Essar Steel Q1 net profit surge by 462% YoY

Essar Steel Limited has reported a growth of 48% in its total income, which stood at INR 2827 crores for April to June 2007 quarter as compared to INR 1904 crores in April to June 2006. At INR 642 crores the EBIDTA registered a growth of 62% YoY for the April to June 2007 quarter as compared to INR 396 crores in April to June 2006 quarter.

Essar Steel’s net profit at INR 231 crores in April to June 2007 went up by 462% YoY as compared to INR 41 crores in April to June 2006 after providing for
1) Finance Costs, net, of INR 93 crores as compared to INR181 crores in the corresponding period last year including an exchange gain of INR114 crores.
2) Depreciation of INR 187 crores as against INR 149 crores in the corresponding period last year
3) Provision for Deferred Tax, MAT and FBT of INR 130 crores as compared to INR 22 crores in the corresponding period last year.

Performance highlights

1. Essar Steel’s production for April to June 2007 quarter increased by over 18% YoY to 0.833 million tonnes as compared to 0.706 million tonnes in April to June 2006 quarter.

2. Its total sales during the quarter grew by 31% YoY to 0.799 million tonnes as compared to 0.611 million tonnes in April to June 2006 quarter.

3. Domestic sales stood at 0.548 million tonnes up by 25.4% YoY as compared to 0.437 million tonnes in April to June 2006 quarter accounting for 68.5% of total sales.

4. Exports registered a growth of 44% YoY at 0.251 million tonnes in April to June 2007 quarter as compared to 0.174 million tonnes in April to June 2006 quarter.

5. Essar Steel’s retail initiative has received encouraging response from the customers. Currently, it has 82 retail outlets under the brand Essar Steel Hypermart. Sales at the Hypermarts accounted for 20% of total retail sales. The retail sales stood at 0.11 million tonnes.

Indian iron spot prices up by USD 2 in last week

China Chamber of Commerce of Metals Minerals and Chemicals Importers and Exporters released the average reference prices for import transactions of Fe 63.5% Indian iron ore concluded last week on July 30th 2007.

The change is with respect to prices posted on July 23rd 2007

The CCCMC reference prices are average prices for import transactions of Fe 63.5% Indian iron ore concluded the week prior to issuance date of such reference prices and the reference price practice is intended to regulate the domestic trading of Indian iron ore and avoid speculation on the raw material for China's booming steel industry.

IIM to study manpower needs of Indian steel sector

It is reported that India’s steel ministry has asked the Indian Institute of Metals to conduct a detailed study on manpower required at every level in the backdrop of huge capacities being added in the country’s metals sector, which is likely to result in an acute shortage of professionals. The study is expected to be ready within the next six months.

Mr B Muthuraman MD of TATA Steel and outgoing president of IIM said that two regional centers of excellence were being set up by IIM at Kalpakkam in Chennai and Jamshedpur with a view to making youngsters more interested in metallurgy and allied sciences and that such centers could be set up at other places as well at a later date. He said “The future of India lies in manufacturing, mining, minerals both ferrous and non ferrous. As such, it is important to get our youth involved in metallurgy and mineral sciences, among other things. No large country in the world can grow without manufacturing.”

As per report, it would look into the steel sector’s need for manpower as per growth plans announced by domestic and foreign companies and global merger and acquisition activity. The study would suggest adequate measures that need to be taken to boost education and training facilities to create a pool of resources.

TATA Steel formally concludes Corus buy out

It is reported that TATA Steel had formally concluded the buyout of Corus for USD 13 billion through its wholly owned arm, TATA Steel Asia Holdings. TATA Steel board at its meeting has approved an increased TATA Steel & TATA Steel Asia Holdings contribution for the acquisition of Corus Group from USD 6.7 billion to about USD 7.4 billion.

TATA Steel said that “This contribution is being enhanced by raising the quantum of preference shares to be issued by Corus. The other detailed terms of this issue will be finalized closer to the time of the issue.”

TATA Steel added that “The overall objective of the financing package would be to raise the required resources in the most cost effective manner for TATA Steel and TATA Steel Asia and well within the ability of the group to service the total investment.”

The increase would essentially be covered by increasing the amount of the rights issue of 2% convertible preference shares from INR 4,350 crore to INR 6,000 crore. Apart from the funds raised through equity capital in the last 12 months and the proposed rights issue and convertible preference shares and long term debt already raised by TATA Steel, the balance would be raised through appropriately structured issues.

Corus is Europe's second largest steel producer, with a high value added product range and strong positions in automotive, construction and packaging sectors. The combined TATA Corus Company will have a crude steel production of 27 million tonnes in 2007 and will be the world's 5th largest steel producer with 84,000 employees across 4 continents.

China and India to lead global economic growth – IMF

As per International Monetary Fund, China and India are the new engines of world economic growth, replacing the United States and other developed countries.

Mr Rodrigo Rato MD of International Monetary Fund told a business conference in the Philippines that China overtook the United States this year to become the biggest contributor to world economic growth. He said "For the first time, the largest contribution to global growth will now be made by China.”

Mr Rato added that "Looking ahead, we expect this pattern of growth to continue. We expect China and increasingly India to grow in importance as engines of global growth." He said that China would grow by more than 11% and India at around 9% in 2007 with almost equal rates in 2008.

Mr Rato also said that after slowing down, the US economy would regain momentum gradually as the drag from the current housing correction and the softness in the business sector dissipates." He added that "Prospects in Europe and Japan remain good.”

Mr Rato concluded that "The outlook for the global economy is generally good and the economic prospects of most countries in emerging Asia are also good.”

POSCO hopes to start earth work in October 2007 – Report

ET reported that the long wait for POSCO’s USD 12 billion Orissa project is over as it is all set to begin construction work on its proposed 12 million tonne steel plant. As per report, POSCO expects to get possession of a portion of the project land over the next 2 months to start earthwork for the first phase from October 2007.

Mr Soung Sik Cho CMD of POSCO India told ET that “We hope to start preparatory work at the project site from October 2007. The Orissa government has assured us that forest diversion clearance for the project land would be given soon. Once we get this approval, the land transfer process could be restarted at the earliest.”

He added that the construction work could start over 400 acres that belonged to the state government and was not categorized as forest land and the remaining land would be offered to us in phases once forest diversion clearance is obtained from the centre.

Mr Cho added that “We are already late by 1 year from our earlier schedule. However, things are moving faster now and we hope to put in place the first phase of 4 million tonne steel capacity by 2011.”

As per report, POSCO has identified 4,004 acres in Jagatsinghpur district of Orissa near Paradip. While 3,566 acres of this land is owned by the Orissa government and was offered to POSCO, the state government later realized that this entire stretch was forest land which needed clearance from ministry of environment and forest thus delaying the entire process of land acquisition.

JSPL expects 100% growth in steel products business

Jindal Steel & Power Limited, which has posted net profit of INR 250 crore in April to June 2007 quarter up by 63% over YoY on sales volume of INR 1,223 crore up by 84% YoY, expects 100% growth in volumes in the steel products business.

Mr Sushil K Maroo director finance of JSPL during an interview with CNBC-TV18 said that “In April to June 2007 quarter, we have operating margin of about 40%. Last year was a specific quarter where we had good operating margins but on an average, in the last 3 quarters, we virtually keeping a good operating margin of 40%.”

Mr Maroo added that “Production of steel products has gone up by about 106% to 300,000 tonnes roughly. Sales also have gone up to high in steel products. In fact our plate mill has started production in uphill. So we expect steel production to further grow in the coming quarter.”

He said that “We except good volume growth because now, we have a plate mill also ready and we had blast one ready in the last year. So we expect almost 100% growth in our steel products.”

Mr Maroo added that “The price is driven by the market. Production of steel will be high in the next quarters also. So we will be able to maintain the 106% growth that we have done in the current quarter too. At a sense, improvement will take place during the year also. So I expect the year to be far better than last year.”

UGSL Q1 net sales up by 31% YoY

Uttam Galva Steels Limited has posted net sales of INR 721.98 crores for the April to June 2007 quarter up by 31% YoY as compared to INR 549.80 crores for April to June 2006 quarter. It has posted operating profit of INR 66.51 crores in April to June 2007 quarter up by 18% YoY as against INR 56.24 crores for the April to June 2006 quarter.

UGSL’s production volumes has increased by 16% YoY to 0.133 million tonnes for the April to June 2007 quarter as against 0.115 million tonnes for the April to June 2006 quarter.

Uttam Galva has been able to maintain net profit at almost the same level as the April to June 2006 quarter due to the increase in production volumes whose impact has been offset by an increase in interest costs by 43%, hike in depreciation by 17% and raw materials like HR prices increase by 12%.

Mr Ankit Miglani director commercial of Uttam Galva Steels Limited said that “It has kept up the momentum in the April to June 2007 quarter inspite of the adverse effect of higher interest rates and depreciation impact. Although the appreciation of Indian rupee is a matter of concern, the company is completely focused on enhancing productivity through various initiatives such as the commissioning of the new 1650mm in order to continue to provide world class value added steel products in the global market. Our future focus will be maintained through a pincer strategy combining both exports and domestic sales.”

Last month, Uttam Galva crossed a new landmark by exporting 2 million tonnes of value added steel and now exports to 131 countries worldwide. It supplies to most of the developed nations including USA, Japan, Australia, New Zealand, Canada and Germany. Its value added products include galvanized coils, galvanized sheets, CRCA and color coated steel.

Mr Sanjiv Batra honored with International Trading Man of the Year award

BL reported that Mr Oscar Fernandes India’s minister of state for labor and employment has given prestigious International Trading Man of the Year award to Mr Sanjiv Batra CMD of MMTC Ltd.

The award was given to head of business organisations that were number one in their respective fields, based on their last 3 year’s growth rate, annual turnover, quality of products, exports, net sales, net profits, increase in productivity, return to shareholders and other such parameters.

NTPC Q1 net profit up by 52% YoY

National Thermal Power Corporation Limited has announced the following unaudited results for April to June 2007 quarter:

National Thermal Power Corporation Limited has posted a net profit of INR 2369.90 crore for April to June 2007 quarter up by 52.6% YoY as against INR 1552.80 crore in April to June 2006 quarter. While it has posted a total income of INR 9,687.80 crore for April to June 2007 quarter up by 19% YoY as against INR 8,139 crore in April to June 2006 quarter.

Visa Steel reaches 0.4 million tonne coking capacity

Visa Steel Limited announced recently that it has commissioned an additional 100,000 tonnes per annum out of its 400,000 tonnes per annum capacity coke ovens thus taking the commissioned capacity to 400,000 tonne per annum.

Visa Steels coke ovens are located at Kalinga Nagar Industrial Complex in Jaipur district of Orissa.

NTPC inks MoU with Anna University for R&D platform

National Thermal Power Corporation Limited announced that it has signed a MoU with Anna University of Chennai on July 29th 2007 to provide a platform for knowledge sharing and collaboration to promote Research and Development.

As per MoU, National Thermal Power Corporation Limited and Anna University would cooperate and promote Research & Development in the area of mutual interest, continue education program conducted by Anna University in mutually identified areas of interest and establish a NTPC’s Center of Excellence in Energy Studies.

GEECL plans to revive DPL Durgapur to Kolkata pipeline

It is reported that Great Eastern Energy Corporation Limited has started discussions with Durgapur Projects Limited over revival of an abandoned gas pipeline from Durgapur to Kolkata, which when revived will help Great Eastern Energy Corporation Limited supply coal bed methane in and around Kolkata.

Great Eastern Energy Corporation Limited which has commenced commercial production of coal bed methane at Ranigunj block some 50 kilometer from Durgapur has also received support of the WB government for the revival of the pipeline as coal bed methane has lower impurity content and is less flammable.

The pipeline which is of 200 kilometer was created by DPL a State undertaking for transporting coal gas. Coal gas is more inflammable due to high content of impurities and corrosion agents like coal tar and sulphur. The pipeline has not been in use for almost two decades.

Suzlon may shift new projects from Maharashtra due to local resistance

Moeycontrol.com reported that Suzlon Energy’s ongoing problems with local farm owners is forcing Suzlon Energy to shift close to 150 MW of new projects away from Maharashtra to Gujarat, Tamil Nadu and Karnataka in the current financial year.

Mr Tulsi Tanti CMD of Suzlon said that it is facing problems at Dhule in North Western Maharashtra and Sangli in Western Maharashtra districts in executing the projects. He said “The local residents near the wind farms are not giving right of way to Suzlon for constructing road and power lines for the facilities. The process of taking necessary permission is taking six months which is casing inordinate delays.

He said that “Therefore, whatever projects we have planned in Maharashtra we have decided to shift those projects to other States in consultation with our clients.”

As per reports local residents in these areas are seeking high rates for selling their land for wind farms and the prices have increased by 20 times. The residents are also creating hurdles in the movement of extra large trucks and cranes needed for installing the 20 story tall turbines. In April 2007 44 wind turbines in Sangli district had to be shut down following protests from local residents for more money. Of the 222 MW of installed capacity in Sangli 74 MW was shut down.

Suzlon has installed wind turbines in 36 locations across Maharashtra with an installed capacity of 1,122 MW.

Adani Enterprises Q1 profit up by 83% YoY

BL reported that Adani Enterprises Ltd posted a net profit of INR 45.43 crore for April to June 2007 quarter as compared with INR 24.81 crore in April to June 2006 quarter. Total revenue increased to INR 1,943.70 crore in April to June 2007 quarter from INR 1691.72 crore in April to June 2006 quarter.

Adani group posted a net profit of INR 68.46 crore on revenue of INR 3274.45 crore for April to June 2007 quarter.

ArcelorMittal reports record results for Q2 and H1 of 2007

ArcelorMittal announced its April to June 2007 quarter and January to June 2007 results. Highlights for the January to June 2007 results
1. Record quarterly and half year results
1. EBITDA of USD 9.7 billion up by 42% increase over pro forma H1 of 2006
2. Net income of USD5.0 billion up by 45% increase over pro forma H1 of 2006
3. Operating income of USD 7.7 billion up by 50% increase over pro forma H1 of 2006
4. USD 973 million of synergies captured by end of H1 of 2007

Financial highlights

US dollars in millions

Mr LN Mittal president & CEO of ArcelorMittal said that “We are pleased to be able to report a record set of numbers for the second quarter and first half 2007. These results were driven by a strong demand for steel combined with higher selling prices in all our major segments. The company reported EBITDA of USD 9.7 billion in the first half of 2007, as compared with USD 6.8 billion for the first half of 2006, representing an increase of 42%. We are anticipating a robust end to the year supported by the strength of our unique global and diversified business model.

He added that “We are also continuing to make good progress with our three dimensional growth strategy. Most recently we have been awarded the mining license for an attractive iron ore deposit in Senegal and have strengthened our presence in the automotive sector through the acquisition of two French pipes and tubes businesses. One year on from the merger, the Company has made excellent progress in effecting a successful integration and is well positioned for the future.”

Nippon Steel Q1 net income up by 16% YoY

Japanese steel giant Nippon Steel Corporation has posted net income of JPY 86.7 billion in April to June 2007 quarter up by 16% YoY as against JPY 74.7 billion in April to June 2006 quarter. It has posted operating profit of JPY 129.4 billion in April to June 2007 quarter up by 8.3% YoY as against JPY 119.5 billion in April to June 2006 quarter.

Nippon Steel’s sales in April to June 2007 quarter is recorded at JPY 1,115 billion up by 18.3% YoY as against 942.7 billion in April to June 2006 quarter while ordinary profit stood at 148.6 billion in April to June 2007 quarter up by 20.8% YoY as against 123.07 billion in April to June 2006 quarter.

Outline of operating result in April to June 2007 quarter is as under

JPY in million

Mr Akio Mimura president of Nippon Steel said that it will share capacity and technology with other steelmakers, including bigger rival Arcelor Mittal, partly to deter takeover bids amid a wave of mergers in the industry.

Nippon Steel, which controls 50% of Japan's market for high grade automotive sheet steel said that it was in negotiations to expand its alliance with Arcelor in North America. Nippon needs to boost production in the US, India and China, where car makers such as Toyota Motor Corporation are expanding. Arcelor has capacity to serve the plants and is seeking to broaden its access to Nippon Steel's technology.

Japanese FTC launched investigation on price fixing

It is reported that the Japan Fair Trade Commission raided 29 offices of Nippon Steel, JFE Steel, Sumitomo Metal Industries and Kubota as part of an investigation into the alleged formation of a cartel to fix prices for construction use steel products in one of the biggest crackdowns on alleged collusion the industry has faced. All four companies said they were cooperating with the authorities.

The four companies are suspected of having agreed the timing of price increases on steel parts sold to construction companies. The total sales of the products involved in the investigation were JPY 100 billion (USD 839 million) in 2004. If the companies involved are found guilty, they will be forced to pay an administrative fine of 10% to 15% of the sales of the product.

The investigation is the second by the competition watchdog into the steel industry in four years and underlines the relationships that still dominate many of Japan’s traditional industries despite a recent crackdown by authorities. Observers said that price fixing and collusion are endemic in certain industries in Japan due to extremely low fines levied by Japanese regulators. The fines serve as ineffective deterrents and lead to repeat offenders.

A long awaited amendment to Japan’s anti monopoly law has toughened the country’s competition policy, which critics say has lagged behind international standards for years. Crackdowns have also increased thanks to the introduction of a leniency policy, which grants immunity to companies that report participation in price collusion or cartels to the JFTC.

IMF raises Chinese economic growth forecast to 11.2% for 2007

The International Monetary Fund has raised China's economic growth forecast for 2007 to 11.2% up by 1.2% points from its forecast in April 2007. IMF in a revision of its World Economic Outlook said that the growth in China for 2008 is expected to 10.5%, 1 point higher from the earlier forecast.

Mr Charles Collyns deputy director of research at IMF said that "For some time China has been the largest contributor to global growth measured in purchasing power parity. With the growth slowdown in the United States, China will be contributing the largest part to the increase in the global growth measured at market exchange rates as well as purchasing parity terms."

He said China has accounted for one quarter of the annual growth rate of the world economy adding that China, together with India and Russia would provide half the growth.

The IMF official said that China would represent 15% of the global economy on purchasing power parity terms, while on market exchange rate terms, China only accounts for 5% of the global economy.

Smorgon break up approved by shareholders

It is reported that shareholders in Smorgon Steel Group have voted to approve AUD 1 billion takeovers by OneSteel nearly a year after the company was first approached.

Mr Graham Smorgon chairman of Smorgon told that 99.75% of proxies supported the break up. Votes from shareholders present at the meeting are expected to push support for the break up to more than 99.8% with the final result to be announced to the ASX shortly.

Mr Smorgon told reporters after the meeting that "It is a sad day when I think back to the start of this company and where it's come from and where it's going to. But under these circumstances, it's the right thing for shareholders and so it's got to be done."

Mr Smorgon said consolidation in the steel industry was inevitable. He said that "Australia's a very small market and it's just not big enough to sustain the growth that's necessary in steel. Steel is back in favor and I think there will be further consolidation worldwide."

Under the break up arrangement, BlueScope will acquire Smorgon's distribution business for about USD 700 million and OneSteel will pick up the rest of Smorgon's assets for USD 1.1 billion. An independent expert's report carried out by Grant Samuel & Associates has deemed the merger as being in the interests of Smorgon's shareholders.

SDI to expand rolling capacity to 2 million tonnes at Columbia City

Steel Dynamics Inc announced that its board of directors has approved an additional investment of USD 75 million at its Structural and Rail Division at Columbia City in Indiana designed to increase the mill’s combined production capacity for structural steel and rail to 2 million tons per year. The project is planned for completion in the fourth quarter of 2008.

This project includes the installation of a second caster to produce larger quantities of semi finished steel at the facility. This additional investment complements a previously announced USD 200 million mill expansion, currently underway, to add a second rolling mill. The new medium-section rolling mill, which will have the capability to roll some of the lighter products currently made on the existing mill as well as other new light structural steel products, will have a rolling capacity of about 1 million tonnes per year. The second caster will provide steel to permit each of the two rolling mills ultimately to operate at a production capacity of approximately 1 million tons per year. The new bloom and billet caster will be installed initially with four strands, expandable to five strands in the future as warranted by market conditions.

Mr Dick Teets, President and COO for Steel Shapes and Building Products said “Since Steel Dynamics announced the addition of the second rolling mill at Columbia City last year, the markets for structural and rail products have remained strong and our assessment is that this is a market where Steel Dynamics can continue to grow. We believe the combination of the customer relationships we have built in the five years since we entered the structural steel business, our central upper-Midwest location, and our low cost structure will allow us to compete successfully as we expand our capacity to serve the market and introduce new products to the marketplace.”

Mr Teets added “We are acting now to add the needed casting capacity to allow the new rolling mill to ramp up more quickly to its rated capacity. When the medium section mill project was announced a year ago, we expected to meet some of the needs of the new mill from excess production of semi finished steel shipped from the company’s Pittsboro bar mill. Since then, we decided to increase our rolling capacity at Pittsboro, which will commit that semi-finished steel for the Pittsboro mill’s own use. Producing additional semi-finished steel at Columbia City will lower costs and further compress the Division’s cost per ton.”

After these projects are completed, the Columbia City operation will have the flexibility to schedule each of its rolling mills to produce the products best suited to their capabilities as well as adjust the production plan to produce a mix of products best matched to market demand. Current estimates of a possible annual product mix under full utilization conditions would be 1.4 million tonnes of wide flange beams and H piling, 300,000 tonnes of light structural shapes and 300,000 tonnes of rail.

JFE Steel and Guangzhou Iron JV to expand capacity

JFE Steel Corporation announced that its 51:49 JV called Guangzhou JFE Steel Sheet Company Limited, formed in December 2003 with Guangzhou Iron and Steel Enterprises Holdings Limited to produce and market hot dip galvanized steel sheets primarily for the automobile and electric appliance industries in China, has completed the construction of the No1 continuous galvanizing line with a capacity of 400,000 tonnes per year in March 2006. As Guangzhou JFE Steel Sheet Company Limited obtained approval for the expansion from the National Development and Reform Commission on June 22nd 2007, JFE Steel and Guangzhou Iron have executed a JV agreement and conducted a signing ceremony in Guangzhou.

JFE Steel Corporation, in a press release said that “As we announced in an earlier press release on March 6th 2007, in order to meet the demand for high quality automotive and electric appliance steel sheets which is expected to continue to rise, JFE Steel and Guangzhou Iron and Steel reached an agreement to expand the business of Guangzhou JFE Steel Sheet Company Limited and build additional production facilities including cold rolling mill, continuous annealing line and No 2 continuous galvanizing line.”

Guangzhou JFE Steel Sheet Company Limited plans to commence production in 2010. Outline of the Guangzhou JFE Steel Sheet Company Limited is as follows
1. Cold rolling mill capacity: 1.8 million tonnes per year
2. Continuous annealing line capacity: 1 million tonnes per year
3 No 2 continuous galvanizing line capacity: 0.4 million tonnes per year
4. Plant location: Nansha Development Zone in Guangzhou City
5. Total investment: Approximately USD 170 million

NLMK approves new management board

Novolipetsk Steel’s board of directors has approved a new management board membership submitted by its president and chairman of the management board.

The composition of Novolipetsk Steel’s management board is as follows
Mr Alexey Lapshin: president & chairman of the management board
Mr Vladimir Nastich: Senior VP & head of steel division
Mr Alexander Gorshkov: VP & head of iron ore division
Mr Alexander Saprykin: VP & head of coal division
Mr Igor Anisimov VP of purchasing
Mr Galina Aglyamova VP & CFO
Mr Yuri Larin: VP of technology & environment
Mr Stanislav Tsyrlin VP of HR & management system
Mr Dmitry Baranov: VP of sales

Mr Alexander Saprykin, previously head of NLMK’s Iron Ore Division, has been appointed head of Coal Division replacing Mr Alexander Zarapin who has left of his own accord.

Mr Alexander Gorshkov has been appointed as VP and head of Iron Ore Division. Mr Alexander Gorshkov has been GD of OJSC Stoilensky GOK since 2004. From 2003 to 2004 he was deputy director of the Lipetsk branch of LLC Rumelko. From 1999 to December of 2003 he held the role of GD of OJSC Dolomit.

Vallourec Q2 profit up by 7.5% YoY

Steel tube maker Vallourec announced that its net profit for the April to June 2007 quarter rose by 7.5% YoY to EUR 257.7 million compared to EUR 239.7 million in April to June 2006 quarter, lower than the pace of growth in the January to March 2007 quarter as rising costs and a one off charge for asset depreciation weighed on the Vallourec's operational performance.

Operating profit for the April to June 2007 quarter declined by 1.2% YoY to EUR 418.6 million from EUR 423.5 million in April to June 2006 quarter, while sales jumped by 11.4% YoY to a record level of EUR 1.558 billion. EBITDA rose by 3.6%YoY to EUR 466.6 million in April to June 2007 quarter giving an EBITDA/sales ratio of 29.9%.

Net profit for the January to June 2007 was EUR 495.4 million up from EUR 452.6 million in 2006, while operating profit for the period came out at EUR 814.5 million up by 4.5% from EUR 782.5 million a year earlier. Sales for the January to June 2007 totaled EUR 3.012 billion representing 10.8% YoY growth against EUR 2.717 million in January to June 2006. In January to June 2007, EBITDA increased by 6.6% YoY to EUR 891.2 million, equivalent to 29.6% of sales.

(In EUR million)

Mr Pierre Verluca chairman of the Management Board stated that "Despite the continuing OCTG inventory reduction observed in the United States, further strong growth was recorded during the first half of 2007. As we anticipated, our level of operating profitability remained very high, just under 30%. During the semester Vallourec announced a major new investment in Brazil. In this way, the Group is preparing for the future by significantly increasing its capital expenditure program whilst at the same time strengthening its capacity to seize opportunities for external growth."

EU emission cap to limit growth – ArcelorMittal

The Guardian reported that ArcelorMittal has warned that a blitz of planned investments in Europe to meet booming demand is threatened by strict new EU caps on greenhouse gas emissions to combat climate change.

Mr Michel Wurth board member of ArcelorMittal and in charge of flat products in Europe while opening of the ArceloMittal's new USD 381 million hot strip mill in Krakow said that "By cutting the allocation of CO2 quotas, the European commission will limit our growth possibilities in Europe and encourage a surge of imports from countries unaffected by such controls."

Mr Wurth said that the group planned to make further investments in Poland, the Czech Republic, Romania and eastern Germany. It is also planning de bottlenecking investments in Belgium, France, Luxembourg and Spain. But he said that the EU's emissions trading scheme threatened to curtail these. He further added that "We consider that this scheme has perverse consequences, putting a brake on growth and there are no excess quotas we can buy to participate fully in the growth of the market."

Mr Wurth said the group had cut overall emissions in Europe by 20% since 1990. He said that "Steel today is environmentally friendly and can be endlessly recycled. We can now dramatically reduce the weight of steel in its industrial applications so that, if one were to build the Eiffel Tower with current products and technology, it would weigh 25% of what it actually does and that drastically cuts CO2. It will not be easy to transfer quotas from one country to another so we need to find agreements with the governments in different countries so we can grow."

EU has cut Poland's allocation by 30% prompting ArcelorMittal to join forces with the Warsaw authorities to demand an easing of restrictions. Before last year's merger with MittalSteel, Arcelor had already lodged legal action against the EU's flagship emissions trading scheme at the European Court of Justice.

Mitsui to establish Mitsui & Co Steel Ltd

Japan based Mitsui & Company Limited announced that it has decided to establish Mitsui & Co Steel Ltd a new subsidiary company involved in trading, marketing and distribution of steel products focusing on Japanese domestic market by consolidating its 4 existing subsidiaries for steel products; Mitsui Bussan Construction Materials Co Ltd, Sintsuda Corporation, Mitsui Bussan Plate Processing Corporation and Mitsui & Co Stainless and Special Steel Ltd.

Mitsui said that the objective of establishing Mitsui & Co Steel is to create a successful steel products company with competitive cost structure and highest efficiency. The streamlining measures are to be implemented by April 1st 2008.

Alabama Senator urges US ITC to keep tariffs on HR

It is reported that Alabama Senator Jeff Sessions told the US International Trade Commission that removing duties on hot rolled steel imports would damage the American steel industry and jeopardize Alabama jobs. Mr Sessions advocated open markets but stressed the need for fair trade.

Mr Sessions testified that revoking the duties could hurt 3 Alabama steel companies including Birmingham's US Steel. He added that "It is critical that the ITC continue on hot rolled steel products from countries that have traded unfairly. We must ensure that American manufacturers can compete in a domestic market that has not been skewed by unfair competition."

US ITC is debating whether to revoke tariffs from hot rolled steel imports from 11 countries. Tariffs were imposed to provide relief to American companies that suffer from unfairly priced and subsidized imports. If the Commission determines revoking the duties will lead to material injury to the US steel industry, the current duties will remain in place for five additional years.

EU calls for restructuring of Turkish steel industry

Turkish Daily News reported that European Union has put new demands on Turkey regarding its plans to restructure the iron and steel industry according to EU standards. As per report, although the negotiations concerning the restructuring have been going on for a year now but new demands are likely to cause new problems for the industry. If Turkey does not abide by these new demands, it is likely that accession negotiations on the relevant chapter will not start.

In recent talks, EU has demanded that the subsidies Turkey provided beforehand for some companies be taken back on the grounds that those companies did not abide by the restructuring program. It also demanded that the production capacity of companies abiding the program be decreased and their exports limited. Also the production capacity of those companies should be limited for five years.

Moreover, the EU has additional demands. These include the conveying of all legislative and administrative information to the related EU Commission and also a provision that no company outside the program gets EU incentives. Also, the process for the closing down of companies to be closed in accordance with the program should be clarified.

But the demands caused harsh reaction from the industry and Turkish companies are expressing their discontent about the demands and representatives of the sector are contemplating postponing the restructuring altogether. Mr Veysel Yayan secretary general of the Iron and Steel Producers Association said that 40% of producers wanted to take part in the program before, but now they also have changed their minds. The representatives of the sector say that the EU's restructuring program has become a major impediment for Turkish iron and steel industry, worth EUR 6.5 billion.

In 1996, Turkey and the European Coal and Steel Community signed a Free Trade Agreement that outlaws state subsidies as they may have a negative impact on trade between Turkey and EU member countries. However, the iron and steel sector has been put into an exceptional category because of its need for structural transformation. The same agreement also provided that the restructuring program would be implemented after 2001 and state subsidies to the sector could continue until 2005, for facilitating the transformation. But the program has lagged until today and now the EU says the subsidies worth EUR 276 million given by the Turkish government between 2001 and 2005 are a problem, demanding that money be taken back. The restructuring program was planned to continue until 2010. According to th plan, subsidies would be invested on modernization of technology, environment and research and development. By the end of the year 2010, the total cost of the program is expected to reach EUR 7.7 billion.

Australian CFMEU calls for emissions targets

It is reported that the Construction, Fotrestry, Mining and Energy Union CFMEU is launching a million dollar advertising campaign attacking the recently announced policies of Australian government on emission control.

Mr Tony Maher mining division president of CFMEU told Channel 10 mining jobs depend on cleaning up the coal industry. He added that "Importantly, we need a clean energy target, a target that guarantees a market share for all of the technologies that can produce a low emissions future. That is what is missing from the debate at the moment. The Federal Government is proposing an emissions trading scheme but they would not tell us what it is going to look like until after the election."

Earlier this month Mr John Howard's prime minister of Australia announced that Australia would spend over AUD 600 million on measures to tackle global warming including establishing a comprehensive cap and trade emissions trading scheme, bit it would not set a target for emissions until after the election.

Mecheltrans increases own rolling stock fleet

Mechel announced that Mecheltrans OOO has increased its own rolling stock fleet more than tenfold over the last 4 years from over 300 cars in 2003 to over 3,600. The increase was achieved to support its strategic program of increasing shipment volumes both within the company and to third parties.

Mr Alexander Starodubov GD of Mecheltrans OOO said that “Mecheltrans has invested in expanding its rolling stock and is developing various promising types of carriage today. It is creating favorable conditions to attract new cargoes, specifically by applying a flexible tariff policy, new logistic schemes of transporting, and broadening its shipping range. Increasing the rolling stock permits Mecheltrans to increase the volumes of cargoes transported and significantly extend cargo flows geographically.”

Mecheltrans OOO is the transport subsidiary of Mechel OAO and the main railway carrier of the company's products. Mecheltrans OOO started its operations in 2002, and since then has transported over 130 million tonnes of cargo, the bulk of which has been black coal, iron ore concentrate, and metal products. Products are shipped to markets both within Russia, the CIS and other foreign countries. Export products are shipped to the countries in Europe, the Near East and the Asian and Pacific regions. Mecheltrans OOO is one of Russia’s top 10 railway carriers. Besides having its own rolling stock, Mecheltrans OOO is also capable of using about 7,000 cars of other operators.

Siemens to supply drives for new steckel mill at Maghreb Steel

It is reported that the Siemens Industrial Solutions and Services Group has received an order from the Maghreb Steel Company in Morocco to equip a new Steckel mill with drive systems. The project volume is around EUR 16 million. The drive systems will be delivered, installed and commissioned at the end of 2008.

The new hot rolling mill includes a roughing stand with edgers, a Steckel rolling stand, a cooling section and a down coiler. For the roughing stand and the Steckel stand, Siemens is supplying twin main drive motors each with an output of 5.2MW as well as the motors for the edgers, the Steckel coilers and the down coiler and all the roller table motors. Cylindrical rotor synchronous motors will be used as the main drives and will be supplied with power through DC link converters of the type Sinamics SM150. The other motors will also be equipped with Sinamics converters. The transformers are an additional part of the scope of supply. Siemens is also responsible for supervising installation and commissioning the drive equipment.

Maghreb Steel Company operates a rolling mill near Casablanca for producing cold rolled, galvanized and coated steel strips and pipes. In the course of an extensive investment program, the company is building a hot rolling mill with an annual capacity of 1 million tonnes. The aim is to cover Maghreb Steel's own needs and also to produce hot strip for export from 2009 onwards.

Acindar net profit down by 38% YoY in H1 of 2007

Reuters reported that Argentine steel maker Acindar net profit in January to June 2007 shrank by 38% YoY to ARS 235.5 million (USD 75.8 million) due partly to higher energy, labor and iron ore costs.

In January to June 2006, Acindar net totaled ARS 377.9 million a figure boosted by profits related to Acindar's sale of its tube business. But this year, Acindar did not record any one off benefits.

In January to March 2007 quarter, Acindar reported a net profit of ARS 127.8 million. If that figure were unchanged, Acindar’s April to June 2007 quarter profit would have totaled ARS 107.7 million.

Acindar is Argentina's No 2 steel maker and the market leader in rolled steel. It is controlled by Belgo Siderurgica, which is part of ArcelorMittal. It provides building materials to Argentina's farm and construction sectors, along with local industry all of which have been booming as the economy grows at around 8% a year.

Fording Canadian Coal reports 24%YoY dip in profit in Q2

Fording Canadian Coal Trust announced that it is April to June 2007 quarter results. Its net income from continuing operations was CAD 106 million in April to June 2007 as compared with CAD 140 million in 2006. Net income from continuing operations before unusual items, future income taxes and unrealized gains or losses on foreign exchange forward contracts was CAD 128 million in April to June 2007 as compared with CAD 151 million in 2006, which primarily reflects lower US dollar coal prices for the 2007 coal year that commenced April 1st 2007, partially offset by higher sales volumes and lower unit transportation costs.

On an YTD net income from continuing operations was CAD 183 million for 2007 versus CAD 305 million for 2006. Net income from continuing operations before unusual items, future income taxes and unrealized gains or losses on foreign exchange forward contracts was CAD 199 million YTD versus CAD 347 million in 2006, which primarily reflects lower US dollar coal prices and a higher realized US/Canadian dollar exchange rate during 2007 compared with 2006 as well as higher unit cost of product sold in 2007.

Mr Boyd Payne president of Fording Canadian Coal Trust said that “We are pleased with our operating and financial results for the second quarter, which validates our previously issued guidance for the year. We will continue to focus on coal quality going forward, which may limit volume growth in the near term, but will ensure that we receive maximum value for our hard coking coal reserves in future market cycles.”

Fording Canadian Coal Trust is an open ended mutual fund trust and one of the largest royalty trusts in Canada. The Trust makes quarterly distributions to unitholders using royalties received from its 60% interest in the metallurgical coal operations of the Elk Valley Coal Partnership. Elk Valley Coal Partnership, comprised of Canada's senior metallurgical coal mining properties, is the world's second largest exporter of metallurgical coal, supplying high quality coal products to the international steel industry.

World DRI production using MIDREX process crosses 0.5 billion tonnes mark

Midrex Technologies Inc last month announced that the world total of direct reduced iron produced using the MIDREX® Direct Reduction Process has surpassed 500 million tonnes.

Mr James D McClaskey president & CEO of Midrex said that “This production milestone is a great example of how much we have progressed as a process technology and as a company since Portland, Oregon less than 40 years ago. In addition to this milestone, just recently we began engineering on our newest contracted project, Egyptian Sponge Iron & Steel Company, the first 2G HOTLINK Plant and the largest MIDREX module ever to be built in Egypt. The market is healthy and the future is bright.”

The first commercial Midrex Plant began operation in 1969 in Portland Oregon and the technology has steadily evolved and grown. Since Portland, Midrex has built more than 60 MIDREX® Modules in 19 countries worldwide and has become the leading process technology for producing DRI with more than 60% of the world’s DRI produced using MIDREX® Technology. Midrex has also been awarded numerous contracts for new plants over the past few years and commissioning of these plants has already begun and at the current rate of growth DRI produced by the MIDREX® Process would surpass 1 billion tonnes by 2015.

Raspadskaya Q2 net profit down by 62% YoY in Q2

Russia's leading coking coal producer OJSC Raspadskaya announced that its net profit in April to June quarter of 2007 as per Russian accounting standards dropped by 62.16% YoY to RUB 254.243 million.

Raspadskaya said that its net profit fell in the period because of a drop in regular coal sales. It produced 3.335 million tonnes of coal in April to June quarter of 2007. Coal concentrates sales jumped by 37% to 2.171 million tones of which 801,000 tonnes were exported. Regular coal sales fell by 15% YoY to 316,000 tonnes.

The Evraz Group controls 40% of Raspadskaya, which is from the Kemerovo region. The remaining 20% is in free circulation after Raspadskaya held an IPO in November 2006.

Investika notes softening in demand for laterite nickel ore

Australia’s Investika, which holds an 18.7% direct stake and a 6.1% indirect stake in the Berong nickel operations in the Philippines, said that its April to June 2007 demand for nickel ore softened in the last part of the period in line with falling LME nickel prices.

However, it noted that low grade direct shipping ore containing 0.9% to 1.2% nickel has been most impacted with demand for higher grade ore of more than 1.5% nickel remaining more robust.

Investika said that ore is still coming from the bulk metallurgical sample area of the mine. Increasingly, ore of higher grades will be extracted from the commercial mining area as mining proceeds. It added that the ramp up in production to the export target of approximately 900,000 tones for 2007 is continuing although some difficulties are being experienced with equipment availabilities.

Berong, which started up operations at the end of last year, shipped 262,994 tonnes of ore, grading an average 1.52% nickel, in the second quarter.

Taigang profit quadrupled during H1 of 2007

China's Shanxi Taigang Stainless Steel Company said that its January to June 2007 profit probably quadrupled from 2006 after buying assets from its parent, boosting output and sales.

Taigang in a statement to the Shanghai Stock Exchange said that its net income probably surged between 280% YoY and 330% YoY and earned CNY 676 million (USD 89 million) in January to June 2007.

Mr Zhang Shibao a Shenzhen based analyst at China Merchants Securities Company said that “Increasing demand is likely to make up for the output cut at the company. The huge, first half increase was largely attributable to the purchase of parent's assets. Taigang's second half profit may keep rising as lower raw material prices make stainless steel more attractive to consumers.'' Mr Zhang added that the falling price of nickel, which is added to stainless steel might help to boost demand.

Taigang bought most of the steel assets from its parent, Taiyuan Iron & Steel Group with CNY 5.74 billion in stock in June 2006 becoming China's 4th biggest steel maker by market value. A new plant also started operation in the second half of 2006 making as much as 1.5 million tonnes of stainless steel a year.

Steel companies including Taigang are boosting profits by buying mills from parent companies. China became the world's biggest producer of stainless steel as capacity expanded, prompting Taigang and rivals to trim output from this month.

Newcastle bids farewell to MV Pasha Bulker

It is reported that the bulk carrier MV Pasha Bulker has been guided out of the port of Newcastle last week after undergoing repairs to damages sustained during its grounding off Nobbys Beach. The ship is heading to Asia where it will undergo major repairs.

The ship was attached to tugboats, which have been given the job of taking the Pasha Bulker out of the harbor, where it will then be hooked up to the Japanese supertug Kyo Maru that is attached to anchorage points offshore.

Outokumpu continues to cut production in Q3

YIEH reported that Outokumpu announced that it would continue to cut its stainless steel production for third quarter of 2007 because distributor demand is very weak.

The report added that falling nickel prices will affect the demand and supply in third quarter whiles many stockiest hold stainless steel from second quarter. The price rise of alloy surcharge in July 2007 also put pressure on base prices. Therefore, the company is planning to cut the production in third quarter to balance the company’s profits overall. Outokumpu believes the situation will be improved in forth quarter.

Outokumpu said its April to June 2007 quarter net profit is about USD 780 million favored by the stronger demand and inventory gains. Its revenue was USD 2.9 billion in April to June 2007 quarter about USD 1.9 billion up than in 2006.

Shandong Rigang's converter project put on stream

It is reported that Rigang's No 4 60 tonnes converter was put on stream recently after a construction period of 92 days.

The project was rebuilt on the basis of old plant in Shandong Rigang. The demolishing works started on March 1st 2007 following which the construction works started on 15th and facilities installation on May 10th 2007. The construction works completed on July 3rd 2007 which ensured operation of No.4 converter on time.

Australian Jubilee reports lower nickel production

Australian junior Jubilee Mines reported payable nickel production of 8,633 tonnes in the financial year to June 2007. That was in line with guidance but the company had revised down its forecast from 9,000 tonnes to 8,500 tonnes to 9,000 tonnes in April 2007. It was also some way short of the 12,741 tones produced in the previous financial year.

Lower production was a function of what Jubilee has called a transitional year as its mining of the Cosmos pit in Western Australia moves to multiple production centres at three adjacent deposits.

Jubilee said it expected ore grades and production to improve from the December quarter onwards.