Tough week ahead for India steel makers

PTI reported that India’s steel ministry has recommended banning export of finished steel and hiking duty on iron ore export to the Cabinet Committee on Prices, which would be chaired by Dr Manmohan Singh on April 15th 2008.

Mr Ram Vilas Paswan union steel minister told reporters that “We have recommended a ban on exports of finished steel products completely. This recommendation has gone from my Ministry to the Government.”

Mr Paswan said that other recommendations of steel ministry sent to the CCP include
1. Cut in excise duty on steel from 14% to 8%
2. Abolishing import duty and countervailing duty on steel products
3. Imposing 15% duty on export of iron ore

He also warned that even after these measures, if steel producers do not rein in exports and reduce prices, then the Government will resort to bringing steel under the Essential Commodities Act. He said “But we do not want to go to such an extent. We hope the industry will act responsibly.”

Indian government has so far taken following initiatives in steel sector to control inflation in the country.
1. Withdrawal of export incentives on steel products
2. Reduction in excise duty from 16% to 14%
3. Abolished of import duty on scrap

During the coming week many more measures are likely to come.

ISA and ASSOCHAM release on steel price tussle in India

ASSOCHAM and ISA vide a release said that “Recent increases in the price of steel have been singled out for blame as a major contributor to inflation. Inflation of over 7% is certainly a challenge to the economy of the nation and Indian Steel Alliance and the ASSOCHAM believes that it should be addressed by government, industry, services etc jointly in a cooperative endeavor.”

The release added that “Isolating any single industry and adopting short term measures will at best hold back the symptoms for a short period without addressing the long term threats. Steel industry has been cooperating with the Government and will continue to do in this regard.”

According to Mr Moosa Raza president of ISA “Steel prices have been rising mainly due to the unhindered rise of input costs. The steel industry assured the government that it would not increase the steel prices on 03.04.08, after meeting with secretary steel. Subsequently steel prices were brought down by most of the steel producers by an amount of INR 2000 per tonne.”

The release highlighted increase in input costs and outlines the major ones as under

1. NMDC a Public Sector Enterprise, supplier of iron ore to domestic steel producers have informed long term customers that the prices are subject to revision from April 1st 2008, but the quantum will be notified after negotiations with Japanese steel mills. This would result in a similar increase in domestic prices of ore, with retrospective effect. All those who do not have dedicated ore mines will face this threat.

2. The contract prices of coking coal has sky rocketed from USD 95 in March 2007 to USD 305 in April 2008. Spot prices are ruling at USD 400. Reports that POSCO has agreed upon a long term rate as high as USD 335 will definitely impact the prices of imported coking coal, adding further fuel to the fire. Coke which was USD195 in April 2007 went up to USD580 in April 2008 and is threatening to reach USD750 in the near future.

3. Recently, the Railway Board has changed the slab for transport of iron ore, thereby increasing the costs by another Rs.300 per tonne of steel.

4. Similarly, BCCL, a government of India company is demanding a 40% increase for supplying Coking coal to SAIL.

5. Scrap prices have gone up from USD363 to USD 650 in a year’s time.

6. Manganese Ore India Ltd, a government of India enterprise, has increased its ore prices by a whopping 65%, from less than INR 5,000 in April 2007 to close to INR 18,000 in April 2008.

It said that “Global events coupled with rising input costs has once again forced steel producers to increase steel prices as most of the primary domestic steel producers are to a more or less extent dependent on supplies of iron ore on NMDC, coal from Coal India, transport on Railways and on imports.”

The release added that “Addressing only the end product prices like steel, by short term measures such as withdrawal of incentives for export persuading them to withhold increases voluntarily etc are only short term palliatives. Unless the basic causes are addressed, long term prospects for the investment in steel industry are jeopardized. Already foreign investors in the shares of steel industry are getting worried at the intervention and are having second thoughts. If we do not want to revert back to the era of blind controls, as the Prime Minister apprehends, we have to address primary causes of increases expeditiously.”

Indian government to act tough on cartelization in steel

Indian government has warned domestic steel makers that it will come down heavily on cartelization of steel producers and freight operators, and hoped the Competition Commission of India, which is to become operational soon, will help stop these malpractices.

Mr Kamal Nath union commerce and industry minister during a FICCO function said “There is cartelization taking place in the country in freight rates and steel prices. This is happening and government has to respond commensurately.”

He said the government will take measures to stop cartelization across sectors. He asked the industry to inform the government about the difficulties arising from increase in prices in certain sectors.

Last month, anti monopoly watchdog, MRTPC, directed a probe by its investigative unit DGIR after it got input on price rigging in the steel sector. The government has already taken various measures to control the rising inflation, the latest being withdrawal of export incentives on primary steel products. Inflation has touched 40-month high of 7.41 per cent.

SAIL BSL wins Rajiv Gandhi National Quality Award

Steel Authority of India Limited’s Bokaro Steel Plant has won the prestigious Rajiv Gandhi National Quality Award for the year 2007.

Mr VK Srivastava MD of BSL received the coveted 'Best of all awards for achieving excellence of the highest order among all participants' from Mr Yashwant Bhave secretary at union ministry of consumer affairs, food & public distribution. BSL also became the first recipient of the cash reward of INR 500,000, which was introduced as part of the Rajiv Gandhi National Award in the evaluation year 2007.

BSL acquitted itself with honors on the rigorous evaluation criteria established for these awards, covering the 9 parameters of leadership, policies, objectives & strategies, human resource management, resources, processes, customer focused results, employee satisfaction, impact on environment & society and business results.

Instituted in 1991 by the Bureau of Indian Standards, Rajiv Gandhi National Awards recognize leaders of the quality movement in India and encourage the pursuit of excellence in various categories of business. RGNQ awards comprise a 'Best of all award', followed by four Category awards and a series of Commendation certificates.

The 2006 edition of this award was won by SAIL’s Bhilai Steel Plant.

India likely to revise iron ore export duty structure

It is reported that, in order to moderate iron ore prices and thereby control steel prices and curb inflation, Indian government is toying with the idea of revising the iron ore export duty structure and bring in a mix of fixed and ad valorem duties.

Official sources said that "The talk doing the rounds within the government is to fix the export duty on lower grade ores up to 62% iron content at INR 300 per tonne. In case of ores having more than 62%, the idea is to introduce a 15% ad valorem duty on exports." They added that any final decision is subject to the approval of the Cabinet Committee on Pricing.

As of now, iron ore exports attract a fixed ad hoc duty. Ore containing up to 62% iron attracts a duty of INR 50 per tonne while exporters of ores with higher iron content have to pay an export duty of INR 300 per tonne.

Meanwhile, Mr Sis Ram Ola union minister for mines said that the ministry would oppose any move to impose fresh tax on iron ore exports.

Indian steel producers suggest ban on forward trading

It is reported that, during the second meeting between the secondary steel producers and the steel ministry to explore ways of controlling prices, India’s domestic steelmakers have suggested to the government to ban forward trading in steel items in order to check rising prices and to curb inflation.

Steel manufacturers have told the government while noting that items of mass consumption such as TMT bars, angles, joists and roofing sheets, which directly affect the consumers, constitute bulk of the volumes in futures market. They pointed out that it is not possible to reduce prices because there is no such scope in the face of rising input costs.

However, the producers pointed out that higher price that are being quoted in the futures trading of steel items at the Multi Commodity Exchange were creating artificial volatility in spot market prices. They pointed out that if futures’ prices are higher by INR 1,000 on a particular day, the wholesalers at the mandis will immediately start charging INR 500 more and also start hoarding of material expecting better future realizations.

Iron ore export ban would not lower steel prices – Mr Nath

Mr Kamal Nath union trade minister said that any ban on the export of iron ore would not impact domestic steel prices, which have been rising strongly.

It may be noted that India has imposed export duties of INR 300 per tonne on high grade iron ore and INR 50 for low grades, but steel firms have been lobbying for a hike in the export duty or a ban on exports.

Mr Nath added that the government was withdrawing incentives for exports of steel to help tame inflation.

Indian iron ore reserves to last for 200 years

It is reported that India’s mining ministry said that India has enough ore to last for 200 years.

Mr JP Singh union mines secretary said that "India has enough iron ore to last for 200 years. The steelmakers should adopt technologies to be able to use ore grade below 55% Fe. If you come up with right technologies then you could conserve ore in right perspective."

He said that only low grade ore was being shipped to China as the domestic utilities lack the required technology to beneficiate the same.

He added that India is the only country where captive mining is encouraged.

POSCO not to give up Paradip location

Despite facing problems over land acquisition, POSCO has made it clear that it would not shift its project from Paradip. Mr G Woong Sung director of Orissa project said that Paradip is the best location for the proposed steel plant and there is no question of shifting.

He added that the stumbling blocks would be removed soon. Disturbance over land acquisition is world wide and not particular to Orissa.

Besides land acquisition, POSCO is yet to get mining linkages for the project although Orissa government had promised to grant mining lease for 600 million tonne iron ore required for 30 year operation.

The ground breaking ceremony for the steel plant which was scheduled on April 1st 2008 has been postponed.

CIL and MMTC in talks to source heavy duty OTR tyres from China

BL recently eported that MMTC is planning to grab a pie of the tyre market in mining segment India through imports from China and has initiated discussion with Cola India Limited for acting as a canalizing agency for sourcing very high tonnage OTR tyres, used in mining equipments.

As per report, CIL is facing a shortage in supply of OTR tyres of 85 tonne and above load bearing capacity, which are not manufactured in India and are sourced from global majors like Bridgestone, Michelin and Goodyear with average price tag between approximately INR 300,000 to 600,000 depending upon the load bearing capacity.

The report quoted a CIL sources as saying that “We require approximately 3,000 high tonnage OTR tyres annually. We have entered into a long-term agreement with Mitsui for supplying roughly 500 Bridgestone tyres annually. The rest is sourced from other companies through global tenders. However, there is acute shortage of such tyres and our last tender for 120-190 tonne tyres did not find any participants. Accordingly, we could not meet our entire requirement during the last fiscal.”

However the source added that there is, however, no imminent crisis for below 85 tonne OTR tyres.

As a counter strategy, CIL had recently invited a few interested Chinese tyre makers to send their product in high tonnage category for a trial run. As per the conditions, CIL will use select Chinese products for a one-year performance trial, following which the successful products and companies will be allowed to participate in CIL tenders.

Union power ministry amends hydro power tariff policy

Union power ministry has issued amended tariff policy to promote private sector investment in the hydro power generation. As per the revised tariff policy, long term power purchase agreement will be at least for 60% of the total saleable design energy. However, this 60% will get enhanced by 5% for delay of every 5 months in commissioning of the last unit of the project against the scheduled date approved by the appropriate commission before commencement of the construction.

The total saleable design energy will be arrived at by deducting the following from the design energy at the bust bar at 13% of free power energy corresponding to 100 units of electricity to be provided free of cost every month to every project affected family notified by the state government to be offered through the concerned distribution licensee in the designated resettlement area or projects area for a period of 10 years from the date of commissioning.

It is learnt that hydro power project in the private sector will have the option of getting the tariff determined by the appropriate commission on the basis of performance based cost of service regulations. However, appropriate commission will determine tariff if it is satisfied that the project site has been allotted to the developer by the concerned state government after following a transparent 2 state process.

The first stage should be for prequalification on the basis of criteria such as financial strength as measured by net worth, past experience of developing infrastructure projects of similar size, past track record of developing projects on time and within estimated costs turnover and ability to meet performance guarantee. Moreover, in the second stage, bids are to be called on the basis of only one single quantifiable parameter, such as, free power in excess of 13%, equity participation offered to the state government or upfront payment.

Punj Lloyd bags projects worth INR 18640 million

Punj Lloyd Limited has informed BSE that it and its subsidiary Singapore based Punj Lloyd Private Limited have been awarded projects worth INR 18640 million. Sembawang Infrastructure India Private Limited has been awarded projects worth INR 970 million.

With the award of above projects, the order backlog for Punj Lloyd Group is INR 214,092 million. This is the total value of unexecuted orders as on January 1st 2008 and new orders received till date.

L&T to complete Cairn's crude oil pipeline by June 2009

Engineering and construction major Larsen & Toubro has announced that it would complete a 585 kilometer long pipeline for evacuation of crude oil from Cairn India's Rajasthan field by June 2009 in sink with its oil production plans.

Mr K Venkataramanan operations president of L&T said that "We are talking of project completion to merge evacuation of crude that is planned for second half of 2009."

Mr Venkataramanan said that pipeline would be commissioned by June 2009 and some balance work, including the laying of additional spur lines would be done by December 2009. He added that "There are restoration works of the land that would stretch to end 2009."

It may be noted that Cairn had awarded an INR 600 crore contract to L&T in February 2008 for the laying of a heated pipeline for transporting crude oil from Barmer in Rajasthan to Salaya in Gujarat. L&T’s pipeline engineering centre would provide complete engineering services for the cross country pipeline and the intermediate facilities for this project.

Mining firms among top tax payers in India – Report

It is reported that soaring iron ore, coking coal, manganese and chrome ore prices have turned mining companies like Coal India Limited and National Mineral Development Corporation into one of the top contributors to the government exchequer.

Sources in the income tax department said that mining companies could end up paying a total tax of INR 15,000 crore in 2007-08, the highest ever in India’s history. They added that the figure could be more than the combined tax paid by corporate giants like ITC, HUL, ONGC and Reliance Industries. CIL and NMDC have featured in the national top 10 corporate tax payers list for the first time.

Mr Partha Bhattacharyya CMD of CIL said that "CIL, along with its subsidiaries, paid close to INR 3,500 crore as tax in 2007-08. This is the highest in CIL’s history. CIL itself paid INR 485 crore as tax in West Bengal."

Mr Rana Som CMD of NMDC said that "It paid INR 1,700 crore as tax in 2007-08. We are the 9th largest tax payer in India."

SCI earmarks INR 14000 crore to purchase 68 ships

Exim News Service reported that Shipping Corporation of India Limited, which earmarked a staggering INR 14,000 crore to purchase as many as 68 vessels, has so far placed orders for 28 ships at a cost of USD 1.6 billion.

Mr S Hajara CMD of SCI said that it proposes to order the remaining 40 ships by 2012. He added that it had also been affected by the rising oil price, which is currently trading at over USD 108 a barrel.

Mr Hajara said that "Fuel costs have impacted all shipping companies. Our liner services have definitely been impacted as compared to last year." He added that there was, however, no sign of a slowdown in the shipping industry despite a downturn in the US.

SWR originating freight handling in 2007-08 up by 8.3% YoY

South Western Railway has registered a growth of 8.3% YoY in originating freight handling during 2007-08 to 46.27 million tonnes as against 42.71 million tonnes during 2006-07.

During 2007-08, the originating freight earnings of the zone stood at INR 3,402 crore up by 28.82% YoY as against INR 2,641.10 crore.

Lanco Infratech bags power projects worth 3,300 MW in UP

Lanco Infratech Limited has secured two super critical power projects with an installed capacity of 3,300 MW in Uttar Pradesh. The projects include all the required infrastructure linkages like road, water, fuel and rail.

The bids called by the Uttar Pradesh government for development of the two thermal power projects namely 1,980 MW Prayagraj and 1,320 MW Sangam were opened on April 11th 2008 at the office of Uttar Pradesh Power Corporation which conducted the competitive bidding process on behalf of the government.

From among the 4 leading business houses that participated in the bid for the Prayagraj Power Project, Lanco Infratech won the bid with a quote of INR 2.88 a unit. The second lowest bidder Reliance Power quoted INR 2.94 a unit, followed by NTPC’s INR 3.44 and Jindal Steel & Power’s INR 3.591. The Sangam Power project had five players in the fray namely Lanco Infratech, Reliance Power, JSW, Jindal Steel & Power and RPG. Here also Lanco Infratech won the bid through a quote of INR 2.838 a unit while Reliance Power’s was INR 3.051, CESE’s INR 3.389, JSPL’s INR 3.51 and JSW’s INR 3.545.

As per the terms of the bids, while 90% of power generated through the projects must be sold to the government of Uttar Pradesh, the remaining 10% could be sold by the successful bidder through the merchant market.

Mr L Madhusudhan Rao chairman of Lanco Infratech said that it needed to invest around INR 140 billion for developing the two projects in Uttar Pradesh. With the addition of the two projects, Lanco would now have a total capacity of around 13,000 MW, covering both operational and those under implementation and development.

Indian ports to reach 1.5 billion tonnes capacity by 2012

Mr APVN Sharma secretary for the department of shipping in union ministry of shipping, road transport & highways said that India could handle up to 1.5 billion tonnes of cargo per year by 2012 and the investments, through public private partnerships, would total some USD 25 billion.

Mr Sharma said that "Traffic at the ports has been increasing at a rapid pace and therefore, increasing cargo handling capacities of the ports is crucial to sustain high growth in exports and imports."

He also highlighted the government's aim of attracting more private sector involvement in infrastructure projects, including investment from global companies. He added that "There is tremendous room for the private sector to participate."

Some industry players, however, reacted with scepticism.

A Singapore based ship officer, whose liner makes weekly calls to Indian ports said that "Look at how Gujarat state is trying to force DP World out of Mundra, and how the tariff regulators were forcing PSA to slash their terminal charges at Tuticorin. Maybe it is not the central authorities but individual state officials that are being difficult. But whatever the case definitely foreign companies have to deal with red tape at some point in time."

An industry expert agreed that it was difficult for foreign companies to pull off successful projects in India, but attributed the problem to general inefficiencies in India.

Meanwhile, latest official statistics showed container throughput at India's 12 major ports grew up by 19.03% YoY for fiscal 2008. The 12 major ports handled 6.60 million TEUs in the 12 months up to March 2008, out of which Navi Mumbai's Jawaharlal Nehru port handled 4.06 million TEUs, accounting for more than 61% of the total throughput.

The other 11 major ports are located at Mumbai, Kolkata, Paradip, Vizag, Ennore, Chennai, Tuticorin, Kochi, Mangalore, Mormugao and Kandla.

Bramhani opens project office near Jammalamadugu

It is reported that Mr DN Rao JMD of Bramhani Industries Limited has inaugurated the steel plant’s project office near Jammalamadugu.

Mr Rao said that work on forming a 10 kilometer long railway line was in progress and a pipeline was laid to draw 0.5 trillion meter cubic feet of water from Mylavaram reservoir to meet the water requirements of the steel factory.

He added that a 33 KV electrical sub station has been completed on the premises. Work on a commercial airport has also begun.

Rajiv Gandhi National Quality Awards 2007 presented

Mr Yashwant Bhave secretary at department of consumer affairs has given away the 14th Rajiv Gandhi National Quality Awards 2007.

The 5 National Awards include 1 award each for large scale and small scale companies in the manufacturing and service sectors, and 1 best of all award. 5 enterprises selected for these awards are

1) Best of All Award
Steel Authority of India Limited’s Bokaro Steel Plant

2) Large Scale Manufacturing Industry
TATA Motors Limited’s Commercial Vehicle Business Unit Pune Plant

3) Large Scale Service Industry
TATA Ryerson Limited Jamshedpur

4) Small Scale Manufacturing Industry
TV Super Filter Industries Jammu

5) Small Scale Service Industry
Wealthmax Enterprises Management Private Limited Bangalore

The Rajiv Gandhi National Awards have been established to give special recognition to manufacturing and service sector organizations considered to be leaders of quality movement in India. Given annually by the Bureau of Indian Standards, these awards were instituted in 1991 and have been designed in line with similar awards in developed countries, such as the Malcolm Baldrige National Quality Award in USA, the Deming Prize in Japan and the European Quality Award.

Dolphin Offshore gets LoI for Gujarat shipyard project

It is reported that Gujarat Maritime Board has awarded the letter of intent to offshore service provider Dolphin Offshore Limited for its proposed INR 400 crore Greenfield shipyard project in Gujarat. It has also received the no objection certificate from the Gujarat government and on the basis of this it can lease government land.

Dolphin Offshore plans to set up this shipyard over a 100 hectare piece of land and out of this, the state government is expected to lease out 56 hectares and the balance will be acquired privately.

The project will be implemented in 3 phases.

The first phase will involve an investment of about INR 60 crore, which will be used to set up a fabrication yard for Dolphin’s EPC contracts, shipbuilding yard with slipway, machinery shops and office block. This phase will commence immediately upon receipt of the necessary licenses and clearances from the government including environmental clearance.

The second phase, involving an investment of INR 70 crore, will commence after the shipbuilding activities begin and will include the construction of the necessary jetties and outfitting berths as well as additional infrastructure required. This phase is expected to cost INR 70 crore.

The third phase is estimated to cost INR 270 crore and will involve setting up of repair facilities for ship and offshore drilling units.

After completion of 3 phases of construction, the shipyard will be capable of dry docking jack up rigs, apart from constructing bigger ships. In fact, no shipyard in India can currently service the giant jack up rigs used for offshore oil exploration. At present, oil exploration companies, including ONGC, are forced to tow their jack up rigs all the way to the nearest shipyards in Dubai for servicing.

With more than 60 such rigs in operation in the Indian offshore sector, Dolphin Offshore sees tremendous potential in this space.

JK Tyre buys Mexican Tornel for INR 270 crore

JK Tyre & Industries Limited recently announced that it has acquired privately held Mexican tyre company Tornel for INR 270 crore to expand its global footprint. The buyout is likely to close by May 2008, subject to regulatory approvals. The acquisition will be funded through a mix of internal accruals and debt.

Tornel specializes in passenger car radials, and has three tyre plants with a combined annual capacity of 6.6 million tyres. With this acquisition, JK’s yearly capacity of 8.7 million tyres would increase to around 15.3 million units.

Mr RP Singhania vice CMD of JK Tyre said “The acquisition would be for 100% shareholding in the company and is made through a special purpose vehicle.” Mr Singhania also said that the acquisition was part of the company’s plan to gain access to North American markets through a variety of free trade agreements (that Mexico has with these countries.

The company has decided to carry on the Tornel brand in Mexico, Brazil and other American markets that will co exist with its own JK Tyres. It will also make the most of Tornel’s 241 distributors as well as 282 sales outlets to distribute its personal brand.

Ajanta Group plans to manufacture electric car

Gujarat based Ajanta group has entered into in the small car sector and is planning to manufacture an electric car at its unit at Samkhiyali in Kutch district and market it at a price lower than INR 100,000 Nano car.

Mr Jaysukh Patel director of Ajanta group said that "It is already manufacturing electric scooters and bikes under Oreva brand. Production of electric car is not difficult for us as the technology is almost similar and 70% of its parts can be produced in house, giving us an edge over the vehicle's pricing."

He added that the R&D team is exploring the viability of the small car project under the conditions in India.

At present, in the electric car segment only Reva car is available in India. Meanwhile, another player in the small car segment, Rajkot based Field Marshal Group, is in negotiations with Australian company Farnow Technologies for a JV for a low cost electric car.

Toyota to invest INR 1400 crore for small car plant

It is reported that Toyota Motors will launch a small car in the Indian market and will invest INR 1400 crore for a new factory that will come up in Bangalore by 2010.

Mr KK Swamy deputy MD for Toyota's Indian subsidiary Toyota Kirloskar Motors said that it is developing a new strategic small car that would be sold not only in India but also in the overseas markets and the plant will have a capacity of hundred thousand units. He added that "The small car will be broadly meeting the needs of customers in India."

Mr Swamy said that it would also be expanding its current distribution network of 78 dealers. Toyota has so far invested INR 2500 crore in its Indian JV, which includes INR 1600 crore for its existing passenger vehicle plant under Toyota Kirloskar Motors. The rest of the investment has been made in Toyota Kirloskar Auto Parts that makes transmissions purely for exports.

Toyota sold 54,000 units in India in 2007 at a growth of 12% YoY. In 2008 it hopes to sell 63,000 units. It currently manufactures models like the MUV Innova, and luxury sedan Corolla apart from importing the Camry and Prado models in India.

Canada re investigation copper pipe fittings from the US, Korea and China

The Canada Border Services Agency has initiated a re investigation of the normal values and export prices of certain copper pipe fittings originating in or exported from the United States of America, the Republic of Korea and the People’s Republic of China. But CBSA is not initiating a re investigation of the amount of subsidy respecting certain copper pipe fittings from the People’s Republic of China at this time.

The subject goods are described as solder joint pressure pipe fittings and solder joint drainage, waste and vent pipe fittings, made of cast copper alloy, wrought copper alloy or wrought copper, for use in heating, plumbing, air conditioning and refrigeration applications, originating in or exported from the United States of America, the Republic of Korea and the People’s Republic of China.

The re investigation is part of the CBSA's ongoing enforcement of the Canadian International Trade Tribunal's finding of material injury issued on February 19, 2007.

The subject goods are properly classified under the Harmonized System Heading 74.12, under the following HS Codes:
7412.10.00.11
7412.10.00.19
7412.10.00.20
7412.20.00.11
7412.20.00.12
7412.20.00.19
7412.20.00.20

It is anticipated that this re investigation will be concluded on or before August 27, 2008.

Global price of scrap and pig iron continue to rise

The global prices of scrap and pig iron have continued to rise recently. The price of H1 scrap has reached around USD 600 per ton CNF as the price for pig iron is at USD 700 per tonne CNF.

Besides, the H1 scrap price from the USA to South Korea has reached as high as USD 617 per tonne CNF. The import price of mixed H1 and H2 scrap to Turkey is around USD 600 per tonne CNF and the quotation has even reached USD 610 per tonne CNF.

South Korea’s export price of H2 scrap to Japan is at USD 600 per tonne CNF and Japan to Taiwan’s price of H2 scrap is around USD 620 per tonne CNF.

(Sourced from YIEH.com)

Samancor ferrochrome plant to resume by May or June

Platts reported that South Africa's ferroalloy producer Samancor plans to restart smelting operations at its IC3 ferrochrome production plant in South Africa in May or June.

Samncor said that repair works were underway and all production units, except for the granulation unit, would be ready in one or two months.

The plant was shut after an accident on February 17th 2008 and Samancor declared force majeure on intermediate carbon ferrochrome supplies following the accident. The plant, without the granulation unit is able to produce molten alloy but the alloy will not be processed into a set shape.

Samancor plans to discuss with its customers handling of the processing part of the production, for example, by transporting the molten alloy to another production facility in the country. The plant had the capacity to produce up to 70,000 tonne per year of intermediate carbon ferrochrome.

Czech steel output in 2007 highest since mid 1990s

CTK reported that steel production in the Czech Republic increased by 2.9% to 7.06 million tonnes in 2007 climbing to the highest level since the mid 1990s.

In the record breaking year of 1988, when almost 170,000 people were employed in the steel industry in the then Czechoslovakia, about 15.8 million tonnes of steel were produced. Since then, steel production has been decreasing, with a number of plants being closed down. Czech steel production reached its bottom in 1999 with a mere 5.6 million tonnes. At present Czech steelworks employ about 23,000 people.

The association Hutnictvi Zeleza told CTK that over the past five years, steel products consumption in the Czech Republic rose by a half to 6.55 million tonnes, which was 633 kilogram per person. The figure markedly exceeds the EU average of 395 kilogram per person annum.

It said that most of Czech steelworks achieved record high profits thanks to the growing demand for steel last year. This year, however, the situation is complicated by the fact that raw material prices grow faster that those of steel products. The price of iron ore and coking coal has gone up by dozens of percent.

In the recent years, domestic market demands have been more and more satisfied by imports. The strengthening of the Czech crown aids the imports, making the price of imported steel cheaper. Two thirds of Czech steel productions are on the contrary, exported. Over 90% of the exports head for European countries, mainly for Germany, Poland, Slovakia and Italy. Despite its current growth, steel production will probably not reach the record values of the late 1980s, when 11 million tonnes of raw steel were made.

Czech steelworks' production

(In million tonnes)
(Sourced from Hutnictvi zeleza)

Iron ore price negotiations – CRU sees all time high levels in 2008

A new analysis by CRU predicted that iron ore prices, at all time highs this year, will trend down after 2009, when supply matches up with demand.

Mr Helen O'Malley consultant in steelmaking raw materials at CRU said after 2010 prices will fall off moderately, but they would not necessarily drop dramatically.

Voestalpine delays investments due to EU climate package

Austrian newspaper Die Presse reported that Austrian steel company Voestalpine has put investment plans in Austria on ice while EU politicians are debating proposals for the bloc's future energy and climate policy.

Brazil increases CR export levels for Europe

Brazil has raised its export price of cold rolled coil to Europe as a batch of CRC about 5000 to 8000 tonnes has been marketed by USD 1120 to USD 1150 per tonne recently. This shipment date will be on June July.

Market sources said that the prices of CR have constantly increased from USD 730 to USD 740 per tonne since January and it is estimated that the price would get higher in the near future.

(Sourced from YIEH.com)

Pallet furnace restarted at Cleveland Cliffs Northshore Mining

It is reported that Northshore Mining celebrated the restart of Furnace 5 recently.

Parent company Cleveland Cliffs has permits in hand for the restart since late 2005 but they were waiting for the market conditions to improve. Now, demand is high for taconite pellets and the furnace is running.

The Furnace 5 restart is a USD 40 million dollar project, which will boost production by 800,000 tons a year. Furnace 5 was one of the original furnaces used by Reserve Mining. A great deal of work by all of the employees, made it possible for it to come back online. 30 new employees were added and 100 construction jobs during the life of the project. It signals economic and job security for the 540 employees at Northshore.

Recession reports – US credit crunch to cost world USD 945 billion

According to the International Monetary Fund biannual report, the US credit squeeze could cost more than USD 945 billion worldwide.

The IMF Global Financial Stability Report announced that the US housing market crisis has affected financial institutions in other countries, leading to global losses on a very large scale. It said that the credit crunch began in the US eight months ago after banks suffered huge losses due to rising defaults on sub prime or high risk home loans.

The report added that "The crisis is spreading beyond the US sub prime market namely to the prime residential and commercial real estate markets, consumer credit, and the low to high grade corporate credit markets.”

The report blamed the losses on a 'collective failure to appreciate the extent of leverage in the financial system and the associated risks of disorderly unwinding'.

The IMF also warned of the risk of 'a serious funding and confidence crisis that threatens to continue for a significant period', adding that non-bank financial institution losses around the world could result in a surge in its estimates.

The report comes ahead of a Washington meeting of IMF finance ministers and central back governors this weekend.

Bateman wins ZAR 348 million order from BHP Billiton

Bateman Engineering has won its second major materials handling contract in a year from BHP Billiton.

The latest deal is worth around ZAR 348 million and will see Bateman supply two stockyards as part of the coal handling infrastructure for BHP’s Douglas Middelburg Optimization Project at Mpumalanga in South Africa.

The award will be undertaken as a lump sum turnkey contract and work is expected to be completed by the first half of 2010.

Dr Sivi Gounden CEO of Bateman Engineering said that “This contract is the second award this year of a major materials handling contract from BHP Billiton and underscores our position as a leader in the delivery of world class materials handling systems to the natural resources market.”

CFE emergency coal tender falls flat

Platts reported that Mexico's Comision Federal de Electricidad has failed to receive any responses to its request for 400,000 tonnes of less than 1% sulfur steam coal for delivery on a CIF Lazaro Cardenas basis in April and May.

Market sources said that the request is for Comision Federal de Electricidad's Petacalco plant on Mexico's Pacific coast and was described by one trader as an emergency tender.

A trader said that "It appears CFE has received no offers.” He suggested that coal suppliers may have decided individually against making fresh offers into the 400,000 tonne tender in order to panic the utility into coming on to the market for more tonnage.

Petacalco has been running on expensive fuel oil while it waits for coal to be delivered by Mexic based supplier Ailia. Ailia, a virtually unknown player in the coal market, last month won a tender to supply 5 million tonnes of steam coal to Comision Federal de Electricidad between March and December. The company was believed to have experienced difficulties in raising a USD 50 million performance bond for the 5 million tonne tender.

KOMIPO wins USD 750 million power plant orders in Indonesia

Reuters reported that Korea Midland Power Co Ltd has won a combined USD 750 million orders to build two power plants in Indonesia.

Korea Midland Power Co Ltd is a unit of South Korea's dominant power provider Korea Electric Power Corp.

Recession reports – IEA sees slip in global oil demand

The International Energy Agency said that World oil demand will rise less than expected in 2008 because of slower economic growth in the United States and other industrialized countries.

IEA in its monthly Oil Market Report said that global consumption will rise by 1.27 million barrels per day, 460,000 barrels per day less than the previous forecast.

The assessment follows the latest outlook from the International Monetary Fund, which this week issued lower economic growth forecasts. Growth in top oil consumer the US this year was cut to 0.5% from 1.5%

'The latest GDP projections from the IMF suggest that less robust oil demand growth in the coming months. This report projects April and May oil balances tipping towards a supply surplus.

Lower demand in members of the Organization for Economic Co operation and Development accounted for the bulk of the revision. The IEA cut expected OECD demand this year by 320,000 bpd to 48.9 million bpd.

The agency also trimmed its forecast for 2008 demand in China, the world's second largest oil consumer, by 70,000 barrels per day partly due to weather related effects in the first quarter.

The reduction brings the IEA's global demand forecast closer to that of the Organisation of the Petroleum Exporting Countries, which expects growth of 1.2 million bpd this year. But the IEA said that weaker demand might not translate into lower oil prices given supply risks in countries such as Nigeria and Iraq.

South Korean steel output to reach 59.82 million tonne in 2008

According to the Korea Iron & Steel Association, the country’s steel output capacity may reach 59.82 million tonnes in 2008.

Among them, POSCO’s output could raise by 610,000 tonne to hit 31.49 million tonnes. Other South Korean steel enterprises may increase the output by 1.98 million tonnes, reaching 28.33 million tonnes.

ConvaTech awarded contract by Goro Nickel

it is reported that ConvaTech has commenced its first international project, having been awarded a contract by Goro Nickel SAS for the installation and splicing of the overland conveyor belt for its new nickel processing plant in New Caledonia. The ConvaTech team commenced work on January 15th 2007, with the project expected to take six weeks to complete.

The project for Goro Nickel SAS involves the mobilization of all labor and equipment from Newcastle to project, manage and complete the work. The overland conveyor belt is ST2250 x 1200mm wide and is approx 6km long.

The scope of work included the development of the methodology to install the conveyor belt as well as design and construction of specific hydraulic and manual belt clamps, belt stands and installation equipment, and the design of civil foundations to support the larger equipment.

Noble Group captures iron ore business on film

Noble Group announced that it has recently completed filming Iron Ore pipelines, the second in a series of short films which helps to illustrate its core growth strategy of selectively expanding our asset base and managing the physical trade flows from low cost producing countries to high growth demand markets.

Noble said that “Shot on location in Brazil, Australia, India and China, we invite you to travel with us to visit some of our important mining assets and follow these essential raw materials from their point of origination to their final destination.”

Mr Richard Elman CEO of Noble Group said that “As we continue to expand ownership and create additional profit points along our supply chains, the visual dynamics of our business have grown much stronger. This unique access into our global operations provides investors and other stakeholders with a first hand look at how we effectively move product around the world.”

230 facilities account Japan half of emissions

According to a study released Friday by a Japanese nongovernmental organization, a total of 230 manufacturing facilities such as power plants, steelworks and cement manufacturers accounted for nearly half of Japan’s greenhouse gas emissions in fiscal 2006.

As per report the study found that 127 of them, all of which belong to the power and steel industries, accounted for about 40% of total emissions.

It said that Chubu Electric Power Co’s Hekinan thermal power station in Aichi Prefecture was the biggest single emitter for the year, followed by Tohoku Electric Power Co’s Haramachi thermal power plant in Fukushima Prefecture and Electric Power Development Co’s Matsuura thermal power station in Nagasaki Prefecture.

Midland Exploration advance targets on the Gatineau Zinc

Midland Exploration Inc announced the results of its recent exploration program on its wholly owned Gatineau Zinc Project.

It said that “Midland's strategy is to find new Sedex zinc and lead mineral occurrences and to better characterise the known zinc deposits. The reconnaissance soil sampling program was designed to identify new zinc and lead mineralized systems in the Gatineau Area. Historically soil sampling has been a proven method for finding new zinc occurrences.”

The release added that “The surveyed areas were selected either on the basis of historical known zinc occurrences or unexplained regional stream sediment anomalies. A total of 1,588 soils samples were collected over the Wallace, Venosta, Kazabazua, St Germain, Kilmar, Ski, Davis and Leitch claim blocks. An examination of the assay results has identified several first-order strong zinc and lead anomalies on Leitch, Wallace, Ski and St Germain lake properties.”

Midland's important zinc portfolio includes many properties at different stages of exploration in the Gatineau Area. Depending on target merits, Midland's exploration program includes stream sediments, soil and rock sampling and two pilot tests with combined airborne magnetic and electromagnetic helicopterborne surveys.

Queensland mine production to surges by 4.5%

ABC News reported that Queensland's coal industry continues to surge ahead, with production increasing by 4.5% YoY

Mr Geoff Wilson mines minister of Queenslad said that almost 238 million tonnes of raw coal was produced and 155 million tonnes exported and the industry's future remains strong.

He added that "There are 17 new mines and 11 existing mines planned for expansion the next five years. Most of them are in Central Queensland, but not all of them. That's a total of about AUD 36 billion worth of capital investment."

Mr Knecht joins WCI Steel for continuous improvement

It is reported that WCI Steel has hired Mr Joseph A Knecht who brings more than 25 years of experience in operations improvement to the steelmaker in order to strengthen its commitment to continuous improvement.

Mr Knecht who is serving as VP quality and continuous improvement, is working to engage employees in WCI Steel’s steelmaking, hot rolling and finishing facilities to identify process improvements that will result in greater efficiency, improved yields, reduced cycle times, more consistent quality, lower costs and increased levels of customer service.

Mr Leonard M Anthony, president & CEO of WCI Steel, Inc said that “Mr Joe’s leadership in continuous improvement in the metals industry will greatly assist WCI Steel to involve all employees in better managing our operations and outcomes.”

Mr. Knecht said that “I have been very impressed by the knowledge and experience of WCI Steel employees. Every employee has a role to play in improving our consistency and reliability. Together with the United Steelworkers, we will be engaging employees with the right tools and providing opportunities for involvement to help improve our performance financially and operationally.”

Dow Hyperlast introduces DTM coating for buried steel structures

It is reported that Dow Hyperlast has introduced HYPERKOTE™ 610, a primerless direct to metal protective coating for buried steel structures such as tanks, pipelines, lampposts and marine applications including bulk cargo holds.

Designed for application via generic high-pressure spray equipment, HYPERKOTE 610 was developed primarily to protect against corrosion in bulk cargo internal holds that require a high abrasion and impact resistant coating to withstand damage from abrasive materials such as coal, granite and bauxite.

Dow Hyperlast said that “The coating’s smooth, glass like finish produces a low coefficient of friction coating, which minimizes impact effect and eases the flow of materials in container loads. Minimal surface imperfections also help to prevent the build up of dust and contaminants that could hinder the movement of container contents.

The coating is described as a fast setting, moisture tolerant, solvent free, high build system. According to the company, it is resistant to moderate concentrations of a large number of acids and alkalis and is suitable for applications requiring fast setting systems, resulting in minimal downtime.

Aker Yards Germany cuts steel for first RoPax 55

Aker Yards Germany has started the production of the world's largest combined freight and passenger ferries. The first steel plate has been cut at its site in Warnemünde for Yard number 159 the first of two Aker RoPax 55 vessels for Stena Rederi being built under a EUR 400 million contract.

At 63,600 gt each, the new Stena ships have a gross tonnage 35% higher than any similar vessels currently in service. The ferries were developed and designed by Aker Yards Rauma in Finland and Stena RoRo in Sweden.

Delivery of the vessels is scheduled in the first and third quarter 2010 respectively. Production will be split between the Aker Yards Germany sites in Warnemünde and Wismar.

Aker Yards Germany is increasingly targeting higher value added specialized ships. Besides RoRo and RoPax projects, recent orders have included ice breaking and ice going tonnage and projects for specialized tankers.

Taipower plans to build 8 gas fired plants in 10 years

Bloomberg reported that Taiwan Power Co is planning to build eight gas fired generators in 10 years as the government takes steps to cut carbon emissions.

Mr Tu Yueh yuan chief engineer of the Taiwan Power Co said that “The first of the units may start commercial operation in 2015 and the last in 2018. The generators will have a total capacity of 5,760 megawatts.”

Mr Ma Ying jeou president of Taiwan who takes office on May 20, said that Taiwan's carbon dioxide emissions in 2050 should fall to 50% of its 2000 levels, according to an environmental policy paper prepared by his campaign. His government will aim to have half of the island's electricity generated from low carbon sources, including natural gas.

According to the Web site of Taiwan Power, gas fired units accounted for 33% of Taiwan's installed capacity in January, compared with 31% from coal fueled generators and 13.5% from nuclear reactors. The government owns 97% of the utility, which generates about 75% of the electricity the island uses and monopolizes transmission in Taiwan.

Nucor increases rebar prices

It is reported that Nucor has increased rebar prices by USD 147 per short tone effective immediately

PSM meets sales target three months earlier

Daily Times reported that Pakistan Steel Mills has achieved its sales target of PKR 41.6 billion for the current fiscal year 3 months earlier, with 30% growth as compared to the previous fiscal year. The upsurge of prices of various steel products caused high sales volumes despite decline in the capacity utilization to 78% from 89%.

In the last fiscal year 2006-07, PSM has posted PKR 32.1 billion with a growth of 33%. However, its management predicted that the growth target will be crossed in the next remaining months of the current fiscal year.

Mr Muhammad Javed chairman of PSM said that it is registering continuous growth during the last 2 years, because it has been run as a commercial company. He added that the prices of PSM steel products remained low cost as compared to the prices of imported steel products.

According to PSM’s financial analysis report, the prices of met coke surged to USD 261 per tonne from USD 189 per tonne in 2 years, coal prices surged to USD 300 per tonne from USD 94 per tonne in last 2 months. However, its transportation and freight cost has been doubled in the last few months.

Mr Qaiser Salam PSM official said that PSM is focusing to utilize locally explored raw material to save its expenses in the future, as the basic steel producing material is abundant in the country. He said that PSM has planned to rely on local raw material and it will utilize local coke, coal and iron ore to produce steel products very soon.

PSM has started utilizing 7% iron ore extracted from Sharigh blended with imported iron ore from Iran and India and it will save around USD 4.7 million per annum. Met coke and coal from various mineral rich areas of Baluchistan would be exploited in the manufacturing of steel products that could saved country’s precious foreign exchange and decrease the cost of inputs significantly.

PSM predicts steel prices will more than double

The News reported that Pakistan Steel Mills has warned that prices of steel products could increase by more than two times in the coming months due to the rising cost of imported raw material.

According to a conservative estimate, the PSM will spend PKR 34.5 billion on the import of iron ore, coal and coke during the fiscal year 2008-09, as against PKR 16.4 billion to be spent in the current year.

The rising input cost is also going to affect PSM’s profitability. Pakistan’s only steel making establishment sees its profit dropping to PKR 2.8 billion by the end of this year compared to PKR 3.15 billion recorded last year.

Mr Qaisar Saleem GM marketing of PSM said that "Pakistan Steel Mills has only 20% market share and the rest is met from imports and other sources."

Mr Saleem said that the best that PSM could do is enhance the use of indigenous raw material. He added that "We will soon receive 50,000 to 60,000 tonnes of iron ore produced from Saindak in Balochistan. This supply will go up to 100,000 tonnes per annum."

PSM consumes almost 1.5 million tonnes of iron ore and 400,000 tonnes of coal. It intends to meet the demand for these inputs, which will help it safe PKR 900 million annually.

Pakistan & India agree to sort out IPI tariff issues

The Dawn reported that Pakistan and India have agreed to finalize their much delayed bilateral tariff and transit fee issues to pave the way for concluding higher level talks between the 2 countries on April 23rd 2008 over Iran Pakistan India gas pipeline project. Official sources said that technical teams of both the countries would meet in Islamabad between April 16th and April 18th 2008 to firm up their recommendations to be discussed by the petroleum ministers of Pakistan and India in their meeting on April 23rd 2008.

An official of the ministry of petroleum & natural resources said both technical as well as ministerial level talks were very important for gas pipeline project after which further meetings would be lined up with Iran in May 2008. He added that "The Iranian side will be briefed next month about the outcome of talks between Pakistan and India."

The sources said senior Pakistani officials have been informed by Iran that it had sorted out 40% to 50%logistic issues to undertake work on Iran Pakistan India gas pipeline. Pakistan was told that Iran had asked India to join the project without caring for the opposition of the US.

Pakistan had also asked Iran to enhance gas volumes for Islamabad by 50% under the pipeline project in case India stays away from the trans national deal. Pakistan would soon be making a formal request to the Iranian side to allocate an additional 1.05 billion cubic feet of gas per day to Pakistan in case India fails to join the project. Originally, Pakistan was to get a total of 2.1 billion cubic feet of gas per day from the 2600 kilometer long Iran Pakistan India pipeline project and India was to receive 3.2 billion cubic feet of gas per day, making the total to 5.3 billion cubic feet of gas per day.

The pipeline length would come down to about 1,600 kilometer, resultantly reducing the project cost in case India decides to stay away. Gas volumes to Pakistan would, therefore, increase to about 3.2 billion cubic feet of gas per day. The sources also said in the absence of both Iran and Turkmenistan gas pipeline projects the government had started working on another project to meet its growing gas requirements.

Wartsila wins EUR 134 million power plant deal in Pakistan

Reuters reported that Finnish engineering company Wartsila had won a turnkey contract for a power plant in Pakistan worth EUR 134 million.

The power plant, ordered by Pakistan's independent power producer Nishat Power Limited, is expected to be operational by September 2009. The contract will be included in Wartsila's order book for April 2008.

Iranian ports to see USD 567 million development plans

Mehr News Agency reported that Iran’s Ports & Shipping Organization has scheduled to carry out development plans worth SAR 5,150 billion in the current Iranian year started March 20th 2008.

Mr Ali Jahandideh deputy director of the organization for administrative & financial affairs said that the lion’s share of the required budget for the plans will be provided through the Organization’s revenues and the balance will be secured through foreign finance and selling participation bonds.

He added that "The budget allocated to the PSO for the current Iranian year is some SAR 7 trillion, while the figure was to the tune of SAR 6.7 trillion in the previous year."

He further added that the organization’s revenues amounted to SAR 4.25 trillion in the past Iranian year and it is expected that the figure to rise to SAR 4.5 trillion in the current year.

Dubai World picking banks to arrange USD 5 billion loan6

It is reported that Dubai World is appointing banks to arrange a syndicated term loan that will refinance the borrower's USD 5 billion, 364-day bridge loan signed in 2007.

As per report, 8 banks namely Bank of Tokyo Mitsubishi UFJ, Calyon, Deutsche Bank , Emirates Bank EBIL.DU, HSBC , ING , Lloyds TSB and Royal Bank of Scotland are in the arranging group so far, which is expected to be expanded.

The loan is expected to consist of a 2 year tranche and a 3 year tranche, worth USD 2 billion each and a USD 1 billion, 5 year tranche. The lead banks are aiming to be left holding USD 250 million each, leaving USD 2.5 billion to sell in a wider syndication.

The original USD 5 billion loan backed the borrower's plan to buy into US casino operator MGM Mirage. It paid a margin of 85 basis points over LIBOR for the first 6 months, stepping up to 110 basis points.

Pricing on the new deal will be higher to reflect current market conditions, which have deteriorated since the original loan was signed, and is expected to be 100 basis points for the 2 year tranche, 125 basis points on the 3 year and 150 basis points on the 5 year.

Total to finalize talks with Iraq for an oil service contract

Mr Christophe de Margerie CEO of French oil & gas company Total said that it is in the final stages of talks with Iraq for an oil service contract and is also hoping investors from the Gulf region will buy into the company.

Mr Margerie said that Iraq could pay up to USD 500 million for each of the 5 service contracts it is negotiating with oil majors. Iraq wants oil majors to boost its output by nearly a quarter through the contracts. He added that "I know discussions are being finalized, but I do not have a date for an announcement."

Total was negotiating for the development of the West Qurna field along with US group Chevron. The service contracts are part of stop gap measures to boost output in the absence of new legislation for foreign investment. Political feuding has stalled a vital oil law in Iraq for more than a year.

He said that funds from other countries where Total is active, in particular Gulf countries, would invest in the French group. He added that "We have a strategy to diversify our shareholder base. We would like funds to come from countries where we have long term relationships. This is why, besides China, we would like to have equivalent partnerships coming from certain Gulf countries.'

Total's shareholders already include state owned investment funds from Norway, Singapore and Middle East.

Indian railway delegation to go to Iran

It is reported that Mr KC Jena chairman of Indian Railway Board along with two senior officers will travel to Tehran to hold discussions with the Iranian railway officials.

As per report, the Indian team would inspect the Iranian railway system and meet senior railway officials, including Mr Hassan Ziari deputy minister for roads & transportation and also president of Iranian Railway, during its three day visit starting from April 12th 2008.

An official source said that "Iran wants to expand its rail network with Indian Railway cooperation. RITES has already done a few feasibility studies for Iranian Railway. A MoU with Iranian Railway may be signed at a later stage but at the moment there is no such proposal. Iran is also keen to cooperate with Indian Railway in its port connectivity plan."

The growth in economy and business prospects of Indian Railway is fast attracting the attention of foreign railways for investments and new technologies. Over the past few years, Indian Railways has signed MoUs with Italy, Germany, Russia, South Africa and most recently with China.

Experts pipe up on slow progress of ongoing drainage projects

Arab News reported that the progress in Jeddah’s ongoing SAR 7 billion project to install a citywide sewage and drainage system by 2013 is seen by many as a very ambitious target.

As per report, Jeddah, which that has exploded in size yet has no system of sewage pipes instead it relies on hundreds of thousands of individual septic tanks that are pumped out regularly by fleets of independent contractors.

Mr Ali Eshqi professor of environmental studies at the King Abdulaziz University said that several parts in Jeddah are covered by stagnant drainage water posing serious health and environmental problems due to these public works trenches. He added that the private sector alone could find appropriate solutions for the issue and complete the works at the scheduled time. But Eshqi lamented that a private company, which offered to help ease the situation by making use of the drainage water, was discouraged by some impossible conditions laid down by the related departments. In order to facilitate the work, the contractors have closed several roads and lanes in some districts. As the work progresses at a snail’s pace the misery of the local residents are increasing.

Mr Muhammad Al Baghdadi supervisor general at the general directorate for water & drainage water in Makkah said that an impediment to the speedy implementation of the project includes what he says is the low priority the project gets in relation to water, electricity, and telephone infrastructure development.

Meanwhile, Mr Hisham Abdeen an engineer expressed surprise at the statement of an official of the directorate that the project would be completed in one year. He said "The time allotted for the completion of the project should be cut by half in view of the need for the speedy implementation of the project guaranteeing the safety of people and the roads. That could be done only with the help of experienced contractors."

Mr Ibrahim Kutubkhana undersecretary for projects at the Jeddah mayor’s office said that the project coordination office at the mayor’s office undertook the task of coordinating with various utility departments such as water, electricity and telephone to avoid delays.

Abu Dhabi buys 20% Algerian Shell venture

Mubadala Development Company has announced that its wholly owned subsidiary Liwa Energy Limited has purchased a 20% stake in Shell’s current exploration and production ventures in Algeria.

This agreement is part of the strategic alliance formed in 2005 and signed in Abu Dhabi between Mubadala and Shell to cooperate in the economic development of new and existing hydrocarbon resources, pursue research and development of economically viable and environmentally acceptable energy solutions in the Middle East & North Africa, outside Abu Dhabi. The agreement also provides learning and development opportunities with Shell to enhance the professional development of select UAE nationals.

Shell holds two production sharing contracts in the Reggane Djebel Hirane and Zerafa permits in Algeria where it is conducting an exploration and appraisal campaign in partnership with Sonatrach. The revised interests in the Reggane Djebel Hirane and Zerafa Production Sharing Contracts are Sonatrach 25% Shell affiliates 60% and Mubadala’s Liwa Energy 15%.

Mubadala, the investment and development company of the Abu Dhabi government, is at the forefront of expanding and diversifying the Emirate’s economy through key investments both locally and globally. Mubadala is also involved in the construction of the first Algerian aluminum smelter at Beni Saf, which will be a significant employer in the region.

ADNOC's unit eyes 1 million BPD output by 2019

Khaleej Times reported that Abu Dhabi National Oil Company's offshore unit will raise output by two thirds to 1 million barrels a day by 2019.

Mr Ali Al Jarwan GM of ADNOC said that Abu Dhabi Marine Operating Company, in which Total SA, BP Plc and Inpex Corporation subsidiary Japan Oil Development Co are shareholders, will raise output by 50% within the next few years..

Mr Al Jarwan said that ADNOC plans to double gas production to supply the domestic network, without saying what current output is. The United Arab Emirates produced 2.56 million barrels a day of oil in February 2008.

Chinese domestic steel prices to remain at high levels

Interfax China reported that domestic steel prices in China are likely to remain at a higher level this year though may face downward pressure from restrictive export policies and slowing domestic and overseas demand.

Mr Luo Bingsheng vice chairman of the CISA at the 2008 International Steel Forum and China Steel Trade Fair in Shanghai said that "Average domestic steel product prices this year will stand above that of last year's. Surging production costs from raw materials such as iron ore, coke and fuel prices has pushed up prices, but there is a resistance level for this year."

Mr Luo however noted that one of the factors that may hinder China's steel product price increase is that lower exports are expected this year, which will lead to an increased supply of steel products on the domestic market. He said that “China exported 7.78 million tonnes of crude steel in the first two months of 2008, down 25.36% YoY. In addition, preliminary figures from the General Administration of Customs show that the export volume for March was 4.16 million tonnes, which falls short from that of the same period last year. China's tougher export policies did bring down steel product exports in the fourth quarter last year and will remain effective this year. CISA forecasts that China will export 48 million tonnes of steel products and 1.5 million tonnes of billet this year, which is equivalent to 52.5 million tonnes of crude steel, down 27% from the previous year."

He added that domestic prices will also face downward pressure from slowing demand on the home front. "In the first two months, China's fixed-asset investment increased by 24.3% on an annual basis and trade turnover increased by 23%. The figures are predicted to be lower throughout the year, which would have an impact on China's steel product consumption."

Crude steel consumption in China is estimated to grow by 11% or between 40 million and 50 million tonnes this year, falling short of last year's growth of 11.87%, while China's growth of crude steel output will remain at 6.3% this year.

Chinese demand for auto steel expected to boom

According to Mr Yaojie vice secretary general of the China Association of Automobile Manufacturers China’s demand on auto steel would be 13.71 million tonnes in 2008, 15.1 million tonnes in 2009, 16.37 million tonnes in 2010, 21.76 million tonnes in 2015 and 27.67 million tonnes in 2020, double the level of 2008.

Mr Yao said that a car in structure is composed by 50% to 60% of steel and 12% to 15% of cast iron.

He said that “In 2008, China’s auto output is expected to reach 10 million units up by 12.61% YoY. Of the total output, passenger car will account for 7.3 million units up by 14.42% and commercial vehicle make up 2.7 million units up by 8%.”

Coking coal prices to support steel product prices - Analyst

Interfax China reported that BHP Billiton’s recently concluded this year's contracted coking coal prices by between 206% and 240% from last year, will further increase already high global steelmaking costs and support high steel prices.

Mr Yu Liangui a Mysteel analyst said "Japan's Nippon Steel Corp. and Korea's POSCO have agreed on a new coking coal benchmark price for this year with BHP Billiton with prices lifting from USD 98 per tonne to as much as USD 300 per tonne. Moreover, this large price hike will limit the expansion of Japanese and Korean Steel mills, as the two countries are short of coal resources."

Mr Yu said "In comparison to Japanese and Korean steel mills, while we all need to import iron ore, coking coal price changes have little impact on China, as the country is rich in resources and steel mills usually have adequate supplies for production. However, increased international coking coal prices will push up domestic coking coal prices, and this will indeed support higher steel product prices."

Baoshan Iron and Steel Co Ltd the listed subsidiary of China's largest steel mill Baosteel Group announced in February that its second quarter core product prices will increase between 17% and 20% in order to offset the 65% to 71% hike in this year's contracted iron ore prices from Brazilian based vale. While in March, Baosteel again lifted its carbon steel product prices for May by between CNY 200 per tonne and CNY 400 per tonne.

China exported 2.54 million tonnes of coking coal last year, down 41.7% from 2006, while the country's coking coal imports increased 33.48% YoY to 6.22 million tonnes over the period.

Tanggang made new month production records in March

It is reported that Tanggang Company Ltd managed to maintain the operation and production at a smooth and high level.

Following January and February, the output in March made new records, with iron output reaching 1.3486 million tonnes up by 29.08% YoY, steel output to 1.4095 million tonnes up by 25.33% YoY, finished steel output to 1.1810 million tonnes up by 11.33% YoY respectively from those of the same period in 2007 all making new records.

During January to March 2008, it produced 3.6792 million tonnes of iron up by 22.81% YoY, 3.8194 million tonnes of steel up by 17.60% YoY and 3.2435 million tonnes of finished steel up by 7.68% YoY respectively from a year ago, making new quarter records.

US ITC issues report on Chinese practice and policies

US International Trade Commission in a prepared report requested by the US House of Representatives' Committee on Ways and Means has issued “China: Description of Selected Government Practices and Policies Affecting Decision Making in the Economy.”

US ITC described and, where possible, quantified numerous practices and policies that central, provincial, and local government bodies in China use to support and attempt to influence decision making in China's manufacturing, agricultural, and services sectors.

The report provides a description of government practices and policies in China with respect to industrial development, the rationalization and closure of uneconomic enterprises, privatization of state owned enterprises and private ownership, price coordination, utility rates, taxation, the banking and finance sectors, infrastructure development, research and development, worker training and retraining, and restraints on imports and exports.

The report also provides an analysis of the likely impact of the December 2006 policy directive from China's State Owned Assets Supervision and Administration Commission, a directive that outlines the industries the Chinese government considers to be strategically important.

Siemens to supply process control systems to Dingsheng

Siemens Metals Technologies announced that it has received orders from the Chinese company, Dingsheng Aluminium Company Ltd to supply new process control systems for a total of twelve rolling stands at the Zhenjiang and Hangzhou locations. The value of these orders exceeds USD 10 million. These projects are scheduled to be completed by the middle of 2009. Siemens had previously equipped four aluminum rolling stands in Zhenjiang with new process technology in 2006.

The release said that 4 of the new Siemens control systems will be installed in the Zhengjiang rolling mill by August 2008. A further eight are intended for the Hangzhou location and are scheduled to come into operation by the middle of 2009. These new process control systems will not only contribute to the further improvement of the quality of the rolled products but also increase the productivity of the plants. One of the main reasons Siemens won this follow up order was Dingsheng Aluminium's satisfaction with the control systems previously installed in Zhengjiang.

Dingsheng is the largest aluminum producer in Eastern China. The company operates two production facilities, one in Zhenjiang in Jiangsu Province and the other in Hangzhou in Zhejiang Province. The company produces not only sheets, strips, foils and coating materials but also finished products with a great processing depth for a wide range of applications. Its customers are in the domestic goods, electronics, communications and transport sectors and the packaging and construction industries. This new Siemens technology will mainly be used in foil rolling mills.

Steel prices hike forces Chery to increase QQ prices

It is reported that Chery QQ compact car, assembled in the Chery Automotive Co Ltd factory at Wuhu in Anhui Province, has become the first car maker to raise car prices this year after soaring iron ore and steel costs eroded profits. The Chery QQ 1.1 liter version has risen to CNY 55,000.

Chery, the nation's fourth largest car maker said an average CNY 1,000 CNY to 3,000 onto the price of its mainstream products, including QQ subcompact, Tiggo sport utility vehicle and the Easter Cross sedan, starting from this month. Chery QQ, one of the top ten best selling models in China last year, is now priced up to CNY 50,000 for the 1.1 liter version. The 2.0 liter Easter Cross was priced at CNY 122,800 after the highest 3% price increase.

Mr Huang Zherui an analyst from automotive consultancy CSM Asia Corp in Shanghai said Chery's price increase was unexpected as domestic car makers mainly compete in the lower market segment with their competitive price.

Mr Wang Zhihui, an auto analyst from China International Capital Corp said makers of small cars were hit harder by the surging cost than models in the mid to high class segment. He said the profit margin of small cars with an engine capacity around 1-liter could drop 16.5% compared to a 4.3% tumble for an economy sedan.

BYD car using 80% steel is from WISCO

According to WISCO’s sales center, the monthly supply of automotive plate to BYD is reached 10,000 ton and 80% of BYD car’s steel is provided by WISCO.

In last year, WISCO’s monthly supply of automotive plate to BYD was just 200 tonnes and subsequently WISCO put forward the strategic objective to seize northwest automobile market then BYD’s steel procurement from WISCO increased rapidly.

It is estimates that WISCO will produced 1.2 million tonnes automotive steel this year.

China to spend CNY1.2 billion on logistics hub for Tibet railway

It is reported that China's government will spend CNY1.2 billion USD 160 million in 2008 on a logistics center for the Qinghai-Tibet railway.

Construction of the Naqu logistics center, 300 kilometers north of the Tibetan capital Lhasa, has resumed after a six-month suspension caused by winter conditions.

Mr Song Jinlun vice general engineer of the project said that about 26 culverts, 27.54 kilometer of rail lines and 7.94 million cubic meters of earthworks will be built for the center, which is near the Naqu railway station. Upon completion next year, the center will have facilities for product processing, storage and distribution.

China becomes 3rd largest equipment supplier to Brazil

Statistics of ABIMAQ show that the imported mechanical equipment of Brazil from China in the first two months this year was USD 364 million up by 147.8% YoY making China the third largest mechanical equipment supplier for Brazil.

Data showed that the imported mechanical equipment products of Brazil from China in the first two months were USD 3.27 billion up by 66.1% YoY.

Vice chairman of ABIMAQ said China was the 15th mechanical equipment supplier for Brazil three years ago, but moved up to the fourth place last year and to be the third largest supplier only after USA and German.

America and German were the two largest mechanical equipment suppliers for Brazil, and import of Brazil form USA was USD 835 million up by 52.1 YoY, as well as USD 464 million from German up by 66.7% on an annual basis.

Shougang Qiangang develops torpedo tank monitoring system

It is reported that recently, Shougang Group Qiangang Company has successfully exploited torpedo tank car monitoring system and put it into operation. It greatly improved the management level of molten iron transportation and fills the blank for Chinese iron and steel enterprise to use information-based technology to achieve torpedo tank car monitoring system.

As per report, Shougang Group Qiangang Company and Beijing Wuhuan Instrument and Meter Factory jointly developed this torpedo tank car monitoring system. This system uses far distance non contact frequency identification technology, realizes the location and recognition of torpedo tank car.

The related workers can look over the torpedo tank car’s all detail information on the computer achieve the dynamic management for torpedo tank car’s molten iron transportation.

Listing of Pangang to be approved by SASAC

A high official from Panzhihua Iron & Steel Group revealed recently that State owned Assets Supervision Administration Commission has basically agreed the listing plan of Pangang.

They are likely to hold the second board meeting before the end of April to make the specific plan. Once shareholders conference agrees the plan, the plan for Pansteel listed as a whole will be formally submitted to China Securities Regulatory Commission.

It is learned that the listing platform of Panfang Panzhihua New Steel and Vanadium Company Limited plans to buy assets of CNY 22.84 billion, net assets of CNY 2.32 billion. The net profit from January to June in 2007 of the company was nearly CNY 370 million.

OMK VMZ pipe production in Q1 down by 24% YoY

Interfax reported that United Metallurgical Company’s Nizhny Novgorod based unit OJSC Vyksa Steel Works produced 361,565 tonnes of piping of various gauges in the first quarter of 2008, including 176,677 tonnes of large diameter pipes down by 24% YoY and 35.5% YoY respectively.

Mr Vladimir Kochetkov ED of VMZ said that "The slight decrease in pipe production in the first quarter was driven by a drop in demand on the Russian market for medium and large oil and gas piping. He said the company was forecasting an increase in large diameter pipe production owing to the start of supplies in the second quarter to several major clients including production for the construction of the Nord Stream project.”

OMK is one of Russia's largest producers of pipes, rail wheels, and other metal products for energy, transport and industrial companies. OMK exports its products to more than 20 countries.

NLMK VIZ Stal launches low thickness electrical steel

NLMK’s subsidiary VIZ-Stal LLC announced that it has launched the production of 0.23 mm thick transformer steel sheets, enabling VIZ-Stal to enter a new rapidly growing market of high power transformer components.

The release said that “This new high tech product boasts lower magnetic losses and to make its production possible, a new higher Mn steel grade was developed by NLMK’s specialists. The cold rolled transformer steel production process was improved in VIZ-Stal’s cold rolling shop.”

NLMK has already arranged the initial shipment of this new product to its customers.

Raspadskaya Q1 coal output dips 11% YoY

It is reported that in Russian coal major Evraz Group’s Raspadskaya produced 2.909 million tonnes of coal in January to March 2008 down by 11% YoY. Its sales of the concentrate however rose by 6% YoY to 2.238 million tonnes including the 13% YoY growth on the domestic market with exports being down by 7% YoY to 703,000 tonnes.

As per report, its coal price moved up to RUB 3329 from RUB 1711.

Raspadskaya now is one of the largest coal companies in Russia. It is a unified regional production complex for the extraction and enrichment of the coal in Kemerovsky region; it has the licenses for the development of the coal fields near Kuznetsky coal sector which provides with the three fourth of the coke output in Russia.

It covers 12 entities including Raspadskaya Mine, MUK 96, Raspadsky Pit, Raspadskaya Coke, Raspadskaya Enrichment Plant and transport divisions. The working interest is held by Cyprus based Corber Enterprises which is held by Evraz and Mine's top managers at par.

OMK Gubakha coke production in Q1 up by 32% YoY

It is reported that United Metallurgical Company’s Perm Territory based subsidiary Gubakha Coke has achieved the target of March in bulk coke production by producing 42,400 tonnes of coke, which is 10,300 tonnes more than the indexes of March 2007.

The output of Gubakha Coke in the first quarter of current year exceeded the similar period of last year in coke production by 24,900 tonnes and it makes 29%.

Coke output in January to March made 124,900 tonnes, coal tar oil 15,600 tonnes.

Coal stocks at Ukrainian thermal plants go up in March

Ukrainian Journal reported that coal stocks at Ukraine's thermal power plants in March grew by 20.7% or 363,700 tonnes and as of April 1st 2008 stood at 2.122 million tonnes.

Fuel and Energy Ministry told Interfax-Ukraine that stocks of fuel oil at Ukrainian thermal plants last month rose by 3.3% or by 5,100 tonnes to 160,500 tonnes and as of April 1st 2008, coal stocks at Ukrainian thermal power plants were less by 0.9% YoY.

China begins to supply drilling rigs to Uzbekneftegaz

Interfax reported that Chinese companies have begun to supply drilling rigs and seismic exploration equipment to enterprises of Uzbekneftegaz national holding company.

A source in the ruling circles told Interfax that "This year, six ZJ DB320 drilling rigs have been supplied to Uzbekneftegaz, three of these have been launched. Two drilling rigs are working in the bore holes on the Kokdumalak field and one is used for exploration work on the Chilkuvar gas condensate field.”

The source said Uzbekistan will get an additional 12 drilling rigs by late 2008 and five drilling rigs in the first half year of 2009.

According to earlier reports in 2007 to 2011 Uzbekneftegaz will buy drilling rigs and 3D seismic exploration equipment for a total of USD 274.2 million.

In particular, in mid 2007, Uzgeoburneftegaz signed a contract with China Petroleum Technology & Development Corp to supply 23 drilling rigs in 2007 to 2008 and special equipment for USD 203 million as well as with China National Machinery Industry Corporation to supply 10 cementers for USD 6.1 million.

SUBR working group unable to settle labor dispute with miners

Interfax reported that a working group formed by Sevuralboksitrud to settle a labor dispute with miners that demand more pay, a 50% increase of tariff rates and funding for the construction of the Cheremukhovskaya-Glubokaya mine has so far been unable to reach compromise.

Ms Svetlana Suleymanova deputy chairperson of the SUBR Mining Union told Interfax that "The working group has been holding meetings for four days, but in vain. She said that mining will not resume until relations with the personnel are settled in full."

The strike at the Krasnaya Shapochka mine of SUBR began on March 26 and lasted for nearly ten days. The company said on April 4 that all the 97 miners had been raised to the surface.

Residents of Severouralsk also supported the strike with a rally last weekend.

Kirovsky Plant finishes restructuring

It is reported that Kirovsky Plant finished the restructuring through the takeover of subsidiaries including Metallurgic Plant Petrostal and Metalik.

Kirovsky Plant is a maker of agro tractors K-774R and K-3180, road building machines, gas production facilities; steel, hot rolled sheet.

The major holders involve three private persons; DCC has 78.41% in the authorized holding.

Mr Fokin appointed as GD of Gazprom Transgaz St Petersburg

According to the Gazprom’s resolution, Mr Georgy Fokin has been appointed as Director General of Gazprom Transgaz St Petersburg.

Mr Georgy Fokin was born in 1965, in Leningrad. In 1988 he graduated from the Leningrad Electrotechnical Institute getting specialty in Optoelectronic Devices. He holds a Ph.D degree in Physics and Mathematics. Over 2003 to 2004 G. Mr Fokin was Head of Commercial Service with Lentransgaz.

Mr Sergey Fursenko previously serving as Director General of Gazprom transgaz St Petersburg is relieved of this post due to his transfer to another appointment.

Crude oil prices unstable and may drop – Mr Kudrin

Interfax cited Mr Alexei Kudrin Deputy PM and Finance Minister of Russia as saying that rude prices on the world market might drop. He told journalists in Washington when he was asked whether the oil prices might go down smoothly or might drop that "There is such a possibility."

Mr Kudrin pointed out that Russian oil cost only USD 50 per barrel in January 2007, while now the price is more than USD 100 a barrel. He said that "The price of USD 100 is unstable and speculative, and it will not stay long. It is too far from the key demand and supply indicators these days and depends on many events, including political and local ones related to the volume of production."

He added that “In addition, the oil price depends on the dollar exchange rate, and the oil price rises with the dollar falling. With unstable financial markets, oil has become a target for investment. All this overheats the market.”

Mr Kudrin said while the prices for oil on the world market are high, it would be a mistake to invest accumulated state money in Russian assets. He said "This would increase the risks of the Russian stock market. In case the oil price goes down, for which you have to be prepared, our economy might sustain a double blow. In this situation, both the private and the government sectors will be affected.”