July, 30 2006
TI to set up CDW tube mill in Suzhou in China
Chennai based Tube Investments of India Limited has incorporated a wholly owned Chinese subsidiary known as the Tubular Precision Products Suzhou Limited for setting up a 12,000 tonne per annum cold drawn welded tube facility at the Suzhou Industrial Park 80 kilometers west of Shanghai in China at total outlay of Rs28 crore.
As automobile manufacturers in China are moving towards CDW tubes from cold drawn seamless tubes, TI hopes to capture a sizeable market share. The market potential as per TI is estimated at 0.25 million tonnes.
JSPL to get Bolivian parliaments nod shortly fro El Mutun
Jindal Steel and Power Ltd's bid for the mining and development rights for 20 billion tonnes El Mutun iron ore deposits is pending for approval by the Bolivian Parliament. It is expected that the final clearance would come within the next few months though no exact time frame is available. Mr Naveen Jindal vice CMD of JSPL told BL that the proposal would now go to the Bolivian Parliament for a final ratification of the agreement.
Though the final agreement is yet to be signed, it is estimated that the company would be paying around 8 to 9% to the Bolivian Government as royalty on iron ore and concentrates and 10% on pellets. The company would also be expected to pay around 5% royalty on steel exports and 7% on sponge iron exports.
The El Mutun mines are one of the largest iron ore reserves in the world with an estimated deposit of 40 billion tonnes. JSPL has won the rights for half of the mine deposits. JSPL plans to set up a wholly owned subsidiary in Bolivia for investing around $2.3 billion over the next 10 years for mining operations (15% to 20%) and balance for setting up a 1.7 million tonnes integrated steel plant for long products, a 6 million tonnes per annum sponge iron plant and a pellet plant with 10 million tonnes annual capacity. The detailed plans also include a 400 MW power plant.
Mr Munda upbeat on Mittal Steel Jharkhand
Jharkhand CM Mr Arjun Munda accompanied by Mr Sudesh Mahto home minister and some senior bureaucrats met Mr LN Mittal at his residence in London to patch up with him. Mr Mundas delegation was reportedly upbeat seeing the warm reception shown by Mr Mittal who hosted a dinner in their honor.
As per reports Mr Munda assured Mr LN Mittal for all possible help in materialization of the 8 month old MoU signed between the two for mega steel plant and Mr LN Mittal asked Mr Munda to meet the company's requirement of quality iron ores as so far Mittal Steel has not been assured of mines with proven record. As per reports, Mr Munda informed Mr Mittal about the mine ores reserved for him, which are mainly concentrated in West Singbhum comprising of Ankuba, Rome, Luttubaru, Panseeraburu, Barabaljori, Parambaljorti, Jareldaburu, Raika, Hatnaburu, Lambera, Rasbera, Chotuburu and Kasiapecha blocks estimated to possess about 1.658 billion tonnes of iron ore.
Mr Arjun Munda told reporters on his return "We had very productive and serious talks in London, and I can tell you there is no question mark over Jharkhand project as had been raised in some quarters earlier. In fact, Mittal Steel is serious about its project in Jharkhand." Mr Munda also said that he had informed Mr Mittal about the government's seriousness in putting in place a Rehabilitation and Resettlement policy, which was earlier cited by the government as reason for delay in clearing the steel project. He said "Work is going on in the right direction and we will make the R&R document public very soon. The departments of finance and mines are active in the process."
Uttam Galvas operating profit up by 9.37% in Q1
Uttam Galva Steels Ltd has reported an operating profit of Rs 56.24 crore in the April to June 2006-07 quarter as compared to Rs 51.42 crore in April to June 2005-06. Gross Profit for the Q1 of 2006-07 stood at Rs 37.75 crore as compared to Rs 32.28 crore in Q1 of 2005-06, despite a higher provision for depreciation of Rs12.24 crore as against Rs 8.57 crore in Q1 of 2005-06. Gross Sales for the quarter stood at Rs 574.71 crore as against Rs 561.05 crore for the corresponding quarter the previous year. Exports for the quarter stood at Rs 321.66 crore as compared to Rs 304.32 crore of the corresponding quarter the previous year.
Mr Ankit Miglani director of Uttam Galva Steels Ltd said Our performance in this quarter has been satisfactory. We have embarked on various major expansion projects, which are in various stages of completion. The benefit of this expansion will be seen in the coming quarters. While we will continue maintaining our export thrust, it is our constant endeavor to increase our volumes in the domestic market. The thrust will in the value added segment which will strengthen our topline and bottomline and enhance profitability.
Kalpataru eying buyouts for increasing presence in transmission sector
Kalpataru Groups Kalpataru Power Transmission is planning a strategic acquisition in India in a bid to increase its presence in the growing domestic power transmission sector. Mr Mafatraj P Munot chairman told ET We are looking at acquisition as a way to grow, apart from organic expansion and are talking to some companies for that. He declined to elaborate further.
The board of Kalpataru Power recently approved a global depository receipt issue of $75 million for qualified institutional buyers, which would be used to fund the companys future programs.
Kalpataru Power recently said that a strong order book position helped its net profit for the quarter ended June 30, to grow sharply to Rs 29 crore from the Rs 9.5 crore it reported last year. Its revenue also surged to Rs 302.6 crore from Rs 131.7 crore in the previous corresponding period. The company currently has an order backlog of Rs 2,120 crore. Mt Munot said We are also planning to increase the share of export as a percentage of our total revenue. Mr Munot said that the company is now targeting overseas business to account for about 25% of the total business, compared to 17% earlier.
Suzlon Energys net profit in Q1 zooms up
Suzlon Energy Ltd has posted a net profit of Rs 1936.00 million for April to June 2006-07 as against Rs 601.40 million for Q1 of 2005-06. Total Income is Rs 9467.00 million for Q1 of 2006-07 as against Rs 3156.20 million for Q1 of 2005-06.
Suzlon Energy has realigned its operations and has commenced sale of tubular towers through one of its wholly owned subsidiaries and the sales of wind tower generators for the April to June quarter of 2006-07 do not include the sale of tubular tower aggregating approximately Rs 934.50 million, which have been sold through the wholly owned subsidiary. Accordingly, the sales realizations and gross margins during the quarter ended June 30, 2006 are to that extent not comparable with the results of prior periods presented.
MMTCs turnover surge by 60% in Q1
MMTC has registered a turnover of Rs 5,465 crore during April to June 2006 quarter as compared to Rs 3,396 crore during Q1 of 2005-06. The total turnover includes exports of Rs 698 crore, imports of Rs 4,461 crore and domestic trade at Rs 306 crore. MMTC posted a net profit after tax at Rs 33.30 crore in Q1 of 2006-07 up by 14% YOY over Q1 of 2005-06. MMTC's net worth rose to a level of Rs 866.57 crore, with a zero long term debt.
Mr SD Kapoor CMD of MMTC told BL He is hopeful that, with this performance, the company is confident of crossing the annual turnover of Rs 20,000 crore during 2006-07.
Mr Kapoor attributed the company's performance to the realignment of business strategy, optimal resources management and other strategic initiatives set off in various respects including logistics and service quality. The company has decided to invest in development of resources abroad for items imported perennially in India to meet the national demand and supply mismatch.
Roads in NE are high on Central governments agenda
Mr TR Baalu union minister for shipping, road transport and highways said that the development of road sector in the North East Region is on the top of the agenda of his Ministry.
He said that his Ministry and the National Highway Authority of India would take into account the suggestions made by the State Governments while implementing the road development projects in the States.
NCCL secures two orders in MP & Chattisgarh
The Nagarjuna Construction Company Ltd has bagged two orders worth Rs 118 crore.
The first is from the Government of Chhattisgarh for rehabilitation and up gradation of road under ADB project for Rs 65 crore. The second is from the Government of Madhya Pradesh for the construction of Sanjay Sagar Dam project. The order is valued about Rs 53 crore.
Japanese steel majors plant production increase by 20%
Nihon Keizai Shimbun has reported that Japanese major steel makers intend to raise their output of crude steel by 10% to 20% over the next several years so they can increase shipments of high end products to other parts of Asia where they have 50% of the market share for high grade steel used in automobiles. Nihon Keizai Shimbun said that the five main producers, including Kobe Steel and Nisshin Steel Co, project annual output of 88.4 million tons by the fiscal year to 2008-2009 up by 7.2% more last years.
Nippon Steel Corp plans to raise its annual output of crude steel to 40 million tons by the fiscal year to March 2012 an increase of 20% over last year.
JFE Steel Corp will increase its annual output to 31.5 million tons by the fiscal year to March 2010 an increase of 20% over last year.
Sumitomo Metal Industries is expected to increase its production to 14.4 million tons by the fiscal year to March 2011 an increase of 10% over last year.
Chinese export tax rebate cut likely to get delayed
According to the State run China Daily the reduction in export rebates is now expected in September or October. According to a spokesman from Chinas Ministry of Commerce The government wants to see a trade balance. Were not deliberately seeking rising surpluses.
This comes after a few months of speculation in the market. Rumors anticipated the reduction in export tax rebates to come into affect in July and later in August.
Thai HR makers condemn dropping of AD duty on Nippon Steel
Thailands domestic producers of hot rolled coils have expressed disappointment with the Thai government's decision to drop the AD duty for Nippon Steel Corp imports. Thailands Foreign Trade Department recently announced that it would drop the 36.25% AD duty on imports of hot rolled coil from Nippon in force since 2003. The government had earlier reduced the AD duty on hot rolled steel from JFE Steel to 3.22% from 36.25% in September 2005.
Mr Win Viriyapraphaikij president of Sahaviriya Steel Industries Plc said that the lower import tariff for a major steel producer like Nippon Steel would have an adverse effect on the local steel industry. He said that better quality steel at lower prices may mean that more companies will start to use imported steel, forcing Thai producers to export a higher percentage of their products. He said ''I'm just wondering why the department has not taken the current Thai economical situation into consideration? Now the industry is weak. The government's decision should favor us rather than the Japanese. The government's decision will only enhance the profits of the Japanese firm.''
However, one steel executive said reducing the AD levy would only benefit Nippon Steel's Thai subsidiaries. They would be able to import raw materials from their parent company for less. He said ''Japanese firms have agreed to buy steel as a raw material from Thai producers if the quality of local products improves to meet their requirements. If local steel makers improve product quality to meet their requirements, we hope those Japanese firms will keep their promises.''
Thailands hot rolled steel capacity stands at around 7 million tonnes each year, half of which serves domestic demand and half is exported, while domestic demand stands at 14 million tonnes.
Centrex Metals signs iron deals with Baotou & Shengyang
Australia's Centrex Metals Ltd last week signed iron ore supply deals with two Chinese steelmakers Baotou Iron and Steel Group Co Ltd. and Shenyang Orient Iron and Steel Group for a total investment of around $7.3 million for equity stakes.
Baotou Iron and Steel, a subsidiary of Bogang Group based in Inner Mongolia, can purchase 1 million tons of iron ore for five years at a purchase price set by the annual benchmark price in return for a $4.38 million investment. The contract has the option to be extended and expanded depending on supplies.
Shengyang Steel, a private medium sized steelmaker with operations in Liaoning and Heilongjiang provinces, can purchase 1 million tons of iron ore from Centrex each year for five years at the benchmark price after investing $3 million for a 7.8% stake in the company.
POSCO to raise $300 million by 10 year bonds
POSCO plans to issue $300 million in 10 year Eurobonds overseas in August, with road shows beginning next week. Presentations will take place in Singapore and London on Monday, Singapore and Frankfurt on Tuesday and wrap up in Hong Kong and Frankfurt on Wednesday. Pricing will be subject to market conditions, but barring any unforeseen market irregularities the deal is expected to close toward the end of the week.
A person familiar with the deal said Posco plans to use the funds to refinance a US$300 million bond maturing in November and to buy raw materials.
Moodys has given the proposed deal an A2 rating, while S&P has assigned a rating of single-A-.
UBS, ABN Amro and HSBC will lead manage the sale.
Shenhua maintains positive outlook on coal
Chinas biggest coal producer Shenhua Energy said that Chinas coal market still looks healthy, although the central government has noted that the industry is showing signs of overcapacity following rapid expansion in the past several years. Shenhua is still optimistic over the outlook for coal production. Mr Huang Qing company secretary in a telephone interview said "The statement from NDRC only highlighted the potential for overcapacity within the sector. I see supply and demand in the coal industry remained balanced in the first half of this year."
National Development and Reform Commission had said last week that "The production capacity of the coal industry reached 2.26 billion tonnes last year, which was driven by the new project investment for the past few years. This shows a sign of overcapacity in the sector."
Shenhua said that it will reach its output target for 2006. It expects coal output to increase by 12.4% to 136.4 million tonnes, while coal prices will rise by 5% to 10%.
Analysts said the consolidation of the coal industry in China could accelerate, benefiting top players such as Shenhua and Yanzhou Coal Mining. Ms Shi Yan of Core Pacific Yamaichi International said "Benefiting from the shift in the industry structure from a fragmented to a more concentrated sector, coal mine giants would have more opportunities to improve their reserves and market share from the small mines through mergers and acquisitions.
CST to add 2.5 million tonnes BF in January 2007
Brazilian CST- Arcelor plans to start their new No 3 blast furnace with has an annual capacity of 2.5 million in January 2007. It said All the equipment involved in the new installation, including a third converter and vacuum degassing facilities should be in production by March 2007.
The expansion will increase CST-Arcelors crude steel production capacity to 7.5 million.
Serbia to sign a gas pipe line deal with Gazprom
Serbia will build a 400 kilometer cross country gas pipeline together with Russia's Gazprom estimated to cost more than $800 million. The deal between Serbias gas monopoly Srbijagas and Russia's Gazprom-Gazexport would make Serbia one of the key regional participants in gas transport. A source in the government said a MOU was due to be signed within weeks.
As per reports the Serbian pipeline is to be built south of the Sava and the Danube rivers. Pipes should run from Dimitrovgrad to Nis and on towards Croatia and Bosnia. The pipes will have a capacity of 20 billion cubic meters. Sources familiar with the plan said the pipeline in Serbia would ultimately be linked to the Bluestream pipeline, running from Russia to Turkey under Black Sea.
As per reports the deal would help Serbia repay a debt to Kuwait as Gazprom has agreed to take over Serbia's $370 million debt to Kuwait. Serbia would start repaying the debt to Gazprom once the gas starts flowing, getting 25% of transit fees and spending it on debt servicing.
BHP likely to post record profits
Despite the cost pressures, BHP Billiton is poised to unveil a mammoth profit next month. Analysts are expecting a result of about $10.4 billion, almost tripling its $3.38 profit just two years ago.
Spiraling project costs are taking the edge off the company's otherwise powerful performance. Tight labor markets and shortages of equipment and supplies have taken some of the shine off the company's performance.
Mittal Steel SA & government pricing talks resume
It is reported that the negotiations between South African trade and industry department and Mittal Steel South Africa on a new pricing model were back on track after stalling earlier this year. Mr Tshediso Matona said trade and industry director general said last week at a Pretoria briefing "We have found each other again. There had been a period where there was a bit of a low point but the two parties had agreed to continue the process after meeting the trade and industry minister.
Mr Matona said there were no differences in opinion between Mittal Steel SA and the department on an outcome, but just the question of how to get there. He said that the department was convinced that Mittal Steel, as much as the other players in the industry, wanted to abide by and comply with government policy without undermining its commercial integrity.
SA Government allowed Mittal Steel to take control of Iscor three years ago on condition that a more favorable steel pricing policy for local buyers was introduced. The talks, which began late in 2004, were initially expected to be concluded at the end of that year.
BHP Billiton Ravensthorpe nickel project faces 30% cost increase
It is reported that BHP Billiton is facing a cost increase of more than 30% above the currently approved budget of $1.34 billion for its Ravensthorpe nickel project in Western Australia. BHPB said in a statement "The project continues to experience cost and schedule pressure as a result of the heated market in Western Australia. BHP Billiton said "A detailed review of both the cost estimate and the delivery schedule commenced during the quarter."
The original $1.05 billion budget for Ravensthorpe was approved in March 2004 but was revised to 1.34 billion in August 2005.
Sumitomo Metal Industrys net profit up by 8% in Q1
Sumitomo Metal Industries Ltd has posted an 8% YOY increase in net profit for April to June quarter. The company posted a first quarter net profit of 41.57 billion yen as against 38.42 billion yen in last years first quarter. Operating profit increased by 9.8% to 69.22 billion yen and revenue increased by 8% to 373.07 billion yen.
Sumitomo Metal produced 3.29 million tons of crude steel in the first quarter. The average delivery price of the company's steel products surged to 95,500 yen per ton in the first quarter as against the average price of 94,000 yen in last years corre4sponding quarter. However higher sales and increases in delivery prices contribution of 16.2 billion yen operating profit was partly compensated by increase in procurement costs amounting to 6 billion yen.
Mr Fumio Honbe EVP told a press conference We managed to report good results thanks to brisk demand for our steel products, which more than offset the adverse impact of rising prices for basic materials.
Sumitomo Metal Industries now plans to make 13.4 mln tons of crude steel in this fiscal year.
Timken fined by EPA for pollution
Timken Co. will pay a $200,000 civil penalty for air pollution control violations. The penalty includes $50,000 to support the EPAs air pollution control programs and $40,000 for the agencys clean diesel school bus program. If the company submits an acceptable plan for an environmentally beneficial project within 30 days, the remainder of the fine could be reduced.
The state Environmental Protection Agency said particulate emissions at Timkens Harrison Avenue SW steel plant exceeded limits on particulate emissions between November 2002 and May 2003. EPA said that the plants pollution control equipment failed to meet efficiency requirements and the company modified two electric arc furnaces without first applying for and obtaining permits.
The company has the permits and has agreed to perform compliance stack testing on the furnaces no later than December 15. Elevated levels of fine particulates can cause respiratory problems in children, the elderly and people with heart or lung disease.
AK Steel to contribute $50 million to pension trust fund
AK Steel last week announced that its board of directors has authorized the company to make a voluntary $50 million contribution to its pension trust. The $50 million contribution follows an $84 million early payment AK Steel made in May, and a $150 million voluntary contribution the company made in January of 2005.
Mr James L Wainscott chairman, president and CEO of AK Steel said "Our strong business results have enabled AK Steel to contribute nearly $300 million to our employee pension fund in the past 18 months. Most of those contributions were either made voluntarily or well ahead of funding deadlines, underscoring our commitment to pension funding."
AK Steel provides pension benefits to approximately 32,000 retirees and / or their beneficiaries. The company said that, while it has continued to fund its retiree health care and pension legacy costs, most of its competitors have reduced or eliminated their legacy obligations through the bankruptcy process.
Sumitomo Metal Mining to recover zinc from smelters slag
Sumitomo Metal Mining has set up an electric furnace at Harima plant in Hyogo to reduce slag of smelting process having 9% zinc content to recover zinc from slag from smelting process.
The operations are likely to starts in fiscal 2007 ending March 2008 to recover annual 3,000 tonnes of zinc. The investment value is unknown.
Vietnam's coal export up by 67% in January to July
Vietnam's export turnover in the first seven months of 2006 exceeded $22.3 billion, an increase of 25.7% over the same period last year.
Coal export in the last seven months exceeded the projected target for whole year, with an amount of 15.8 million tonnes worth $501 million, a rise of 67% compared with the same period in 2005.
Centennial Coal sales down by 1% for year
Australian miner Centennial Coal Ltd last week lowered its earnings guidance for the June 2006 year to a net profit of A$16 to A$17.5 million from A$20 to A$26 million because of production setbacks at some of its mines. It said that the coal sales for the June quarter fell by 5% to 4.3 million tons while sales for the year to June were down by 1% at 15.2 million tons.
Centennial said the lowered guidance primarily reflects operational issues encountered at its Newstan mine, north of Sydney, which had a 2 million tons negative impact on the group's 2006 fiscal year production. It said poor mining conditions at its Tahmoor mine, south-west of Sydney, also impacted on earnings.
Centennial Coal produces mainly thermal coal for domestic and export markets.
Access Economics forecasts metal price fall by 2008 end
Australias Access Economics said, citing a poll of brokerages and research companies said that copper, nickel and other commodities prices may decline as much as by 45% over the next two years as miners expand capacity.
Access Economics said Most of the forecasters think the peak of this price cycle is already with us and that prices will fall substantially. Then again, the commodity forecasters have called the price peak before now, and theyve been consistently wrong.
Prices of copper, zinc and oil have surged to records this year as concern over supply disruptions increases even as demand led by China continues to grow. Merrill Lynch & Co, UBS AG and other brokerages have been revising their forecasts this year, as prices continue to beat expectations.
Access Economics survey in last July had said commodity prices could fall by as much as 49% between June 2005 and June 2007. The Australian firm had polled 11 analysts including from Citigroup Inc and Deutsche Bank AG for that survey.
Scrap prices ease back a little in US in July
US steel mills have been able to pay a few dollars per ton less for ferrous scrap in July, but prices remain high by historic standards for all grades tracked by the Raw Material Data Aggregation Service. In most cases, the drop was so small as to be barely noticeable. Prices paid in July for #2 Shredded Scrap fell by $4 on average throughout the US, while on average $6 less per ton was paid for #1 Heavy Melting Steel.
The $344 per ton for new production scrap marks the highest per-ton figure tracked by the RMDAS system thus far in 2006. The Prompt Industrial Composite grade continues to trade at a premium, with US mills paying an average $70 more per ton than what is being paid for shredded scrap and $99 more than what is being paid for #1 HMS.
The Raw Material Data Aggregation Service Ferrous Scrap Price Index is based on data gathered from a statistically significant compilation of verified ferrous scrap purchase transactions. RMDAS is a service of Management Science Associates Inc of Pittsburgh.
BHP to hold meeting about Caroona Coal Basin plans
BHP Billiton is to host the first a series of public information evenings next week to discuss its plans for the Caroona Coal Basin between Gunnedah and Quirindi. The information meetings will begin at Quirindi on Monday afternoon before moving to Caroona, Gunnedah and Werris Creek.
It is exploring 350 square kilometres around the Caroona area against a backdrop of strong suspicion from property owners who are worried about the effects coal mining will have on valuable farming land and the water tables. The exploration project will incorporate three stages in up to five years.
Belon placed 13% shares among private investors.
Belon OJSC has completed the private share placing, having sold 1.5 million ordinary shares at $38 per share. The Company has so placed 13% shares, taking into account the recent additional issue and received $57 million for them. The shares were placed by offering to large institutional investors abroad and in Russia. Upon the placement, the Company's capitalization totaled $437 million. Troika Dialog was the arranger and lead-manager of the placement.
The raised funds will be used to develop the Company's operating productions and to construct new extractive and processing enterprises.
The Belon Group comprises the Sibir-Ugol Production Association having Belovskaya and Chertinskaya Concentrating Mills, Inskaya, Chertinskaya, Kostromovskaya Mines and a number of other enterprises of Kuzbass coal industry, the Belon Bank, the IKSI Investment Company, the Sibirsky Spas Insurance Company. The main shareholders are Ms Tatyana Dobrova having 34% of authorized stock and Mr Andrey Dobrov with 24%.
