July, 15 2006
India being hailed as the next China of steel industry
UK based GFMS Metal Consultancy in a new report titled "Indian Steel: The Next China" has hailed India as the new China of the steel industry, where crude steel production soared from less than 100 MT in 1995 to more than 350 MT in 2005.
GFMS said that the Indian steel industry is poised for significant growth and is being hailed as the next China in the segment with a sharp jump in its crude steel production to 100 million tonnes by 2020.
GFMS said that it has been only a few years since the Indian steel industry was mired in over capacity, huge losses and a general depression. However, robust consumption growth over the last two years has stimulated enormous expansion plans, facilitated by a relatively unexploited iron ore raw material base in the country.
TATA Steel on prowl for steel mills in SEA
TATA Steel is set to become a dominant player in South East Asia and has already acquired Singapore based Nat sell, which has plants in Singapore, Thailand, Malaysia and Vietnam and Thailand based Millennium Steel. It is reported to be eyeing steel mills in several South East Asian countries as the next stop for expansion. Dr T Mukherjee deputy MD steel said ''Southeast Asia is the market on which we want to focus and will expand our operations in Bangladesh, Indonesia, Vietnam and Thailand.'' He said that many countries in the SEA region have steel consumption growing at over 10% a year.
He said Were looking at opportunities in Indonesia and are happy to have plants there. Steel consumption in Indonesia will be much more in the next 10 years with more than 200 million people. He said that large countries such as Indonesia, which traditionally had a very low per capita consumption of steel, are starting to grow rapidly.
He added that there is huge potential for growth in Thailand. He said that in light of the Thai government's initiative to focus on infrastructure and on making the local auto industry the Detroit of Asia, steel companies should use Thailand as a base for only the final stages of production rather than for integrated production facilities. He said ''We have no plans to invest in basic steel production in the country, but Thailand, due to rising demand for steel products, could be the ideal location for finishing products. He said that Thailand would see demand nearly doubling over the next 10 years to about 25 million tonnes per year from the current 12.5 million tonnes.
Expert panel submits report on toxic wastes aboard SS Blue Lady
The anxiously waited inspection report, on hazardous materials, demanded by India's Supreme Court before SS Blue Lady could be cleared for breaking, has now been submitted by the court appointed committee. The contents of the report remains sealed.
The inspection panel consisted of a 15 member team from Central Pollution Control Board, Gujarat Pollution Control Board and National Institute of Occupational Health and Gujarat Maritime Board. The inspection of SS Blue Lady was carried out while it remained at anchor off Pipavav Port.
It is reported that if the ship gets the go-ahead from the court, BLUE LADY will be beached at Yard No V-4, owned by Rajiv Renival of Haryana Ship Demolitions Pvt Ltd, at Alang to be dismantled.
TATA Steel loses Highveld race
TATA Steel has lost the race for acquiring South Africas Highveld & Vanadium to Russias Evraz.
Anglo American, the owner of Highveld that had put its 79% stake on the block in October and TATA Steel had shown interest in acquiring it. It is not clear whether TATA Steel had finally put in its financial bid. Merchant banking sources said the steel company had put in a conditional bid for acquiring only its steel business.
As per some unconfirmed reports TATA Steel did not find merit in bidding aggressively for a company which had a low steel production capacity as 40% of Highvelds revenue comes from the steel business, while the balance is generated from vanadium and ferro alloys.
CIL plans to improve coking coal washeries
Coal India Limited is taking steps for improving the performance of existing washeries and is facilitating private sector in setting up new washeries by providing required infrastructural facilities in coal fields.
To improve capacity utilization of the washeries, CIL has stressed on increasing raw coal feed, augmenting coking coal production from the linked mines and expediting modernization. However, the capacity utilization of CIL's coking coal washeries is getting adversely affected due to poor quality of raw coking coal feed resulting in low yield, aging of washeries and resource problems in modernizing the existing washeries in time. These washeries were initially designed to use good quality coking coal.
The total coking coal washery capacity existing in the country is about 31 million tonnes per year, out of this CIL's share is about 20 million tonnes. In case of thermal coal the total washery capacity is about 90 million tonnes per year including CILs share of 20 million tonnes.
RBI mulls using SS for coins due to surge in metal prices
PTI has reported that the Reserve Bank of India is thinking of using stainless steel for the manufacture of Rs 2 and Rs 5 coins instead of the copper nickel alloy used currently due to soaring metal prices and leading to mismatch between the intrinsic value and metal value of Rs 2 and Rs 5 coins.
A RBI spokesperson told PTI "As on date, the intrinsic value of coins is still higher than their metal value."
Indian Railways earnings up by 14.22% in Q1
Indian Railways has on an approximate basis earned Rs 14858.60 crore during April to June 2006 as against Rs 13008.40 crore during April to June 2005 thus registering an increase of 14.22%. The earnings from goods have also gone up from Rs. 8605.58 crore during April to June 2005 to Rs. 9973.91 crore during April to June 2006 up by 15.9% YOY.
Evraz to acquire Anglos 79% in Highveld for $ 678 million
Anglo American plc, Evraz Group SA and Credit Suisse have announced that an agreement has been reached in relation to the sale by Anglo American of its shares in South Africa based Highveld Steel and Vanadium Corporation Limited, under which Evraz and Credit Suisse have each acquired 24.9% of Highveld"s share capital from Anglo American.
Evraz has an option to increase its stake in Highveld once regulatory approvals are received by purchasing Anglo Americans remaining 29.2% shareholding as well as the 24.9% holding of Credit Suisse through separate option agreements. Evraz intends to file for such regulatory approvals as soon as possible. However should Evraz increase its interest beyond 35%, it will be obliged to make an offer to all shareholders of Highveld.
On implementation of the Anglo American option arrangement, the aggregate amount that will have been realized by Anglo American for its 79% interest in Highveld is R4.885 million ($678 million) equivalent to an average of R62.36 per Highveld share. This represents a 13% premium to the volume weighted average price of R55.15 per share for the 30 day period preceding Anglo Americans announcement on 26 October 2005 for disposal of its shareholding in Highveld.
Anglo American and Credit Suisse have agreed that Anglo American will retain the voting rights in respect of the shares acquired by Credit Suisse. Anglo American will retain representatives on the Highveld board until such time as Anglo American disposes of all its shares in Highveld.
Mr Alexander Frolov chairman f Evraz said "Evraz has great confidence in the South African steel industry and is excited by its new investment in Highveld and by the outlook for steel and vanadium markets. The South African steel market is experiencing strong demand growth driven by an upswing in new mining, infrastructure and industrial projects. We have high expectations of Highvelds internal growth plans for both its vanadium and steel businesses, including the expansion plan in excess of R1 billion which will increase steel output by more than 20%. Evraz is committed to advancing black economic empowerment at Highveld."
Mr Tony Trahar CEO of Anglo American said: "This represents another important step in the execution of the Groups strategy as announced in October last year. This substantial foreign direct investment by Evraz and Credit Suisse in South Africa is a strong vote of confidence in the countrys prospects and will ensure that Highveld remains an efficient competitor in the South African and global markets."
Citigroup has acted as exclusive financial adviser to Anglo American with respect to the transaction. Credit Suisse and ABN Amro have acted as joint financial advisers to Evraz.
Highveld Steel and Vanadium is a leading vanadium producer and also produces steel, ferroalloys and carbonaceous products. Ore for the steelworks and Vanchem is obtained from Highveld's Mapochs mine near Roossenekal in Mpumalanga. Hochvanadium is a wholly owned subsidiary in Austria which processes and sells vanadium products. Transalloys and Rand Carbide produce manganese alloys, ferrosilicon and carbonaceous products.
US steelmakers publish China Syndrome
Representatives of America's steel industry are asking US trade officials to take action against China for subsidizing its steelmakers as tax breaks, cash grants, export incentives and other generous government subsidies have made China the world's largest steel producer. Chinese steel production has increased 170% since 2000, with the country accounting for nearly a third of world production last year, according to the study.
The report titled "The China Syndrome" was sponsored by American Iron & Steel Institute, the Steel Manufacturers Association, the Specialty Steel Industry of North America and the Committee on Pipe and Tube Imports supported and was prepared by a Washington based law firm Wiley Rein & Fielding LLP.
The study says that China's forgiveness of steel company debt, preferential loan practices, targeted infrastructure development and currency manipulation give Chinese producers a huge advantage over companies that operate under free market rules. The study maintains that a sharp rise in Chinese steel production in recent years is directly related to improper government intervention. The subsidies give Chinese producers a leg up on foreign competitors, contribute to the massive US trade deficit and cause production jobs to move overseas. Because of China's weaker environmental laws, subsidizing the country's steel industry also has environmental consequences, the report concluded.
The report states that much of the assistance appears to violate reforms Chinese government officials promised to make when the country was admitted to the World Trade Organization. Mr Daniel DiMicco CEO of Nucor said The US needs to act aggressively to require China to live up to its World Trade Organization obligations.
Mr Alan Price an attorney with Wiley Rein & Fielding LLP, who was co author of the study, said that the groups will urge the federal government to take complaints against China to the WTO for steel as well as other industries. He said US trade officials will be armed with the study in meetings with Chinese officials scheduled for later this month.
If you need to get a copy of this report, please send a mail to amol.hatwar@steelguru.com.
Mittal Steel USs Sparrow Point BF to be operational on July 21
Mittal Steel US announced that its L Blast Furnace at its Sparrows Point Md. should be fully operational by the end of July. Mr Bill Brake, Mittal Steel US's executive VP operations said We have had a recovery team working around the clock to minimize the outage, and we are now confident that we will be back to essentially full operation by July 21.
Mr Brake said Returning such a large furnace to full capability after an extended power failure is a highly complex, demanding process. We are working closely with customers to make sure that we respond to their needs as we begin filling orders again and that we compensate as much as possible for the production shortfalls related to this incident.
Mittal Steel US's 295 foot tall L blast furnace was struck by lightning, causing a power outage for several hours. The electrical failure caused the furnace, which is the second largest in North America, to shut down and cool, resulting in a breakout of hot metal from one of the furnace's hot blast nozzles. The incident required cleanup and re commissioning of the furnace. There were no injuries. The company expects financial damage will be covered by insurance.
L Blast Furnace can make about 270,000 tons of iron a month and is expected to lose around 250,000 tons of iron making because of the accident.
Mitsui increases stake in Nippon Steel
Mitsui & Co has raised its stake in Nippon Steel to 0.65% from 0.31% through the purchase of 10 billion yen in Nippon Steel shares. Mitsui, which has purchased about 23 million shares in Nippon Steel since mid June currently has no plans for further purchases. According to sources the transaction will help Nippon Steel to secure stable shareholders to foil any potential takeover bids.
Japanese companies are increasing cross holdings among them for protection against hostile takeovers.
Nippon Steel recently increased its interest in Nakayama Steel Works Ltd to more than 7% from 4.5% and raised its stake in Sanyo Special Steel Co to 15% from 11.2%.
Mr Mordashov says Arcelor merger failure no tragedy
Severstal saw no point in raising its offering price for a stake in Arcelor. Mr Alexei Mordashov told reporters "The deal did not come off for economic reasons, as far as we can tell. Business is business, and our rival offered more money. We did not think it made sense to improve our own bid."
Mr Alexei Mordashov also told reporters that the failure of Severstal's proposed merger with Arcelor was no great tragedy. Mr Mordashov said that We are taking what has happened in our stride. Needless to say, we are not happy that it failed to materialize. But we do not see this as a big tragedy.
He added that "We will of course be looking at new options, new projects and new horizons"
BlueScope CEO urges Australian Government to save manufacturers
BlueScope Steel has started ringing the alarm bells over the rapid shrinking of Australia's manufacturing sector and labeled the Federal Government's trade policies as naive. Mr Kirby Adams CEO BlueScope Steel said that the Government was caught up in a trade fantasy and he warned strongly against entering a free trade agreement with China unless imbalances in the current trading relationship were corrected. Mr Kirby during American Chamber of Commerce lunch in Melbourne told "Australia is caught up in ideology, in a fantasy, that we can lead the world to a free trade nirvana by unilaterally dropping our tariffs.
Mr Adams said that Australia had already tried slashing its tariffs on agriculture in a bid to lead by example and it didn't work. He said "Australia unilaterally liberalized its agricultural tariffs, but now it faces a stalled Doha trade round stalled by the refusal of the Europeans and the Americans to do likewise. And we were inundated by EU subsidized Belgian peas. We have been naive. We have nothing to bargain with when we are negotiating trade deals."
He said that The Chinese steel industry was 50 times bigger than the Australian steel industry, yet there were no tariffs in Australia and an 8% tariff on steel going into China. It is hard to argue that China is a developing country in relation to its steel industry when it is the world's largest by four times."
He called for tariff equalization He demanded "Clearly, an FTA that is designed to promote freer trade must ensure the current imbalance in steel tariffs is addressed immediately. Lower theirs, or raise ours, now."
Teck Cominco challenges Inco in Ontario Securities Commission
Teck Cominco Ltd has given another twist to Inco Ltd's already complicated plan to merge with Falconbridge Ltd by announcing that it will argue to quash Inco's shareholder rights plan in a week's time. Teck Cominco has asked the Ontario Securities Commission for a hearing to discuss removing Inco's poison pill. The OSC granted that request Friday, setting a hearing date of July 21.
Teck Cominco contends that Inco does not need a shareholder-rights plan to ensure a fair price for its stock as an auction has already occurred. Teck stated in its filing with the OSC "There is no reasonable prospect that the Inco rights plan, if permitted to continue, will result in an alternative bid or transaction more attractive to Inco shareholders." It said that in fact, maintaining the plan would deprive Inco shareholders of the opportunity to choose between the offers from Teck and Phelps Dodge. Teck maintains its unsolicited bid is not coercive or unfair, but Inco has implemented various defensive tactics.
While it resists the Teck proposal, Inco is embroiled in a battle with Xstrata for control of Falconbridge, with which Inco has been trying to merge since October. Inco's bid for Falconbridge is backed by US copper producer Phelps Dodge Corp which is seeking to acquire both Inco and Falconbridge.
NT Holding acquires Shanxi Jinhai Metal Group
NT Holding Corp announced closing of the acquisition of Shanxi Jinhai Metal Group Limited. NTHH acquired 58% of the equity of Jinhai through its wholly owned subsidiary American Asia Metallurgical Industry Limited, a wholly owned foreign enterprise established in China.
Jinhai is a Chinese company engaged in production of coking coal and steel production in the Shanxi Province of China. Jinhai currently employs approximately 500 employees and its current production capability stand at 180,000 tons of coking coal and 200,000 tons of steel.
Mr Peter Cgun CEO of NTHH said "This is an excellent opportunity to demonstrate our abilities to conduct acquisitions on sizable businesses in China. It proves that we are capable to expand our operations in China through acquisitions. Also, the acquisition of Jinhai will further strengthen our profitability in the future as well as create value to our shareholders."
HK based NTHH invests in and operates companies engaged in energy and natural resources businesses through its subsidiaries. NTHH currently operates PT Borneo which owns a 30 year coal mining right concession in Indonesia.
Highveld shares plunge after Anglo sells control to Evraz
Highveld shares fell as much as 14% after Anglo American said it would sell a 79% stake in the company to Evraz Group SA at a discount to yesterday's closing price.
Highveld stock closed yesterday at R74and traded at a record R99 on Jan 10. They fell as much as R10.50 to R63.50, trading at R66 as of 9:08 am in Johannesburg
10 coal miners found alive in Jinli mine flooding
It is reported that Chinese rescue workers have found 10 missing coal miners alive a day after they were trapped by flood water at a mine in Inner Mongolia.
A rainstorm on Thursday flooded the Jinli Coal Field where 12 miners were working.
Chinas Xinhua news agency said that "The structure of the mine is quite complicated and there are many lanes to protect themselves against danger. As a result, the survival chances of the two missing people are still quite large."
Radiation safety certificates for Ukrainian steel
It is reported in Ukrainian media that Kuwait and Jordan will be demanding certification with regard to no presence of radioactive substances for steel being imported from Ukraine citing Ukraines Deputy Industrial Policy Minister Mr Vladimir Hranovsky.
Mr Dmytro Bilokurov head of Ukrainian steel industry association UkrMet said that the demand to provide radiation safety certificates for Ukrainian steel products was due to negative publicity from Russia on this matter.
Japanese SS mills to raise prices on record nickel prices
The surge in nickel prices has led to price increase announcement by several Japanese stainless steel makers.
Nippon Steel & Sumikin Stainless Steel announced a price hike of Yen 10,000 ($88) per tonne for 304 grade cold rolled stainless sheet for July shipments to coil centers, which account for about 30% of the total domestic stainless shipments.
Daido Steel also plans to raise prices of 304 grade stainless steel by Yen 30,000 per tonne for September shipments. The company spokesman said the Yen 30,000 per tonne hike represents higher London Metal Exchange nickel price rise as well as higher fuel costs.
Aichi Steel is currently studying a price hike for the shaped 304 grade stainless products. The company has raised its product prices by 15% from June 1 shipments and is considering another hike this year.
Severstal starts Izhora Steel Pipe Mill
It is reported that Severstal has launched the Izhora Pipe Plant, which is a part of a $600 million investment that will allow the Company to supply pipes to Russia's oil and gas sector.
Izhora Pipe Plant will be able to produce 600,000 tons a year of welded pipes between 610 millimeters and 1,420 millimeters in diameter.
Striking workers siege POSCO HQ
Local media has reported that about 2,000 striking construction workers in Pohang in North Gyeongsang province paralyzed business operations at POSCO as they occupied the entire headquarters for the second day. The workers, armed with iron pipes and wooden sticks, raided the headquarters on Thursday and blocked the entrance to the 11 story building. About 5,000 police were dispatched and the local prosecution ordered the arrest of 18 workers said to have masterminded the strike.
Strikers have demanded 5 day workweeks and wage hikes since June 29. POSCO has been using substitute workers to avoid project delays.
POSCO said most administrative work at its headquarters was stalled, with the steel plants running as scheduled.
Wuhan to sell $1 billion bonds to finance projects
China's third biggest steelmaker Wuhan Iron & Steel Co plans to sell 8 billion yuan ($1 billion) of bonds that can be converted into shares to finance new steel projects. Wuhan said that shareholders will vote on the planned sale of yuan currency bonds on July 28.
Wuhan said that the bondholders will receive 19 call warrants for each five year bond they hold, with each warrant enabling them to buy one share, the company said. The money raised from the bond sale will be used to build production lines to make silicon and rolled steel,
Investors favor convertible debt when shares are volatile, as they combine the relative security of a bond with the potential for gain if stocks rise. Convertible bonds are also cheaper for a company to sell than other debt securities because investors accept lower yields.
Vietnam government monitors rebar prices
Vietnams ministry of industry has asked the Viet Nam Steel Association to work with the Viet Nam Steel Corporation on stabilizing the construction steel market and to prevent steel dealers from allegedly raising prices of rebars.
The ministry has also required VSC to closely monitor distribution networks and ensure prices and discounts are posted in all of its outlets.
VSA and VSC are also required to co operate on forecasting market demand in order to prevent supply shortages.
VSA last week said the price of construction steel could hit VND9 million per tonne in September if import prices for ingot steel continue to rise. Billet prices have reached $440 per tonne in domestic markets, up from average June prices of $400.
Ukraines GDP up by 9.3%YOY in June
Ukraines GDP has increased by 9.3% in June 2006 as compared to June 2005. GDP increase for January to June 2006 has reached 5% YOY.
The increased GDP growth is attributed to improvement in almost all industries in June and was encouraged by impressive growth in construction, transport, metallurgy and machine building. But one of the main reasons behind such GDP growth is a low comparative base, as GDP increased by 1.1% in June 2005.
However it is expected that GDP growth would slow sown in the next six months and annual GDP growth forecast at about 2% level would be maintained. As per Ministry of the Economy GDP growth forecast for 2006 is at 2.8% levels. Political instability, rising energy prices and the deterioration of the foreign trade balance may depress the GDP growth.
Pakistan to invite EoIs for power plants
Pakistans PM Mr Shaukat Aziz said the energy requirements of the country were increasing and the government was exploring all available sources of energy including thermal, nuclear, hydel, and alternative energy to meet its growing energy needs He said the government was fully cognizant of the vital role played by the various sources of energy in the development and growth of a country and was doing necessary planning to ensure energy security in the years and decades to come.
The prime minister said the government was investing a lot in the energy sector and was fast tracking procedures in order to meet the short and medium term energy needs of the country. He said that the government was providing attractive facilities to both local and foreign investors in order to increase employment opportunities and allowing the private sector to play its role in the economic development.
He said the government was encouraging thermal power plants, which run on furnace oil, coal, natural gas and LNG. He welcomed both the imported and local coal-based power generation projects because they were cost-effective and enhances energy security. He has directed the Private Power Infrastructure Board to globally invite EoIs for setting up coal based power plants.
ZESCOs electricity cut shuts down Maamba coal mine
It is reported that Zambian electricity utility ZESCO has disconnected power to Maamba coal mine in Sinazongwe bringing the entire all mining operations to standstill. It is feared the mine pit may flood with water because the engines used to pump out water cannot function without electricity.
The move is reported to be prompted to recover over K2 billion in unsettled electricity bills.
Mr Wilber Simusa MD of coal mine is making frantic efforts to discuss the matter with ZESCO management.
Hunan Zhuye to sell shares to fund expansion
Hunan based Hunan Zhuye Torch Metals Co, a subsidiary of China's biggest zinc producer, plans to sell about 100 million local currency shares to fund an expansion that could make it China's biggest lead and zinc smelter.
It will sell as many as 77 million shares to Zhuzhou Smelter Group, currently Zhuye's largest shareholder, in return for assets worth 607 million yuan ($76 million). Zhuye hasn't set a price for the shares.
Rebar demand in Tokyo up by 10% in Q1
It is reported that the output of Rebars has increased by 10% YOY in April-June 2006 to reach 1 million tonnes around Tokyo. The output increased by 15% to 350,000 tonnes in June YOY, by 6% to 330,000 tonnes in May and to 340,000 tonnes in April 2006.
The production increased is contributed to strong demand from construction segment which is being driven by demand for condominium, office building and redevelopment projects. The supply is expected to become tighter due to planned seasonal maintenance shutdown by electric furnace steel makers.
Tangshan Chinas most valuable listed corporation
Tangshan Iron and Steel Group is rated number 1 as Chinas most valuable listed corporation in recently released list of top 50 by CCTV.
CCTV Economic Channel for the third time published the list chosen through public appraisal. The top 50s were identified by nearly hundred experts from more than 1,300 listed corporations, among which finally generated one major award and three sub item awards in accordance with their various indexes.
