August, 07 2007
India and China account for 64% GDP among main Asian nations
According to a new study of the Asian Development Bank called “International Comparison Program in Asia and the Pacific: Purchasing power Parity Preliminary Report”, India and China have account for 64% of GDP in 23 Asian countries but rank quite low when it comes to benefits percolating to their people.
While India ranks 18th, China ranks at 10th when it comes to benefits to the people in terms of living conditions. Similarly, China ranks 15th and India ranks 17th when economies are compared based on actual final consumption of households. Actual final consumption of households is a measure of what households actually consume, comprising what they purchase and what they are supplied for individual use by the government principally education and health. The economic well being of the population is obtained by comparing household consumption expenditure per capita.
As for the people living in the 2 giant economies, a person living in China spends an average of only HKD 11,502 per year while an Indian consumes an average of HKD 9,346 per year.
China ranks 8th and India ranked 16th in terms of PLI. Price levels in the Philippines, Thailand and Indonesia are very similar and are close to the Asian average. The cheapest places are Lao, Vietnam, Islamic Republic of Iran, Cambodia and Nepal.
Mr Ifzal Ali chief economist of Asian Development Bank said that “The results provide the most comparable information on breakdown of GDP expenditures across the Asia Pacific. Purchasing power parities are a more appropriate currency converter to compare living standards and the structure of economies than market exchange rates.”
The 5 economies that top the list are
1. Hong Kong with HKD 125,303 per capita
2. Taipei with HKD 109,108 per capita
3. Singapore with HKD 99,706 per capita
4. Brunei Darussalam with HKD 81,744 per capita
5. Macao with HKD 67,639 per capita
The 5 economies that are at the bottom of the survey are
1. Nepal
2. Bangladesh
3. Laos
4. China
5. Cambodia and Vietnam
JSW to raise USD 850 million to fund expansions
It is reported that JSW Steel is planning to raise close to USD 850 million (INR 3,400 crore) to help its INR 17,000 crore expansion plans by issuing securities in the international markets.
JSW is planning to raise around USD 250 million through a debt market issue and has also lined up a USD 400 million equivalent rupee loan. It is also planning to raise another USD 200 million through equities from the international markets. Though JSW has not yet finalized the precise time frame for the fund rising, it is expected to be done over the next 6 to 12 months.
The funds are part of JSW's expansion plans in Bellary where it would increase the production capacity from the current 3.8 million tonnes to 10 million tonnes within 3 financial years. The production capacity would be increased to 6.8 million tonnes by August 2008.
Mr MV Sheshagiri Rao director finance of JSW said that "We have a capital expenditure of INR 17,000 crore over the next 5 years. We have already tied up funds for INR 10,000 crore and the remaining INR 7,000 crore will be raised as debt. We intend to raise funds and there are two or three ways of fund raising. We are working on the precise details and a favorable market conditions to raise resources."
JSW Steel is also planning to invest between INR 800 and INR 1000 crore for an iron ore beneficiation plant in Bellary, where it would take low grade iron ore and improve the quality to make it suitable for steel production. JSW is in talks with mining companies in Uttar Pradesh for procurement of low grade iron ore and intends to take equity participation in mining companies to ensure raw material supplies.
Fitch assigns 'F1+' to TATA Steel short term debt programs
It is reported that Fitch has assigned highest rating of 'F1+' to TATA Steel's INR 500 crore short terms debt programs. It has also assigned 'AAA ' to TATA Steel.
Fitch said the rating with stable outlook reflects the company's position as an efficient value added steel producer with significant iron ore and coal linkages making it one of the low cost steel producers in the world. It said the acquisition of Anglo-Dutch steel maker Corus gave TATA Steel a strong foothold in the European market with access to value-added products and an established distribution network.
Fitch said the company's rating benefits from the support the agency expects from TATA Sons as evidenced by the equity contribution for the acquisition funding. It also noted the lack of immediate synergies from the transaction as TATA Steel does not plan to supply low cost slabs and iron ore to Corus. However, it drew comfort from TATA Steel's ongoing cost reduction initiatives, strong operational framework and the plan to deliver the consolidated balance sheet over the next three years.
Punj Lloyd acquires 25% stake in Pipavav Shipyard
It is recently reported that Punj Lloyd Limited has signed a MoU to acquire 25.1% stake in Pipavav Shipyard Limited for INR 403 crore.
A spokesperson of Punj Lloyd Limited said that this investment will enable Punj Lloyd to operate in offshore market more effectively. As per industry estimates, the shipyard industry is expected to grow at over 30% per annum in a few years.
The deal will provide Punj Lloyd access to fabrication facilities for building platforms, single buoy mooring facilities and rigs and jackets to exploit the opportunities in this sector. Pipavav Shipyard can also be used for fabrication of crude and its products carriers.
The acquisition is likely to bring down the equity holding of SKIL Infrastructure in Pipavav Shipyard Limited to 26%. At present, 51% of the stake in Pipavav shipyard is held by a group of leading financial institutions including IL&FS and Exim Bank while 49% is with SKIL.
The Pipavav shipyard, spread over 725 acres of land, is located on the West Coast. It has 175 acres of developed waterfront land and confirmed orders worth USD 358 million (INR 1,450 crore) and a letter of intent for another USD 513 million (INR 2,050 crore). The entire project is expected to be completed within 10 years in 3 phases. Once completed, Pipavav shipyard is expected to be the largest shipyard in India and the 10th largest in the world.
NTPC update on capacity expansion plans
It is reported that NTPC is focusing all its attention in realizing its goal of having 50,000MW by 2012. Apart from thermal power projects, the utility is implementing three hydro power projects.
Mr T Sankaralingam chairman & MD of NTPC said that “As on date, the installed capacity of NTPC is 27,904 MW. Capacity aggregating 13,360 MW is under construction at 11 different locations. For another 8,000 MW plus capacity, we intend to finalize the orders within this year. With this action plan in hand, we are well on course to achieve our target.”
During this financial year NTPC target is to add a capacity of 2,500 MW of which 500 MW has already been added at Sipat in Chhattisgarh. It has proposed to add 1,000 MW through the Kahalgaon Stage-II project in Bihar and another 500 MW in Sipat. In Bhilai one 500 MW unit has been proposed as part of the expansion of a joint venture plant.
Mr T Sankaralingam said NTPC has planned to meet nearly one fourth of its coal requirement from its own production in 10 years. It has been allocated seven mining blocks including two blocks to be developed in joint venture with Coal India. As regards the first mining block, Pakri Barwadih allocated to the NTPC, it has completed all the preparatory works. It is awaiting the environment clearance from the Union Environment and Forests Ministry and approval for land acquisition under Coal Bearing Areas Act from the Coal Ministry. He added that once we receive these clearances we shall be able to start acquiring land and commence production of coal within six months.
DCI Q1 net profit up by 62% YoY
Dredging Corporation of India has posted a net profit of INR 53.92 crore for the April to June 2007 quarter up by 62.16% YoY as against INR 33.25 crore for the April to June 2006 quarter. It has also posted total income of INR 204.95 crore for the April to June 2007 quarter up by 77.59% YoY as against INR 115.40 crore for the April to June 2006 quarter.
Karnataka to add 2000MW of power in next 4 years
Projects Today reported that Karnataka government will add 2000MW of power in the next 4 years through Greenfield thermal power stations or by enhancing installed capacity in existing stations in the state.
As per report, Karnataka's first 1,000MW (2 x 500MW) Bellary Thermal power Station with an investment of INR 2,100 crore is being more focused by the government. The stage I of the 500 MW Bellary project is expected to be commissioned in September 2007 while work on the second unit of 500 MW has already commenced.
Meanwhile, work has commenced on unit 8 of 250MW of Raichur Thermal Power Station. Karnataka has been preparing detailed project reports for 6,500MW thermal units, which would require coal from the centre while the 400MW Gundia high head scheme is awaiting clearances from the central electricity authority.
The other major projects on which Karnataka has been working include
1. 1,000MW - Kudgi thermal power station in Bijapur
2. 1,000MW - Kowshika thermal station in Hassan
3. 1,000MW - RTPS stage II
4. 500MW - Nandur thermal power plant
5. 1,500MW plant through Bellary stage II
35,000 tonnes thermal coal unloaded at Kandla Port
Exim News Service reported that a record 35,000 tonnes of thermal coal was discharged from the vessel called MV Prem Varsha at Kandla Port through the conventional grab discharging within 24 hours.
The vessel, MV Prem Varsha, having a length of 229 meters and of 82,379 DWT, was one of the biggest vessels to have called at Kandla port. The vessel arrived from Richards Bay with a total quantity of 50,350 tonnes of cargo, berthed at the Port’s No 9 berth on July 19th 2007, commenced operations on July 20th 2007 and completed them in all respects on July 21st 2007.
The vessel MV Prem Varsha, owned by Mercator Lines Limited had arrived at the Kandla port under the agency of Scorpio Shipping Agencies Private Limited ACT Shipping Limited was the stevedore and ACT Infraport Limited, the cargo handling agent, while the cargo was imported by BGH Exim Limited.
Mahindra & Mahindra approached to buy Tractorul – Report
ET reported that Mahindra & Mahindra is understood to have been recently approached by the private equity owner of Tractorul SA Brasov to buy the troubled Romanian tractor major. The report cited a senior Mahindra official as saying that “We have been approached as to whether we would be interested and we will look at it.”
Earlier, Mahindra & Mahindra’s bid to buy Romanian tractor manufacturer Tractorul had collapsed after the Romanian government rejected debt guarantees that Mahindra & Mahindra sought. Later Bucharest based Flavius Invest has been declared the winner of the auction for Tractorul Brasov, at the starting price of EUR 91.6 million VAT included (EUR 77 million without VAT), offered also by another two firms from Iulius Group, because it was the first to register at the auction.
Mahindra was seeking to buy Tractorul as it aims to surpass Fiat SpAs CNH Global NV, Deere & Co and Agco Corp to become the world's largest tractor maker. It acquired a number of tractor companies and auto parts companies overseas last year and would make more acquisitions outside India this year including in China.
Nalco Q1 net profit dip by 28% YoY
National Aluminum Company Limited has posted a net profit of INR 446.66 crore for the April to June 2007 quarter down by 28.2% YoY as against INR 622.30 crore for the April to June 2006 quarter. It has also posted a sales turnover of INR 1287.12 crore for the April to June 2007 quarter down by 20.5% YoY as against INR 1620.82 crore for the April to June 2006 quarter.
National Aluminum Company Limited’s alumina production stood at 0.38 million tonnes in the April to June 2007 quarter up by 8.2% YoY as compared with 0.35 million tonnes in the April to June 2006 quarter. But the metal production is 88,550 tonne in the April to June 2007 quarter down by 0.03% YoY as compared with 88,584 tonne achieved during the April to June 2006 quarter.
Pratibha Shipping bags freight contract from MRPL
BL reported that Mumbai based Pratibha Shipping Company, which owns 6 tanker vessels, has secured a contract from ONGC’s subsidiary Mangalore Refinery & Petrochemicals for transporting fuel to Mauritius for three years. Pratibha Shipping has signed a contract of afreightment with Mangalore Refinery & Petrochemicals and will deploy 2 tankers to ship fuel from India to Mauritius.
Mangalore Refinery & Petrochemicals has signed an agreement with the State Trading Corporation of Mauritius for exporting petrol, diesel, aviation turbine fuel and fuel oil worth USD 2 billion.
Mr Sunil Pawar MD of Pratibha Shipping while speaking on the sidelines of a seminar organized by the Confederation of Indian Industry on the offshore segment said that Pratibha is planning to acquire 3 to 4 tankers for further expanding its activities. He added that “Besides tankers, we are also planning to acquire 3 to 4 floating production storage and offloading vessels.”
Chinese steel product exports unlikely to dive down in H2
It is reported that though China Iron & Steel Association has recently forecasted that steel product exports is possible to show sharp YoY decline of 60% during the H2 but many insiders present at 2007 China Steel Investment Seminar thought that steel product exports are able to come back to a comparatively high level from July to December 2007 because of the strong demand in international markets.
Mr Jia Yinsong deputy director general of the China’s National Development & Regulation Commission said that "One of the remarkable situations is that during January to June 2007, steel product exports amounted to 33.79 million tonnes up by 97.7%YoY. At the same time these steel products are valued at some USD 22.399 billion up by 136.4%YoY. This demonstrates that China's steel product export price is higher this year. Therefore, rising costs for steel exports caused by export rebate cut can be passed on to downstream buyers owing to rigid demand from international market."
Mr Jim Jia CEO of Mysteel said that based on crude steel outputs during the H1 China is expected to produce 490 million tonnes of crude steel in 2007 up by 70 million tonnes YoY. He added that steel product exports would rebound up during the last four months and China's net steel export will exceed 45 million tonnes this year.
IMF has recently upward revised its forecasts on economy growth during these two years, indicating that international demand for steel will remain prosperous. Under such circumstances, slim room is imagined for further decline on China's steel product export during the second half. Besides, constantly rising prices for raw materials will underline international steel prices.
A senior official from CISA said that steel product exports should account for some 10% of the nation's total outputs. However, the ratio surged to hit 13% during H1.
(Sourced from MySteel.net)
Chinese HRC export prices to improve further
It is reported that hot rolled steel coil prices in China have rallied in the past month from CNY 3570 per tonnes to CNY 3890 per tonnes in Shanghai market as predicted in early versions. At present, it slight slip to CNY 3840 per tonnes and is expected to fluctuate in the range of CNY 3780 and CNY 3890 per tonnes in the short term.
As a matter of fact, confidence has been shore up and market sentiment has changed a lot than a month ago when people see a slump in spot prices. If domestic commercial HRC could exceed CNY 3900 per tonnes it would go back to CNY 4200 per tonnes and even hit record high. Before that, there would probably be adjustments and fluctuations so as to gather the strength to inch up.
Shanghai based trader said steel makers have raise ex work prices and export offers citing the improvement in spot market situation. We have shot up commercial HRC offer to USD 540 per tonnes FOB from USD 510 per tonnes in last month. Though there is no transaction at this level, we believe it is only a matter of time taking into account the continuously rise in bids in the past three weeks."
Some traders and steel makers are still cautious about the future performance since they are worried that export would be restrained in the H2 of 2007. Export market is critical and there would be another price dive if exports dropped greatly. So it really depends comment another trader in East China.
MySteel said “We would prefer that HRC export prices have bottomed out and there is little likelihood that it would be lower than USD 500 per tonnes FOB as mentioned in previously articles. The strong overseas demand, solid global economy, and rally in Chinese local prices are believe to major reasons for upturn in exports.”
(Sourced from MySteel.net)
Saudi Arabia, Egypt and UAE to dominate MEA steel markets
According to a report by the Metal Bulletin Research, Saudi Arabia, Egypt and the UAE will dominate steel demand in the Middle East region. The report said that by the year 2010, Saudi Arabia will have an added capacity expansion of 5 million tonnes followed by Egypt with nearly 2 million tonnes and the UAE with 1.5 million tonnes.
According to the report, raw steel production is expected to reach 51.5 million tonnes and 62.9 million tonnes in 2007 and 2010 respectively and finished steel products capacity will increase by 46.7% from 22.9 million tonnes in 2006 to 33.6 million tonnes in 2010. Middle East, due to rising steel demand, which is growing at 9% rate, will become a net importer of semi finished steel, mainly billet, slab and HR coils. The large increase in consumption of semis and flat products has been partly met by imports, which have increased from 6.4 million tonnes in 1997 to around 25 million tonnes in 2005 and is expected to reach 30 million tonnes in 2007. The steel industry in the Middle East is heading for major expansion as crude steel production is projected to increase by nearly 70% from 15.4 million tonnes in 2006 to over 26 million tonnes by 2010.
According to a report entitled 'The Steel Industry Worldwide and Regionally: Assessment of Development and Outlook' by the Kuwait based Gulf Investment Corporation released recently, steel demand in the Middle East is dominated by long products, most of which are used in construction. Long product output such as rebar will be the dominant form of steel production, although its share of output will be declining. Rebar output grew from 14.1 million tonnes in 1997 to 21.6 million tonnes in 2004 and is expected to reach 28.9 million tonnes in 2010.
Although the Middle East has been one of the world's active regions for steel plant suppliers in recent years, its steel plants are mostly starting from a lower steel making base especially in flat products. The report said that total flat products production has increased from 9.9 million tonnes in 1997 to 18 million tonnes in 2004 driven mainly by Turkey and Iran and to a lesser extent Saudi Arabia and Egypt. In the Middle East, most current investments are driven by growth in domestic demand emanating from strong construction boom. Steel demand in the region is expected to increase from 70 million tonnes in 2007 to around 90 million tonnes in 2010. GCC steel demand will be in the range of 20-30 million tonnes during the same period.
According to the GIC report, Gulf Cooperation Council countries are net importers of products such as ingots, steel tubes, seamless, hot rolled rod in coil, welded tubes and cast iron pipes. However, net imports are likely to fall back to 5.4 million tonnes by 2010 with the expected increase in domestic demand.
Arab countries have DRI and EAF plants with total capacity of 8.75 million tonnes. Qatar and Saudi Arabia started their production in 1978 and 1983, respectively, with production capacity at 0.72 million tonnes and 3.65 million tonnes each, then Egypt followed with 2.92 million tonnes in 1986 and Libya with 1.46 million tonnes in 1990. Middle East iron ore imports have increased from 14.5 million tonnes in 1997 to 22.2 million tonnes in 2004 and are expected to reach 42.5 million tonnes by 2010.
The GIC report added that the Middle East steel consumption has grown by 31.1% from 34.7 million tonnes in 2005 to 45.5 million tonnes in 2006 and is expected to reach 73.3 million tonnes by 2010. GCC countries are considered among the largest consumers of iron and steel products with per capita consumption estimated at 378 kilograms while world per capita consumption is barely 182 kilograms.
Total per capita consumption of finished steel in the Middle East in 2004 was 146 kilograms. For Arab countries, the UAE has the highest per capita consumption with 801 kilograms while Sudan the lowest with just 12 kilograms. This reflects the wide divergence among economies within the region. It is expected that by 2010, the population of the Middle East will grow to an estimated 412 million, and per capita consumption will rise to 182 kilograms. Per capita consumption of crude steel (378 kilograms) for Gulf Cooperation Council countries, on average, is relatively high compared to other regions such as Asia (138 kilograms), CIS (123 kilograms) and the global average but lower than Europe (399 kilograms).
ArcelorMittal SA announce ZAR 12 billion CAPEX
ArcelorMittal South Africa has announced that it will spend ZAR 11.8 billion by the end of 2011 on projects aimed at boosting its steel output to meet growing demand.
ArcelorMittal SA expects local steel demand to grow by more than one third to a record 8 million tons a year by 2010 on the back of the booming construction sector, as well as infrastructure projects related to the 2010 soccer World Cup, the Gautrain and expansion by Transnet and Eskom. Last year South African steel demand reached a record of almost 5.9 million tons, beating the previous best level of 5.26 million tons in 1981.
Mr Rick Reato CEO of ArcelorMittal SA said that sub Saharan Africa, it's key market, is expected to experience gross domestic product growth that would remain above 6% a year. The region's annual steel demand was expected to grow from 15 million tonnes now to 20 million tonnes in 2010 because of infrastructure developments.
Second capacity elimination round in China to start soon
Mr Luo Bingshen VC & secretary general of China Iron & Steel Association said that the second round of Chinese obsolete steel capacity elimination is on the way and related provinces/municipalities will soon sign written commitments with National Development and Reform Commission to wash out obsolete capacities. NDRC held a conference on May 31st 2007 to discuss the written commitments for the second round of obsolete steel capacity elimination with 18 provinces or municipalities including Tianjin and Baosteel Group.
Mr Ma Kai director of NDRC at a State Council conference held on April 27th 2007 revealed that 10 provinces or municipalities including Beijing, Hebei, Shanxi, Liaoning, Jiangsu, Zhejiang, Jiangxi, Shandong, Henan, Xinjiang, had signed first round of written commitments to shut down and eliminate outdated iron making capacity and obsolete steelmaking capacity of 39.86 and 41.67 million tonnes respectively in the next five year, with 22.55 and 24.23 million tonnes to be closed down by the end of 2007. Five out of the above mentioned steelmaking provinces Hebei, Shanxi, Henan, Jiangsu and Shandong, are responsible for 70% of the China’s outdated iron making capacity and 50% of obsolete steelmaking capacity.
In a nationwide context, the entire China targets elimination of outdated iron making capacity and steel making capacity of 30 million tonnes and 35 million tonnes respectively by the end of 2007 and eventually 100 million tonnes and 55 million tonnes respectively to be phased out by the end of 2010.
(Sourced from MySteel.net)
IOC to increase output to over 18 million tonnes per year
It is reported that the Iron Ore Company of Canada has earmarked CAD 60 million to expand production capacity to 18.4 million tonnes per year by mid 2008. The feasibility of a further increase to 21.0 million tonnes per year will also be studied.
As per report, throughput would be increased by eliminating operating bottlenecks and improving winter performance. IOC plans to buy new mine loading and haulage equipment make upgrades to the automatic train system and add additional spirals for the concentrator.
Philippines signs coal deal with Indonesia
Reuters reported that the Philippines government has signed a 5 year contract to buy 500,000 tonnes of coal annually from Indonesia at a 5% discount to the international commodity pricing benchmark.
Mr Guillermo Balce Undersecretary Energy of Philippines said that the 500,000 tonnes annual supply would come in eight shipments from Sumatra. While Indonesia could supply more coal to the Philippines, the government is capping its imports to protect local coal producers.
The report also added that Philippines largest power producer, National Power Corp had bought two orders of coal, at 65,000 tonnes each for USD 120 a tonne.
Eramet slashes 2007 nickel deliveries forecast
Metals Insider reported that French nickel producer Eramet expects to deliver around 55,000 tonnes of nickel from its Doniambo smelter in New Caledonia which is a sharp downwards revision from the 61,000 tonnes to 62,000 tonnes guidance it gave at the time of its first quarter results in early May.
Deliveries and production were always going to be lower this year because of the company’s need to replenish internal stockpiles after the crippling effects of the general strike in New Caledonia late last year. However, production guidance is little changed QoQ at 63,000 tonnes of nickel.
Eramet said this phenomenon, the duration of which is hard to estimate is pushing down demand for nickel in the short term and will mean a substantial drop in deliveries by Eramet Nickel in the third quarter 2007. It noted, though, that underlying stainless consumption remains robust and that there will be a return to growth in nickel demand when the period of running down inventories comes to an end.
Eramet said that “This phenomenon, the duration of which is hard to estimate, is pushing down demand for nickel in the short term and will mean a substantial drop in deliveries by Eramet Nickel in the third quarter 2007.”
The cut in the delivery target reflects the slump in demand caused by the recent collapse in nickel prices and customers are holding off purchasing until prices stabilize and in the interim clearing their books of higher priced product.
Wugang's Fangchenggang project moving ahead
Mr Hu Mingwang vice GM of Wuhan Steel told Oriental Morning Post that Wuhan Steel's proposed 10 million tonnes to 20 million tonnes integrated mill located in China's Guangxi Province's Fangchenggang has inched forward and is now waiting for approval from State Oceanic Administration. The project is believed to have passed an inspection by the China International Engineering Consulting Corporation together with Baosteel's Zhanjiang project in March 2007.
Fangchenggang greenfield project is of great significance for Wuhan Steel whose pig iron cost is CNY 400 higher than coastal Baosteel as over 50% of China's iron ore demand is met by imports. The project would help boost the ratio of coastal mills' capacity from 6.4% to over 8% of China's total steel capacity. Moreover, it could take advantage of the coal and iron ore supply from nearby South East Asian countries.
The supply shortage of steel products in southwest and south China would also be greatly eased after the project comes into fruition. It is estimated that the steel consumption in southwest provinces like Guangxi, Sichuan, Chongqing, Yunan and Guiyang would add up to 62.8 million tonnes by 2010, while the current steel output is less than 26 million tonnes.
Besides, the steel base would also help mitigate the supply gap in ASEAN countries, which produce some 18 million tonnes of steel products per annum while their steel consumption would reach 64 million tonnes by 2010.
Wugang Liugang United Company a JV of Liuzhou Group and Wuhan Steel, has already been formed for the proposed 10 million to 20 million tones per year integrated complex to be built at Fangchenggang, a port on the southern Chinese coast 300 kilometers south of Liuzhou city.
(Sourced from MySteel.net)
Timken Q2 earnings dip by 25.9% YoY
Timken Co announced last week that its earnings fell by 25.9% in the second quarter as its automotive business continues to struggle amid a weak industry environment. Timken Co posted earnings of USD 55.3 million for April to June 2007 as compared with profit of USD 74.7 million in April to June 2006. Its sales rose by 4% YoY to USD 1.35 billion from USD 1.3 billion in April to June 2006.
Timken's automotive group recorded a loss of USD 7.4 million in the April to June 2007 quarter as compared with a loss of USD 2 million in April to June 2006. Its sales of USD 407.2 million were down by 5% YoY. The company expects the automotive group to return to profitability in 2008. Timken's steel group sales were USD 410.8 million in April to June 2007 quarter up by 7% YoY as compared to USD 383.3 million in April to June 2006. Industrial group sales were USD 565.9 million up by 7% YoY.
Chonggang to build 3800mm wide plate mill
It is reported that domestic major supplier of shipbuilding steel Chonggang Group signed general contract with Sinosteel Equipment and Engineering Company for China’s most advanced 3800mm wide plate production line, which is expected to complete in April 2009.
It is understood that 3800mm wide plate would be mainly used to produce steel for ship pipeline and boiler pressure vessel as well as structural steel.
PT Inco Q2 profit surges 6 folds
PT International Nickel Indonesia announced that it April to June 2007 quarter un audited sales of USD 859 million up by 232% YoY as compared to USD 258.6 million in April to June 2006 quarter. Net earning in April to June 2007 quarter were USD 479.2 million up by 501% YoY from net earning of USD 79.7 in April to June 2006 quarter.
Its sales in January to June 2007 were USD 1305.7 rose by 196% YoY from USD 4440.5 in January to June 2006. Net earning in the January to June 2007 increased by 473% YoY to USD 707.0, from USD 123.3 in January to June 2006.
April to June 2007 quarter nickel futures on the London Metal Exchange averaged USD 45,701 a tonne compared with USD 19,651 in April to June 2006 quarter.
PT Inco in a statement said that its nickel output in April to June 2007 quarter rose to 21,100 tonnes from 15,900 tonnes in April to June 2006 quarter. The company sold 21,700 tonnes of the metal at USD 38,926 a ton in April to June 2007 quarter compared with sales of 17,800 tonnes at USD 14,326 a ton in April to June 2006 quarter.
Mr Arif Siregar president & CEO of PT International said that “PT Inco balance sheet improved further during the quarter of 2007. Despite increased divedend payments of USD 497.1 million in the first quarter of 2007, our cash balance at the end of the second quarter of 2007 stood at USD 683.2 million compared with USD 170.4 million at the end of the second quarter of 2006.”
Highveld expects domestic steel prices to come down in H2
South African steelmaker Highveld Steel & Vanadium said that the domestic demand for all its steel products was expected to come under pressure in the second half of 2007 due to high stock levels at merchants. In addition, the refurbishment of one of its 7 furnaces, which was scheduled to be brought back into service in 2008, would hit the steel production levels.
Releasing its interim report for the January to June 2007, Highveld said that its steel sales volumes were down by 9% in the first half of 2007 due to lower steel production caused by the shutdown of one of its furnaces. Sales of major steel products fell to just above 381000 tons in January to June 2007 period from 420000 tons in the January to June 2006 period period. Steel products contributed more than ZAR 2 billion to Highveld's revenue of ZAR 2.9 billion. Profit for the January to June 2007 period under review has risen by 47% YoY to ZAR 390 million from ZAR 265 million in January to June 2006 period.
Mr Walter Ballandino CEO of Highveld said that the furnace was closed to allow engineers to convert the equipment to open slag bath technology. He added that "This refurbishment was one of the main reasons for the lower steel production for the first half of the year. As the furnace will be inoperative for the next six months, production for the remainder of the year is expected to be at similar levels to the first half."
Mr Ballandino said that steel contributed about 50% of the company's revenue. He added that this figure would be lowered after the sale of Vanchem and SA Japan Vanadium. The increased steel demand in China could increase Highveld's sales volumes and mitigate the sluggish domestic sales affected by high stock levels at the merchants.
Highveld said that it would spend about ZAR 745 million in 2007 to optimize the capacity of its facilities.
Chinese firm plans investment in Vietnam
According to Vietnam Economy report, Chinese delegates of Fujian Province lately had a visit to ThaiBinh giving birth to a steel plant construction memorandum between a Chinese investment corporation and Vietnam ThaiBinh department of planning & investment.
According to the report, the project will be carried out in two phases: phase 1 involves annual capacity of 1 million tonnes with a cost of USD 50 million and phase 2, 2 million tonnes production per annum with fund of USD 80 million.
(Sourced from MySteel.net)
Inmet cuts zinc production target for 2007
Metals Insider reported that Canadian miner Inmet has cut its 2007 zinc production target to 82,400 tonnes contained metal from 87,000 tonnes, reflecting a downgrade of expected production from the Cayeli mine in Turkey. Cayeli is now expected to produce 44,400 tonnes of contained zinc, down from original guidance of 48,600 tonnes.
The problem is a technical one with more complex ore posing significant challenges to the process plant, resulting in lower metallurgical recoveries. The company said that it is looking at ways to maximise recoveries from such ore but in the interim has decided to defer mining high grade zinc areas of the mine.
The target for the Pyhasalmi mine in Finland is unchanged at 38,400 tonnes contained metal in 2007.
WISCO develops X100 hot rolling steel coil
It is reported that Wuhan’s pipeline development has achieved a major breakthrough when Wuhan Research Institute and the production company codeveloped 14.7mm X100 hot strip mill plate, which was used by Baoji Petroleum Steel Pipe Manufacturing Company for manufacturing 1219mm diameter SSAW pipe. On examination, the pipe properties far exceeded API 5L and ISO3183 standards.
Tin price on LME ease after hitting record of USD 16,600
It is reported that the price of tin eased back to USD 15,800 per tonne as trading resumed on the London Metal Exchange on Wednesday after reaching a record price on Tuesday.
Tin rose to a record price of USD 16,600 per tonne on the LME on Tuesday and remained at USD 16,200 as the London markets closed. Prices have risen 42% on the LME since the start of 2007.
The high price has been attributed to supply concerns owing to production problems in Indonesia, the world`s largest supplier of the metal. Speculative buying of the metal has also been high as stocks are expect to fall this year.
Raspadskaya could hold SPO after merger – Evraz
Interfax cited Mr Pavel Tatyanin VP of Evraz as saying that Evraz Group, which would receive control over Raspadskaya after it merges with Yuzhkuzbassugol, has not ruled out the possibility that Raspadskaya could hold a secondary public offering following the merger. Mr Pavel Tatyanin said it would make sense for Raspadskaya to hold an SPO because it could increase its liquidity following the merger. He added that this is an issue that requires additional consideration.
Mr Pavel Tatyanin said there is no need to hold an additional share issue after the two coal companies merges to finance the development program of Yuzhkuzbassugol since this company's production losses resulting from accidents at the Ulyanovskaya and Yubileinaya mines were insignificant. He said that the human lives are the most important and irreparable loss and they are still impacting us all emotionally. He said “These two explosions marked the peak in the degradation of the company's safety control systems. But in terms of production losses, they were minimal."
He also added that "The indicators of the first half of 2007 when coal production at Yuzhkuzbassugol fell 49% compared to the same period of 2006 fully correspond to the indicators of the previous half, while the reduction in coal production can be explained by the fact that the company is currently in the process of setting up or reinstalling coal faces. But our mines extract roughly 30,000 tonnes of coal per day even without the two mines without Ulyanovskaya and Yubileinaya."
Ulyanovskaya and Yubileinaya are affiliated with the Evraz Group, which owns 40% of Raspadskaya and until recently owned 50% of Yuzhkuzbassugol. Following the accidents at the Ulyanovskaya and Yubileinaya mines, Evraz bought the remaining 50% stake in the company from its management.
Claymont Steel forecasts soft market in Q3
Claymont Steel Holdings Inc last week forecast that its third quarter earnings would be well below expectations due to softening market situation.
Claymont Steel however said that pricing and demand should strengthen again in the fourth quarter along with profitability.
Antam H1 FeNi production up by 28% YoY
Indonesian state owned metals producer Aneka Tambang reported higher ferronickel production in the first half of this year but warned again that it would not meet its 2007 target of 20,000 tonnes of nickel in ferronickel.
Antam’s production of nickel in ferronickel was 4,394 tonnes in April to June 2007 quarter up by 6% YoY while that in the first half of 2007 at 8,746 tonnes was up by 28% YoY.
The YoY growth reflects the commissioning last year of the new FeNi III smelter with capacity of 15,000 tonnes. The ramp up process was problematic with the smelter under performing last year after a leak. Another leak on Jun 16 this year is going to constrain production again.
Antam said that it would give a further update shortly but at the moment the estimate is that repairs will take up to four months and it is not likely the company will be able to meet its original 2007 production target.
Mill Con Steel to list on MAI in Q4
It is reported that Thai Mill Con Steel Industries Plc expects to list on the Market for Alternative Investment in the fourth quarter of this year. The market listing will also help the company reduce its debt to equity ratio and increase competitiveness to accommodate future expansion.
The steel company yesterday filed its listing proposal to the Securities and Exchange Commission with KTB Securities as its financial adviser.
Mr Sittichai Leeswadtrakul MD of Mill Con Steel Industries said the company's planned initial public offering would lift its paid up capital by THB 100 million from THB 300 million currently.
However, prior to the listing on the MAI, the steel producer will improve its accounting and financial discipline. Mr Leeswadtrakul said ''After all the changes and improvements, we will be stronger and able to use a number of financial tools to efficiently manage our finances.”
High cost of electricity alarms Kenyan steel industry
It is reported that Kenyan steel and metal products manufacturers have complained of the high cost of electricity in the country, which they say could force the robust industry to its knees.
Manufacturers have also complained of the fluctuation in the cost of electricity. The Kenyan power company KPLC charged consumers KES 1.73 and KES 1.44 per kilowatt hour in March and June respectively as fuel cost adjustment charges due to the unstable prices of crude oil in the international market. According to the Kenya Association of Manufacturers as a result, medium to large size steel and metal product makers have had to pay between KES 2 million and KES 6 million every month on electricity bills compared to an average of KES 3 million paid by their Uganda counterparts.
Mr Manga Mugwe chairman of Morris and Company Ltd, without giving the exact figures of his company’s electricity bill, said that the cost of power his company is faced with huge power bills and that this has pushed the cost of production to the roof. He added that the truth is that the cost of power cannot come down if the government does not subsidize electricity cost and also suggested that the government should source cheaper electricity from Southern Sudan. He also added that the government should source power from cheaper sources such as Southern Sudan which is preparing to produce between 2000 and 5000 MW annually from River Nile.
Mr. Mugwe said power from that region will be cheaper compared to that from local sources and switching production to night shifts will not be in the best interest of the manufacturing outfits. Night production is always a bit inefficient. He added that night shifts will bring inefficiency in production since in case of a breakdown of a machine it would not be easy to have it fixed as most technicians are off duty during such hours.
According to a manufacturing survey report produced by the Kenya Association of Manufacturers late in 2006, Kenya 258 registered steel and metal products manufacturers export some 122,000 tonnes of various metal and steel products every year. These are valued at KES 4 billion.
Norochcholai power project phase I to be completed by 2012
It is reported that the first phase of the 300MW coal based power project at Norochcholai in Puttalam region of Sri Lanka is expected to be completed by 2012. The project is funded by the Government of China.
A spokesman of the Ceylon Electricity Board said that electricity tariffs are high because power generation in our country depends mainly on diesel. He said elevating the infrastructural facilities in the area is being implemented at an accelerated rate and the residents will benefit from these facilities.
A spokesman said about 80 families that were displaced due to the demarcation of lands for the project have already been given housing facilities under a re settlement program. Each family been allocated a new house on 500 square feet an allotment of 20 perches and an additional 300 perches for cultivation and are entitled for compensation for loss of land and property. He said that for 12 months each family will receive an allowance of LKR 5,000 per month.
The Ceylon Electricity Board has made arrangements to provide the housing scheme with kindergartens, medical clinics and a cluster of common amenities for the dwellers and will give priority to members of displaced families and the residents in the suburbs in recruitment for direct and indirect jobs created during the construction period and once the project has been commissioned.
Red Dog zinc lead mine starts shipments early
Metals Insider reported that the giant Red Dog zinc lead mine in Alaska kicked off its summer shipping season around 19 days earlier than last year on July 5th 2007.
Planned shipments are 1 million tonnes of zinc concentrates and 260,000 tonnes of lead concentrates comparable to year earlier levels.
Contained zinc production at Red Dog rose to 142,000 tonnes in April to June quarter 2007 from 133,200 tonnes against in April to June quarter 2006. In H1 2007 production rose to 286,700 tonnes from 268,600 tonnes. Lead production rose to 31,600 tonnes in April to June quarter 2007 from 28,000 tonnes against in April to June quarter 2006, while H1 production rose to 64,100 tonnes from 57,600 tonnes.
