WB cabinet clears 4 steel projects

PTI reported that the West Bengal government has cleared several industrial projects across steel, cement and power sectors that involve an investment of INR 41,200 crore. Mr Amit Kiram Deb chief secretary of West Bengal said that the four projects in Purulia and Burdwan districts would require 11,350 acres of land.

1. Jai Balaji group would set up a 5 million tonne steel plant and a 3 million tonne cement plant at Raghunathpur in Purulia district at a cost of INR 16,000 crore. Nearly 3,800 acres would be needed for these projects.

2. Bhusan Steel would set up an integrated steel and power plant with a capacity of 2 million tonne at Salanpur in Burdwan district besides a cold rolled unit at Bijpur in North 24 Parganas district. These two projects would involve an investment of INR 8,000 crore and would require 2,650 acre.

3. Another large project approved was the one by Abhijit Steel, which would install a 2 million tonne steel and power plant at an investment of INR 10,800 crore. Around 2,500 acres would be acquired at Jamuria and Barabani in Burdwan for the project.

4. Adhunik Steel would set up a steel plant with a capacity of 1.1 million tonne and a cement unit with 1 million tonne capacity at Raghunathpur in Purulia district at an investment of INR 6,400 crore. 2,400 acre would be needed for the projects.

Finance ministry approves PSU coal SPV

BL reported that India’s finance ministry has given its approval to set up a special purpose vehicle promoted by five public sector companies to scout and acquire coal properties abroad. The five public sector units that would participate in the SPV are Steel Authority of India Limited, Rashtriya Ispat Nigam Limited, National Mineral Development Corporation, National Thermal Power Corporation Limited and Coal India Limited.

The SPV would have an authorized capital of INR 10,000 crore and a paid up equity of INR 3,500 crore. While SAIL and CIL would chip in with INR 1,000 crore each, the other three would contribute INR 500 crore.

Mr PK Bishnoi CMD of RINL said on the sidelines of an event said that “All the companies that are involved with the SPV would be signing the MoU soon and we have also been told that the final Cabinet note is being circulated and will be sent for getting the requisite approval soon. He added that the SPV would approximately cater to around 10% of the requirement of SAIL and RINL. Both the companies import around 15 million tonnes, but this is expected to go up to around 45 million to 50 million tonnes by the time the expansion and modernization plans of the companies are completed.”

Mr Bishnoi said “The SPV would be looking at three routes for acquiring the stake. Firstly, we might look at the possibility of a buyout of an existing coalfield or may be looking at buying a stake through the stock exchange and lastly may take the prospecting route. The route adopted, however, would vary from country to country.”

Maharashtra signs MoUs with ISMT for expansion

It is reported that Maharashtra government has signed MoU with ISMT Ltd, a manufacturer of seamless tubes, on August 21st 2007.

Under the MoU, ISMT would invest INR 260 crore in its expansion project at Baramati. This will triple company's production capacity from 47,500 tonne per annum to 155,000 tonne per annum.

Strike notice served on 4 more ports

It is reported that subsequent to the notice of strike by worker’s unions of 5 ports earlier this week, 4 more unions have served the notice for an indefinite strike on September 1st 2007.

The new list comprises of
1. Kolkata
2. Paradip
3. Kochi
4. Tuticorin

With these notices, the strike is likely to take place at 9 ports as under
1. Kandla
2. Mangalore
3. Chennai
4. Vizag
5. Haldia
6. Kolkata
7. Paradip
8. Kochi
9. Tuticorin

All India Port & Dock Workers’ Federation has listed the following demands of the port and dockworkers
1. Restoration of retirement age to 60 years
2. Merger of 50% dearness allowance with pay with effect from April 1st 2005
3. Interim relief at INR 1,000 per month to the workers including pensioners with retrospective effect from January 1st 2007
4. Filling up of vacancies including promotional vacancies
5. Regular or perennial jobs should not be contracted out or outsourced
6. Major Ports should not be turned into corporates
7. Reject the retrograde recommendations of the respective consultants monitored by the port of Rotterdam experts.

SAIL RSP awards it employees for creativity

It is reported that Steel Authority of India’s Rourkela Steel Plant has awarded some of its departments and individual employees in recognition of their innovative spirit and creative endeavor under the Srujani Creativity Scheme for the year 2006-07. Mr BN Singh MD of RSP presented these awards to the employees.

The list of awards and winners is as under.
1. The Coke Ovens department bagged the Srujani Rolling Trophy for the Best Department, second year in succession.
2. The Steel Melting Shop-II received the second award.
3. The year’s Best Suggester award was conferred on Mr Sriram Soren senior technician of Coke Ovens. He was presented with an award of INR 7,000 and a certificate. Mr Chambru Majhi senior technician of Coke Ovens was also awarded the same.
4. Mr T Tripathy SOST of TOP-II, Mr Abhaya Ranjan Das SOST of SMS-II and Mr Sarat Chandra Parichha of the personnel department also got the second award. Each got a cash award of INR 1,500 and certificates of merit.

This award system has become instrumental in harnessing the creativity and enhances the innovative potential of the employees. This has in turn brought about all round improvement in the process parameters, safety, quality and housekeeping. Last year this system generated 10143 suggestions. In all 5436 awards comprising of INR 691,000 in cash and other prizes were distributed amongst the recipients.

JSW Steel (Netherlands) BV becomes JSW subsidiary

JSW Steel Limited announced that its board of directors at its meeting held on August 21st 2007 have taken on record JSW Steel (Netherlands) BV as the wholly owned subsidiary of the company:

JSW Steel (Netherlands) BV is incorporated in Netherlands on August 17th 2007 to create a holding company structure overseas.

SER Q1 freight earnings up by 9.6% YoY

It is reported that South Eastern Railway has posted freight earnings of INR 1252 crore during April to June 2007 quarter up by 9.6% YoY as against INR 1142 crore recorded in April to June 2006 quarter. It has posted a freight volume of 26.2 million tonnes as compared to 23.5 million tonnes.

Among the freight traffic, iron ore export volume rose from 1.6 million tonnes in Q1 of 2006-07 to 2.8 million tonnes in Q1 of 2007-08 and goods carried to and from the steel plants grew from 8.3 million tonnes to 8.7 million tonnes. Other commodities also reported a 15% YoY growth as their volume went up from 8.8 million tonnes to 10.1 million tonnes.

However, the South Eastern Railway witnessed a negative growth in coal traffic, with the coal volume sliding from 4.9 million tonnes in April to June 2006 to 4.6 million tonnes in April to June 2007 down by 0.5% YoY. A spokesperson of South Eastern Railway said that "We expect a 5% growth in coal volume in the forthcoming quarter of this year."

South Eastern Railway, which surpassed its freight target of 100 million tonnes for 2006-07, has been assigned to meet a target of 111 million tonnes for 2007-08 set by the union ministry of railways.

West Bengal to set up a renewable energy corporation

It is reported that, in order to harness green energy, West Bengal will set up India's first renewable energy corporation. The new corporation will deal with generation, transmission and distribution of grid connected green energy.

As per reports, the Green Energy Corporation would be promoted by the West Bengal Power Development Corporation with 45% stake, West Bengal State Electricity Board with 30% and West Bengal Renewable Energy Development Agency the balance 25%. It will be formed with INR 5 crore equity capitals by October 2007.

Mr SP Chowdhuri director of West Bengal Renewable Energy Development Agency said that the new company would aim to produce at least 400MW of power by harnessing wind, biomass, bio diesel and municipal waste. While, some of the power plants would be set up by the new corporation, others would be in collaboration with the private sector. This is a very bold and aggressive new step towards green power generation and we hope to begin initially with 50MW of generation and gradually reaching the target of 400MW."

Mr Chowdhuri added that a biomass plant would be set up in Burdwan district and wind power plants in North and South 24 Parganas that adjoin Kolkata. He added that "The municipal solid waste would also be harnessed to produce 100MW of power."

With a generation of only 46MW from renewable sources, green energy now accounts for only about 1% of the total 4,500MW generation in West Bengal. India accounts for only 3% of its power generation from renewable energy and West Bengal currently has the highest users with more than 56,000 of renewable energy in India.

NHPC starts work on Chutak hydel power project in J&K

It is reported that National Hydroelectric Power Corporation has commenced work on its INR 675 crore 44MW Chutak hydel power project at Sarzhe Village in Ladakh district of Jammu & Kashmir. After receiving all other approvals including from the cabinet committee on economic affairs, NHPC has started work on the ground.

The project will be comprised of 4 units of 11MW each and techno economic clearance was accorded to the project by CEA in 2004. Civil work has been awarded to Hindustan Construction Co while NHPC is in talks with Bharat Heavy Electricals for awarding electrical and machinery contract of the project.

Central Electricity Authority, while giving clearance said that "The Ladakh region is a high altitude plateau devoid of vegetation and having severe winters. The area remains cut off from the rest of the country for vehicular traffic for most part of the year. Setting up this plant will give an impetus to the economic development of the region."

NHPC officials said this is a bold step by the corporation to set up a plant there and exuded confidence to complete and commission the project by 2012-13 little beyond the scheduled time in 2012 due to difficulties in the terrain in the Ladakh region. They said that setting up of this project would further trigger development in the region and many more companies may decide to set up projects, which would help development of the region.

Bharat Earth Movers gets approval for name change to BEML Ltd

Leading manufacturer of earthmoving equipment Bharat Earth Movers Limited announced that it has received shareholders approval for changing its name to BEML Ltd. A decision in this regard was taken at the Annual General Meeting.

The AGM also re appointed Mr VRS Natarajan as CMF while Mr Haleem Khan, Mr A Prasad, Mr Prakash C Apte, Mr Birendra Kumar and Mr KVK Seshavataramas were re appointed as directors. Shareholders also approved the appointment of Dr Kiran Chadha as the director and Mr BL Bajaj as director finance, Mr V Mohan as director defense business and Mr M Poongavanam as director mining and construction.

Elecon inks technical agreement with Renk AG for gearboxes

BS reported that Elecon Engineering Company Limited has signed a full fledged technical contract agreement, which includes back to back guarantee with Germany based Renk AG for a vertical roller mill drive gearboxes.

As per agreement, Renk AG will provide technical expertise to design and manufacture 2 stages bevel planetary type gearboxes for vertical roller mills used in the cement and coal mills.

Mr Prayasvin Patel CMD of Elecon said that “Renk AG is a leading firm in the manufacturing of gear units. Using their technical expertise and Elecon’s superior technology, we will be the first company in India to manufacture such gearboxes.”

This is Elecon’s second major endeavor in sophisticated marine gears technology after a successful delivery of gearboxes for Navy’s new stealth warships under construction at Mazgaon Docks Limited in Mumbai. Elecon is also the only engineering company to bag a prestigious contract for supplying the main propulsion gearboxes for India’s first indigenous aircraft carrier.

Elecon recently also signed a MoU with the Gujarat government to invest around INR 400 crore in projects across the region. As per the MoU, Elecon would manufacture windmill gearboxes, set up wind farms and fabrication of various kinds of blocks for shipbuilding. It is planning to invest about INR 80 crore in windmill gearbox facility in the segment of 1MW to 2MW. Presently, these gearboxes are imported.

Mundra Port and SEZ files IPO papers with SEBI

Moneycontrol.com reported that Mundra Port and Special Economic Zone Limited has filed papers with the Securities and Exchange Board of India for an initial public offering of 40,250,000 equity shares of INR 10 each for cash at an issue price to be decided later. Out of the total shares, 150,000 shares will be reserved for the employees. The net issue will constitute 10.05% of the fully diluted post issue paid up capital.

Mundra Port plans to develop an SEZ at Mundra Port and surrounding areas over 2,406.8 hectares of land which is already in its possession. It will raise over INR 1910 crore for construction and development of basic infrastructure and allied facilities in the proposed SEZ like construction and development of a south basin terminal for coal and other cargo at Mundra Port, contribution towards investment in Adani Petronet Port Private Ltd, contribution towards investment in Adani Logistics Ltd and towards investment in Inland Container Private Ltd.

DSP Merrill Lynch, JM Financial Consultants, ENAM Securities, SSKI Corporate Finance and SBI Capital Markets are the book running lead managers.

BHP Billiton posts record profit of USD 13.7 billion

World’s biggest miner BHP Billiton has posted full year net profit before one offs for the year ended on June 30th 2007 at a record USD 13.68 billion.

Records achieved across all key earnings measures includes
1. Underlying EBITDA up by 27.1% YoY to USD 23 billion and Underlying EBIT up by 31.4% to USD 20.1 billion
2. Attributable profit up by 34.7% YoY to USD13.7 billion and EPS up by 39.1% benefiting from ongoing buy backs
3. Record Underlying EBIT margin and Return on Capital Employed increased to 48.4% and 38.4% respectively. This is the sixth consecutive record for both measures
4. Record net operating cash flow of USD15.6 billion up by 48.9% YoY
5. Annual production records for natural gas, alumina, aluminum, copper, nickel, iron ore, manganese ore and metallurgical coal

(In USD million)

Partial highlights for some of the segments for the year are as under

Stainless Steel Materials
Underlying EBIT was a record USD 3,697 million an increase of USD 2,796 million or 310% over last year. Higher nickel and cobalt prices were the main contributors with an average LME nickel price of USD 17.21 per pound as compared to USD 7.03 per pound. The higher prices net of price linked costs added USD 3,109 million to underlying EBIT. Record annual nickel production was driven by strong performances at all operations. Annual production at Yabulu in Australia increased by almost 40%.

Iron Ore
Underlying EBIT was USD 2,738 million up USD201 million over last year. This was driven mainly by increased prices together with higher sales volumes. Record production was achieved despite cyclonic events unfavorably impacting production in the third quarter. Record sales reflected business improvement initiatives implemented to promote increased shipping efficiency.

Metallurgical Coal
Underlying EBIT was USD 1,249 million a decrease of USD 585 million, or 31.9% over last year. This was mainly attributable to lower prices for hard coking coal own by 10% YoY and weak coking coal down by 32% YoY. Higher sales volumes at both Queensland Coal and Illawarra Coal impacted Underlying EBIT. The increase in sales volumes at Queensland Coal was supported by the expanded capacity at our Hay Point coal terminal. Royalties were lower due to lower prices.

Energy Coal
Underlying EBIT was USD 484 million, an increase of USD157 million or 48% over last year. The increase was mainly attributable to higher export prices resulting from continued strong demand and a favorable movement of the Rand against the US dollar. The profit on divestment of Koornfontein, 1 million tonnes of Richards Bay Coal Terminal annual capacity and the Eyesizwe investment increased Underlying EBIT. Despite adverse weather conditions in the last quarter and high demurrage costs in Australia, Hunter Valley Coal achieved record production volumes as well as increased cost efficiencies. At Cerrejon Coal (Colombia) higher volumes also had a favorable impact on results. The divestment of the Zululand Anthracite Colliery in South Africa during the year, reduced Underlying EBIT.

Manganese
Underlying EBIT was USD 253 million up by USD 121 million compared to last year. Stronger demand drove increased sales volumes of manganese ore and higher prices for manganese alloy. Production volumes were also higher than last year with manganese alloy up by 17% YoY and manganese ore setting a production record, up 14% YoY.

BHPB said that exchange rate movements had a negative impact on Underlying EBIT of USD 271 million, the stronger Australian dollar had a negative impact of USD 478 million but this was partially offset by the favorable impact of a weaker South African rand on operating costs for South African businesses.

Chinese market situation likely to weaken iron ore price negotiation

It is reported that iron ore concentrate prices in the North China have rocketed up over the recent month, with the past two weeks seeing rises every single day, concerted by purchase price of the steel makers. Iron ore prices in North China went straight up by CNY 135 per tonne (USD 18) on average within one month a 16.5% gain.

Analysts said that iron concentrate prices in larger part of China have recorded new high, with panic spreading the market seems having lost control. The analysts believe regional tight availability and panic market sentiment combined to push up the price. The situation is said quite similar to that of March to April 2004.

In addition, the improving steel market and constantly rising imported iron ore price have effected the domestic iron ore prices as more and more steel makers especially small and medium plants have reduced the purchase of imported iron ore turning to domestic sources putting sever pressure on the supply and demand chain and thus resulting in overall shortages and price jumps. This was further pressurized by reduction in domestic iron ore production hit by recent floods.

In addition, a number of unsafe and backward small pits are closed across the China, which has led to prevailing supply strain. In the North, dressing plants' output is cut by one third for limited electricity and the steel makers all report dissatisfied stock level. Northeastern mills want to build stock for winter while the sellers would not like to ship out and raise the price frequently.

On the other hand the spot prices for import of Indian iron ore have climbed to highest ever level. As per the released the average reference prices release by China Chamber of Commerce of Metals Minerals and Chemicals Importers and Exporters for import transactions of Fe 63.5% Indian iron ore concluded last week on August 20th 2007 was USD 122 to USD 125 per tonne on CIF basis, a gain of USD 15 in last 20 days.

This situation of China’s domestic as well as spot Indian iron ore import prices is likely to strengthen the position of global iron ore miners while negotiating the bench mark prices for next year.

CVRD to suspend iron ore supplies to Coispar and Usimar

Companhia Vale do Rio Doce informs that as of September 1st 2007, it will stop supplying iron ore to pig iron producers which do not comply with the environmental and or labor legislation in force in Brazil. CVRD release said that the first suspensions will be applied to Companhia Siderúrgica do Pará and Usina Siderúrgica de Marabá SA.

CVRD said that “The inspections conducted by Brazil's Ibama environmental protection agency pointed to environmental liabilities in those two companies. Ibama, following inspections this year in pig iron producers in the Brazilian states of Pará and Maranhão, has sent to the states' environmental bodies as well as the Federal and State Prosecutors' Offices a report on environmental liabilities in these pig iron complexes. On August 8th 2007, Ibama filed public civil actions against those companies concerning the same matter.”

CVRD release added that “Acting in accord with the principles of sustainable development to which the company is committed, CVRD requires its clients and suppliers to comply with the environmental and labor legislation in force.”

CVRD release reaffirmed its commitment to the sustainable development in the regions where it operates as well its respect for the legislation in force.

EU steel prices firm despite record imports in 2007

MEPS reported that the year 2006 has represented the onset of greater global competition as China became a substantial net exporter of steel and US recorded high levels of imports from China. However in 2007, the EU has taken a larger share of Chinese exports as the US dollar weakened significantly.

MEPS said that EU carbon prices showed slight signs of softness through the winter of 2006 but was short lived as the beginning of 2007 marked the start of further rises and selling values continued to climb above record levels almost disregarding the flood of material arriving into Southern Europe from China.

MEPS said that “The Chinese government’s efforts to curb exports by eliminating the VAT rebate and introducing a tax levy on some products has not, so far, stemmed the volume of steel leaving the country. There was a rush to export before the deadlines for the measures leading to a build up of cheap imported material, which has caused carbon prices to weaken in recent months. However, no significant falls have, as yet, transpired.”

The MEPS composite all products carbon steel price surpassed the previous peak of 2006 and still remains above that point, despite the recent softness in transaction prices. In September 2006, the figure stood at EUR 571 per tonne but in May 2007 the value had risen to EUR 607 per tonne demonstrating an increase of more than 6% above the previous peak.

The majority of the rise came from long products, where the MEPS EU average price grew by almost 14% between September 2006 and May 2007. This was fuelled by surging demand from the construction sector, particularly in the Middle East, along with higher scrap costs. Flat product numbers have not shown the same volatility as long products.

Over the past 12 months, the MEPS EU flat products price has remained above the EUR 600 per tonne level with July 2007 transaction values being similar to those seen a year ago. This is forecast to continue in the longer term as demand stays firm. A slight seasonal slowdown is, however, anticipated towards the end of this year.

MEPS said that steel values are expected to recover early in 2008 and demand is likely to increase and imports should be lower by the start of the 2008. It added that as the Chinese government is asserting that it will curb exports of energy intensive products and if they are successful, a sharper upturn in prices could be seen.

Formosa Group may set up a SS plant in China

The Economic Daily News reported that Taiwan's Formosa Plastics Group is planning to invest TWD 32 billion to build a 750,000 tonnes stainless steel factory located in Zhangzhou region of China's Fujian Province. It is expected to be operational after three years with construction starting sometime later this year.

Formosa in a statement filed with the Taiwan Stock Exchange said that “The company is currently reviewing the project and waiting for final approval from government authorities.” The statement was filed in response to this report Economic Daily News.

Taiwan's government must approve all major investments in China as it fears economic over reliance on its massive neighbor that views the island as a wayward province and has threatened force if it moves towards formal independence.

The Formosa group, which includes Formosa Petrochemical Corp, Nan Ya Plastics Corp and Formosa Plastics Corp, has already heavily invested in the petrochemical industry in China. This would be its first steel investment in the mainland.

Formosa is also planning to invest TWD 130 billion to build a 7.5 million tonnes per year steel mill in southern Yunlin County in Taiwan, but it is still pending government approval.

Tycoon to increase investments in Vietnam steel plant

Thanh Nien news reported that Thai company Tycoons Worldwide Steel Group is planning to increase its investment in a steel complex in Vietnam’s Dung Quat Economic Zone. According to the government of Quang Ngai province the group has applied to local authorities to up the amount to USD 1.8 billion after initially deciding to invest USD 1.1 billion.

The report added that construction on the plant is expected to start next month and finish in 2009 when it will supply raw materials to Vietnamese steel manufacturers and a Tycoons factory in Thailand. The plant’s capacity will be increased to 5 million tonnes in 2010.

The Vietnam Association of Steel makers said the technology to be used in the plant was somewhat outdated and no longer used in countries like Thailand and China. The Dung Quat zone authorities said that however that the technology was appropriate for Vietnam’s practical needs and Tycoons’ long term strategy here.

Ukraine starts AD probe into Chinese steel ropes

Interfax reported that Ukraine's International Trade Commission has started an anti dumping investigation into steel ropes and cable imported from China.

The Commission in a statement said that it launched the probe following complaints by Ukrainian producers OJSC Stalkanat and OJSC Silur from the cities of Odesa and Khartsyzsk respectively.

The Ukrainian Economics Ministry will register the interested parties within 30 days and consider their written comments within 60 days.

Ukraine wrapped an anti dumping investigation against Russian steel ropes and cable at the end of July up without taking further action saying that "Anti dumping measures would be against national interests." The Ukrainian companies blasted that decision, but claim that the imports from China are doing even more damage to them than the imports from Russia.

Angang Steel H1 net profit up by 54% YoY

Chinese steel major Angang Steel Company has posted net profit of CNY 4.80 billion in January to June 2007 up by 54% YoY as against CNY 3.11 billion during January to June 2006. Its revenue for the January to June 2007 rose to CNY 33 billion from CNY 25 billion in January to June 2006.

Angang Steel produced 7.87 million tonnes of steel in January to June 2007 up by 8.4% YoY from January to June 2006 period. Its output of steel products, including cold rolled sheets, galvanized steel sheets and wire rods rose by 9.7% YoY to 7.41 million tons during January to June 2007.

Angang Steel's operating profit margin rose to 22% in January to June 2007 from 19% a year earlier due to significant sales growth in higher margin products. Its production of high quality and high value added specialized products totaled 6.83 million tons in the January to June 2007 accounting for 92.3% of its total sales volume, 13.2 percentage points higher than January to June 2006 period.

US steel mills aiming for a price increase – Report

Platts reported that US major mills seem intent on boosting flat rolled steel product prices in the final months of 2007 despite lackluster demand so far this year. The report said that most of the steel mills are aiming to hike prices by USD 20 per short tons to USD 40 per short tons for October 2007 delivery of hot rolled coil, cold rolled and galvanized material.

The report referred to an internal ArcelorMittal USA memo to all its sales and marketing employees dated August 20th 2007 signed by Mr Daniel G Mull executive VP sales & marketing department as saying that "Market conditions have improved in recent weeks from the seasonal summer doldrums and we have experienced a marked increase in demand for flat products. Meanwhile, the global market continues to be stronger and, generally, more attractive than in North America. When you combine this situation with our weaker dollar, the threat of a potential surge of imports is unlikely."

Mr Mull also pointed to the July Metals Service Center Institute figures, released last week as a source of encouragement said that "Service Centers continue to reduce inventory levels to a more efficient level, which will eventually require some replenishment. Inventories have been reduced by 2.6 million tonnes since October 2006." He added that another outcome of the strong global market this year is that continued upward pressure on raw material inputs primarily iron ore, energy and scrap has increased production costs. Mr Mull said that "With these factors in mind, effective with all new orders for October and beyond, ArcelorMittal USA announces a minimum price increase of USD 20 for all hot rolled, cold rolled and coated sheet products."

As per report, other mills were also advising their customers of similar moves and Nucor Berkeley is trying to go up USD 40 per short ton on hot rolled coil to about USD 550 per short ton for October delivery.

However, the report cited a service center buyer as saying that "Of course, the mills can announce hikes all day long. That does not mean the market will go along with them." The same source indicated that the release of ArcelorMittal memo was reminiscent of bygone years when big mills would routinely leak internal pricing documents, ostensibly not for publication. He said "But in reality, they wanted the information to get out there.”

Chinese domestic steel product prices on upward trend – NDRC

According to China’s National Development and Reform Commission release, China's steel product prices continued to increase over the August 6 to August 12th 2007.

According to the NDRC release, steel product price monitoring in twenty two Chinese cities showed that the average price for the four major types of steel product stood at CNY 4,206 (USD 553.64) per ton up by CNY 35 (USD 4.61) or 0.8% WoW and rising by 13.4% YoY.

The following table shows the domestic prices of major steel products over the August 6th to August 12th week.

(Sourced from NDRC)

Meanwhile, the steel product price index for the international market during the period rose by 0.5% WoW from the previous week and increased by 3.6% YoY from the same period last year.

It added that the average price of domestic grade 66% iron ore concentrate reached CNY 950 (USD 125.05) per ton a fortnight ago, up by 5% WoW from the previous week and was up by 58.3% YoY.

China raises interest rates to curb inflation

It is reported that China's central bank has raised the benchmark interest rates on Tuesday for the fourth time this year in an effort to prevent the economy from overheating and curb accelerating inflation. The increase is aimed at better steering bank credit and stabilizing inflation expectation.

People's Bank of China said in a statement on its website said that the one year deposit rate will increase 27 basis points to 3.60%, while one year lending rate will rise by 18 basis points to 7.02%, effective on Wednesday.

The timing is somewhat of a surprise as the central bank usually announces interest rate changes during the weekend in the past. However, the latest hike is not totally unexpected given mounting concerns about overheating economy and accelerating inflation, indicated by the following.
1. China's gross domestic product grew 11.9% in the second quarter this year, the fastest recorded in a decade.
2. In July, the trade surplus rose by 67% from a year earlier to USD 24.4 billion, the second highest monthly total and the money supply climbed 18.5%, the biggest increase in more than a year.
3. Fixed asset investment in urban areas increased by 26.6% in the first seven months from a year earlier, close to the 26.7% expansion in the first half.
4. The Consumer Price Index, a barometer of inflation, jumped by a 10 year high to 5.6% in July, well above the official target of 3%.
5. The inflation rate is also higher than the deposit rate, indicating a loss of purchasing power if people put their money into banks.

Besides interest rate hikes, the central bank has ordered banks to set aside more money as reserves for six times so far this year.

Boiler explosion kills 4 workers at steel factory in Bangladesh

The Associated Press reported that a boiler explosion at a steel factory killed at least four workers in southeastern Bangladesh on Wednesday. 20 people were also injured in the blast at the Seema Automatic Rerolling Factory in Chittagong district of Bangladesh. The rescuers have recovered four bodies from inside the factory and they were searching for other victims.

Mr Nadim Uddin ED of the firm told The Associated Press that a fire broke out inside the factory after the explosion but the firefighters doused the flames immediately. He said that at least eight people were seriously injured in the blast and were hospitalized.

Mr Uddin added that the cause of the blast could not immediately be ascertained.

Uhde to build coke plant for Hyundai Steel at Dangjin

South Korean steel major Hyundai Steel has awarded a contract to ThyssenKrupp Uhde for building a new coke plant consisting of four coke oven batteries and a large single train gas treatment unit. The contract will be implemented by a consortium consisting of Hanjin Heavy Industries & Construction Co Ltd. of South Korea and Uhde GmbH of Dortmund Germany. The first coke oven battery and the gas treatment unit are scheduled to go on stream in late 2009, and will be followed by the commissioning of the other three coke oven batteries by late 2010.

The coke plant, the annual production capacity of which will be 3.2 million tonnes of coke, is part of a new integrated steel mill complex being constructed by Hyundai Steel at Dangjin in Chungnam Province of South Korea. The four coke oven batteries planned will together produce around 8,700 tonnes of coke per day from approximately 11,600 tonnes of coal and will each comprise 60 large capacity coke ovens with a chamber height of 7.6 meters. At the same time, one of the world’s largest gas treatment units with 190,000 meter cube per hour throughput will be installed at the same location.

Uhde’s scope of supplies and services comprises the complete basic engineering, the procurement of special equipment and the supervision of erection and commissioning. The Korean partner will perform the detail engineering and procure all local supplies. The total order value amounts to about EUR 250 million, Uhde’s share being some EUR 150 million.

Uhde is a company in the Technologies segment of the ThyssenKrupp Group and has a workforce of more than 4,100 employees worldwide. The company's activities focus on the engineering and construction of chemical and other industrial plants in fertilizers, electrolysis, gas technologies, oil, coal and residue gasification, refining technologies, organic intermediates, polymers and synthetic fibers and also coke plant and high pressure technologies.

MMK increases stake in Australian FMG to 5.37%

Interfax reported that Magnitogorsk Iron & Steel Works has increased its interest in Fortescue Metals from 4.71% to 5.37%. MMK did not say how much it spent increasing its stake in the Australian iron ore miner.

FMG is developing Australian fields with more than 2.4 billion tonnes of iron ore reserves in Pilbara.

TATA Steel Thailand aiming for 10% YoY increase in sales in 2007

According to reports in Thai media, TATA Steel Thailand Plc expects its revenue to grow by more than 10% in 2007 driven by increasing product prices and higher sales volumes. TATA Steel Thailand expects its sales volume in 2007 to reach 1.3 million tonnes up by 23%.

During the April to June 2007 quarter it sold 633,000 tonnes of steel worth THB 5.77 billion up by 20% YoY as compared to April to June 2006 quarter. It posted a net profit of THB 426.27 million in April to June quarter 2007 up by 82% YoY from THB 233.18 million in April to June 2006 quarter.

The report cited Mr Aditya Choudhury VP of TATA Steel Thailand Plc as saying that “TATA hoped to boost exports to about 10% of total sales this year from only 2% to 3% in the previous year and we are on pace to hit 12% by year's end. Due to healthier demand in the export market, we have seen not only rising sales volume, but also a surge in selling prices.”

Mr Srithai Hemsoraj VP administration of TATA Steel Thailand said that the company's margins would likely remain similar to last year at 12% amid higher operating and raw material costs. He added that TATA Steel's refinancing late last year has given the company an outstanding low debt level of THB 4.7 billion or 0.5 times.

TATA's Thailand operation was created after the TATA Steel bought a 65% stake in Millennium Steel Plc from the Siam Cement Group. TATA Steel Thailand sold 1.05 million tonnes of construction steel in 2006 to bring in total revenue of THB 18.8 billion.

MMK may carry out SPO by end of 2007 - Report

FIS reported that Russian MMK, which recently conducted IPO at London Stock Exchange, is set to conduct the second public offering at the end of the year.

As per report the MMK is currently looking for an investment bank to act as financial consultant of SPO, which aims to increase MMK capitalization. MMK may place additional shares worth of USD 0.8-1 billion.

Egypt withdraw power subsidies for energy intensive industries

Reuters reported that Egypt has recently announced big increase in the prices that energy intensive industries will pay for their gas and electricity, through the gradual elimination of the subsidies they are receiving.

As per report, the price rises of 61% for electricity and 110% for gas spread over three years, applies to Egypt’s steel, cement, aluminum and fertilizer industries, which have made large profits partly because the state subsidies their energy costs. Electricity prices will rise from EGP 0.111 to EGP 0.178 pounds per kilowatt hour for very high tension supplies, from EGP 0.134 pounds to EGP 0.216 pounds for high tension and from EGP 0.183 pounds to EGP 0.295 pounds for medium tension. The ministry said it would increase the price of natural gas to USD 2.65 from USD 1.25 for every million British thermal units.

Mr Rachid Mohamed Rachid minister of trade and industry of Egypt said that the government decided to shift these industries to paying full market prices for energy because it wanted to make sure that new investors coming to Egypt know where they stand. He added that “I was keen to ensure that we are going to build all this new capacity with clarity and transparency and the understanding of what the prices are going to be in the next 5 to 10 years. I was dead scared that we would build all these factories and once we adjust our prices which we would be forced to do, I will see all those factories close again.”

Mr Rachid said industry gets EGP 4 billion of the EGP 20 billion a year the government spends on energy subsidies and the 40 companies operating in the energy intensive sectors receive 70% of that or about EGP 2.8 billion per year. But because of expected rises in energy prices and the expansion of production, the changes will save the government EGP 15 billion over the next three years.

Analyst have said the decision could have a short term marginal impact on inflation but added that it should not pose severe challenges to the energy intensive sectors because of their high profitability. Mr Angus Blair head of research at Cairo based investment bank Beltone Financial said “This is a very good step. Subsidies in Egypt are significant and were creating inefficiencies in the market because people were not paying the full market price.”

Swedish Steel using RFID tags to monitors slab carrying wagons

In an effort to improve oversight of its production process Swedish Steel is using a radio frequency identification system to monitor the shipment of steel slabs. In April 2007, the steelmaker began mounting active RFID tags to some 400 railcars used to transport steel slabs from its facility in the city of Luleå to one in Borlänge, about 900 kilometers away and also from a facility in Oxelösund.

The system features seven different points where the tags are interrogated two in Luleå, two in Oxelösund and three in Borlänge. When a car is loaded in Luleå or Oxelösund, a reader mounted on a pole at the station interrogates its tag and the tag ID number and wagon are recorded in a database and linked to a description of the slabs being shipped. When the train leaves the site, a pole mounted reader in the rail yard records the car's departure. At the facility in Borlänge, two readers along two separate train tracks log the freight car's arrival. A third reader, mounted at the receiving station notes when the car is unloaded.

The RFID system, which cost the company about EUR 100,000, is helping Swedish Steel manage the flow of materials and plan production more efficiently. As per report, the system is helping the company makes sure that the right cars are being loaded with the correct materials as well as identifies the cars' locations.

Swedish Steel is using custom designed active RFID tags and readers from Swedish systems integrator and technology provider Adage Solutions. Sometime this month, the tagging of the 400 freight cars will be complete. Integration of the system's software will begin in September 2007.

Mr Anders Hermanson a sales manager for Adage said that the tag stays dormant until awoken by a 125 kHz signal. Once awake, it uses the 855 MHz UHF band to transmit its ID number and the freight car's wagon number. Without volume discounts, each tag sells for roughly EUR 60. He added that I don't want to reveal any company secrets but I can say that active tags are one cornerstone of our solution as well as using magnetic fields to wake up the tags on the 125 kHz frequency.

ArcelorMittal Gent changing over to converter gas recovery

SMS Demag announced that it has received an order from ArcelorMittal Gent NV of Belgium to supply a converter gas recovery system for its two 280 tonnes converters. The system enables up to 150,000 Nm³ of dry converter gas per hour to be recovered. Commissioning of the plant is scheduled for the first half of 2009.

The SMS Demag supply scope includes the planning of the integrated plant and the supply of all core components, among which are the switch over stations and the pressure boosting stations for conveying the gas to points of further utilization inside the works.

SMS Demag is also supplying the basic engineering for the electrical equipment and the X Pact electrical and automation systems.

The converter gas recovery process is assisted by a special gas switch over station from which the cleaned gas is conducted into a gas holder during the high energy operational phases. This gas is fed to a power station and to other consumer points in the works where the energy contained in the gas is utilized thermally.

China's iron ore stocks at ports down to 41.62 million tonnes last week

Interfax China reported that Iron ore stockpiles in China's 23 major ports reached 42.9 million tonnes on August 17th 2007 down by 3.05% from the previous Friday, while Indian concentrate stockpiles plunged 18.73% to 8.07 million tonnes.

The following table shows stockpile figures in China's major ports on August 17th 2007.

In million tonnes

The delivery price of Indian grade 63.5% concentrate in China's Tianjin Port climbed to between CNY 990 (USD 130.31) and CNY 10,000 (USD 131.63) per ton recently while the price of grade 62.5% rose to CNY 950 (USD 125.04) per ton up by CNY 90 (USD 11.85) per tonnes from the previous Friday. The delivery price is a combined charge consisting of the iron ore CIF price, import taxes paid to Indian government value added taxes and port charges.

According to the latest information provided by Shanghai Mysteel. Freight costs from Brazil's Tubarao Port to Beilun/Baoshan ports stood at USD 63.15 per tonnes on August 17th 2007 up by 7.09% from August 10th 2007 while freight costs from Western Australia to Beilun/Baoshan ports reached USD 23.93 per tonnes on August 17th 2007 up by 4.86% from the previous Friday.

AK Steel announces carbon steel price increase

AK Steel has announced that it will increase spot market prices for its carbon steel products by USD 30 per ton for all new orders accepted for shipment on October 1st 2007 and later.

AK Steel said that the price increase is in response to increased demand for carbon steel products as well as the need to recover higher costs for steel making inputs.

AK Steel produce produces flat rolled carbon, stainless and electrical steel products as well as carbon and stainless tubular steel products for automotive, appliance, construction and manufacturing markets.

Independent study confirms Yilgarn potential

The Directors of Polaris Metals NL have released the results of an independent economic evaluation study of the Yilgarn Iron Ore Project by consultants Project Development & Management Services. Results of current exploration by Polaris indicate that this target potential is likely to increase significantly. The project is stated to have a target potential of 100 million tonnes to 125 million tonnes of direct shipping iron ore.

The Yilgarn Iron Ore Project comprises more than 1,000 square kilometer of granted exploration licenses, mining leases and mining lease applications owned 100% by Polaris and centered approximately 60 kilometer north of Koolyanobbing in Western Australia. The mining tenements include iron ore deposits in the Helena and Aurora Ranges, which were explored and drilled by BHP between 1960 and 1972.

The release added that “Specific extensions to the Mount Manning Nature Reserve and an upgrade to A Class are recommended by the Environmental Protection Agency to protect areas deemed to have high conservation value. The recommendations impact on parts of the potential resource base for the Yilgarn Iron Ore Project. Resolution of the final boundaries of any Nature Reserve by the State Government is required so that the Yilgarn Iron Ore Project, can be developed.”

Thar Coal mines to start commercial production in 2012

Associated Press of Pakistan reported that commercial production from Thar Coal mines would start in 2012, substantially enhancing the coal share in overall energy mix in Pakistan.

Mr Irshad Ali Khokhar director general of Pakistan Mines & Minerals Department said that Mr Pervez Musharraf president of Pakistan has approved a roadmap on July 20th 2007 to speed up work and ensure commercial production from Thar Coal mines by 2012. Under the roadmap advanced hydrological studies would be undertaken before test pit digging to make foreign investors realize that besides 120 meters deep sand bed the commercial production of coal was possible in Thar. He added owing to large coal reserves, each coal block has potential to help generate 1,000 MW power for 60 years.

To harness Thar coal deposit on fast track basis, a Thar Task Force headed initially by the President and now by the Prime Minister is facilitating development of infrastructure and commissioning of coal projects in Thar. A road network from Karachi to the mining area in Thar has been constructed to transport heavy machinery required for mining and power generation projects. WAPDA has laid transmission lines up to the mining area to cater to power requirements during construction and PTCL has developed a good communication network in the area. Sindh government has provided potable water in the mining areas, besides surveying the private and state land for possible acquisition by potential investors.

A mining feasibility study has also been prepared with the technical assistance of leading German company RWE. The Task Force would hire services of a foreign firm for mine development after test-pit phase. The federal government has also extended lucrative fiscal incentives for commissioning of coal fired power plants including exemption from sales tax and custom duty on the import of machinery and equipment for first coal fired power project. This will be in addition to incentives already available under the Power Policy 2004.

Depending on quality the Thar coal can also be utilized as fuel in processing industry, cement and fertilizer units and for making smokeless briquettes for alternate heating source at high altitude.

Mr Ferns appointed director communications of Dofasco

Mr Joan Weppler VP corporate administration & general counsel of Dofasco Inc announced the appointment of Mr Thomas Ferns as director of communications & public affairs.

Mr Tom joined Dofasco in 1999 and before his most recent appointment was Senior Counsel in the Legal Services Department. Prior to joining Dofasco. He practiced corporate/ commercial law with a national law firm.

Dofasco is a wholly owned business unit of ArcelorMittal and one of the leading North American steel producer and supplier of high quality flat rolled steels as well as tubular products.

BEIC leases a furnace to increase FeCr production capacity

Beicang Iron & Steel Inc announced that Pinglu County Changhong Ferrochromium Co Limited, one of the subsidiaries of the Company, has leased an ore heating furnace of 12,500 KVA to produce high carbon ferrochrome alloy since June 1st 2007, thus increasing its production capacity to meet growing market demands.

Currently, it owns two ore heating furnaces of 6,500KVA. After putting the third furnace of 12,500 KVA into production, it's monthly output increased by 1,200 tonnes.

Earlier on June 1st 2007, it reached a lease agreement with Shanxi Yuncheng Yunneng Electric Power Enterprise Co Ltd to rent its ore heating furnace of 12,500KVA for an initial term of 7 months. Upon the maturity date of the term the agreement may be renewed upon mutual consent at the end of each financial year.

Mr Hou Beicang chairman of the board of directors & CEO of Beicang Iron & Steel said that "BEIC has always been devoted to supplying high quality raw materials to iron and steel manufacturing enterprises. Although production capacity has been increased, we cannot satisfy the raw material demand from iron and steel enterprises since their output has also increased. PL's ferrochrome products are mainly supplied to TISCO and those iron and steel plants surrounding Shanxi province. Under the premise of a quality guarantee, the Company will continuously enlarge its production capacity to fulfill market demand, thus increasing the profitability and bringing higher investment returns for its investors."

Beicang Iron & Steel is a Nevada corporation that is publicly listed in the US. It is focused on providing elementary refined raw materials to iron and steel enterprises. The main products of the company include pelletized ore and ferrochromium alloy products. The company produces palletized ore and ferrochromium alloy through its two subsidiaries in Shanxi province, PR China, Fanshi county Xinyu Iron Resource Co Ltd and Pinglu County Changhong Ferrochromium Co Ltd.