October, 05 2007
SAIL September saleable steel production up by 18% YoY
Steel Authority of India Limited has recorded best ever performance in September 2007 by producing 1.1 million tonnes of saleable steel up by 18% YoY as compared to September 2006. Capacity utilisation of the SAIL plants went up to 120% in September 2007. SAIL's domestic sales during September 2007 were more than 1 million tonnes, which was higher by 14% YoY over September 2006.
Consequently, during July to September period of the current financial year, production of saleable steel went up to 3.25 million tonnes up by 10% YoY over July to September period 2006. The continual thrust on production of value added and special steels resulted in the SAIL plants producing nearly 1 million tonnes of steel in July to September period 2007 up by 27% YoY as against July to September period 2006. Domestic sales during Q2 crossed 3 million tonnes, which was higher by more than 8% YoY.
The captive mines of SAIL produced 6.07 million tonnes of iron ore and met 100% requirement for production of hot metal by plants. Coal production from captive collieries was increased during the year by 43%.
Further improvement in key techno economic parameters also continued, with lowest ever energy consumption and coke rate achieved during April to September 2007. Production through the energy efficient continuous casting route crossed 0.7 million tonnes in September 2007 and consequently, production during the current year went up by 5% at 4.2 million tonnes over 2006.
Among new units commissioned during July to September period 2007 were Coke Oven Battery No 5 after rebuilding at Bokaro Steel Plant and Bloom Caster at Durgapur Steel Plant. Blast Furnace No 5 at Bhilai Steel Plant was also put on stream after capital repairs during the quarter.
JSPL commissions continuous caster at Raigarh
It is reported that SMS Demag AG has successfully commissioned a continuous casting installation at the Raigarh works of Jindal Steel & Power Limited.
The single strand caster is designed for an annual output of 1 million tonnes of slabs, which vary in width between 1,800 mm and 2,600 mm and are 215mm, 250 mm or 280 mm thick. The original casting thickness of 215 mm was augmented by the sizes of 250 and 280 mm.
SMS Demag's services included the basic and detail engineering plus the supply of the ladle turret, all casting floor equipment, mold level control system, hydraulically powered resonance oscillator, the components of the run out section, the hydraulic system as well as the complete electrical and automation systems.
A particularly noteworthy feature of this commissioning job is the origin of the mechanical components of the strand guide system. They were installed in a slab caster which SMS Demag had originally commissioned at a German customer in 1979. In 1996, the circular arc caster was converted to a vertical bending unit. This revamp required the replacement of the base frame, mold and segments.
JSW buy for Jindal Saw US assets gets antitrust approval
Reuters reported that US antitrust body has approved JSW Steel's plan to acquire 90% stake in a plate mill, double jointing and coating, and pipe mill facility in the United States from Jindal Saw Limited’s US based subsidiaries.
US Federal Trade Commission in a notice said that US authorities reviewed the deal without taking any further action.
JSW Steel announced the deal in August 2007 citing an enterprise value of USD 900 million.
Chinese domestic steel demand to keep steel prices firm – Dr Irani
Dr JJ Irani director of TATA Sons said that bullish trend in the steel prices is going to stay for a longer period as China is helping steel prices to remain at higher levels by discouraging steel exports from the country.
He added that “China needs cheaper steel for use in projects coming up ahead of the Beijing Olympic to be held next year and discouraging exports will keep the steel prices in the country under control. Besides, iron ore prices are also ruling at higher levels, thus keeping the prices for finished product at higher levels.”
Mr Irani said that “I do not see HR coil prices going down below USD 500 to USD 550 a tonne. The all time high is USD 700 and USD 650 levels are in sight. If one looks at the trend, each dip earlier was lower than previous dip and each peak was lower than earlier peak. Situation has now reversed, with dips are higher than previous dips and peaks are higher than previous peaks.”
He said that “Indian producers should keep in mind imports and the strengthening rupee. Currently, India imports 7 million tonnes to 10 million tonnes of steel. However, imports are viable only for projects situated near coastal areas.”
Videocon chooses Barabani in WB for steel project
BS reported that Videocon Industries has identified 3,000 acre at Barabani in Bardhaman district of West Bengal for its 3 million tonne per annum integrated steel project and the 1,200 MW power project.
Mr Venugopal Dhoot chairman of Videocon Group said that "Videocon Industries has floated a special purpose vehicle with a US partner for the steel and power project in West Bengal to be set up with an investment of INR 15,000 crore." He added that Videocon will have no difficulty in land acquisition for the project.
Mr Buddhadeb Bhattacharjee chief minister of West Bengal said that production from the Videocon's steel and power projects is expected to start within 4 years.
CIL gets new rehabilitation policy
Ranchi Express reported that union ministry of rural development has come out with a new rehabilitation and resettlement policy for the Coal India Limited that provides rehabilitation of land losers but without provision of employment.
Mr Ashok Yadav, president of Koyala Mazdoor Union, owing allegiance to the All India Trade Union Congress, said that as per the revised rehabilitation and resettlement policy, the coal companies shall cease to offer employment against acquisition of land but would try to protect the income hitherto generated by the land losers from their acquired land by way of subsistence allowance.
The land losers shall be paid at the rate of INR 10,000 per acre annually up to 5 acres while, beyond 5 and upto 10 acres of land it will be INR 7,500 per annum and beyond that, it will be INR 5,000 per acre. The amount has been assessed roughly as the equivalent of 125 annum at the rate of INR 80 per day.
Mr Padiyar takes charge as director project and production of KIOCL
Mr M Balakrishna Padiyar has taken over as director of production & projects of Kudremukh Iron Ore Company Limited.
Mr Padiyar was earlier GM in charge of Mangalore unit of the company. Mr Padiyar had worked in instrumentation control systems, mining, crushing, conveying, and beneficiation of iron ore units at Kudremukh; and in filter plant, pellet plant and pig iron unit in Mangalore.
Orissa to form mining squad to check mineral trading
Mr Padmanav Behera steel and mines minister of Orissa said that a mining squad called state mining enforcement squad will be formed, within a month to check smuggling and illegal trading of minerals in the state.
Mr Behera informed that funds have been allocated in the budget for the squad. He said that “The squad, to be headed by a mining officer, will comprise of 12 police officers and one forest range officer.”
Bangladesh still undecided on TATA projects - Report
PTI reported that Bangladesh has ruled out any immediate decision on the proposed USD 2.5 billion investment by TATA Group, saying it is yet to get a clear picture on the country's gas reserve to guarantee supply to the Indian conglomerate.
Mr Mirza AB Azizul Islam commerce adviser of Bangladesh said that "One of the issues closely related to the TATA investment is the gas reserve as its proposal tags the uninterrupted supply of gas to TATA project for several years. It is not possible to take a decision, as we do not have any concrete data about the actual gas reserve. Before assessing the gas situation we cannot give a guarantee."
Sources said that the adviser's comments came as the Asian Development Bank expressed concern that the government's indecision about the investment proposals was giving wrong signals to investors. TATA proposal became uncertain after it demanded gas supply guarantee for 10 years and made a gas tariff offer, which the state run regulatory Petrobangla rejected.
The past government had in principle accepted TATA's proposal in 2004 and a series of meetings were held between the 2 sides. The last round of talks between the TATA Group and Bangladesh government ended on February 10th 2006 amid disagreements. The apple of discord was supply, prices of gas and electricity to TATA projects. During the last round of negotiation, Bangladesh government had offered gas for the proposed steel and fertilizer plants at the same rate as in the Singapore market while the TATAs had proposed a rate of USD 1 per unit.
Essar to invest in Song Hong Basin in Vietnam
It is reported that Essar Energy Holdings has recently participated in the second international bidding round for open blocks in Song Hong Basin offshore in northern Vietnam. The bid was submitted for one block on a standalone basis.
The blocks are located at average water depths of 60 meter to 100 meter covering 50 square kilometer area at 50 kilometer to 100 kilometer distance from the shoreline. The last date for submission of the bid was September 21st 2007 and the contract is likely to be awarded by end of October 2007.
It is noted that Vietnam Oil & Gas Group PetroVietnam had launched the bidding round, inviting global participation in oil and gas exploration in 7 offshore blocks namely 105 –110 /04, 111/04, 114, 115, 116, 120 and 121 in June 2007.
Essar has already submitted bids for one onshore block in Syria in consortium with Gujarat State Petroleum Corporation. It is also awarded the contiguous shallow water block (A2) in the Rakhine coast in Myanmar.
Patel Engineering bags Tapovan Vishnugad order from NHPC
It is reported that Patel Engineering has bagged an order worth INR 428 crore from National Hydroelectric Power Corporation for 520 MW Tapovan Vishnugad hydroelectric power project at Dhauliganga River in Chamoli district of Uttarakhand.
The scope of work includes surge shaft, pressure shaft, penstock, tail race tunnel, switch yards and power house for the project. The work order is to be completed within 48 months.
Patel Engineering has also bagged its first order worth USD 153 million in Algeria from Agence Notionale Des Barrage Et Transfets in a JV. The work includes detailed design and construction of the dam under the project called Travaux De Construction Du Barrage De Mehouane Sur L'oued E-Guessar.
Sandvik to make India its global manufacturing base
It is reported that Swedish precision tools and mining equipment major Sandvik AB is looking at its India subsidiary Sandvik Asia as an integrated partner with an increasing role in its global business and Sandvik Asia is preparing to introduce newer products in India and also considering the option of making India its global sourcing base.
Mr Lars Pattersson president & CEO of Sandvik AB said that “The Indian operations, which contribute to about 3% of the company's global turnover will always be in the top five priority markets for the company. Sandvik AB would use acquisitions to address the increasing demand for its products and services, though organic growth will be the mainstay of its strategy in India.”
Mr Patterson said that engineering design and training could soon become important revenue generation sources for Sandvik Asia. He added that "We are early stages of considerations to make India a base to manufacture some of our products for global sourcing. We will put up at least one more facility in India to manufacture construction and mining equipment. The proposed plant will assemble both existing and new products, including large crushers, drilling and loading equipment. We expect to manufacture the same products with the same lead time as any other country.”
The company’s expansion plans stem from the fact that the construction and mining business is it’s biggest and the fastest growing segment, generating nearly 35 per cent of its global revenues. In India, with one plant at Patancheru, the percentage is slightly lower.
ONGC board approves investment proposals for Mumbai High
It is reported that board of Oil & Natural Gas Corporation has approved investment proposals of INR 5,713 crore for second phase of re development of Mumbai High in western offshore.
The re development project will enhance production from the south field of Mumbai High and will improve the oil recovery to over 346 million tonnes per annum with an incremental oil of 22 million tonnes per annum. The project envisages drilling of 86 infill wells and 5 new well head platforms and six clamp on structures are planned.
Western Offshore contributes around 16 million tonnes per annum which is over 60% of the total crude production of ONGC.
MMK acquires 10.75% stake in coalminer Belon
Magnitogorsk Iron & Steel Works Open Joint Stock Company announced the acquisition of 10.75% shares in OAO Belon, a Russian producer of coal and coal concentrates. The stake was acquired from Sapwood Investments Limited.
The decision on participation of MMK in the authorized capital of Belon was taken by the board of directors of MMK on September 13th 2007 and going forward MMK will consider a further increase of its stake in Belon.
Belon Group is a dynamic producer of coal and coal concentrate and one of the leading steel traders in Russia. OAO Belon is the managing company of the Group, which comprises of several mining, processing and service companies. The Group includes Chertinskaya-Koksovaya, Novaya-2, Listvyazhnaya & Kostromovskaya coalmines, which are under construction, Novobachatskiy-1 & Novobachatskiy-2 under construction, open cast mines and Belovskaya & Listvyazhnaya concentration plants.
In 2006, its coking coal production amounted to 1,724 million tons, coal concentrate production 4,389 million tons. The total volume of coking and thermal coals produced came to 3,381 million tons. According to Belon Group IAS accounts the Group's revenue for 2006 amounted to RUB 10.43 billion, net income for 2006 was RUB 1.222 billion.
MMK’s participation in the authorized capital of Belon is towards creation of its own raw materials base and allows MMK to further secure the long term supplies of coal of the required grades.
BHP Mt Mewman railway line appeal dismissed
It is reported that BHP Billiton Ltd may have to open its railway lines in the Pilbara region of Western Australia to third party users following a Federal Court of Australia ruling. The full bench of the Federal Court dismissed BHP Billiton's appeal. This decision paves the way for the rail lines potentially to be declared open to third party access under the Trade Practices Act.
The Australian Competition Tribunal will determine the broader question of whether the rail lines should be declared open to third party access under the Trade Practices Act.
Fortescue Metals initiated tribunal proceedings in June 2006 after Mr Peter Costello the federal Treasurer declined to follow a National Competition Council recommendation that the Mt Newman rail line be declared open to third party access.
BHP Billiton Ltd had appealed a Federal Court ruling made in December that declared the company's railway lines in the Pilbara were not part of the production process.
The Mt Newman and Goldsworthy rail lines transport about 100 million tonnes of iron ore each year to Port Hedland for blending, processing and shipping.
MEPS forecast SS price revival by New Year
MEPS reported that its Asian average SS hot rolled coil transaction value for September 2007 dropped by more than 17% from July's figure due to large falls in nickel prices and weaker demand. MEPS however said that as exports are not attractive to Western buyers, resulting in more material in the Asian domestic markets, mills have responded by cutting production, which should help to stabilize prices in the short term.
MEPS added that its Asian average SS hot rolled plate price did not drop by as much as coils, due to stronger market conditions. MEPS said that as mills are pursuing exports to the West aggressively with some success, plate figures should therefore continue to be firm over period four.
MEPS forecast a price revival for the New Year, with mill order books strengthening as customers look to refill inventories. It said “Consumer confidence in transaction values is expected to return with nickel prices once again moving upwards. Exports to the West should also begin to pick up. The first half of 2008 we forecast a 5% price hike for both products.”
MEPS said that “The monthly average nickel figure is set to be higher in September 2007 after a low of just over USD 27,500 per tonne in August 2007. This was due, in part, to the recent Fed rate cut. However, the cash price is not expected to climb much further in the short term as nickel inventories on the LME continue to rise. Volumes have topped 30,000 tonnes for the first time since April 2006. As the fourth quarter of 2007 progresses, stainless mills are expected to begin drawing down on these nickel reserves once again. This is forecast to push nickel values gradually back towards the USD 40,000 per tonne mark during the first half of 2008. The traditional summer holiday period for the stainless industry is then predicted to result in a softening in nickel prices.”
Cape Lambert terminates stake sale agreement with Mr Ding
It is reported that Cape Lambert Iron Ore has terminated a sale agreement with a Chinese investor for AUD 240 million investments in the company.
Cape Lambert said the investor Mr Ding Liguo had failed to satisfy a condition of the sale agreement and had breached a MoU with the company. It said “As such has given notice to Mr Ding that the sale agreement is at an end.”
Cape Lambert said it viewed Mr Ding's inability to adhere to the binding sale agreement as a termination of the deal and it had advised his representatives that all further negotiations and any proposed variations would cease.
Mr Ding entered into the agreement on March 29th 2007. Under the deal, he was to take a 70% interest in the company's Cape Lambert iron ore project for about AUD 240 million.
Latest steel price forecasts from MEPS
MEPS reported that Global all products price in September 2007 was slightly above their estimate made in July 2007. It said that “This was the result of an unexpected rise in Chinese figures for both flat and long products. Supplies became tight after the steel market picked up as activity improved when the temperature cooled from the hot summer weather in China.”
MEPS added that “A period of price stability in the global price is anticipated to the end of the year. A modest rise in average flat products values is expected to be countered by a decline in the EU and North American markets. In 2008, we forecast a price improvement across all regions as the mills push for higher selling figures to compensate for rising raw material costs. The pricing scene is forecast to peak in mid year as oversupply develops across the globe. This prediction is based on an expected slowdown in demand as the economies in the industrialized nations weaken, together with a degree of oversupply from new plant installations mainly in China.”
MEPS said “In September 2007 EU all products price was down on the July figure and also below our prediction two months earlier. Both flat and long products values fell further than we anticipated. Substantially higher import volumes in mid year weakened the cold rolled and coated categories. Demand for wire rod and reinforcing bar decreased over the holiday period due to poor weather conditions as activity in civil engineering works was curtailed. We expect further price slippage to the end of this year mainly in the long product categories. Demand is predicted to pick up early in 2008 and the mills will also push for higher selling figures to recover all or some of higher input costs. In mid year, the construction sector is likely to slow after the boom of the past two years. The rest of the economy is also likely to slow down. Steel demand should fall and prices may start to slip towards the end of the year.”
MEPS added that “Despite the prospect of weak economic conditions in the United States in the coming months we expect a modest steel price revival. This dichotomy is brought about by our belief that the inventory drawdown in most product categories is almost complete. Furthermore, the import threat has been reduced dramatically for certain products. The declining domestic prices over the past six months and a fall in the value of the US dollar against most major currencies have made the market much less attractive to foreign suppliers. Moreover, the threat of a new wave of antidumping actions is making exporters more conscious of the problems of making very low offers into North America.”
MEPS said that “The price improvement is forecast to extend into mid 2008. At that time global oversupply is likely to have developed. This could lead to higher import volumes and reduce the potential for any further upward price movement in the flat products segment. Traditionally, long products prices decline in the second half of the year.”
MEPS also added that “After the price explosion in September, we forecast no major gains in the MEPS Asian all products price in the near term. A small improvement is possible as the producers push for higher prices to cover the anticipated increase in raw material costs. Demand for both flat and long products is expected to continue to expand over the next twelve months. However, we believe that the rate of growth in capacity and output will be faster than consumption particularly in China. Furthermore, exports to the West from China are likely to decline in volume and the excess will be channeled into the domestic market. This will probably have the effect of slowing down any price increases. By the second half of 2008, the global market could be entering a period of oversupply which will hold back the price acceleration seen since the start of 2006.”
Sinosteel to pay US USD 200 million for Zimasco
It is reported that Sinosteel, which announced a bid for Zimasco last week, will pay USD 200 million to acquire half of Zimasco Consolidated Enterprises, the holding company of Zimbabwe's largest ferrochrome producer.
Sinosteel has agreed a deal with Zimasco to invest in ferrochrome mines and smelters. Sinosteel, primarily into steel trading, has been expanding into ferroalloys used in steel production in response to strong Chinese demand for steel.
A spokesman for Zimasco last week said the deal was still subject to certain conditions
Mechel to bid alone for Yakutsk coal deposits
Interfax reported that Mechel Group will bid in the auction for OJSC Elgaugol and OJSC Yakutugol on its own but is still considering offers for partnership. Sources aid Mechel might bid in partnership with Sumitomo but Mechel did not comment.
The report quoted Mr Igor Zyuzin GD of Mechel during a conference call with analysts as saying that "We are going on our own, but are considering offers." But he did not specify which offers the company was considering.
Mr Alexander Fedotov general director of Republic Investment Company, which owns the assets offered in the auction told Interfax that all bidders would partner with foreign companies. The first bidder Yakutsk Coal New Technologies is bidding with ArcelorMittal and Alrosa. Mechel is bidding with Sumitomo. The third bidder is a Russian company representing an unnamed foreign company.
The Federal Anti Monopoly Service has received three bids to buy 68.86% of Elbaugol and 75% minus one share in Yakutugol. But did not comment on which companies filed bid for the coal assets. The starting price of the lot was set at RUB 47.396 billion (USD 1.84 billion) and bidding will move by RUB 100 million. The lot includes 75% minus one share in Yakutugol and 39.36% of Elbaugol, which are owned by Republic Investment Company, and SPV set up by Yakutia, and 29.49% of Elbaugol owned by Russian Railways. The lot also includes real estate owned by Russian Railways. The buyer must open the Ulak Elga railroad by September 30th 2010.
Glencore, Sumitomo, Mitsui, Alrosa, Evraz Group, NLMK and Mechel had shown interest in the auctions earlier.
Update on Boulder Steel seamless tube project
Boulder Steel Limited directors announced that further progress has been made towards securing the full financing package for its seamless tube project in Australia and the finishing plant in the United Arab Emirates.
The release said that “The European bank with whom Boulder has been in discussions regarding the debt funding for the projects has confirmed its strong interest in providing the debt funding package for the two projects. The bank has also expressed interest in providing some equity funding directly to the projects.”
The release added that “In view of this unexpected proposal by the bank, it has decided to defer seeking Shareholders’ Approval for the proposed equity fund raising through private placement until the company and the bank have confirmed, in principle, the final debt to equity mix and the terms on which any direct project equity funding by the bank would be provided the parties are aiming to confirm these matters within the next several weeks. The provision of direct project equity funding by the bank may result in less equity having to be raised through the placement of shares and thereby reduce the dilution of issued share capital in the interest of the Company’s existing shareholders.”
The release concluded that “Boulder management, in close co operation with other project parties, will deliver the documentation requested by the bank to allow the bank to reach internal approval and to confirm Project funding before year’s end.”
SA commission prohibits ArcelorMittal buy of Duferco Steel Processing
Reuters reported that South Africa's Competition Commission has recommended that ArcelorMittal's proposed purchase of Duferco Steel Processing Limited should be prohibited.
Competition Commission in a statement said that "The Commission's assessment concluded that the merger would substantially prevent or lesson competition."
Brazilian Q4 slab price levels seen at USD 600 C&F
YIEH reported that Brazil’s export price of slab for the fourth quarter is expected to be around USD 600 per tonne C&F Asia region.
As per report, Brazil slab makers are seeking to hold the price at USD 500 per tonnes FOB with buyers in South Korea and due to the increasing freight, the price is likely to be settled at USD 600 per tonnes C&F.
Current freight cost has reached in a range of USD 80 per tonne to USD 100 per tonnes in the fourth quarter in comparison of USD 65 per tonne to USD 70 per tonnes in the third quarter.
The export price of slab to Asia from Brazil was around USD 525 per tonne to USD 530 per tonnes FOB during July to September 2007.
Chinese coal production to exceed 2.5 billion tonnes in 2007
According to Mr Wang Xianzheng deputy director of China’s State Administration of Work Safety, China’s coal production is expected to exceed 2.5 billion tonnes in 2007. Its annual coal production may even exceed 3.1 billion tons, since more than 600 million tons is required by 2010.
According to Mr Wang, China plans to build large coal production bases and restructure comparatively smaller coal mines, to sustain coal output by 400 million tonnes between 2006 and 2010. So far only 219 coalmines are granted as safe and highly efficient. At present, China's annual production output growth of 11.5% has been sufficiently meeting the country's double digit economic growth.
China intensively relies on coal for its energy sectors, which is the world’s second largest energy consumer preceding the US, dominating nearly 70% of its total domestic consumption. To keep pace with the rapid economic growth, coal production has been increased extensively in recent years.
CVRD and Baosteel CSV JV open for new partner
It is reported that Brazilian mining giant Companhia do Vale do Rio Doce and Chinese steel maker Baosteel are looking for a partner to be part of their consortium to build Companhia Siderurgica Vitória, a steel plant in the Brazilian state of Espírito Santo.
Mr José Carlos Martins executive director for ferrous metals of CVRD said that Banco Nacional de Desenvolvimento Económico e Social is a candidate for partner but its demands for a certain percentage of Brazilian ownership of the project could limit the investment. He added that “It has not yet been defined if it will be the BNDES, it could be a Chinese investment bank or another partner. The Chinese want to have up to 60% and Vale wants 20%.”
Companhia Siderurgica Vitória a project costing USD 5.5 billion will start operating in three to four years and will have the capacity to produce 5,000 tonnes of steel per year, a level which could be increased to 10 million tonnes, if there is enough demand. he project includes a railroad line, port and a 400 MW thermoelectric power plant
CVRD and Baosteel negotiated the construction of a steel plant in Brazil five years ago but problems with the government of Maranhao state led the companies to opt for the state of Espírito Santo.
PSMC sets record for sale in Q3
Pakistan’s Daily Times reported that Pakistan Steel Mills Corporation recorded the highest ever sales figure of PKR 9.301 billion during July to September 2007 quarter. The sales recorded for this quarter is higher than the budgeted target of PKR 9.282 billion and the sales record is bettered three times in this calendar year.
The sales for the first quarter was recorded at PKR 8.615 billion and in the second quarter it rose to PKR 8.891 billion and now for the first time in the history of sales the figure has surpassed PKR 9 billion mark.
Pakistan Steel Mills Corporation said that this sustained continuous growth in sales is being attributed to efficient and highly vigilant management.
The sales target for the current financial year 2007-08 has been fixed at PKR 36 billion which is already higher by 20% than the all time sales of PKR 30 billion recorded during 2006-07.
CSC raises export offer levels for Q4 as domestic order book is full
It is reported that Taiwanese China Steel Corp capacity for domestic sales has been fully booked for the fourth quarter to December 2007 and its export wholesale price quotations for the fourth quarter were largely higher than the third quarter levels.
A company official said "Our capacity for domestic sales has been fully booked. Export orders were also looking positive. He added that we just started to take orders for exports recently and demand for exports looks good. We have yet to be seeing whether capacity for exports will be fully booked."
The official made the comment after the Commercial Times reported that the company plans to sell 1.81 million tonnes of steel on the domestic market in the current quarter. The report also said a 660,000 ton capacity planned for exports in the quarter is expected to be fully booked soon. It added that CSC has raised its export wholesale price quotations for the fourth quarter by an average of around 2% to 3% from the third quarter, with prices for cold rolled steel, hot rolled steel and bar & wire rod products rising by USD 10 to USD 20 per tonne.
Rio Tinto receives Australian and EU clearance for Alcan buy
It is reported that antitrust regulators in Australia and Europe have given Anglo Australian miner Rio Tinto a thumbs up regarding its plans to acquire Canadian aluminum producer Alcan.
Rio Tinto said in a statement US and Canadian antitrust authorities have already cleared the deal. The expiry date for the transaction was recently extended to October 23rd 2007 from September 24th 2007 to allow time to obtain all necessary approvals.
Rio Tinto's USD 38.1 billion deals to acquire Alcan would create the world's largest aluminum producer and bauxite miner. The combined company, Rio Tinto Alcan would also be one of the largest alumina producers and hopes to take the number one spot through the commissioning of the Gove project and expansion of the Yarwun project both in Australia.
Centrostal to merge with Zlomrex Steel Services
Polish Centrostal SA announced that it decided to merge with Zlomrex Steel Services SA and in return Zlomrex Steel Services SA will issue merger shares to the shareholders of Centrostal SA. As a result of the merger Centrostal SA will dissolute.
The merged company will specialize in the wholesale of steel products and in steel processing.
Zlomrex, a company mainly active in Poland, has steel production capacities in the region of approximately 650,000 tonnes of rebars and also trades actively in steel and raw materials.
US weekly crude steel production down by 1% YoY
American Iron & Steel Industries reported that in the week ending September 29th 2007, US’s raw steel production was 2.125 million net tons while the capability utilization rate was 89.8 %. Production was 2.147 million net tons in the week ending September 29th 2006 while the capability utilization then was 91.2%. The current week production represents1% YoY decrease from the same period in 2006.
Production for the week ending September 29th 2007 is up by 1.1% from the previous week ending September 22nd2007 when production was 2.101 million net tons and the rate of capability utilization was 88.8%.
Adjusted YTD production through September 29th 2007 was 79.394 million net tons at a capability utilization rate of 85.6%. That is a 4.9% YoY decrease from the 83.485 million net tons during the same period 2006 when the capability utilization rate was 90.1%
AISI’s estimate is based on reports from companies representing about 75% of the US’s raw steel capability and includes revisions for previous months.
Severstal to invest USD 40 million in service center in Kolpino
It is reported that Severstal Service Metal Center Kolpino CJSC, a subsidiary of Severstal OJSC, is to put online tech thick sheet processing complex in 2008.
The new production complex will have aggregates with unique technical characteristics like a metal roll conservation line, bar welding line and plasma cutting units.
FESCO acquires 50% of Vladivostok Port management company
Far Eastern Shipping Company announced that it closed the acquisition of a 50% stake in NM Port for USD 90 million and that it plans to purchase the remaining 50% stake in M Port.
M Port is VMTP's management company and its main shareholder controlling 95.1995% of the port's common shares. The company was founded in the middle of 2005 on a parity basis between CJSC Port Aktiv, which is controlled by VMTP's management and Magnitogorsk Iron & Steel Works. VMTP's management acquired 50% of M Port's charter capital from MMK in the middle of 2007.
Far Eastern Shipping Company carries out shipping operations between ports of the Far Eastern Russia in addition to South Korea, Japan, China, Taiwan, Vietnam, Australia, New Zealand and the United States. The main shareholders in FESCO are the Industrial Investors group with a 64% stake, management of OOO Firma Transgarant with 12% and the Swedish investment fund East Capital with 9.8%.
Gibraltar to close Hubbell Steel unit
Gibraltar Industries Inc announced that it would cease the operations of its subsidiary Hubbell Steel and sell the assets. Gibraltar expects to complete the Hubbell shutdown and the sale of its assets before the end of this year.
Hubbell Steel, a service center specializing in coated and painted products, was acquired by Gibraltar in 1995. It has annualized sales of approximately USD 45 million, operates two facilities and employs approximately 40 people.
Hubbell’s results, including losses resulting from the differences between the carrying value and the net realizable value of its assets including goodwill, will be reported as discontinued operations when Gibraltar reports its earnings for the quarter ended September 30th 2007. Gibraltar expects to incur a charge in the range of USD 13 million to USD 16 million as a result of this action.
Mr Brian J Lipke chairman & CEO of Gibraltar said that “This decision is part of our plan to sell non core assets and businesses and it is consistent with earlier actions to improve the performance of our Processed Metal Products segment, including last year’s sale of our strapping operations, the elimination of our Duferco Farrell joint venture earlier this year, and the consolidation of two Buffalo area steel processing facilities into a single location. We will continue to focus our resources and capital on those areas that provide the best strategic fit and which will produce the highest returns for our shareholders.”
Mr Henning N Kornbrekke president & COO of Gibraltar’s said “Our decision to exit this business together with our recent acquisitions and ongoing efforts to improve our existing operations are all steps we are taking to strengthen the performance characteristics of Gibraltar. We expect that this shutdown will positively impact our financial performance on an ongoing basis.”
Gibraltar Industries is a leading manufacturer, processor, and distributor of products for the building, industrial and vehicular markets. It serves customers in a variety of industries in all 50 states of US and other parts of the world. It has approximately 4,000 employees and operates 84 facilities in 27 states, Canada, China, England, Germany and Poland.
Aurox revises iron ore sales agreement with RockCheck
Aurox Resources has announces the signing of a revised long term Sales Agreement with RockCheck Steel Group.
The enhanced agreement calls for increased iron ore deliveries to RockCheck Steel rising from 3 million tonnes per annum to 7 million tonnes per annum within 5 years of commissioning the Balla Balla operation.
The new RockCheck contract complements the current 3 million tonne per annum sales agreement with Chengde Iron & Steel Group which will uplift total annual production and sales of Balla Balla iron concentrate to 10 million tonnes by 2014.
Vietnam may put cap on rebar prices
Vietnam News reported that Vietnam is likely to set a ceiling retail price for steel, in an effort to stabilize the market under a suggestion by the finance ministry of Vietnamese to the government.
As per report, the ceiling price would be applied when the import price of steel billets exceeds USD 600 per tonne, steel price in the domestic market rises above USD 680 dollars.
Mr Nguyen Tien Nghi deputy chairman of the Vietnam Steel Association said that “It is very difficult to set an exact price. If the ceiling is not suitable, some private steel producers will stop production to avoid loss. If this happens, we will face a steel shortage and this is even more dangerous than a higher price."
According to the Vietnam's General Statistics Office, Vietnam imported over 5.5 million tonnes of steel billets and finished products worth more than USD 3.4 billion dollars in January to September 2007 period up by 28.9% and 57%.
According to the association steel makers in the country had a combined annual production capacity of some 6 million tons by late last year.
PTC Alliance and USW to meet for settling labor contract
It is reported that PTC Alliance Corp and the United Steelworkers of America have agreed to meet with a mediator next week in hopes of settling a labor dispute at the company's tube plant in Alliance.
Mr Joe Holcomb staff representative with the union's sub district office in Canton said that more than 200 members of the USW went on strike after midnight Sunday when their labor contract expired. The union wants, among other things a new contract that will be honored even if the company is sold. That guarantee is called contract successor ship. The Steelworkers also want contract language that limits the company's ability to shift work from the Alliance plant to nonunion plants in the United States without proof of necessity as well as a greater commitment to investment in the Alliance plant.
Mr Cary Hart COO of PTC Alliance's North American Tubing division declined to comment on the union's demand for contract successorship. He said that the union is unfairly portraying the company as anti union. He said that while some work is shifted from Alliance to nonunion plants, the reverse also is true and that the union status of a plant has nothing to do with it. He added that "Unfortunately, the workers voted to reject the deal and the union then approached management with a new list of noneconomic demands which were clearly unacceptable."
PTC Alliance, based at Wexford in Panama went in and out of bankruptcy last year and is now controlled by a hedge fund called Black Diamond Capital Management. PTC Alliance has 11 US plants, a mixture of union and nonunion operations. Several make the same product as the plant in Alliance.
Antam to reduce dependence on nickel mining
It is reported that Indonesian state owned miner PT Aneka Tambang plans to reduce its dependence on nickel and step up its gold and bauxite business in coming years.
Mr Kurniadi Atmosasmito, finance director of Antam’s said that it expects nickel to account for 60% to 70% of its revenue within 10 years, down from more that 90% currently while gold and bauxite will contribute around 40% to its coffers. He said "It will be difficult to depend on one commodity and nickel has been dominant in our revenue. We need to have a balance."
Mr Atmosasmito said "We have shortlisted 10 gold mines but we are going to pick one which will be profitable for Antam adding gold investment was relatively stable due to higher oil prices and growing demand from China and India. He added that Antam plans to develop more new smelters for gold and bauxite in future. We have to be a bit aggressive to diversify our business."
Antam, 65% owned by the Indonesian government, is involved in exploration and production of nickel ore, smelting of ferro nickel, exploration, production and refining of gold, silver, bauxite and iron sands. But nickel is the main business of the company whose sales revenue more than quadrupled to IDR 4.1 trillion (USD 451.1 million) in January to June 2007.
SDI announces fund raising for acquisition of OmniSource
Steel Dynamics Inc announced that it plans to sell approximately USD 500 million in aggregate principal amount of debt securities in a transaction exempt from the registration requirements of the Securities Act of 1933, subject to market and other conditions.
Steel Dynamics intends to use the net proceeds from the sale of these debt securities to finance a portion of the planned acquisition of OmniSource Corporation. In the event that the Company does not consummate the acquisition, SDI will use the net proceeds to repay indebtedness outstanding under its revolving credit facility and for other general corporate purposes.
Mano releases update on Putu iron ore project in Liberia
Mano River Resources Inc has announced the positive conclusions of an independent technical report on the Putu Range Iron Ore Project in eastern Liberia in which Mano holds an 80% interest through its subsidiary African Iron Ore Group. Mano and African Iron Ore Group have completed a review of the recent SRK Consulting Ltd report and is satisfied with the exploration to date and will progress the project.
Mano has reported the following
1. African Iron Ore Group is targeting a potential resource of 900 million tonne, which SRK considers a reasonable objective
2. Initial drilling program to commence in Q4 of 2007
3. 4,000 meter drilling program planned
4. Historic exploration adit now known to be 218 meter long being rehabilitated
5. Trench, grab and adit samples to date have averaged in excess of 50% iron
6. Initial scoping study planned on shipments via local deep water port
Mr Guy Pas director of Mano commented that "We are delighted with the exploration results to date from the Putu Iron Ore project and are highly encouraged by the conclusions of the independent technical report. At this stage the project is exhibiting many of the hallmarks of a sizeable iron ore deposit. The project could potentially be significantly larger than the historic estimates."
Mr Luis da Silva CEO of Mano added that "Mano intends to fast track the deposit to the pre feasibility stage. We plan to undertake a scoping study on the transport and shipping options via the potential deepwater port at Greenville which is located only 100 kilometer south west of Putu. In the meantime we continue to hold discussions with major iron ore and steel companies with respect to potential synergies and partnerships as we advance the project."
AK Steel announces surcharges for SS and electrical steel
AK Steel has announced that it has advised its customers that a USD 240 per ton surcharge will be added to invoices for electrical steel products shipped in November 2007.
AK Steel's surcharges are based on reported prices for raw materials and energy used to manufacture the products, with the September 2007 purchase cost used to determine the November 2007 surcharges.
AK Steel produces flat rolled carbon, stainless and electrical steel products, as well as carbon and stainless tubular steel products, for automotive, appliance, construction and manufacturing markets.
S&P assign B+ for G Steel credit rating
Standard and Poor's Rating Services announced that it placed 'B+' long term corporate credit rating on G Steel Plc and its 'B+' long term debt rating on the company's USD 170 million senior unsecured notes on CreditWatch with negative implications.
The CreditWatch action reflects continued pressure on the company's liquidity position and a delay in the refinancing of a USD 120 million syndicated bank bridging facility. Although G Steel expects to make progress in discussions with its banks on renewing the syndicated bank facility in the next few weeks, refinancing may be delayed beyond the extension period of October 30th 2007. Despite that, G Steel continues to have the capacity to meet scheduled interest payments from cash reserves and operating income. However, the company does not have the capacity to internally fund full redemption of the bank facility without raising external funding. In addition, G Steel's key financial metrics could be stretched if financing costs escalate following its refinancing of USD 120 million bank facility.
Standard and Poor's expects to resolve the CreditWatch status after further discussions with G Steel management on the refinancing of the bank facility and a fuller assessment of the company's financial position through the third quarter of 2007. Higher financing costs or failure to refinance the bank facility ahead of the maturity date will most likely result in the rating on G Steel being lowered.
