March, 22 2006
Das Committee recommends PSUs mergers
It is reported that the expert BL Das Committee set up by the steel ministry has recommended that Bharat Refractories Limited and Maharashtra Electrosmelt Ltd may be merged with SAIL to further strengthen the downstream activity of the steel major. Steel ministry is reported to be studying the committees recommendations after which a final proposal of the ministry would be sent to the Cabinet for clearance.
Das committee has also suggested that individual identity of Manganese Ore India Ltd may be retained. SAIL had suggested merging both MEL and MOIL with itself as a package. MOIL has, however, been reluctant to be merged with SAIL.
The committee has been silent on merging Rashtriya Ispat Nigam Ltd with SAIL as it was not mandated to so.
According to the reports, the expert committee has also recommended that Sponge Iron India Ltd may be considered for merger with NMDC. However, the committee has not agreed on merging Kudremukh Iron Ore Company Ltd with NMDC.
Sources said that strengthening SAILs operations was important as competition in this sector would increase with international steel majors like POSCO and Mittal Steel all set to start their respective plants here.
Orissa media urged to boycott visit to POSCO plant in South Korea
Kalinga Sena, a regional party in Orissa, has threatened to socially boycott media people who visit South Korea accepting invitation from POSCO. "The POSCO project has become controversial and we don't want media people to become part of this controversy," Sena president Mr Hemanta Ratha told IANS.
POSCO has invited about 26 journalists from Orissa through an advertising agency to visit the POSCO plants at Pohang and Gwangyang in South Korea next month. Described as a "familiarization trip" from April 9 to 14, the company said it would bear the expenses, including travel and hospitality. The purpose is to introduce POSCO's developmental works to the media and Orissa officials and give them an insight into how the company contributes to sustainable development in society, the company claimed.
Punj Lloyd to take equity in health venture
Punj Lloyd Ltd has informed BSE that the Board of Directors of the Company at its meeting held on March 20, 2006, inter alia, has approved the investment of a sum not exceeding Rs 1380 million in the equity share capital of Global Health Pvt Ltd, New Delhi, a Company promoted by Dr. Trehan for implementing the Medicity Project, subject to the Parties entering into a Shareholders agreement on mutually acceptable terms and conditions.
TopCorus rumored to be in merger talks with Evraz
It is reported that Anglo-Dutch steelmaker Corus has held possible merger talks with Russias largest steelmaker Evraz. A report on the ft.com Web site published on Monday said the two companies had been in talks to create one of the world's top six steelmakers by volume. The talks, which are not currently ongoing, took place over several months without yielding concrete results, the newspaper said.
Corus has a market value of around 3.9 billion pounds ($6.9 billion), with Evraz at $8.5 billion.
A Corus spokeswoman said she had no comment on the report. "All we have said is that we are in the initial stages of looking at opportunities in low cost, high growth countries like Russia and Brazil," she said.
Evraz said in a statement it was "aware of certain rumors circulating in the market relating to potential transactions in its shares and of its disclosure obligations as a listed company", but did not comment on speculation or rumor. Evraz also declined comment on separate reports linking it with Russia's richest man Mr Roman Abramovich.
Steelmakers can absorb 22% rise in iron ore prices - Merrill Lynch
Steel companies can afford to pay as much as 22% more for iron ore and keep overall costs unchanged as other charges drop, according to Merrill Lynch & Co. Lower coal prices agreed between Japanese mills and miners and the possibility of lower freight charges will enable steelmakers to afford higher ore prices, Merrill Lynch analysts said in a report.
Ore prices will increase by 18% this year, the world's biggest securities firm by market value said in the report, maintaining an earlier forecast.
Iron ore producers "still hold the upper hand in the current price negotiations" because of the lower coal prices, a supply shortfall and improving steel prices, the report said. But they "may hesitate to push too hard" on price increases because they are "cognizant of the need to maintain close relationship with the major steel mills."
Steelmakers can afford iron ore price increases of up to 150% before they become unprofitable, ABN Amro Holding NV said in a report March 16.
Luxembourg parliament to vote on crucial takeover law today
Luxembourg's parliament is to decide today whether to introduce new rules which could obstruct the bid of Mittal Steel for Arcelor. Members of the Luxembourg parliament's finance committee are keeping their cards close to their chests. "Everything is possible, you will just have to wait until Wednesday," said Mr John Castagnero, a member of parliament and Arcelor board member, but not on the committee.
Mr Laurent Mosar, head of the finance committee, said on Monday that he would not adopt that proposal but did not rule out other changes which might impact the offer. Mr Mosar said he would propose "amendments on liquidity," but declined to provide more details.
However, Ms Anne Marechal, a Paris based partner at law firm DLA Piper Rudnick, said imposing liquidity rules would go against the European Union's takeover directive, probably triggering a legal row with the EU's executive Commission. "European takeover rules on liquidity apply only to mandatory offers where shareholders are obliged to tender their shares," she said.
Other questions include whether the law can be introduced before Mittal Steel's bid gets underway, and if it is not, whether it can be applied retroactively, after the bid is launched. Legal sources on both sides of the deal have different interpretations of the regulatory framework.
The new law would require that a bidding company to have at least 25% of its shares traded publicly on the market in order to use its stock to buy another listed company. Because the Mittal family owns 88% of the capital of Mittal Steel, the company would have been obliged to launch a cash only offer or at least a cash alternative for Arcelor shareholders.
MEPS see price recovery in Europe
MEPS see a recovery in prices has now definitely commenced in the European steel market. In the first two months of this year, despite much talk by the mills, the market saw little actual upward movement. But now the advance is underway. Mills order books are swelling with new business, as buyers return to the market to replenish their inventories. Price increases of about 7% are being obtained for strip products from negotiations this month, the first upward move in prices in more than a year. Producers are intending to follow this up with further increases. They will try to add 20-40 per tonne to flat product prices.
MEPS said that European mills continue to hold back their production rates in order to keep the supply side of the market in check. Januarys crude steel output by the EU - 25 was 5.8% less than in the same month the year before and in the EU 15, which contains the regions biggest steel producers, the production cut was as high as 6.6% YOY. February output figures are expected to show a similar pattern. Evidently, steel makers are implementing their stated intention to restrain production when necessary. A number of unplanned output cuts have also assisted. It now seems clear that this policy has helped to support prices during the recent decline in demand, and it probably prevented the kind of plunge in prices that, in previous years, would have left mills reporting heavy losses.
In long products, MEPS sees that prices are beginning to reflect the normal seasonal upturn in demand. Moreover, construction activity is forecast to grow this year in most European countries. Supply has also been curtailed by unexpected breakdowns and output disruptions at some plants. An absence of low-priced import offers is one of the main factors behind the rise in long product prices. Turkish steel makers are having to pay higher prices for scrap, so they are unwilling to export their finished steel cheaply.
All producers, outside the EU as well as within, are anxious to recover higher costs through escalating selling prices. Energy costs are at the top of some mills concerns. Among the major raw material inputs, prices for top grade hard coking coal will be somewhat lower this year. Prices have come down by between 8% and 16% percent according to grade for 2006 shipments. Iron ore is a different story. Steelmakers are stubbornly resisting miners demands for a further increase in annual contract prices. But most independent observers believe they will have to concede a rise in the range of 10% to 20% as per MEPS.
MEPS said that European mills cannot push their selling prices too far up without keeping a close eye on the competition from foreign suppliers. EU imports of finished steel in 2005 were about 5% lower than 2004 at 17 million tonnes. So far this year, there does not appear to have been any significant increase certainly not enough to imperil price levels. But there have been some indications from import license statistics that a rise in third country shipments could be in the offing. While Chinas much-discussed export potential is not currently having a serious direct impact on European markets, there are plenty of other nearer sources of supply. Mills in Libya, Iran and Egypt are looking to raise their shipments into Europe.
Zinc reaches a record high
Zinc rose to a record in London as a decline in stockpiles signaled strengthening demand from China. Zinc for delivery in three months on the LME rose as much as by $20 or 0.8 percent to $2,490 a metric ton, beating the previous all time high reached on March 17 by $5.
Inventory tracked by the London Metal Exchange fell by 2,400 tons or 0.8% to 302,700 tons, the exchange said in a report today, equal to less than 11 days of global consumption.
China became a net importer of zinc for the first time in 2005 as its booming economy stoked demand for steel needed for buildings, cars and appliances. The country imported 620,816 tons last year, equal to about 6% of world demand, as steel production jumped by 25%.
Demand for zinc will outpace supply by 210,000 metric tons this year, according to Deutsche Bank AG. The zinc market is going to become as tight as copper,'' Mr Stephen Briggs, an analyst at Societe Generale in London said. Every speculator is buying zinc now.''
China halts approval of new steel mills due to overcapacity
It is reported that China will not allow new steelmakers to come online this year in a bid to control the rapidly deteriorating overcapacity problems in the sector, the State Council announced. China's cabinet said that much needed realistic reforms taken so far were already showing positive results, and this year's clampdown on new mills will reap even greater rewards for China's steel industry, the official Shanghai Securities News reported.
In order to facilitate restructuring, enhance quality, raise competitive strength and help rationalize prices, no new steel mills this year will 'in principle' be allowed to initiate operations, the newspaper cited the State Council as saying. Over-investment in certain sectors has caused overcapacity, yet the remedies are quite basic, the newspaper cited the cabinet as saying, referring to the policy of prohibiting new steel firms from increasing existing overcapacity.
Many analysts said they believe overcapacity of some 100 million tons of steel is currently plaguing China's steelmakers and proving a serious drag on prices, but today's directive would only work if the central government makes serious efforts to carry it out. If the government keeps its word... then it could of course help to kill new overcapacity, said Mr Xu Zhongbu CEO of Beijing Metal Consulting Ltd. But, he said, in reality such directives are hard to carry through to a local level.
Nucor to acquire Connecticut Steel
Nucor Corp. announced that it has entered into an agreement to purchase substantially all of the assets of Connecticut Steel Corp for approximately $43 million, subject to post closing adjustments. Finalization of the acquisition will occur after satisfactory resolution of regulatory approvals, transfer of appropriate permits and operating contracts, and other closing conditions. The transaction is expected to be completed in early May of this year.
Connecticut Steel Corp has been in continuous existence since 1984, first as a welded wire reinforcement operation, with wire rod mill operations added in 1988. Founder Dr. Willy Korf sold the company to Swiss Steel AG in 1990 and in 1999, a senior management group comprising of Mr V Alan White, Mr Rolf Kuhn, Mr W Fergus Porter and Mr Charles Volpert purchased the company from Swiss Steel.
Located in Wallingford, the bar products mill has an annual capacity of approximately 300,000 tons of wire bar and rebar, and fabricates roughly 85,000 tons of wire mesh and structural mesh.
Connecticut will be a good addition and will offer a complementary product offering to our existing bar products group in the construction services segment, commented Nucor president and CEO Mr Dan DiMicco. The addition of Connecticut will allow our bar products group to increase its product offerings to existing customers and enhance our abilities to grow into new product offerings, added executive VP Mr. Mike Parrish.
Nucor and affiliates are manufacturers of steel products, with operating facilities in sixteen states. Products produced are: carbon and alloy steel in bars, beams, sheet and plate; steel joists and joist girders; steel deck; cold finished steel; steel fasteners; metal building systems; and light gauge steel framing. Nucor is the nation's largest recycler.
China Steel's Q4 profit falls by 67%
China Steel Corp, Taiwan's largest steelmaker, had the smallest quarterly profit in 3 & 1/2 years after cutting prices due to increased production in China. Net income declined by 67% to NT$4.9 billion ($151 million) for the fourth quarter from NT$14.7 billion a year earlier. Sales dropped by 12% to NT$41.2 billion.
The figures were derived by subtracting nine month figures from full year earnings announced by the Kaohsiung based company.
Profit for 2005 fell by 1.9% to NT$50.6 billion, the company said today. This was the first decline since 2001. Sales for 2005 rose by 11% from 2004 to NT$186.3 billion, according to a previous stock exchange filing.
China to set up national coal trading center in 2006
China plans to set up a national coal trading center this year as part of its reform of the coal ordering system, which aims to solve the problem of oversupply. Sources with the National Development and Reform Commission said China's coal supply and demand would balance this year. But the pressure of oversupply is increasing due to rapidly rising coal output, Beijing News reported. NDRC suggested a series of measures be implemented to straighten out the coal industry, including carrying out the state regulation for management and supervision of coal marketing, and controlling the approval of new licenses for coal dealers.
NDRC forecast China's total demand for coal will hit 2.25 billion tons in 2006, with domestic demand standing at 2.17 billion tons, and the remaining 80 million tons exported. China will consume 1.21 billion tons of coal to generate electricity, it said.
The difference between the market price and the state-fixed price for the coal supply to power plants, which can range from 30yuan ($3.75) per ton to 80 yuan ($10) or even 100 yuan ($12.5) per ton, is another problem plaguing the sector.
Mechel forms a Hardware Marketing Company
Mechel OAO announced establishment of a 100% owned subsidiary, Mechel Hardware OOO. The changes are in line with Mechel's overall strategy to develop its mining segment and improve the efficiency of its steel business.
Mechel Hardware will sell hardware produced at Beloretsk Metallurgical Plant, Vyartsilya Metal Products Plant, and Mechel Nemunas to the Russian and international markets. Mechel's consolidated hardware output was over 557,000 tonnes in 2005.
Mr Vladimir Polin a Senior VP of Mechel is appointed to the position of General Director of Mechel Hardware. "Though the hardware market is tightly competitive, we have a positive view on this segment. We intend to strengthen our presence in this sector, and are happy that Vladimir Polin, who has been with Mechel for many years, will be in charge of the new company," said Mechel's COO Mr Alexey Ivanushkin.
Mechel is one of the leading Russian mining and metals companies. Mechel unites producers of coal, iron ore, nickel, steel, rolled products, and hardware. Mechel products are marketed domestically and internationally.
Xstrata asked to revise McArthur River Zinc mine plan
Switzerland-based Xstrata Plc, which owns the world's largest zinc smelter, must revise its A$66 million proposal to expand its McArthur River zinc and lead mine in northern Australia to gain development approval. Xstrata must address nine environmental issues, Mr Kon Vatskalis, the Northern Territory mines and energy minister, said in an e-mailed statement after rejecting the company's original plan.
The outstanding issues must be resolved to the satisfaction of both myself and the minister for environment and heritage,'' Mr Vatskalis said in the statement, released late yesterday. We must strike a balance between development and the environment.'
Xstrata said it hasn't decided what it will do. Xstrata said in August it would close the McArthur River mine if it didn't get approval for its plan to convert it to an open-pit operation and extend the mine's life by 25 years.
CMC posts higher earnings for Q2
Commercial Metals Co reported second quarter earnings that increased from the previous year as the company logged higher revenues and posted a net LIFO income for the quarter compared to expense last year. Net Earnings for the second quarter increased to $80.10 million from $56.57 million in the prior year quarter. Net sales for the second quarter rose to $1.64 billion from $1.60 billion in the preceding year quarter.
For the six-month period, net earnings climbed to $149.73 million from $130.30 million a year ago. Net sales for the six months went up to $3.28 billion from $3.13 billion year earlier.
CVRD & Usiminas studying a $3 billion steel complex
Brazilian CVRD and Usiminas are studying a $3 billion steel complex in South America's largest country, a CVRD executive said. Mr Jose James Mendes Pessoa director of CVRD's steel industry department said during an industry seminar that working groups from the two companies were discussing the project, but gave no further details.
Mr Mendes Pessoa also said a steel mill project with Baosteel and Arcelor in Brazil's Maranhao state was still in a wait and see mode due to environmental and fiscal issues. It is designed to produce 3.7 million tonnes of steel slabs a year for export in a first phase, estimated to cost $1.5 billion. In a second phase, output would rise to 7.5 million tonnes, making it Brazil's largest semi finished steel products project.
Chinese coal industry under restructuring program
China's large state owned coal mines will accelerate steps to merge and restructure local small and medium sized mines, according to Tuesday's Economic Information Daily. Mr Zhang Guobao, vice chairman of the State Development and Reform Commission, made the remark at a ceremony to signal the start of the production of a new large scale coal mine belonging to China Coal, the nation's largest coal trader and major coal producer.
Mr Zhang spoke highly of the newly built Anjialing Coal Mine, located in North China's Shanxi Province, which has a production capacity of 30 million tons of coal each year.
China plans to regroup its coal mining industry into 13 conglomerates to improve safety and efficiency, as small mines, with less capital and lower production capacity, are more prone to accidents.
Coal plays a strategic role in China's economic and social development, and the restructuring of small coal mines is an important measure to optimize China's coal industry and to ensure safe production, Mr Zhang said.
Chaparral Steel 3Q profit boosted by steel shipments
The Midlothian-based producer of structural steel beams, Chaparral Steel's third quarter profit more than tripled compared to the prior year's third quarter, helped by a 43% increase in shipments. It reported net income of $49.2 million for the third quarter ended Feb. 28, compared to net income of $14.2 million for the third quarter of fiscal 2005.
Revenue for the quarter rose by 44% to $374.6 million from $259.1 million a year ago. Chaparral said its shipments increased by 43% to 573,000 tons, the second best quarter of shipments in the company's history.
"The results for the third quarter demonstrate the earning potential of our assets. These results are a testament to our employees and their dedication to doing things right and focusing on maximizing the profitability of the products that we produce," stated Mr Tommy A Valenta, President and CEO. "Improved global demand, industry consolidation and low cost production are the primary factors contributing to strong industry results."
Chaparral Steel Company, headquartered in Midlothian, Texas, is the second largest producer of structural steel beams in North America. The Company is also a significant supplier of steel bar products. In addition, Chaparral is a leading North American recycling company.
Aricom raises $158 million to fund iron ore mining in Russia
Aricom, a British-based mining company, raised $158 million in a share sale to help fund iron ore and titanium dioxide projects in Russia. The company sold 200 million shares at 45 pence each, Aricom said in a statement Tuesday.
Proceeds from the sale will be used to buy a 50% stake in the Kimkanskoye and Sutarskoye iron ore deposits, the completion of Kuranakh mine, and development of the Bolshoi Seim deposit, the company said. Aricom plans to develop mines to supply iron ore to China, the world's largest steel producer, the London-based company said Tuesday in a Regulatory News Service statement.
Mittal Steel Kryviy Rih fulfils investment commitment
Mittal Steel Kryviy Rih has been fulfilling its investment commitment in Ukraine undertaken after purchasing Kryvorizhstal, a senior official said after an inspection.
Ms Valentyna Semeniuk, the head of the State Property Fund, visited Mittal Steel Kryviy Rih, formerly known as Kryvorizhstal, after opposition parties have complained that the investment commitment had not been met.
Raspadskaya to invest in Koksovaya coal mines
Kemerovo based ZAO Raspadskaya Coal Company will invest 3.2 billion rubles in the development of its enterprises, Company's CEO Mr Gennady Kozovoy told today a press conference.
These funds will be transferred mainly to continue the construction of Raspadskaya-Koksovaya mine and to modernize operating enterprises. The coal production is planned to increase to 10.8 million tones.
6 killed and 22 still missing in Shanxi colliery flooding
The death toll from Saturday's colliery flood in North China's Shanxi Province rises to six after rescuers recovered another miner's body Tuesday morning. Another 22 miners were still missing and there was little chance for them to survive after being trapped for three days, according to the rescue headquarters at the site.
The water level underground has lowered half by 50 meters after two pumps worked for over 60 hours. The remaining water could be completely pumped out in about 20 hours, said an official of the headquarters.
The Fanjiashan Colliery, which was operating with an expired safety license, was flooded at around 3:30PM on Saturday in the county of Linxian. Altogether 58 miners were working in the pit and 30 managed to escape.
CVRD & JBIC sign $150 million loan for infrastructure
It is reported that CVRD and the Japan Bank for International Cooperation have signed a $150mn loan agreement to improve the company's transport infrastructure, the bank said in a release.
The loan will be used for improving and strengthening CVRD's rail and port infrastructure to increase iron ore transportation capacity and efficiency, as the company plans to increase output at its mine in Minas Gerais state. Specifically, the financing will benefit the Vitria-Minas railroad that connects the Itabira mine and Tubaro port.
Japan, which has to rely on imports for almost all its iron ore requirements, expects the improved infrastructure will guarantee a stable supply. CVRD supplies about 15% of Japan's iron ore imports.
Brazilian Mangels increases rolling mill capacity
It is reported by BNamericas that Brazilian metal products maker Mangels has invested roughly 9 million reais ($4 million) in a new rolling mill for its S Bernardo do Campo city complex in S Paulo state. Mr Adelmo Felizati CFO and investor relations director told "Total investments, including the rolling mill and other complementary equipment and lay out changes in our facility, reached 12 million reais."
German made rolling mill is designed to increase Mangels' rolled steel capacity from 5,500 tons per month to 7,500 tons per month.
Mangels plans to invest 147mn reais by 2008 to increase rolling and wheels production capacity and to create new cylinder products.
January income of Polish mines falls due to coal prices
According to the Polish Ministry of Economy, the net income of the mining sector fell from PLN 154.9 million to PLN 46.6 million (Euro 11.9 million) during January 2006.
The reasons are falling coal prices, which on average are 13.6% lower than a year ago. Mines sold in January 13% more coal than in the same period of 2005. However, inventories rose to 3.8 million tons, the yearly production of two mines.
It is not that bad. The most important is that they have income, Mr Janusz Olszowski, the CEO of the Mining Industry and Trade Chamber commented.
