa Cruz department by 60 days
State mining company Comibol president Mr Juan Cabrera is quotes as "The process was put off but has not been cancelled and I believe the bidding process will go forward as planned. It's a normal procedure within the context of the change of government." Presidential minister Mr Iv Avil is quoted as saying The government delayed bidding to solve any issue that could be questioned by the next government. We have managed this process with complete transparency."
But the local newspapers have reported that before the government's announcement of the delay, the MAS party of Bolivia's president-elect Mr Evo Morales called upon the government to halt the process, warning that El Mutn would be nationalized if bidding continued. The left-wing radical Mr Morales won Sunday's presidential election and is due to take office January 22.
It is also reported that the decision to push back the bidding came as a result of pressure from mining cooperatives that plan to develop the deposit independently. The mining cooperatives, supported by MAS, are at odds with Santa Cruz department officials who want bidding to continue.
Companies that bought bidding rules are Brazil's EMPX Siderrgica Brasil, China's Luneng Shandong Group, Mittal Steel, Argentina's Siderar and India's Jindal Steel & Power Limited.
El Mutn is one of the world's largest iron ore deposits, with some 40 billion tonnes of reserves over 60 square kilometers at an average content of 50% iron, according to Bolivia's government. The deposit is close to the Bolivia-Brazil border, 41km south of the city of Puerto Suez, with access to the Atlantic Ocean via a series of waterways. According to bidding rules, operations would have to start in 3 to 4 years after project startup, reaching minimum production of 1.5 million tonne iron.
China & India drives SS global production up by 1.1% in 9 months
The International Stainless Steel Forum ISSF has announced that stainless crude steel production for the first nine months of 2005 was 18.4 million tonnes. This is a rise of 1.1% compared to the same period in 2004.
Asia is the only region to show positive growth over the first nine months of 2005. Asia has produced 9.4 million tonnes of crude stainless steel, a rise of 7.8% on the first nine months of 2004. Driving forces were China and India and other Asian producers are showing flat or lower production figures.
Stainless steel production in the Western Europe and Africa region was 6.7 million tonnes for the first three quarters of 2005. This is 4.8% lower than for the same period of 2004.
US have produced 2.1 million tons of crude stainless steel for the first three quarters of 2005. This is a decline of 5.4% compared to the first nine months of 2004.
Production also fell in the Central and Eastern Europe region. Production was 191,000 metric tons for the first three quarters, a drop of 16.3%
AK Tube to setup SS tube factory for truck exhausts tubes
AK Steel has announced that it will invest approximately $8.5 million at its wholly owned subsidiary, AK Tube LLC, to produce large diameter stainless tubing that will assist heavy truck manufacturers in meeting new standards for diesel emissions. AK Steel said the capital investment would include a resistance weld tube mill, and associated equipment. Construction of the new tubing mill will begin in the near future, with completion estimated by mid-2006.
The new US Environmental Protection Agency standards, which will become effective January 1, 2007, are designed to lower particulate matter and hydrocarbon emissions from heavy duty diesel engines, the staple of the truck transportation in the United States. Due to the significantly higher exhaust temperatures that will result from the new emission designs, diesel engine manufacturers have specified large diameter stainless tubing for many of the exhaust system components. Historically, those components have been manufactured using bare and aluminum-coated carbon steel tubing.
"AK Tube and AK Steel are already leaders in vehicle exhaust component steel technology," said Mr James L. Wainscott, president and CEO of AK Steel. "This new capital investment further enhances our industry-leading technology by helping us meet new market requirements for heavy duty truck exhaust components."
AK Tube, with locations in Columbus Indiana and Walbridge Ohio, is a leading supplier of carbon and SS ERW tubing products for truck exhaust, hydro forming, air handling, outdoor furniture and automotive markets.
Rescuers save 18 miners out of flooded colliery in Guizhou
Rescuers have saved all 18 miners trapped in Monday's colliery flooding at Sandu Town, southwestern Guizhou Province, Wednesday evening, local government said.
The flooding happened on Monday at the Xinyuan Coal Mine when 18 miners were working underground. More than 160 rescuers entered the flooding laneway to search for the trapped.
Police have detained the mine owner and an investigation into the cause of the accident is underway.
Kryvorizhstal trade union demands wage increase for workers
The trade union at Ukraine's Kryvorizhstal is demanding that new owner Mittal Steel increases wages in accordance with the obligations it has shouldered. The trade union is preparing a protest demonstration over Mittal Steel's failure to fulfill its social obligations, which will take place in Kryvy Rih on December 23, the Central Committee of Ukraine's Trade Union of Metallurgists and Miners said in a release.
It is reported that when Kryvorizhstal was put on tender a package, developed by trade union comprising of demands aimed at social rights and guarantees for workers, was included in the terms of the tender. "Mittal Steel consented to the terms of the tender by making a bid. Now, having won, it is obliged to implement all clauses of the social package, which is reflected in the purchase agreement for Kryvorizhstal shares between Mittal Steel and the State Property Fund. However, as of today we have every reason to declare the new owner's failure to uphold a single one among the most important social obligations," the release said.
Nucor Steel pickling line gets new trimmer & scrap chopper
Butech Bliss, builder of process line and scrap processing equipment, reported that it has installed a new side trimmer and scrap chopper for Nucor Steel Decaturs pickling line in Decatur. The line is a push-pull operation running strips up to 64 in. wide at a rated capacity of 400,000 tons/year. Butech Bliss indicates its equipment will trim and chop hot-rolled carbon steel up to 0.375 in. thick at 65,000 PSI shear strength, at 700 fpm maximum line speed.
As detailed by Butech Bliss, the side trimmer is a driven turret-head style operation with closed-loop controls for knife lap, gap, and width settings.
The scrap chopper is a new "shimless" helical-knife cutting design, with double knife hubs in each head, dual-drive design, and quick-change head system, with a second set of chopper heads for off-line knife maintenance.
Russian government may claim taxes from Vizstal
It is reported that Russian Federal Tax Service may claim 3.7 billion rubles ($129.08 million) in taxes from the steel plant VIZ-Stal in Yekaterinburg.
This amount might force Duferco, the owner of the plant, to speed up a deal on selling the plant to the NLMK
Erdemir receives $300 million loan for Isdemir modernization
Turkish Erdemir Group has received a $300 million credit from The Bank of Tokyo-Mitsubishi Ltd under the leadership of BNP Paribas Tokyo. The 12 year loan is at the interest rate of LIBOR + 0.125 %.
The company said that the loan would be used to modernize, transform and boost capacity of the Isdemir
Erdemir said that the loan was the continuation of $200 million loan which was signed on April 13 in assurance of the Nippon Export and Investment Insurance.
KCI Konecranes to supply nineteen cranes to SeverCorr
KCI Konecranes has bagged an order to supply nineteen cranes to SeverCorr. The cranes will be built in Houston, Texas by Konecranes America, Inc and delivered from May through July 2006. The value of the order is approximately $10 million
The radio controlled SM Spacemaker cranes will be used for handling steel coils and for maintenance of process equipment. Eight cranes will be used in the hot mill for handling tundishes, machine rolls, mill motors and other equipment, as well as hot coils. The eleven cold mill cranes will manage finished coils in the pickling-, annealing, tempering and galvanizing lines and in the shipping area, by using motorized, rotating coil grabs, c-hooks and magnets supplied by SeverCorr LLC. Most of the cranes are rated for 55 tons process duty for coil handling and 100 tons for maintenance lifts.
Low operating cost was a watchword of this project, which made KCI Konecranes' proven Spacemaker technology an excellent match for both the hot and cold mills. The low headroom design will favorably impact building costs, and a high degree of commonality in key components will be a cost-saving feature for years to come."
"Konecranes America is excited to be one of the key suppliers for this groundbreaking venture, and we are pleased to be part of SeverCorr's team," said Mr Doug Maclam, Vice President, Sales and Marketing, Konecranes America, Inc.
Mr John Correnti President and CEO of SeverCorr, was personally involved in negotiating the crane purchase. "Konecranes gave us the best proposal, and as a result, they will be building more than 75% of the cranes for our facility," Correnti said. "They have a good reputation, and I know they'll do a great job for us".
KCI Konecranes is a world leading crane technology and Service Company and their product range includes light crane systems, heavy-duty cranes for process industries and shipyards, special harbor cranes for bulk materials and containers as well as reach stackers and lift trucks.
MMK close to buying Rover coal mines
It is rumored that MMK would soon announce the acquisition of coal mines in Kuzbass. We solved the coal problem by buying reserves, an insider said, refusing to give more details. As per media reports, most probably, Magnitogorsk is purchasing Rovers mines.
MMK spokeswoman Ms Yelena Azovtseva, though, denied that information. We have not considered the issue seriously since 2004. We are not in talks with Rover presently, and we have no interest in its assets, she said.
But Mr Sergei Cheremnov, press secretary of the Kemerovo region administration, told a Russian daily that the regional authorities had no doubts that the deal would be signed. A representative of Moscow based coal mining company operating in the Kemerovo region also said that the negotiations between MMK and Rover had lasted for so long that the acquisition could pass almost unnoticed now.
CMC maintains earnings in-spite of downturn
The Irving based Commercial Metals Co said that its earnings in the latest quarter fell as market conditions grew more challenging. It earned $69.9 million on sales of $1.65 billion in the fiscal first quarter ended November 30.
In the same period a year earlier, it earned $73.7 million on sales of $1.53 billion.
The company however said that it expects earnings increase in the second half. "Steel and nonferrous prices were relatively high and shipments especially robust in the United States," said CEO Mr Stanley Rabin.
Alliance Resource secures 6 year agreement for coal supply
Coal producer Alliance Resource Partners LP reaffirmed its 2005 guidance Wednesday and said it entered into a six year agreement to sell 23.5 million tons of coal to Louisville Gas and Electric Co. beginning January 1. The company did not disclose financial details of its deal with Louisville Gas and Electric, but added the parties have an option to extend it for an incremental 16 million tons of coal over four years. Louisville Gas and Electric is a subsidiary of German energy conglomerate E.ON AG.
The company also said that it expects sales, excluding transportation revenue, to be in the upper range of its previous outlook of $780 million to $800 million, and net income between $135 million and $155 million.
Alliance also announced its plans to develop its Elk Creek mine, to produce 3.8 million tons of coal a year beginning in 2007, compared with the current 2.1 million tons.
Consol Energy approves $300 million buyback
Coal mining company Consol Energy Inc on Wednesday said it has authorized a two-year program to repurchase up to $300 million of the company's common stock. The buyback program will be in effect from Jan. 1, 2006 until Dec. 31, 2007, the company said.
The buyback program is "another tool with which to deliver value to shareholders," said Mr J Brett Harvey, president and CEO.
Odessa port development plan envisions $1.5 billion investments
Odessa maritime merchant port has drafted a development plan including eight investment projects worth $1.5 billion as per Mr Mykola Pavliuk, head of the port
He said that the plan had already been agreed with local authorities and endorsed by the Transport Ministry.
Coal International anticipates sales early 2006
Coal International said it has completed the refurbishment of its King-Coal preparation plant and started first coal production in December, with sales expected in early 2006.
CEO Mr W Durand Eppler said, We have had a strong start since coming to AIM earlier this year and have fulfilled our initial objectives of acquiring and investing in near production coal assets. We have already brought our first coal mine into production and aim to become a substantial coal producer within the next few years, enabling us to capitalize on the strong fundamentals which are driving the global markets for coal and steel.
I am pleased with our progress to date and enthusiastic about our long term growth potential, said Chairman Mr John J Byrne.
Mr Philip D Fracassa joins Timken as VP Tax
The Timken Company announced that Mr Philip D Fracassa has joined the company as VP tax. Mr Fracassa will be responsible for the company's global tax reporting, planning and strategy.
Prior to joining Timken, Mr Fracassa was senior tax counsel and director of taxes for Visteon Corporation, where he had responsibility for the automotive supplier's global tax function. He began his career with Price Waterhouse LLP in Detroit and also served as a tax attorney with General Motors Corporation.
"Phil brings a broad range of experience to Timken, including proven success in leading a corporate tax function," said Mr Sallie B. Bailey, senior VP finance and controller. "He is a welcome addition to our leadership team and has a global perspective on tax strategy that will be valuable to Timken as we continue to position the company to grow in key global markets."
China Steel to buy back own stock
China Steel Corp Taiwans largest steelmaker, said it planned to buy back 200 million of its own shares, four days after the stock closed at its lowest level in more than two years until February 20
China Steel wants to buy back shares because the stock price plunged deeply recently and the company has a lot of cash on its hands,'' said an analyst. The company had NT$12.8 billion in cash and equivalents at the end of September, according to the Taiwan Stock Exchange's Web site.
