October, 01 2007
Inter ministerial group on steel to meet on October 8
It is reported that an inter ministerial group, set up to fructify various projects in the steel sector, will meet on October 8th 2007 to address bottlenecks impeding the estimated investments of INR 2,76,880 crore in the next 5 years.
A top steel ministry official said that "We envisage an investment of INR 276,880 crore in the steel sector by 2011-12. The inter ministerial group, which has been constituted to delve into various issues impeding these investments, will deliberate on them when it meets on October 8th 2007."
The official pointed out that "After a detailed scrutiny of the current steel scenario, we found that steel production by 2012 is likely to be at 124.06 million tonnes per annum. This will necessitate 198 million tonnes of iron ore by the same period and 438 million tonnes by 2019-20." He added that companies which have announced investment plans in the sector have made it clear that they would require iron ore mines to carry out Greenfield and brownfield expansions.
The official said that "Environmental issues impeding the investments will also come up for discussion. Present environment clearance policy needs amendment for faster and transparent clearance of mega projects."
The key issues to be discussed are ensuring adequate iron ore resources to the steel utilities, including foreign steel giants like ArcelorMittal and POSCO, who have announced major investments in Jharkhand and Orissa.
The ministerial group will also discuss the issue of allowing private investments in areas like creating railway infrastructure including procuring and operating rolling stock. The possibility of opening up more coal blocks for major steel projects and seek their expeditious allocation will also be discussed by the group. Various steel companies have sought allocation of coal blocks in Jharkhand, Orissa and Chhattisgarh.
Steel Authority of India Limited has sought Mandakini, Fatehpur East, Ganeshpur and Gourangdih blocks, while ArcelorMittal has sought Mandakini and Rampia Dipside of Rampia for its proposed captive power plants in Orissa and Ganeshpur and Saragarha blocks for the Jharkhand project.
SAIL is awaiting environmental clearance for Budhaburu, Dhoil and Singhbhum (W) for the past 3 years. Major steel utilities have announced massive capacity expansions. SAIL is carrying out its modernisation programs to ramp up its production capacity to more than 24 million tonnes, while Rashtriya Ispat Nigam Ltd is executing a corporate plan to increase production capacity to more than 6 million tonnes by 2011-12.
Besides, TATA Steel has announced plans to increase production to 13 million tonnes from the current 5 million tonnes, while Essar Steel will up its capacity to 14.5 million tonnes from the current 4.6 million tonnes and JSW to 11 million tonnes from current 4.1 million tonnes. Among the Greenfield projects pledged by steel utilities are 3 million tonnes by TATA Steel, 6 million tonnes by Essar, 5 million tonnes by BSPL and 1 million tonnes by Monnet Ispat.
Jharkhand assures SAIL of iron ore
It is reported that Mr Madhu Koda chief minister of Jharkhand has assured Steel Authority of India Limited of providing iron ore according to its requirement for the proposed expansion plan in Bokaro.
Mr Koda, when asked about the legal tussle between the state government and SAIL over the Chiria iron mine in West Singhbhum district, said that the expansion plan of SAIL will not hamper for the raw material as the government assure them of fulfilling their requirement. However, he was non committal on Chiria mines.
Mr Koda, while referring to the series of memoranda of understanding signed between the prospective investors and the state government, said that all those players, including Mittals, Essar and Jindals have shown their keen interest afresh to invest in Jharkhand.
Iran, Pakistan to ink pipeline deal without India
PTI reported that Iran and Pakistan have finalised a deal on USD 7.4 billion gas pipeline project without the participation of India and have agreed to sign draft agreement and a letter of understanding by the end of October 2007.
Mr Hojjatollah Ghanimi Fard Iranian oil minister’s representative said that “Iran welcomes India whenever it joins us in the peace pipeline project.”
Iran and Pakistan are now scheduled to sign the final deal by November 2007. The 2 sides have prepared the final text of the agreement and Iranian and Pakistani officials will meet again in Islamabad from October 15th 2007 to October 19th 2007.
Mr Ghanimi Fard told the official Iranian news agency that “Both countries have reached consensus on all conditions of the deal and the draft agreement is ready to be signed by the lawyers and experts of different technical, financial and commercial sectors. Pakistani side is to submit the draft agreement to us next week and we will declare our views on it in a week. The two sides will explore the draft agreement not to be contrary with the MoU already signed by the leaders of the countries parties in the project.”
The India Pakistan Iran talks in Tehran, which began on September 24th 2007, was not attended by India, which said it will not attend the tri nation meetings unless the transit fee issue was resolved with Islamabad. Mr Ahmed Mokhtar a senior advisor to Mr Shaukat Aziz Pakistani prime minister and Mr Farooq Qayyum petroleum secretary represented Pakistan at the talks.
Water policy tops steel conference
SNS reported that the need to have a national as well as a state water policy dominated the closing session of the 2 day international steel conference.
Mr Anand Kumar senior VP (commercial) of Jindal, while participating in a session on ‘What is the role of a state for the sustainable growth of the steel industry in the eastern region?’ emphasized on a water policy. Orissa, with a 4% population enjoys more than 10% of the total water storage. He suggested the building of dams and promoting rain water harvesting. He added that “There is an urgent need to develop the infrastructure.”
Mr S Padhi of Uttam Galva steels limited said that “The signed MOUs are not fool proof. Many basic infrastructure related issues like water, power are often absent in the MOUs and it leads to confusion and unnecessary delay. It will help the industry better, if the government takes up industry wise review.”
Mr SK Tamotia former CMD of Nalco stressed on the proximity of material sources to the production centre. He said that this will not only reduce the pressure on the existing infrastructure, but also simultaneously reduce cost.
BHEL expects orders worth INR 35,000 crore for FY08
Bharat Heavy Electricals Limited said that it expects to win more than INR 35,000 crore (USD 8.7 billion) of orders in the year ending March 31st 2008.
Mr Ashok K Puri chairman of BHEL said that its total orders rose to INR 65,000 crore in August 2007 after it won INR 20,000 crore of new orders. BHEL won INR 35,000 crore of orders in the last financial year ended March 2007. He added that “We are looking at almost the same level of orders as last year.’
BHEL is winning orders at home as India targets expanding power generation capacity by more than 50% to 193,000 MW by 2012. Record crude prices are driving oil rich nations to build infrastructure, fetching Bharat Heavy orders from countries in the Wets Asia and Libya.
India, which currently generates 128,182 MW of electricity, plans to set up 8 large power projects, each generating more than 4,000 MW. The union government aims to spend USD 149 billion to boost generation and upgrade transmission and distribution networks.
Mr Puri said that BHEL, whose stock has risen by 71% in the past 12 months, plans to invest INR 3,200 crore to boost its capacity to 15,000 MW by 2009 from 10,000 MW in December 2007. It plans to raise the capacity to 20,000 megawatts by 2012 after completing its expansion plan. It also plans to more than double manpower in the next 5 years to 20,000 employees from 8,000.
SCI plans to set up shipbuilding yards
It is reported that, after engineering giant L&T, India's largest shipping company Shipping Corporation of India has jumped into the fray for setting up world class shipbuilding yards that will build vessels up to 0.32 million DWT capacity.
Mr S Hajara CMD of SCI said that "SCI has definitely shown interest to be involved in ship building as well. We have indicated our interest to shipping ministry, who has welcomed the idea."
This follows the centre's decision to set up 2 such yards, 1 each in the east and the west coast. The centre has also appointed Ennore Port and Mumbai Port Trust appointed as nodal agencies. Each shipbuilding yard is expected to cost more than INR 3,000 crore. SCI is not averse to the idea of bidding for both the Greenfield shipbuilding yards in the east and west coast.
Mr Hajara said that "We have asked Ernst & Young to prepare a feasibility report in 3 months. If the report is positive then it will go to the cabinet for approval."
SCI also plans to set up a mega dredging company in alliance with Mumbai Port Trust, Jawaharlal Nehru Port Trust, Kolkata Port Trust and Cochin Shipyard. The dredging company would look into all aspects of dredging including building dredgers and its operations.
Though no sites have been identified, the locations that are being looked at are in Gujarat, Andhra Pradesh and Tamil Nadu. Apart from these two shipyards, there is no restriction for private shipyards to come up with more. Some of the existing shipbuilding yards are expanding their facilities as globally they are running at a full capacity.
SCI, which has recently ordered 18 vessels at a cost of USD 1.3 billion to meet its expansion plan, proposes to go for acquisition of 42 more ships soon at a cost of USD 2 billion to USD 3 billion.
Coal India seeks proper relief, rehabilitation policy
Coal India Limited, which has set an ambitious target of producing 160 million tonne of additional coal in the 11th Plan, said that a proper relief and rehabilitation policy should be put in place to enable it to meet its target.
Mr Partha S Bhattacharya chairman of CIL said that "CIL at present has 128,000 hectare under its possession and another 42,000 hectare is required to scale up production to 520 million tonne from the current level of 360 million tonne at the end of the 11th plan." He added that and was vital for the company to start new projects to achieve the production target. However, he did not elaborate on the suggestions given by the company and merely said that instead of being employment-oriented, the new policy should focus on improving the quality of life of the people. The current policy was employment oriented.
Coal India Limited is planning to invest INR 18,000 crore to produce 160 million tonne of additional coal during the 11th Plan.
Shipping Ministry wants ASG out of Sethu case
IANS reported that union shipping ministry, headed by Mr TR Baalu of DMK who is keen on seeing the Sethusamudram canal project through, is upset with Mr Gopal Subramanium additional solicitor general for withdrawing from the apex court its affidavit on the project and has asked that the law officer be taken off the case.
Shipping ministry, in a letter to the law ministry dated September 26th 2007, has expressed lack of confidence in Mr Subramanium to represent and articulate its views in the court in response to the petition by Mr Subramaniam Swamy president of Janata Party.
The letter read as "There is, thus, an apparent contradiction and confusion at all stages that has presumably been created by the ASG. Mr Gopal Subramanium may be dissociated from this case."
The Sethusamudram Shipping Canal Project has triggered controversy over an affidavit by the Archaeological Survey of India in the apex court. The affidavit stated there was no historical evidence to prove the existence of Hindu god Ram or of the Ram Sethu, which many Hindus claim is the bridge referred to in the epic Ramayana and may face destruction if the project is allowed.
Besides the ASI, the shipping ministry too had filed a separate affidavit reaffirming the government's position on the Sethusamudram project, giving details of how it had progressed, including during the years when the BJP led NDA was in power. It also cited the report of experts that enabled the government to decide on the viability of this project.
According to the letter, Shipping and Transport Minister Baalu summoned Subramanium to demand an explanation on why he withdrew the shipping ministry affidavit. But Subramanium has reportedly ignored the request of the minister.
DCI declares 150% dividend for 2007
Dredging Corporation of India has declared a dividend of 150% for the second time including interim dividend of 60% paid in February 2006-07, involving an amount of INR 48.64 crore and dividend tax of INR 6.64 crore.
In 2005-06 also, the corporation paid 150%, with a total outgo of INR 47.89 crore inclusive of dividend tax of INR 5.89 crore. As much as INR 18.9 crore was transferred to general reserve during 2006-2007.
During 2006-07, DCI recorded a turnover of INR 622.09 crore compared with INR 542.89 crore during 2005-06. It included operational income of INR 572.89 crore and the other income consisted mainly of interest on fixed deposits. The profit before tax was INR 206.39 crore and the net profit was the highest ever at INR 188.73 crore. The earnings per share during the year rose to INR 67.40 against INR 63.02 in 2005-06.
It also carried out maintenance dredging at Kolkata, Haldia, New Mangalore, Paradip, Visakhapatnam, JNPT, Cochin port, Southern Naval Command, Kochi, and also capital dredging at the Sethusamudram project site.
TATA inks with Chinese firms for coke oven at Kalinga project
It is reported that TATA Steel is all set to sign up with 2 China based Anshan Coking & Refractory Engineering and Chinese arm of Germany company Koch for the import of technology and equipment for a 1.5 million tonne per annum capacity coke oven plant to be set up at its proposed 6 million tonne, INR 15,000 crore steel facility at Kalinga Nagar in Orissa. The estimated size of the contract is INR 500 crore.
While Anshan Coking will supply the main battery, Koch will supply machinery for the coke oven plant. TATA Steel is likely to sign the contracts with the companies next week.
A senior TATA official said that “We had considered a number of companies in Europe and Asia before selecting these 2. Their technology was best suited for producing good quality coke from inferior coal.”
The coke oven plant will consist of 2 stamp charged batteries. While ACRE and Koch would supply the technology and some key equipment for the plant. The annual 1.5 million tonne coke output from the plant is expected to meet the first phase requirement of the steel project.
TATA Steel would set up the 6 million tonne plant in 2 phases of 3 million tonne each. It has finalised technology and equipment supply for various units of the steel project, such as sinter plant, blast furnace, steel melting shop, slab caster and placed orders for civil and structural packages worth nearly INR 6,000 crore.
Bengal revives Kulpi port plans
It is reported that the proposal for setting up a port in Kulpi in South 24 Paraganas district of West Bengal is being revived again. Mr Ganesh Raj, CEO of Dubai Port World in India, met the senior officials of the West Bengal government and Kolkata Port Trust to discuss the means to go about it.
The MoU signed between the West Bengal Government and Bengal Port Limited had expired in 2004 and Dubai Port World is now the single largest shareholder of Bengal Port Ltd.
Dr Sabyasachi Sen secretary commerce and industry department of West Bengal said that the issues like the sharing of the dredging cost and the port charges were discussed. He added that “We have discussed the matter and the West Bengal government will send a report in this regard to the union shipping ministry shortly.”
Kolkata Port Trust, it might be recalled, had always insisted on the sharing of the huge dredging cost. The issue of port charges had to be decided by the tariff authority of major ports.
Gangotri Iron - outcome of board meeting
Gangotri Iron & Steel Company Limited has announced that its board of directors at its meeting held on September 28th 2007 has discussed the requirement of funds for the ongoing expansion and diversification.
Gangotri Iron has decided to raise funds upto INR 15 crores and a committee was formed of 3 members comprising of the directors to consider various sources available including rights issue, preferential issue etc. For this purpose the MD of the company was directed to appoint an advisor and go ahead with the necessary formalities including obtaining approvals from various authorities as required after the scheme is formulated.
Essar Steel updates on delisting of equity shares
Essar Steel Limited has announced that its promoters Mauritius based Essar Steel Holdings Limited has informed that they have extended the bid period of the delisting offer of the equity shares to close on October 3rd 2007.
Accordingly, the bid Period will now close on October 3rd 2007 instead of September 28th 2007.
Skoda turbine facility phase I by April 2008
It is reported that work on Skoda Power's turbine manufacturing facility at Hyderabad has already commenced and Phase I of the project is scheduled for completion by April 2008.
The project entailing an investment of INR 2,000 crore will also manufacture power equipment, such as casings and auxiliaries. The facility, to be set up in four phases, will be completed by 2011.
Punj Lloyd a buying opportunity for investors and traders
Mr Sudarshan Sukhani technical analyst is of the view that Punj Lloyd is buying opportunity for long term investors and traders.
Mr Sukhani told CNBC TV18 that "Unitech has some other reasons why people are upbeat on it but for example Ansal has a chart, which looks attractive. Beyond that I’m a little apprehensive of going into realty stocks. I much prefer the construction space, which promises much better chance and a probably more robust growth in terms of price." He added that Punj Lloyd which is a favorite. It will go on BL Kashyap and just opened construction chart Nagarjuna Construction, HCC. I like most of these charts. Each of them is a buying opportunity for long term investors and traders.
Iron ore giant considering 30% price hike
Bloomberg reported that Cia Vale do Rio Doce, Rio Tinto Group and BHP Billiton Ltd, the world's three largest iron ore exporters, may increase prices by 30% next year as demand driven by steelmakers in China outpaces growth in supply.
According to the median forecast of eight analysts surveyed by Bloomberg benchmark prices for shipments from Australia will rise to a record USD 66.40 a ton next year from USD 51.47 in 2007. Sales may climb by 11% in 2007 as supplies gain by 8%, Merrill Lynch & Co estimates. Mining companies and customers begin annual contract talks next month for shipments from April.
According to Citigroup Inc research Chinese steelmakers, the biggest consumers are raising production by 15% to meet demand for cars, railroads and buildings. The increase will provide record profits for mining companies and may help Brazil's Vale double earnings from iron ore by 2009. Mr Peter Chilton who helps manage the equivalent of USD 1.4 billion at Constellation Capital Management in Sydney said that “It’s a sellers' market."
According to Mr Paul Gray a commodities analyst at Goldman Sachs JBWere Pty in Melbourne said that “Iron ore mining companies won't expand fast enough to keep up with growth in consumption for years, so prices will rise until 2010.”
Merrill Lynch analysts in a report said that prices may rise more than 50% next year because of low inventories at Chinese ports and lack of supply. CVRD, London based Rio and BHP in Melbourne account for about 75% of global iron ore exports.
According to Metal Bulletin steel makers can afford to pay more by increasing prices for their products. Coils of hot rolled steel, used in car bodies and washing machines, have risen by 11% in the past year to USD 590 a ton in Antwerp in Belgium, the highest level since April 2005. ArcelorMittal said in August that profit had risen 50% to USD 2.72 billion in the second quarter. Nippon Steel, its closest rival, expects to post a second annual record profit in 2007.
According to Credit Suisse prices for individual iron ore cargoes, which include shipping costs, have risen to USD 165 a ton. It takes 1.6 tons of ore to make a ton of steel.
China overtook Japan as the largest buyer of iron ore in 2003, and last year the biggest Chinese steel maker, Baosteel, set global benchmark prices for the first time. It agreed to a 9.5% gain, the smallest increase in four years. Mr Chen Xianwen deputy director of market research at the China Iron & Steel Association said that "Baosteel has improved negotiating skills in the past years, but the price will be decided most by the supply and demand."
Criteria for licensed steel exporters to be released soon – NDRC
Mr Hu Chunli director of Industry Development Research Department of National Development & Reform Commission disclosed to 21st Centry Business Herald that "The authority is drafting criterias of license system for steel export in a bid to put a cap on China's hectic steel shipment out of the country."
He added that checking China's steel export is a long-term policy due to its adverse impact on environmental protection and energy conservation.
The newspaper learns from a well-informed industry source that the criterias would be jointly made by Ministry of Commerce, China Iron & Steel Association and NDRC and slated to be released by the end of this year. The license system would tip in favor of large scale steel producers and traders.
The move is taken to further rein in the country's steel export on top of a series of tax changes. In fact, the new licensing system for exports of 83 steel products has already taken effect from May 20th 2007, but the detailed criterias for exporters have yet to be finalized so far
Jiangsu based trader said that "We heard that exporters are required to send out a minimum of 1m tonnes per year for obtaining the license. If so, most of the trading companies would be forced out of business." Meanwhile, China's major mills reached a consensus to limit steel exports to no more than 10% of their production at a meeting held in June by China’s National Development & Reform Commission.
The China Iron and Steel Association has long maintained that exports of around 10% of production are healthy and sustainable. Ministry of Commerce officials admit that the government may examine quotas in the near future. However, the industry is still reeling in the wake of recent policy changes that have occured in a very short period. Industry sources suggest it will take time to stabilize after the export rebate abolition/reduction and subsequent imposition of export taxes.
According to Mr Zhao Xiange analyst with Everbright Securities said that "The export license system may not be as effective in curbing steel export as tax changes in the short term, but it would have some impact in the longer term."
Beijing is very likely to leverage on tax changes again and the tax rebate on pipe exports is poised to be removed in the remainder of this year, cautions a senior official of Delong Steel.
(Sourced from MySteel.net)
Taigang Stainless projects to have 7.5 million tonnes per year iron
Securities Daily's quoted Mr Chen Chuanping chairman of Taigang Stainless Steel Co during a shareholders meeting held in Taiyuan as saying that Chuanping expressed optimistic forecasting toward future development and disclosed the company is planning 7.5 million tonnes iron concentrate and 5 million tonnes steel capacity project.
Mr Chen said that the global demand for stainless steel products is on quick increase without a substitute in store. As a leading company in this line, Taigang Stainless boasts low cost, superior technical advantage and most complete production flow in the world. It has nearly 3 million tonnes stainless steel capacity already and targets 7.5 million tonnes iron concentrate and 5 million tonnes steel with further project, which is awaiting authority's approval. The company is reportedly upbeat on obtaining government's nod and pins great hope on the project for a leap.
Mr Chai Zhiyong GM of Taigang Stainless Steel said that Taigang Stainless plans future growth from such facets as further optimizing product mix, extending industrial chain, strengthening cooperation with partners and raw material suppliers. The top officials further introduced about collaboration with Tianjin Pipe Corporation, whose subsidiary is to build a JV with Taigang Stainless. The two parties schedule to launch co op in seamless steel pipe as well.
Taiwan’s plate price keeps high due to tight supply
YIEH reported that Taiwanese domestic plate price has increased by 14% MoM due to tight supply. Currently, the carbon steel A36 plate is quoted at NTD 24,500 per tonnes. Given tight domestic supply, demand for steel plate mainly relied on export from China.
Some buyers in Taiwan said that the current export price of steel plate from China is usually quoted at above C&F USD 700 per tonnes and the price is very likely to rise higher in the next few months because the export tariff in China might increase from 5% to 10%.
Russian steel industry well positioned to fend off China threat – Fitch
Fitch Ratings said that Russian steel producers are well positioned to face off the looming competition from China's steel exports to the international markets. This is because of their competitive advantages and strong Russian demand for steel, as well as the consolidation driven by the Chinese government to rationalize national steel production and restrain exports.
Fitch in a report said that “Russian steel producers are able to retain their cost competitiveness even in the face of mostly low end commodity steel exports from China. They have high self sufficiency in the main raw materials including iron ore and coking coal for steel production whereas China imports 50% of its iron ore needs and some grades of coal. Further, the Chinese steel industry remains highly fragmented, which limits its bargaining power in negotiations with major raw materials suppliers. Overall, Russian steel industry benefits from low cost production amid relatively low energy and labour costs. Although labour costs in China are low, Chinese steelmakers face relatively high and rising energy costs.”
It added that “Russian steel producers could be shielded against any downturn in the global industry by buoyant domestic demand due to rapid construction expansion and strong industrial production growth. Steel makers in Russia also benefit from high prices as a result of the strong domestic demand and the concentrated nature of the Russian steel industry, which adds to the pricing power of its major players. Furthermore, Russian steel companies enjoy even sales diversification across domestic and international markets. In contrast to their Chinese counterparts, Russian steel makers are extending their footprint in international markets (primarily the EU and US) through acquisitions. Although competition from the Chinese steel producers could intensify in southeast Asia and the Middle East, it should be mitigated by the limited exposure of Russian steel companies to these markets.
Fitch further added that “Chinese government has sought to curb the rapid expansion of Chinese steel capacity, in light of inefficient steel operations and potential anti-dumping actions in the EU and US. Measures include reduction in steel export tax rebates and introduction of taxes on some steel product exports. In Fitch's view, the fragmentation and overcapacity in the Chinese steel industry may improve further in the coming years, although it has been slower than expected so far."
Fitch notes that some global steel players are adopting a more disciplined approach to production to adjust output to demand changes. Finally, Russian steel producers have strong credit metrics relative to their international counterparts, including Chinese peers, which reflect their competitive advantages. The average net leverage of the largest Russian steel producers rated by Fitch amounted to 0.3x in 2006 versus an average 0.9x for the Chinese steel producers rated by the agency. At the same time the average EBITDAR margin of Russian steel companies was 32.1% in 2006, compared to 22.3% for their Chinese competitors. This provides additional financial flexibility for leading Russian steel companies to weather any industry downturn. Nonetheless, Fitch notes that Russian steel companies are rated in the 'BB' range whereas their Chinese counterparts are rated in the 'BBB' range, due to corporate governance concerns linked to the Russian domicile.
China's surging demand for steel products over the last decade has played a vital role in reviving the world steel industry. In 2006, it accounted for more than one third of the world's steel production and consumption. In the first seven months of 2007, exports of steel products amounted to 39.7 million tonnes, up 92% YoY. However, strong growth in China's steel exports has raised concerns of potential price weakness and intensifying competition in the international markets.
ThyssenKrupp aims to expand presence in China
German industrial conglomerate ThyssenKrupp announced that it aims to double its China sales to EUR 2 billion (USD 2.85 billion) in the next five years. The report quoted Dr Ekkehard Schulz CEO of ThyssenKrupp at the opening of the ThyssenKrupp Technology Days in Shanghai said that ThyssenKrupp Group intends to grow further in China. He said that “In the coming years we aim to double our sales in China to two billion euros and invest half a billion euros. With our increased sales we aim to support China’s economic growth quantitatively and qualitatively.”
In the fiscal year to the end of September 2007, ThyssenKrupp increased its sales to customers in China by 10%. In 2005/06 the Group achieved sales of EUR 1 billion in China, roughly EUR 400 million of which was generated by the Group’s biggest company in China, Shanghai Krupp Stainless. ThyssenKrupp holds a 60% stake in this joint venture.
Mr Schulz said that “China is today by far the biggest steel manufacturer in the world, producing more than a third of the world’s steel. Chinese steel companies are putting their faith in new, state of the art mills meeting high environmental standards 50 million tons of efficient capacity is under construction or planned. In return, outdated facilities are supposed to be closed. However this is not yet being carried out with the necessary rigor. All the measures taken by the Chinese governments to curb exports have been without effect so far.”
Mr Schulz added that “China is developing into a steel exporter, and Europe is the first destination outside Asia for its products” continued Schulz. Ten million tons of steel will be exported to the EU this year; last year it was only half that amount. If China wishes to avoid long running trade conflicts, the rules of the market have to be obeyed.”
Dongbu Steel orders for a new hot strip plant
South Korea Dongbu Steel Co Ltd placed a contract with Danieli in consortium with MHI, for a new upstream production line. The new plant to be installed at the Asan Bay works by Danieli in consortium with MHI will produce up to 2.6 million tonnes per year of carbon steel grades for CR applications and HSLA grades for automobile and pipe applications.
Two of the major targets of the Dongbu Steel project were plant flexibility and low transformation costs. To this end, the Danieli's worldwide experience and knowledge of the mini mill concept and the cooperation with MHI, have been recognized.
The meltshop consists of two AC Electric Arc Furnaces, two twin Ladle Furnaces, and double-tank Vacuum Degasser. Each Electric Arc Furnace, with capacity of 160 tonnes and tap to tap time of 46 min, will be equipped with a Consteel continuous scrap charging system, chemical energy injection, and HiREG electrode digital regulation system to optimize energy consumption. The furnace can be charged with different combinations of scrap, pig iron and HBI.
The casting plant consists in two independent Danieli single strand thin slab casters capable of producing 70mm to 85 mm thick slabs, 800mm to 1650 mm in width.
The Dongbu Steel casters will include all the cutting edge technologies embodied in the Danieli flexible Thin Slab Casting concept for thin slab production, such as: the patented, long-funnel Danieli H2 (High quality, High speed) mold, hydraulic oscillation, complete thermal mapping, vertical-curved design, dynamic soft reduction, and dynamic air-mist secondary cooling.
The Hot Strip Mill will produce strips 800 to 1,650 mm wide and 12.7-1.2 (0.8)-mm thick. Max coil weight will be 30 tons.
The Danieli supply covers all main mechanical, electrical, and automation equipment, including a complete Level 2 automation system with mathematical models for the dynamic control of the casting operations. According to Dongbu Steel's plans, the new facility will be put in operation during Summer 2009.
Summary of Chinese steel export prices
Chinese steel export prices continue to witness downward adjustments on concern the probable increase in export tariff rate would further dampen steel exports, which in turn would direct more cargo back to domestic markets. Export market is quiet since most steel makers and traders employ wary attitude in face of policy and market risk.
HRC
Chinese HRC prices continue to go down amid rumor of imminent increase in export tariff rate. Commercial 4.5 mm to 11.5mm*1500mm HRC are being offered at CNY 4080 per tonnes, down by CNY 130 per tonnes, 1800mm material at CNY 4450 per tonnes to CNY 4520 per tonnes. 2.75mm HRC remain at CNY 300 per tonnes a decrease of CNY 80 per tonnes to CNY 100 per tonnes.
HDG
After rebounding to CNY 5100 per tonnes from CNY 4800 per tonnes, prices for 1.0 HDG by Anshan Steel which is regarded as base are now slipping down. In Shanghai, 1.0mm HDG drop by CNY 20 per tonnes to CNY 5080 per tonnes; quotations for 0.5mm HDG by private steel mills go down by CNY 20 per tonnes to CNY 30 per tonnes to CNY 5550 per tonnes to CNY 55570 per tonnes. HDG is expected to follow the downward adjustments of HRC and CRC.
HR plate
Export offers for hot rolled steel plate offers are still on the rise in China, bolstered by robust overseas demand and firm domestic market prices. Among others, ship plate and high end plates enjoy much higher prices and they are actually the export engines.
Most tier two steel makers have raised offers for SS400/Q235 HR plate to USD 710 per tonnes to USD 730 per tonnes FOB and up in line with domestic market. But the rise has led to fewer transactions at moment. A North China based steel mill is quoting S275JR plate at USD 720 per tonnes FOB base and S335JR USD 735 per tonnes FOB base, early November shipment. The offer require equal share of the possible increase in export tariff rate. Another neighboring steel maker, who mainly produces high value added plates, is quoting at USD 20 per ton higher for the same products and also ask buyers to born all the loss if there is policy change. Traders attribute its high price to its small output of commodity grade plate.
Long products
Rebar and wire rod prices continue their downward adjustments in Chinese domestic market. In Shanghai, HRB335 20mm rebar is being offered at CNY 3840 per tonnes to CNY 3850 per tonnes, HRB400 material at CNY 4020 per tonnes down by CNY 30 per tonnes to CNY 40 per tonnes. Wire rod has also dropped to CNY 3850 per tonnes to CNY 3870 per tonnes.
ANZ helps raise capacity of Thai Nguyen steel plant
The Australia and New Zealand Banking Group on September 28 announced a USD 120 million loan to help Viet Nam raise the capacity of the Thai Nguyen Iron and Steel Corporation.
According to Mr Dam Bich Thuy general director of Australia and New Zealand Banking Group Vietnam the sum will be used to buy equipment and production lines to increase the TISCO’s capacity to 750,000 tonnes of steel ingot a year from 250,000 tonnes at present. As a result, TISCO will be able to ensure ingot supply for steel manufacturing.
According to the Vietnam’s trade ministry, the price of imported ingot is about 560 USD per tonne, while a tonne of ingot produced in the country costs only 360 USD.
Over the past years, Australia and New Zealand Banking Group has funded many infrastructure projects in Viet Nam, including the Dung Quat Oil Refinery and A Vuong Hydro Power Plant.
ANZ Viet Nam was established in 1993. The bank won the title “Viet Nam’s best foreign bank” in 2002-2003 and 2003-2004 by the FinanceAsia magazine.
Sandvik steel bar approved
It is reported that Sandvik has received StatoiL approval for its stainless steel bar in full accordance with the Norsok M650 Rev 3 for use in oil and gas applications. The approval covers Sanmac SAF 2205 - UNS S31803/S32205 in sizes from 20mm to 260mm and Sandvik SAF 2507 - UNS S32750 in size ranges from 20mm to 250mm.
The approval is recognized by StatoiL and is effective until 2012. Both grades are duplex steels, which combine high strength with corrosion resistance. They have more than twice the strength and lower thermal expansion than austenitic steels, making them fit into applications in the oil and gas industry, seawater services, refineries and petrochemical plants.
Bar products in Sanmac SAF 2205 provide machining properties, which lower machining costs and significantly increase productivity. This is achieved without compromising the material's corrosive resistance and mechanical strength. The approval covers an increased program of sizes of bar and all are stock standard items.
SMSP interest to develop low grade ores at Koniambo Nickel Project
It is reported that SMSP, which is a major mining company of nickel ore in New Caledonia, recently announced to finance USD 1,500 million to develop the Koniambo nickel project. SMSP’s board of directors had decided this financing on September 7th 2007.
In order to produce 60,000 tons per annum of nickel in ferro nickel at full capacity from 2012 to 2013, the work to materialize the Koniambo nickel project is expedited with a high pitch and this nickel project has possessed 2 million tons of nickel contained in the reserves, which will enable to supply stably nickel ore for a long period of 70 years and are expected to become a seldom promising nickel project in the world.
According to the official announcement made in 2004 the nickel reserves possessed by SMSP are indicated ore quantity 142.1 million tons, grading 2.13% of nickel content, and inferred ore quantity 156 million tons, grading 2.2% of nickel content. Apart from garnierite ore to be supplied to the Koniambo nickel refinery, laterite ore and low grade garnierite ore are accumulated at the Koniambo mine as remaining nickel ores after mining and, therefore it seems to come up as the subject for SMSP that is how to utilize these remaining ores as a target for the next phase of this nickel project.
The reason, why SMSP is now able to finance a 50% of USD 3,000 million as the amount to be required for this nickel project, has owed to higher nickel prices continued for 2 years. Also, in the course of recent years, SMSP has established a joint venture with POSCO to produce 30,000 tons per annum of nickel in ferro nickel at the site of POSCO Kwangyang Works in South Korea which is scheduled to start the production from January to March quarter of 2009 and this materialization of the JV has caused to strengthen the financial status of SMSP as an enterprise.
Accordingly, the nickel projects in New Caledonia have totaled to the three to be materialized. Namely,
1. Eramet as the oldest enterprise in New Caledonia to produce nickel has preceded to expand the capacity at the Doniambo refinery and is anticipated to produce 75,000 tons per annum of nickel in ferro-nickel from 2008.
2. CVRD has invested USD 3,000 million in the Goro nickel project to produce 60,000 tons per annum of nickel metal by PAL method from January to March quarter of 2009.
3. Xstrata has been proceeding the Koniambo nickel project as a joint venture with SMSP and is scheduled to produce 60,000 tons per annum of nickel in ferro-nickel from 2012 to 2013 as mentioned above.
In New Caledonia with population of 240,000 people, the three nickel projects, each of which is planned to produce nickel on a scale of 60,000 to 70,000 tons per annum, are going to materialize at the heels. Consequently, in parallel with these three nickel projects, nickel mines will be operated on a large scale to feed raw material to the projects and, by taking into accounts of manpower and infrastructure in New Caledonia, there is an opinion in the market that additional new projects to produce nickel in New Caledonia will be difficult to materialize from a real point of view.
SMSP bears a 50% of the fund to develop the Koniambo nickel project and, consequently, it is supposed that SMSP will acquire the right to sell half of nickel in ferro nickel to be produced at this project. SMSP has already set up the structure to produce ferro nickel in Kwangyang area of South Korea as a joint venture with POSCO a major producer of stainless steel in South Korea, and this tide will come in sight of POSCO as the market to sell ferro nickel to be produced at the Koniambo project. Since POSCO has been consuming 90,000 tons per annum of nickel, it is thought to become a powerful safety valve for POSCO to secure a stable supply of nickel through direct and indirect participations in the nickel projects on the basis of New Caledonia, where is a major country having possessed enough reserves of nickel.
Australia Newcastle port to cut Q4 coal load quotas
Reuters reported that Australia's Newcastle port will impose another cut in producers' shipping allocations in the fourth quarter to reduce vessel queues.
The report quoted Mr Graham Davidson general manager of Port Waratah Coal Services as saying that "We have sent out a notice to producers asking if they would like to voluntarily reduce their loading allocation for the fourth quarter. If there are no voluntary reductions, we will be imposing a cut on all producers."
Alfonso Gallardo acquires Eusebio Calvo
It is reported that Spanish long products maker Alfonso Gallardo has acquired steel distribution company Eusebio Calvo y Cia.
Eusebio Calvo y Cia has long products warehouses in Getafe and Talavera de la Reina in Spain. It currently distributes 80, 000 tonnes per year of structural profiles, tubes and rebar. Eusebio Calvo will merge with Ferralaca, a subsidiary of Alfonso Gallardo based in Madrid and Asturias, northern Spain.
Alfonso Gallardo in a statement said that “The strategic location of the warehouses will improve the distribution capacity of Ferralaca to serve its clients.” It added that the group's susidiary Siderurgica Balboa SA has invested EUR 300 million in the expanding its steel plant. The new steel mill will have a capacity of 2.4 million tonnes and it will be the second producer of profiles in Europe.
Straits acquires Indonesian coal mine
Indonesian coal mine Straits Resources Limited announced that it has signed a MoU to purchase a thermal coal mining business in Indonesia. The company advised that it entered the agreement with Vital Century Investment, Pacific Communication Corp and Mitsui Matsushima International Pty Limited, to buy the coal mining business located in East Kalimantan in Indonesia.
Straits said that it would proceed to satisfy all applicable conditions, with completion expected to occur prior to the end of 2007 and advised that it intends to finance the transaction through a combination of debt and equity.
Mr Richard Ong CEO of subsidiary Straits Asia said the acquisition is already similar in scope and operation with similar coal quality to the group’s Sebuku operation. He added that the business would have the opportunity to more than double its coal production and significantly expand its resource base at a time when global thermal coal supply and demand conditions are extremely favorable to coal producers. He also added that we will now focus on completing this transaction quickly so that we can deliver value to our shareholders.
Kremikovtsi steel picks Danish Consultant over green woes
Sofia News Agency reported that Kremikovtsi steel mill, believed to be the biggest polluter in Sofia region, picked a Danish company to advise it in implementing an ambitious environment protection program.
As per report representatives of Denmark's Grontmil Karl Bo and Kremikovtsi mill signed an agreement for cooperation in the field of environment protection. The steel mill, owned by India's Ispat and located in the suburbs of the capital, is traditionally blamed for most of the smog layer that covers the Bulgarian capital.
Mr Boyko Borissov mayor of Sofia said that it is the biggest polluter of the air, ground and waters in the area that is home to two million people. He said that "We are not considering the prospect of shutting down."
According to Alexander Tomov executive director of Kremikovtsi steel mill the contract with Denmark's Grontmil Karl Bo is a guarantee for ecological stability. He added that the first job for the Danish experts will be to make an assessment of the program for environment protection and select the most urgent projects. Next they will help find financial resources for its implementation.
US Steel paid lobbyist USD 240,000
It is reported that steel producer US Steel Group paid Skadden, Arps, Slate Meagher & Flom LLP USD 240,000 to lobby the federal government in January to June 2007.
According to form posted online August 13th 2007 by the Senate's public records office the firm lobbied on legislation to amend trade laws. Besides Congress, the firm lobbied the Commerce Department and the US Trade Representative.
Under a federal law enacted in 1995, lobbyists are required to disclose activities that could influence members of the executive and legislative branches. They must register with Congress within 45 days of being hired or engaging in lobbying.
United States Steel Corp is based in Pittsburgh.
Baosteel fulfilled the steel supply contract for 150,000 cube meter oilcan
It is reported that with the last batch of B610E steel for 150,000 cube meter oilcan left Baosteel to the user, Baosteel fulfilled the steel supply contract. In the tender by SinoPec’s Baishawan 150,000 cube-meter oilcan project, Baosteel took the advantage of integrated operations, winning the steel supply contract for 150,000 cube meter oilcan, with marketing mix strategies and stronger ability in supply.
During the contract implement, under the coordination of manufacturing sector, Baosteel made detailed production plan to secure the delivery and kept in touch with quality checking section, sale center and research institute to solve the problems encountered quickly as possible and secure the quality, even in the critical point in of the relocation of Pugang’s plate plant.
Sims to consolidate before expanding
The world's largest recycler of scrap metal Sims Group Ltd said it would concentrate on integrating Metal Management Inc before it expanded further into the US ferrous and non ferrous recycling markets. The planned merger with Metal Management Inc, which is valued at about USD 1.6 billion (AUD 1.85 billion) is expected to create the largest metal recycling business in North America. The combined entity will have more than 200 global operations in its portfolio.
Mr Jeremy Sutcliffe CEO of Sims told ABC's Inside Business that the merged company would be looking to expand through acquisitions, but not right away. He said that "I think this is a pretty big step for us but it's not the only step, but we've really got to keep the integration and the extraction of the synergies as our number one priority."
Mr Sutcliffe said that "I mean we're not going to run before we can walk. You don't always have the choice of timing with these things but in the ordinary course we'd like to get this merger bedded down first." He added that “The company had huge plans for the recycling solutions component of the business, which currently accounts for five per cent of the revenue of the group. We do want to double that business and I think it's better to talk about doubling the current recycling solutions business revenue or current solutions business revenue earnings before interest and tax over the next two to three years and we've got a very clear plan as to how we're going to do that."
Dubai Steel Futures poised to emerge as strong hedging tool
It is reported that the steel rebar futures trading, which the Dubai Gold and Commodities Exchange will launch on October 29th 2007 and is expected to serve as an effective hedge against price volatility.
Mr MY Habibullah GM of Star Steel International said that "The futures trading in steel is very new to our region. From what we understand it will be useful to those who have relatively longer term exposure to the market such as big contractors and end-users. We are not very sure about its usefulness to traders because they in any case build their margins into their bid and offer prices in the physical market."
Prices of steel a key metal used extensively in the region's core sectors have seen extreme volatility in recent months fuelled by fluctuations in demand and supply, sentiment, freight rates and rising costs of raw material.
The high volatility in steel prices is unusual. Its severity is evident in shorter price cycles, which have fallen from 5 to 7 years in the 70s and 80s to two to three years in the 90s, further shrinking to a mere four to five months in recent months.
Mr John Short ED for Steel and Base Metals at DGCX said that "The Middle East region is one of the world's fastest growing steel markets. With the introduction of futures in steel, the physical steel supply chain would be in a better position to mitigate the negative impacts of price volatility. The price volatility can be in excess of 15% to 20% putting tremendous stress on cash flow management and project profitability."
As DGCX offers a delivery based contract, steel industry participants believe that the futures trading will also serve as a hedge against supply constraints. However, many said the efficacy of the contract in mitigating risks related to volatility and supply will depend a great deal on the acceptance and participation from the industry.
A few physical steel traders in the market expressed fears that futures trading will allow speculators who have nothing to do with the market to influence the price. But many established players said Dubai futures prices will be significant to all market participant right along the Black Sea to Asia and China to Mediterranean region.
Mr Zhao elected VC of Shanxi province's chamber of commerce
Puda Coal Inc has announced that the Mr Zhao Ming its chairman & CEO has been elected to serve as VC of Shanxi Chamber of Commerce in the Tenth Assembly of Member Representatives.
Shanxi Chamber of Commerce is organized to foster an economic environment that encourages the growth of responsible private and non state owned enterprises. Puda Coal is a recognized leader in Shanxi province for its highly efficient production processes, environmentally-friendly coal washing facilities and positive influence on Shanxi's coal industry.
Mr Zhao Ming stated that "I am honored to be elected as the VC of The Tenth Chamber of Commerce and Industry and to be recognized for the many contributions Puda Coal has made to Shanxi Province. I am committed to fulfilling the goals of this organization and will work with other industry elite to promote an economic and legislative environment that encourages the development of responsible private enterprise."
Puda Coal, through its affiliates and controlled entities, supplies premium grade coking coal to the steel making industry for use in making coke. The Company currently possesses 3.5 million metric tonnes of annual coking coal cleaning capacity and management believes it is the largest coking coal cleaning company in terms of capacity in Shanxi Province, China. Shanxi Province provides 20% to 25% of China's coal output and supplies nearly 50% of China's coke.
Siemens to supply controls for Korean steel mill
Siemens Metals Technologies announced that it has received an order from Dongkuk Steel Mill Co Ltd to supply the entire mechanical equipment and automation system for a new 5 meter wide plate mill. The plant, where plates with a width of up to 4.9 meters can be rolled, will be built at the company’s Dangjin works. Production of the first plate is scheduled for the end of 2009. Siemens is part of a consortium for the project that is led by Sojitz Corporation, Japan and also includes Hyundai Heavy Industries, Korea.
Dongkuk Steel Mill Co Ltd is a leading steel producer in Korea. In the past Dongkuk and Siemens have completed a series of projects together with Siemens supplying and modernizing Dongkuk’s plate production facilities and increasing their capacity. The new mill’s scheduled production capacity will be 1.5 million metric tons per annum, increasing Dongkuk’s total production capacity of plates for shipbuilding, pipe making and construction to 4 million metric tons per annum. At the new plant, it will be possible to roll plate with thicknesses of between 4.5 and 150 millimeters.
The mill comprises a 4 high stand equipped with long stroke hydraulic automatic gauge control capable of producing 11,000 tonnes of rolling force, work roll shifting functions based on SmartCrown technology and heavy bending a Mulpic intensive plate cooling section, a hot leveller, three cooling beds and a shearing line consisting of a crop shear, double side trim shear, slitting shear and divide shear.
In addition to the mechanical equipment, Siemens is also supplying the entire automation system, including sensors. The automation system comprises the basic automation, including all the technological control systems as well as operation and visualization equipment and the process automation functions. Due to the close interaction of analytical process models and technological closed loop control systems, all the process parameters are kept within close tolerance limits.
Functions such as plan view pattern control and thermo mechanical rolling are also part of the Siemens solution. A rolling sequence control system enables nested multi-plate rolling. This will enhance the productivity of the plant. This flexible system can be adapted to changes in the range of products or the quality requirements, thus safeguarding the original investment. A higher level material-tracking system ensures the smooth flow of material and correct correlation of plates and process data at all times. All the components and systems used are part of “Siroll PM”, the integrated solution for plate mills. In addition, Siemens is responsible for commissioning and customer training.
With this project, Siemens will further consolidate its leading position as a supplier of mechanical, automation and electrical equipment for plate mills. Among the reasons for the contract being awarded to Siemens were the company's technological competence, the large number of references for plate mills, the comprehensive solution concept and the good experience of Dongkuk working with Siemens in preceding projects.
Baoshan to buy 92.5% of Nantong Baogang
Baoshan Iron & Steel Co Ltd announced on September 26th 2007 to pay CNY 601.3 million to purchase 92.5% of Nantong Baogang Nippon Steel Co Ltd a JV between Baosteel Group and Nantong City Investment Administration Center. Insiders consider this will trigger Baosteel Co Ltd's a series of assets acquisition from its parent.
Given the rumors in steel market and the trend of steel sector, investors worry about steel sector in the fourth quarter. Steel shares once went upwards continuously yet Ferrous Metal Index offered by Shenyin & Wanguo Securities Co Ltd kept falling since September 19th 2007.
Analysts forecast steel price in Q4 will remain the same as that in Q3 and the government is less likely to further raise export tariffs. According to price index provided by China Iron & Steel Association on September 24th 2007. Prices for both steel products and iron ore present continuous upswings since Q3, spurring fluctuations in spot market. Spot price in steel market slid since September 18th 2007. Price for common carbon wire rod dropped 0.38% WoW that for flat products lost 0.23% or CNY 10 per tonnes that for cold rolled sheet decreased 0.06% or CNY 3 per tonnes. However, industry index increased 0.18% and spot prices began to climb since September 25th 2007.
Mr Zheng Dong an analyst of Guosen Securities, explained that recent price adjustments are only short-term undulations and the uptrend of steel sector still continues.
Mr Zhou Tao analyst of Sinolink Securities revealed gross profit in steel sector does not shrink and current rises of both steel prices and production costs indicate a generally balanced supply and demand relationship. He added that steel price in Q4 will stay flat with that in Q3 and October 2007 may witness the best operation. He added that given the statistics in August 2007, the government is unlikely to release strict controlling policies.
China has introduced five policies this year to curb the exports of high polluting, high energy consuming and resource intensive products. The policies have taken effects and steel price has risen some 20%. In the meanwhile exports also drop for consecutive months. Mr Zheng Dong agreed there is little possibility of added export tariff imposition.
As for the coming iron ore benchmark price negotiation, Mr Zhou forecasted despite iron ore price increment, steel price will rise proportionally and gross profit will maintain stable or even climb.
According to Mr Zhou four kinds of companies will eye notable business increases: companies that boast their own iron ore mines, such as Jiuquan Steel; companies that focus on medium plates, including Xinhua Metal Products Co Ltd and Jinan Steel; companies that will see surging capacities like Anyang Steel, Ma'anshan Steel and Wuhan Steel; companies that are preponderant in cost control, for example, Anshan Steel and Baosteel. He forecasted net profit growth of key steelmakers will stand at over 20%.
(Sourced from Mysteel.net)
Corus extends fleet contract with Lloyds
It is reported that Steel giant Corus has extended its fleet management contract with Lloyds TSB autolease for another three years.
The deal is worth GBP 24 million, with around 600 vehicles delivered each year to a fleet of 1,600 to 1,800.
