February, 27 2006
Indian steel mills looking for prices increase
After hiking the prices of galvanized steel products by 10-15%, integrated steel producers are contemplating raising prices of other steel products, too, such as hot-rolled and cold-rolled coils. We will take a call on the price revision in the next few weeks. The demand trends both in the international and domestic markets mean we will favor a price increase, said Vikram Amin director sales & marketing of Essar Steel Ltd.
Other integrated producers like JSW Steel, Tata Steel and Steel Authority of India Ltd are also reported to be contemplating a March price hike.
Steel prices in Europe and north America have been showing signs of marginal hardening since early January. The domestic market has gone through a lot of de-stocking over the past two months. But till now international steel prices have been refusing to consolidate at higher levels from fears of large Chinese exports, said a SAIL source. But demand in China is rising once again and Chinese exports, therefore, are unlikely to be as much as feared at least not in the short term. This gives Indian producers a window to increase prices as domestic demand for cold-rolled coils is very strong from sectors like white goods and automobile, the SAIL source said.
India to increase handling capacity of ports
Indian Shipping and Transport Minister Mr TR Baalu said that under the new Maritime Policy, the handling capacity of the ports in the country would increase from 100 billion tonnes to 150 billion tonnes. He said the project would be sent for cabinet approval after the budget process was over.
The government is planning to set up 276 ports and 111 shipping units in the country at the cost of around Rs 55,000 crores within a period of 20 years. This would also include enhancing the infrastructural facilities like inner harbor development and deepening of draft, of the existing ports.
High input costs lead to fall in profits of steel majors in Q3
It is reported that the high costs of inputs have forced 36.37% decline in the combined net profit of the country's four steel majors in the third quarter this fiscal. ''This is largely the fallout of the skyrocketing prices of iron ore, gas and power as well as the fall in the price of finished steel in the domestic market. The situation is likely to continue and there will hardly be any change in the results in the last quarter as well,'' industry sources said.
The combined net profit of SAIL, TATA Steel, Essar and JSW Steel in Q3 dipped to Rs. 17.88 billion from Rs 28.27 billion during the corresponding period of the last year. TATA Steel remaining less affected among the four, the net profit of SAIL during the quarter took most of the beating having plummeted by 54.7%. While the net profit of JSW Steel fell by nearly 62% Essar's profit declined by 30%.
Their combined sales fell by 3.6% to Rs. 143.67 billion from Rs. 149.04 billion. TATA Steel sales increased by 31.78% and that of Essar remained more or less static, the sales of SAIL and JSW Steel experienced sizable fall during the period respectively by 16.49% and 18.29% contributing to an overall decrease. The reason of Tata Steel making a better sale despite a depressed market was its better product mix, the sources said.
Takeover opposition softens Mittal Steel CFO
Opposition to the disputed proposal to combine the world's two largest steel manufacturers is softening said the CFO of Mittal Steel on Sunday in defending his firm's hostile takeover bid for rival Arcelor. "There has been a reduction in terms of the negative reaction to this offer as governments have begun to realize the strategic rationale, the industrial rationale and begin to understand what Mittal Steel is about, what Mittal Steel wants to do with Arcelor," he told reporters. "The reaction is turning more in our favor."
Mr Aditya Mittal said the company will start sharing specific post-merger plans this week with the countries involved. The proposed acquisition, he argued, will be good for both companies and their shareholders and will create more growth opportunities for the industry. "We expect as we share with them the industrial plan and the strategic plan, they will become more and more understanding of what we're trying to propose and realize that it's actually a great thing for Arcelor and a great thing for the steel industry," he said.
In addition, the takeover of the world's second-largest steelmaker by the world's number one would accelerate growth, reaping even more profits for shareholders as the combined company would gain access to untapped markets in China, India and elsewhere, Mittal Steel's CFO said.
Responding to Arcelor's call for shareholders to resist the bid, he said they had only to look at how the markets have viewed Mittal Steel's move. He told journalists during a presentation in Chicago that Arcelor's share price had risen 6% on January 27 when Mittal's takeover bid was announced. By February 14, it was 11% higher and, at 30.12 euros, was 36% higher than the all time high of 22.22 euros last year.
He predicted the controversial deal will close by the end of June after gaining approval from European regulators and Arcelor shareholders.
Rio Tinto's CEO expects iron ore prices to keep rising
Rio Tinto expects iron ore prices to keep increasing as demand surges and suppliers face obstacles as they try to accelerate production. Demand for iron ore is extremely strong,'' Rios CEO Mr Leigh Clifford told Nine Network's Business Sunday program. I think we're looking forward to strong markets going forward into 2006.'' However Mr Clifford declined to comment on what price increase Rio Tinto wants to get from Asian buyers
As demand fuels higher prices, miners are trying to boost production to take advantage of the strong markets. Still, shortages of skilled workers and machinery have prevented supply rising at the same pace as demand, Mr Clifford said. Across the board, supply is rising a little more slowly than we would have thought,'' he said.
In China, a surplus of steel production is unlikely to affect iron ore prices, Clifford said. Our business is with the major mills and those mills are very efficient,'' he said. You will see some rationalization in China but I don't think that will necessarily be an impact on iron ore prices.''
Arcelor Deputy CEO gives no chance to Mittal Steel bid
Arcelor will succeed in fighting off Mittal Steel's $23-billion hostile takeover bid Arcelor's Deputy CEO said on Friday. "As the proposal is today, Mittal Steel in our opinion has no chance to succeed," Mr Michael Wurth, Arcelor's deputy CEO, told Reuters in an interview. "There is very little trading volume presently and the feeling we have from our shareholders is that they do not want to sell their shares."
Remarking that it is not fair to "play with a company like a football", Mr Wurth said Arcelor wants to keep Dofasco because of the 10% share of the North American auto steel market that Dofasco has built through contracts with the top five automakers. Adding to the lure of Dofasco is that it owns an iron mine, Quebec Cartier Mining, at a time of rising iron prices. Mr Wurth said "We primarily want to grow strong with Dofasco," he said. "We thought that Dofasco was by far the best company because of its high quality assets...strong growth prospects and the highest quality products,"
Arcelor is now pulling out all the stops to thwart the Mittal offer and recently sent shareholders a letter to urge them not to cave into a bid it says underestimates the value of the company.
Nippon Steel likely to beat JFE on pretax profits this year
The Nihon Keizai Shimbun reported that Nippon Steel Corp is likely to report a 40% increase in group pretax profit to about 520 billion yen for the year to March. The figure would mark a record for a second straight year. Sales are expected to rise 12% from fiscal 2004 to around 3.8 trillion yen. Operating profit will likely rise 28% to around 550 billion yen.
With overseas market conditions having deteriorated, Nippon Steel has reduced output of commodity-grade and other steel to hold down exports. The average price of its steel products is therefore estimated to be about 20% above the year-earlier level, the report said. Earnings will be buoyed by robust sales of high-grade steel products it supplies to manufacturers in such industries as automobile, machinery and shipbuilding.
JFE Holdings Inc is expected to post its own record group pretax profit of about 500 billion up by 9% from fiscal 2004.
Ever since its creation in 2002 through the merger of Kawasaki Steel Corp and NKK Corp, JFE Holdings has beaten Nippon Steel in full year pretax profit. But for this fiscal year, Nippon Steel's pretax profit will likely top that of JFE, whose earnings have been weighed down more by output reduction, the report said.
Sinosteel secures finance for overseas mining ventures
Chinese Sinosteel has revealed a $3 billion war chest to kick start new overseas mining ventures, including in Australia, as China tries to escape the dominance of iron ore heavyweights BHP Billiton, Rio Tinto and Brazil's CVRD. Speaking on the sidelines of the AJM Iron and Steel conference in Perth, Sinosteel Australia MD MrXiaofei Cui said China was eager to identify and control new supplies of raw materials.
Sinosteel, which last year traded more than 20 million tonnes of iron ore, has already secured two bank facilities giving it $3 billion for new mining ventures, Mr Cui said.
Ural mining to double zinc capacity
Mr Konstantin Plekhanov technical director Urals Mining and Metals said that it plans to more than double zinc capacity by building a 140,000 tonnes per year plant at an investment of $380 million in Kirovgrad in the Sverdlovsk region where it produces blister copper and zinc oxide in Kirovgrad.
UMMC's zinc subsidiary, Elektrotsink, runs a 100,000 tonne capacity plant in Vladikavkaz. "There is currently an imbalance between the amount of raw materials we are producing and the capacity that exists in Vladikavkaz," Mr Plekhanov said in an interview.
Severstal-Metiz buys 60% of Ukrainian Dniprometiz
Severstal-Metiz, the metalware division of Severstal has bought 60% plus one share in Ukraine's Dnipropetrovsk based metalware plant Dniprometiz from Ukraine's TAS Group under an agreement that TAS and Severstal-Metiz signed on February 17, 2006.
A press release said that the main purpose of the transaction was to develop Dniprometiz, make the best technologies of Severstal-Metiz's Russian plants available to it and expand the product range. "Severstal-Metiz views the acquisition of the stake in Dniprometiz as the next step in the implementation of its export-oriented development strategy," the release said.
Dniprometiz is Ukraine's biggest metalware producer. The Teko-Dniprometiz holding company, which is a member of the TAS Group, owns 27% of the Ukrainian metalware plant.
Severstal-Metiz, Russia's biggest metalware producer controls 31% of Russia's metalware market and accounts for around half of the country's metalware exports. It produced 825,400 tonnes of metalware in 2005, exporting 200,000 tonnes.
Sinosteel sets up Sinosteel Shandong Mining Co
Sinosteel Shandong Mining Co Ltd has been set up as JV between Sinosteel Corporation and Linyi Sanshan Import & Export Trading Co Ltd with 80% share of Sinosteel and 20% of Linyi Sanshan. The establishment of the company marks the commencement of Sinosteel Cangshan iron ore project construction.
Sinosteel is developing Cangshan iron ore mine located in Shandong Linyi Cangshan County. The total reserve of the mine is estimated at 80 million tons. After the commissioning, during the first season it will produce 2 million tons of iron ore per year and 600 thousand tons of fines and is estimated to have life of 30 years.
IUDs Dzerzhinsky mill boosts pretax profit in 2005
It is reported that Donbass Industrial Union IUDs Dzerzhinsky Iron & Steel Works in the Dnipropetrovsk region boosted pretax profit by 240% in 2005 to 425.5 million hryvni.
Sales were 4.72 billion hryvni and the profit margin rose to 12.7% in 2005 from 6.6% in 2004. Net profit soared by 160% to 62.9 million hryvni in 2004.
Shougang to start Jingtang billet mill construction in March
Shougang announced that construction of the Jingtang Iron and Steel plant will start next month. The project's capacity will be about 4.85 million tons of steel billets per year on completion of the first phase.
Construction is expected to be completed by June 2008.
Sinosteel set up mining company in Shandong Sinosteel has set up a new mining company in Chinas Shandong province. The new company will focus on mining iron ore in Cangshan, Shandong. The mine has an estimated reserve of around 80 million tons of ore. Sinosteel is currently also part of a project looking exploit iron ore in North Korea. (Feb. 17)
Cargo handling at Karachi Port privatized
Cargo handling at the Karachi Port has been privatized and Cargo Handling Companies would take charge of all import and export cargoes as the Karachi Ports Board of Trustees approved the outsourcing of cargo handling and setting up of CHCs under the private sector.
There would be no limit on the number of CHCs, which may work for any type of cargo. CHC would pay royalty on all import cargo and no royalty would be charged on export cargo. No rent would be charged from CHCs for storage of break, bulk and CFS cargo.
KPT would provide space for auction of cargo free of charge and sale proceeds would be shared on fifty-fifty basis. Storage charges would be recovered by CHCs. Slinging and un-slinging charges would be paid by the CHCs.
There would be no change in the present system of wharfage and wet charges. CHC schedule of charges would be decided with the mutual consent of KPT and CHC. All stevedores having valid KPT license for 5 years would be eligible to apply for registration as CHC.
Belarus increases steel output by 18.3% in Jan
Belarus increased steel output 18.3% YOY in constant prices in January to 252.5 billion Belarusian rubles, the Statistics and Analysis Ministry reported.
Production grew by 7% to 198,100 tonnes of crude steel, 22.3% to 234,200 tonnes of finished steel, 32.7% to 12,300 tonnes of ordinary grade wire, 20.8% to 6,800 tonnes of steel wire, 6% to 8,200 tonnes of steel cord and 16.3% to 9,300 tonnes of steel pipes.
Ilyich denies takeover talks
Ilyich Iron and Steel Works, the second largest steel plant in the Ukraine, have announced that the company is not for sale.
This comes after the Ilyich chairman Vladimir Boiko held talks with companies like Arcelor, Severstal, Smart Group and System Capital Management. The talks were said to be wide ranging discussions and did not include discussions about any deals.
Coal mining affects water resources in Shanxi
A new study shows that coal mining has seriously undermined the underground water resources of central China's Shanxi Province, the Xinhua news agency reported. The study reveals that for every ton of coal produced some 2.48 tons of water is consumed, which means that a yearly output of 500 million tons of coal costs some 1.2 billion cubic meters of water. This amount of water is equivalent to the total amount of water the province has diverted from the Yellow River in order to ease its water shortages.
The consumption of water for coal production has also caused the groundwater level to drop around mining areas. About six million people and tens of thousands of livestock now have great difficulty in accessing drinking water.
Experts say the disruption of underground water resources during coal production is a problem that is faced around the world. They call on the government to devote more technology, personnel, and investment to this field and to improve coal production management.
Excel raises $100 million to fund Millennium mine
The increased cost of Excel Coal's delayed Millennium project in Queensland has forced the miner to raise $100 million in equity to keep its balance sheet in shape. "We've taken out quite a bit of debt in the last 12 months," MD Mr Tony Haggarty said. "Instead of taking further debt, we decided it was prudent to do it with equity. There's quite a good demand for our stock."
"We're not unhappy with it," Mr Haggarty said. Six of the company's founding directors, sold off some of their personal holdings at the same time as conducting the equity raising. The founding directors previously owned 54% of the company, which floated in 2004 but that fell to 47% on Friday. "It's been nearly two years now since we listed the company and none of the directors had sold any shares," Mr Heggarty said.
