RINL net profit in 2007-08 up by 36% YoY

It is reported that Rashtriya Ispat Nigam Limited has posted a 35.73% YoY increase in net profit at INR 1,850 crore for 2007-08 as compared with INR 1,363 crore in 2006-07. Its turnover also grew by 5.63% YoY to INR 10,425 crore in 2007-08.

During the year, the firm produced 1.9 million tonnes of special steel, a rise of 74% YoY over the last year and sold 1.82 million tonnes as against 1.11 million tonnes in 2006-07. Its exports also grew to INR 556 crore.

Competition Council to meet Indian steel makers

PTI reported that India’s Competition Commission of India, the body responsible for ensuring fair competition, will meet steel producers this week.

As per report, CCI in a communication to the steel companies and associations has sought their assistance and co operation in industry's compliance with the Competition Act, 2002.

The meeting will be attended by representatives of TATA Steel, Essar Steel, SAIL, JSW Steel, Ispat Industries, Cold Rolled Steel Manufacturer's Association, Indian Stainless Steel Development Association, ISA among others.

Anti POSCO protests gather steam

SNS reported that POSCO continues to face stiff public resistance in Orissa’s Jagatsinghpur district where it is setting up a 12 million tonne steel plant and in fact has gained substantial grounds after April 1st 2008, when protesters violated the district administration’s prohibition orders and entered the Balitutha Bridge near the plant site.

Police detained several agitators who were led by Mr Abhay Sahu of the POSCO Pratirodh Sangram Samiti. The protesters included those who were evacuated from the area in November 2007 for the project. Apart from those who lost land for the proposed plant site in eight villages in three panchayats, people from far lying Kalinga Nagar and Ganjam districts also joined the agitation.

Addressing a meeting of the agitators later, Mr Sahu hailed the capturing of the bridge as symbolic victory of the people over the company. Several political leaders from neighboring areas attended the rally.

Tension has been mounting in the area for the past few months after many protested against land acquisitions. Though the company had said it would hold a ground breaking ceremony on April 1st 2008, it postponed the event.

Auto majors hit by steel price hike – SIAM

It is reported that the increase in prices of steel has put an additional per unit burden of INR 750 to INR 100,000 on two wheelers to commercial vehicles though the auto companies may not pass on the impact to the customers. This is a broad assessment made by the automobile industry of the surge in steel prices and dos not include price increase that may be on account of component prices going up.

Mr Dilip Chenoy director general of Society of Indian Automobile Manufacturers said that "Taking into consideration only steel that manufacturers use and not including components, the industry would need a price hike between INR 750 for two wheelers at the lower end and up to INR 100,000 for commercial vehicles at the upper end. In a declining market, it is difficult for manufacturers to raise prices."

Mr Chenoy said that "Tough times ahead for three wheelers and commercial vehicle industry even as the passenger vehicles segment continues to grow." He added that there were a whole set of administrative and regulatory framework that needs to be streamlined for the growth of goods carriers. The non availability of finance and re possession of vehicles in case of default is a major area of concern.

Cement export ban will lead to oversupply in domestic market – Report

According to a report by Citi Investment Research, the ban on cement export by India will lead to oversupply in the domestic market in the current fiscal, resulting in a pricing pressure in western states. The report said that "We expect an oversupply in 2008-09, which will worsen due to this ban."

According to the estimates of the report, India exported about 6 million tonnes of cement and clinker last fiscal. Gujarat alone accounted for about 75% of the total exports. It produces 15 million tonnes of cement per annum, but consumes only 11.5 million tonnes. The biggest impact on volumes and margins would be on Ambuja Cements and UltraTech Cement.

The research report further added that "While the companies affected are still formulating strategies such as finding new markets and setting up grinding units, they would suffer some volume loss, as finding new markets and the necessary infrastructure will take some time."

It may be noted that the Indian government has recently completely banned the export of cement to contain inflation, which touched a 40 month high of 7.41% for the week ended March 29th 2008. It has since eased to 7.14% during the first week of the current fiscal.

RINL denies price hike news

Rashtriya Ispat Nigam Limited vide a release has denied a news about price hike last week.

It said that “With reference to the news report “RINL hikes steel price by INR 6,000 per tonne” published in the BL edition dated April 16th 2008, RINL has denied that it has put up its prices.

BL had reported that Rashtriya Ispat Nigam Limited has increased prices of all its products by INR 6,000 a tonne, which would translate into effective increase by INR 6,840 per tonne considering 14% excise duty.

Coimbatore builders seek government intervention

It is reported that the construction industry associations in Coimbatore have sought immediate intervention of central and state governments to rein in the prices and break the steel and cement cartels failing which the user industries would take to the streets to protect the interests of the stakeholders. They also want the Tamil Nadu government to provide for a price escalation clause to be built into all contracts for infrastructure works irrespective of the duration for their execution.

Mr G Srinivasan chairman of Builders’ Association of India Coimbatore Centre said that the contractors were not able to complete the works they had taken up because of the continuous spurt in prices of raw materials. The absence of any escalation clause in the contracts entered into has been working to their disadvantage and the contractors were facing a panic situation.

He added that it is only recently the state government agreed to include a provision for cost escalation in contracts that had an execution period of more than one year, subject to certain conditions.

Factors driving Indian steel sector mega growth

It is reported India is poised to be the 3rd largest steel producer by 2013 as strong domestic demand and global fundamentals will drive Indian steel output to 100 million tonnes from 53 million tonnes in 2007.

Among the factors that enable India to reach the third position include 1. Growth in demand
2. Higher domestic prices of finished steel
3. Lower iron ore costs
4. Lower transportation costs
5. Skilled manpower pool at low costs
6. Thermal coal availability at low cost

1. Growth in demand
According to Goldman Sachs, Indian steel consumption has accelerated from 3.4% in 2002 to 11% in 2007 and the momentum is likely to be maintained on the back of USD 540 billion infrastructure investment and USD 210 billion capital expenditures by various industries

2. Higher domestic prices of finished steel

There are only 5 producers of hot rolled coil currently that manage their sales such that there are no surpluses in the domestic market. Thus, re rollers have the option either to buy locally or import, thereby prices are based on import parity, which is generally higher due to factors such as high sea freight, import duty of 5% and high inland transportation costs.

India is a net importer of steel scrap due to poor local generation and high consumption from a large number of mini mills. Therefore, long products too are priced higher.

3. Lower iron ore costs
India has rich iron ore reserves. The annual production of iron ore is above 160 million tonnes and 60% of this is exported. The Indian iron ore industry being largely fragmented, miners are left with no choice but to sell at export parity prices. The high grade iron ore mines are located in Karnataka, Chhattisgarh, Orissa and Jharkhand. Miners at these locations have to bear high inland transportation costs to send iron ore to the ports, about 400 to 600 kilometers away. Shortage of railways rake forces them to incur roadway transportation costs that are several times higher. Additionally, miners are liable for export duty of INR 300 per tonne. Therefore, prices of iron ore at the mine mouth are far lower than international prices. SAIL, TATA Steel, Jindal Steel Power have captive mines and are thereby insulated from input price risk.

4. Lower transportation costs
Indian steel producers are mostly located in iron ore rich belts and incur low costs despite high inland transportation costs. Proximity to iron ore mine is more critical than the proximity to customers as the requirement is twice the volume of iron ore for every ton of saleable steel.

5. Skilled manpower pool at low costs
India has a rich pool of trained manpower due to overstaffing by two of its leading steel companies, SAIL and TATA Steel. Combined with lower salaries, the specific labor costs per ton of HRC produced is just USD 15 to USD 20 per tonne for players like JSW, Ispat and Essar Steel while the costs ranges from USD 50 to 150 per tonne in the Western world.

6. Thermal coal availability at low cost
India has 250 billion tonnes of coal reserves, the third largest in the world. Though Indian coal has high ash content and low calorific value, the cash cost of power generation is less than US cent 2 per kWh. Many of new generation steel plants have access to captive coal blocks or they are located in coal rich belt of West Bengal, Jharkhand, Orissa and Chhattisgarh.

HZL clarifies on press release on expansion plans

With reference to the earlier announcement dated April 24th 2008 regarding press release titled 'Hindustan Zinc to become world's largest integrated zinc lead producer', Hindustan Zinc Limited has now informed BSE that in the said press release, in para one the figures of 210,000kt and 100,000kt be read as 210,000 tonnes and 100,000 tonnes.

In this regard the revised press release is as follows

Hindustan Zinc Limited has announced expansion projects that will take its total integrated zinc lead capacity to 1,065,000 tonnes per annum with fully integrated mining and captive power generation capacities, thereby making HZL the world’s largest integrated zinc lead producer by 2010. HZL will continue to maintain its superior cost leadership position among the zinc producers in the world. Two brown field smelter projects, which will increase the production capacities of zinc and lead by 210,000 tonnes and 100,000 tonnes respectively, will be undertaken at Rajpura Dariba in Rajasthan.

HZL expects to increase its silver production from the current levels of approximately 100 tonnes to 200 tonnes per year to a level of approximately 500 tonnes per year in the form of silver and silver hearing residue. A large part of this increase would be front the Sindesar Khurd mine where silver occurrences are approximately at levels of 200 ppm and from the use of appropriate technology in the new smelters. The expansion is supported by HZL's strong reserves and resources of 232.3 million tonnes containing 27.5 million twines of Zinc-lead metal at March 31, 2008. The reserves and resources position have been earlier independently reviewed and certified as per the JORC standard.

To support the increased smelting capacities, HZL will expand its ore production capacity at the Rampura Agucha mine from 5 million tonnes per annum to 6 million tonnes per annum. Further, ore production at the Sindesar Khurd mine, the new star in HZL's mining portfolio, will be increased from 0.3 million tonnes per annum to 1.5 million tonnes per annum. HZL will also start mining activity at the Kayar mine which will have a production capacity of 0.3 million tonnes per annum.

In line with the group's philosophy of being a fully self reliant producer of power, a captive thermal power plant with a capacity of 160 MW will also be set up at Rajpura Dariba.

The zinc and lead smelters as well as the 160MW captive power plant and the Rampura Agucha mine expansion will be complete by mid-2010. The expansions at the Sindesar Khurd and Kayar mines will be completed in phases by early 2012.

The total investment in these projects is estimated at INR 3,600 crore. This investment includes the cost of the smelters, captive power facilities, mine development and shaft sinking and other infrastructure. The expansion will utilize the same technology and project management skills that successfully delivered the Chanderiya II expansion project ahead of schedule.

Captive power producers too may get mega project sops

It is reported that, keen to increase its power generation capacities, union ministry of power is willing to go that extra mile to encourage captive and merchant power plants. The proposal would ensure zero customs duty on import of capital equipment for the projects, deemed export benefits, and an income tax holiday regime as per Section 80IA of the IT Act.

The ministry informed the parliamentary standing committee on energy that it is considering a proposal to extend the fiscal incentives of the mega power policy to captive and merchant power plants both private sector enterprises. While the standing committee has supported the ministry’s proposal, it would like a similar tax holiday for the state sector as well. But for the time being, it is only the captive and merchant power plants that are on the agenda.

In its observations, the standing committee noted that "It strongly recommend that the government should finalize the mega power policy at the earliest and benefits from the same should not be confined only to the captive power generators but be extended to the projects in the state sector in order to increase and encourage participation of states in the power generation."

Mr Anil Razdan union power secretary told the standing committee that "Wherever private enterprise can step up in, I personally feel that it is more welcome than public enterprise getting in and moving into other areas."

In the past, the ministry of power had sought to extend the tax benefits of the mega power policy to all power projects, a stand that found support in the Planning Commission’s Integrated Energy Policy. However, the finance ministry has always been lukewarm to this proposal. However, it would seem that the union power ministry has not considered extending the same benefit to the state sector power projects.

At present, captive power plants account for an installed capacity of 22,335 MW.

Update on implementation of NMDP

Mr TR Baalu union minister of shipping, road transport & highways said that under the National Maritime Development Program, 276 projects have been identified in the port sector for implementation in the Major Ports which are to be taken up by 2011-12 and till date 29 projects of the port sector with total cost of INR 3846 crore have been completed under NMDP.

These projects cover the entire gamut of activities in the port sector which include berth development, deepening of channel, procurement of equipment and port craft, rail or road connectivity and other associated work.

Implementation of projects is a continuous process from the conception of the project, preparation of feasibility report, identifying the source of funds, preparation of detailed project reports, commencement of the project and its final completion.

The projects under NMDP are being taken up by the respective major ports as per the phasing of the schemes and the current requirement of trade for various facilities.

INR 7,777 crore approved for Gosikhurd irrigation project

Technical Advisory Committee of the Central Water Commission has recently approved the revised budget of INR 7,777 crore for Vidarbha Irrigation Development Corporation's Gosikhurd irrigation project in Maharashtra.

The proposed project, has encountered several roadblocks in the past few years due to lack of funds, so the centre had recently declared Gosikhurd as a national asset and decided to provide nearly 90% of the funds for the project and the state government will share the rest 10% amount. The original estimated cost of the Gosikhurd project was INR 372 crore in 1982, while in 1988, the cost had gone up to INR 461 crore and in 1995 it rose to INR 2,091 crore.

The project envisages construction of an 11.35 kilometer long earthen dam with gated spillway across Wainganga River near Gosikhurd village. The Vidarbha Irrigation Development Corporation has spent about INR 2,464 crore till December 7th 2008 on the project that will develop irrigation potential for 250,000 hectare of land in Nagpur, Bhandara and Chandrapur districts.

Currently, about 97% of dam work is complete, raise of the embankment is in progress, 90% concrete work of spillway is complete and 33 gates have been installed, while the ancillary works are underway. The project also includes four lift irrigation schemes and generation of 24 MW power.

Modernization of Rourkela airstrip delayed

SNS reported that the much awaited expansion and modernization of the existing airstrip at Rourkela to a fully functional airport seems to have been delayed.

The Airport Authority of India showed interest in developing the Rourkela airport to a level where bigger aircraft can land. Last year a team official discussed the project with RSP authorities here. But a year later nothing has moved. Neither the AAI or nor the state government or any agency have sincerely followed the project.

The focus has apparently shifted to neighboring Jharsuguda, district where an airstrip has been lying unused for several decades. Reliable sources say the AAI is not keen to work on two airports in such short distances and hence if Jharsuguda were to be developed the one at Rourkela will be abandoned.

It was set up by TATA Steel as they had interest in this area as they wanted dolomite for their steel unit. This was set for facilitating the movement of its officials in this area during the quarrying days. However, once TATAs stopped their operation the airstrip was handed over to the state government and in due course it came into the possession of RSP and since then it is being maintained by RSP.

After the grand revival of RSP and simultaneous industrialization of Sundergarh district gave rise to the need of a fully functional airstrip with regular flight connection to Rourkela. A persistent demand for regular flight connection to Rourkela thus came to the fore. Some private operators also showed interest to start tri weekly flight.

TN power panel okays 1,320 MW Cuddalore thermal project

BL reported that the 1,320 MW Cuddalore thermal power project has received Tamil Nadu Electricity Regulatory Commission’s clearance.

The Cuddalore Power Corporation, part of the BGR Group, which is to set up the INR 6,000 crore project, envisages establishment of a power plant, exclusive coal jetty to handle imported coal and a captive desalination plant. The project, spread over 1,000 acres is to come up at Thyagavalli and Kudikadu villages in Cuddalore district.

The commission has approved a capital cost of INR 6,004 crore at INR 4.55 crore an MW. This compares favorably with the recently commissioned projects of the National Thermal Power Corporation at Barh, SIPAT and North Karanpura ranging between INR 4.55 crore and INR 4.71 crore a MW.

The project is to be executed in 5 years and the commission has directed the company to achieve financial closure within 12 months.

SAFTA custom duties reduction not to impact Bhutan

Foreign trade officials said that although the South Asian free trade area, which came into force two years ago, will reduce customs duties to 0 to 5% by 2015, it will not have an impact on Bhutan.

Mr Sangay Tenzin joint director of foreign trade of Bhutan said that "India is our biggest trading partner, so the preferential treatment is not really going to have impact on us. But it will, without doubt, open up export opportunities and provide options to trade with other countries like Bangladesh, particularly in ferrosilicon."

He added that “Five new ferrosilicon factories were approved in the last few years. But the government has now put a cap on any new silicon ventures because of its high power consumption.”

The custom duties are annually reduced with the help of the trade liberalization program. It a schedule of tariff reduction, wherein the SAARC countries are segregated into non least developed contracting states of India, Pakistan and Sri Lanka and least developed contracting states of Bhutan, Nepal, Maldives, Bangladesh and Afghanistan. The tariff for both non least developed contracting states and least developed contracting states are being reduced to 20% and 30% respectively within the time frame of 2 years since the launch of the agreement. If it is below 20% and 30%, annual reduction is made on the actual tariff rates for each of the 2 years on margin of preference basis of 10% and 5% respectively.

Petron Engineering gets order for Rosa Power project

Petron Engineering Construction Limited recently announced that it has received letter of intent from Utility Energytech & Engineers Private Limited and Reliance Energy Limited for erection, testing, commissioning and handing over of critical piping pack age for 600 MW Rosa Thermal Power Project in Uttar Pradesh with an investment of INR 9.44 crore.

SIAM data on auto production in India in 2007-08

According to the latest Society of Indian Automobile Manufacturers data, the passenger car segment in India grew by 12.17% YoY in 2007-08 with 1,547,985 units being sold in the domestic market compared to 1,379,979 in the previous year. For the first time, exports of passenger vehicles crossed 200,000 units in 2007-08 and ended the year with 217,054 units as against 198,452 units in 2006-07.

Sale of commercial vehicle during the 2007-08 increased by 4.07% YoY to 486,817 units. Medium and heavy commercial vehicles segment declined by 1.66% to touch 270,994 units in 2007-08 compared to 275,556 units in 2006-07. This is in spite of robust 34.72% growth in passenger carriers sector segment at 28,655 units. However, goods carriers declined by 5.88% to fall to 232,339 units.

Motorcycle sales in India during the year were down by 11.9% YoY at 5,768,341 units as against 6,547,195 units in 2006-07. While total two wheeler sales in 2008 also slipped by 7.92% at 7,248,600 units as compared to 7,872,334 units in 2007.

Guidelines for PPP projects at major ports

Mr TR Baalu union minister of shipping, road transport & highways said that government has issued guidelines for upfront tariff setting for public private partnership projects at Major Port Trusts 2008.

He said that “Tariff Authority for Major Ports shall fix tariff caps for handling various commodities or providing various services by private operators licensed by Major Ports under the provisions of the Major Port Trusts Act.”

He added that “Once tariff caps are set for handling different commodities or providing various services for a port, they would apply to all terminals that are bid out subsequently in the same port during the next 5 years for handling identical commodity or for providing similar services.”

For fixing up upfront tariff, TAMP shall follow normative cost based approach and tariff caps are indexed to the variation in wholesale price index in the manner provided in the guidelines.

Development of Colachal Port in Tamil Nadu

Mr TR Baalu union minister of shipping, road transport & highways said that non major ports are under the overall jurisdiction of the respective state government. A request has been received from government of Tamil Nadu for development of Colachal Port as a Major Port.

Sethusamudram Corporation has been directed to conduct techno economic feasibility studies, prepare a detailed project report as well as environmental impact assessment studies for this purpose, which would look into all relevant aspects.

Steps taken for boosting power generation during 11th plan

Mr Jairam Ramesh union minister of state for power said that steps have been taken for timely commissioning of 11th plan generation projects. The details are as follows

1) According to information received from Bharat Heavy Electricals Limited, it has enhanced its capacity to deliver 10,000 MW of main plant equipment per annum. Furthermore, they have put in place an action plan to enhance capacity to deliver 15,000 MW per annum by December 2009.

2) A JV agreement has been signed between NTPC Limited and BHEL to take up work related to engineering, procurement and construction for power plants and other infrastructure projects. NTPC has also entered into a MoU with Bharat Forge Limited to promote a JV company initially to take up the manufacture of castings, forgings, fittings and high pressure piping.

3) Private sector power equipment manufacturers have also set up power generation equipment manufacture facilities.

4) All stakeholders have been sensitized towards enlarging the vendor base so as to meet the balance of plants requirements.

5) To address the issue of shortage of manpower, ministry of power has taken initiative and power project developers have been asked to adopt an ITI in the vicinity of the project area to build the skilled and semi skilled work force required for the projects.

6) There is an acute shortage of gas for power projects. Only those gas based projects have been taken up for which gas has already been tied up. An additional capacity of 13,000 MW gas based projects is feasible only if gas is made available at reasonable price.

7) The monitoring mechanism has been made more robust. The Central Electricity Authority has got a nodal official associated with each on going project who continuously monitors the progress at site through frequent visits and continuous interaction. A power project monitoring panel comprising of 7 independent monitoring consultants is also being operationalized.

Capacity of major ports in India to be enhanced

Mr TR Baalu union minister of shipping, road transport & highways said that under the 11th Five Year Plan, the capacity of Major Ports is planned to be enhanced to 1016 million tonnes per annum to cater to a projected traffic of 708 million tonnes per annum.

He said that “Major Ports have identified projects covering the entire gamut of activities, namely, deepening of channels or berths, construction and reconstruction of berths, floating jetties, rail and road connectivity projects, procurement, up gradation and modernization of equipment and other demanding schemes in order to meet the capacity requirement.”

He added that “The centre has also put in place a scheme for private sector participation in Major Ports for handling bulk, break bulk and multipurpose and specialized cargo, warehousing and public storage facilities, dry docking and ship repair facilities. “

He said that to make the project bankable, government has also issued a new model concession agreement. It takes into account, amongst other things, investor’s concerns.

He informed that in addition, all the 12 Major Ports have formulated port business plan, with a 20 years perspective as well as action plan for 7 years period with a view to transforming them into ports with world class facilities suited to the requirement of future economy of India.

The total proposed outlay for the 11th Plan period for the Major Ports is INR 17551.24 crores, of which the gross budgetary support component is INR 2056.98 crore. Private sector investment is anticipated to the tune of INR 36868.24 crore.

Mumbai and Ennore Ports to act as nodal agencies for shipyards

Mr TR Baalu union minister of shipping, road transport & highways said that government of India has nominated Mumbai Port Trust and Ennore Port Limited to function as the nodal agencies for setting up of shipyards on the West Coast of India and the East Coast of India respectively.

The nodal agencies have been authorized to appoint consultants with clear terms of reference to identify 3 or 4 alternative sites each for setting up of shipyard on West Coast and East Coast of India respectively and also suggest optimal locations with detailed justification.

The Nodal Agencies have been entrusted with the responsibility/job of engaging consultants for preparing, inter alia, detailed project reports, documents for request for proposals for setting up two international size shipyards. As such, no definite time frame can be set at this stage for finalization of the project and commencement of civil works.

The Ministry had projected to the Planning Commission an outlay of INR 3000 crore comprising of gross budgetary support from government and internal & extra budgetary resources.

AP keen to get East Coast shipyard

It us reported that the government of Andhra Pradesh has proposed Vodarevu in Prakasam district as a suitable site for setting up international size shipyard.

The features of the said location are as follows

1) Vodarevu is declared Non Major Port and is situated in Prakasam District at Latitude 15 degrees 48’ North 80 degrees 15’ East.

2) Vodarevu is well connected with the state highway at a distance of 5 Kilometers and Howrah Madras main railway line is about 6 Kilometers.

3) Due to unique geographical position, it is sheltered port with 5 meters contour at a distance of 300 meters from the shore and 10 meters contour at a distance of 5 Kilometers.

4) The required land would be made available free of cost for the purposes of shipyard

Shipping ministry to retain HSL brand for another shipyard

While the shipping ministry might have to transfer Visakhapatnam based Hindustan Shipyard Limited to the defense ministry, following a Group of Ministers’ recommendation, it is learnt that it may retain HSL as a brand name for new shipyard.

This is because the Group of Ministers’ that recommended the transfer of HSL to the defense ministry for strategic reasons also suggested that the Government set up another shipyard for merchant shipbuilding purposes and the HSL brand can be used for the new shipyard. However, finer details of the new shipyard are yet to be firmed up.

The HSL restructuring cum revival proposal, proposed at a cost of about INR 799.61 crore, was referred to a GoM by the union cabinet, given Indian Navy’s strategic interests in the region around Visakhapatnam.

HSL had been in financial crisis for many years due to several factors that include poor order-book position, lack of working capital, managerial inadequacies and inability to raise funds from financial institutions due to negative net worth. But, driven by the recent surge in the shipping industry, the order books of all shipyards in India, including HSL, have swelled.

At present, the defense ministry has 3 shipyards in India namely Mazagaon Dock Limited, Garden Reach Shipbuilders & Engineers Limited and Goa Shipyard Limited. Meanwhile, the shipping ministry has 3 shipyards in its fold HSL at Visakhapatnam; Cochin Shipyard Limited at Cochin and Hooghly Dock and Port Engineers Limited.

Ternium to accept deal or face takeover – Mr Chavez

It is reported that Mr Hugo Chavez president of Venezuela has suggested that Ternium SA should accept a fair' price for the nationalization of its 60% stake in Sidor immediately or face expropriation because shareholders are demanding excessive compensation for the company's nationalization.

Mr Chavez said that he is prepared to occupy the company's facilities on April 29th 2008 should the company and the government fail to reach an agreement during a final meeting tomorrow. He said “I will sign the expropriation decree and take control immediately of the company. I have no problem doing it.”

Venezuelan government has put t values Ternium's Siderurgica del Orinoco unit, known as Sidor, at USD 800 million.

Ternium bought its stake in Sidor in 1997 for USD 1.5 billion and had asked for between USD 3.2 billion and USD 4.8 billion. Sidor is 60% owned by Ternium, 20% by the Venezuelan government and another 20% by current and ex workers. Ternium SA is controlled by Argentine Italian conglomerate Techint Group. It produces about 85% of the 5 million tonnes of steel produced annually in Venezuela.

Venezuela puts Ternium Sidor stake worth at USD 800 million

Reuters reported that Venezuela has estimated a value of about USD 800 million for Argentine steelmaker Ternium's stake in Venezuelan steel producer Sidor.

Mr Rodolfo Sanz basic industries and mining minister said that "We have preliminarily concluded that the value of the shares of Ternium group is close to USD 800 million.”

Mr Sanz said that from the USD 800 million figures the government would subtract outstanding financial and labor debts and any debts that might result from lawsuits against Sidor. He added that one suit, a dispute over the price of natural gas Sidor pays to state oil company PDVSA, could add USD 200 million to those outstanding debts.

He said Ternium had asked for between USD 3.2 billion and USD 4.8 billion which he said does not correspond to the preliminary analysis we have carried out.

EU steelmakers will embrace benchmark pricing -Vestas

A senior executive at wind turbine maker Vestas last month told Platts that in the context of increased steel price volatility, steel mills will have to move towards floating benchmark based pricing and disclose details of raw material purchases.

The executive explained that "There is absolutely no doubt that sooner or later, external pricing benchmarks will be used as a basis for steel contracts explaining that this would allow for a more accurate distribution of value between steel supplier and consumer. He predicted that the market will also become more transparent as steelmakers are forced to disclose details of their iron ore and coal purchases, in order to justify steel price increases.

He also dismissed the idea that Asian mills couldn't produce the highest quality steel as a myth propagated by European producers. He said that "If you are firm on the requirements for your order, Asian mills can produce exactly the same material adding that European standards were often used to define the steel orders.

Addressing recent concerns about a general lack of availability in the market of steel plate used in wind towers, he said that "We have enough steel, thanks to good long-term contracts negotiated two years ago. He also stressed the importance of conducting forward looking market intelligence in order to minimize the adverse impact of upstream price volatility.”

ArcelorMittal confirms talks with Indonesian government

Thomson Financial reported that ArcelorMittal confirmed that it has held preliminary discussions with government officials in Indonesia about investments it may seek to make in the country and that the talks are ongoing.

ArcelorMittal said it is looking forward to continuing the talks. The spokesman said that “We believe we have a great deal to offer, given our strong track record in project development and in research and development.”

But the spokesman declined to disclose the magnitude of the potential investments, which were reported by the Indonesian newspaper Investor Daily to involve steel and mining projects involving USD 5 billion to USD 10 billion.

Kobe Steel 2007-08 income up by 18.9% YoY

Kobe Steel's announced that its consolidated net sales in fiscal 2007 rose JPY 222.1 billion to JPY 2,132.4 billion in comparison to the same period last year, owing mainly to firm demand for steel, construction machinery and other products. Operating income decreased by JPY 6.2 billion to JPY 202.3 billion in comparison to the same period last year, due to higher depreciation arising from a change in the depreciation method brought about by tax reforms.

Ordinary income decreased by JPY 25.3 billion to JPY 157.9 billion in comparison to the same period last year, due to dismantling and disposal incurred in blast furnace refurbishments. After extraordinary loss from the business restructuring of a few subsidiaries, net income amounted to JPY 88.9 billion.

Kobe steel said that its domestic demand for steel products used mainly in the automotive, shipbuilding and other manufacturing industries was strong in fiscal 2007. Exports, too, were firm on the back of growing world demand. Under these conditions, Kobe Steel increased its shipments of steel products, in comparison to the previous year, owing to the strong demand for upper-end steel products mainly from manufacturing industries. Kobe Steel was also able to increase its sales prices of steel, centered on specialty steel in comparison to the previous year.

It said that brisk demand for steel castings and forgings from the shipbuilding industry and for titanium mill products used in power plants contributed to higher sales in comparison to the same period last year.

Sales of welding consumables were higher in fiscal 2007 in comparison to the previous year. In Japan, demand was strong from the shipbuilding and automotive industries. In overseas markets, demand was strong from the shipbuilding and energy-related industries.

As a result, segment sales increased 11.2% to JPY 923.7 billion but operating income went down by JPY 2.6 billion to JPY 91.9 billion compared to the same period last year. Operating income was affected by higher depreciation arising from a change in the depreciation method brought about by tax reforms.

UBS launches benchmark for freight derivatives

UBS Investment Bank has launched the UBS Blue Sea Index, a tradable benchmark for global investments in the freight derivatives market, constructed using liquid, actively traded dry bulk Forward Freight Agreements. UBS has incorporated a proprietary port congestion factor accounting for the impact on prices in the freight derivative market of delays in the loading and unloading of dry freight in over 60 iron ore and coal ports worldwide.

A committee will meet annually to determine the composition and the weighting of the Index and its three sub indexes: the UBS Blue Sea Capesize Index; the UBS Blue Sea Panamax Index and the UBS Blue Sea Supramax Index.

Mr Ilija Murisic executive director of Hybrid Derivatives Trading at UBS said that “The UBS Blue Sea Index opens up this asset class to institutional investors and private banking clients looking for portfolio diversification as well as providing end users with a simple way to hedge their exposure to freight price volatility.”

Mr Murisic said that “Dry freight transportation volumes to countries including China and India have grown dramatically over the last 12 months. At the same time, the number of freight derivative contracts traded has increased exponentially.”

He added that Forward Freight Agreement’s remain however predominantly a hedging instrument for ship owners, charterers and other organizations involved in the transportation of commodities and are largely inaccessible for the broad investor community.

Canada initiated an expiry review on hollow structural sections

The Canadian International Trade Tribunal, pursuant to subsection 76.03(3) of the Special Import Measures Act, initiated an expiry review of its finding made on December 23rd 2003, concerning hollow structural sections originating in or exported from the Republic of Korea, the Republic of South Africa and the Republic of Turkey.

As a result, the President of the Canada Border Services Agency initiated an investigation on April 10th 2008, to determine whether the expiry of the finding is likely to result in the continuation or resumption of dumping of the goods.

Google ranked as best brand in the world again

Google ranked as the world's most powerful brand for the second straight year, as the company capitalized on its name to sell advertising globally, according to a study by Millward Brown, which surveyed more than 1 million consumers about 50,000 brands.

The rankings reflect a company's revenue, the markets in which it competes, consumer attitudes and the brand's expected contribution to future sales and based on those factors, Google has a brand value of USD 86.1 billion.

General Electric took second place for the third year in a row. Microsoft, Coca Cola and China Mobile rounded out the top five.

Technology companies, including Google, Microsoft and Apple, accounted for 28 of the top 100 brands in Millward Brown's survey. They represented a combined brand value of USD 187.5 billion.

Mr Chávez plans to turn Sidor into a socialist company

Venezuelan President Mr Hugo Chávez strongly recommended the workers of Venezuelan Orinoco's steelmaker leaving aside the capitalist model that has damaged the company's operations.

At Florentino Productive Genetic Center at Barinas in west Venezuela, the president pointed out that the steelmaker workers are committed to turn Sidor into a socialist company, socialism!

On Thursday, some 2,000 Sidor ex workers took over the administrative head office of Venezuelan Corporation of Guayana, a mining conglomerate, from where 200 workers were not allowed to leave.

They requested the presence of Mr Rodolfo Sanz chairman of CVG who promised to discuss with them the sale of 10 percent of Sidor shares. Since Sanz was not present, the discussion on Sidor collective bargaining agreement was not held. Consequently, Sutiss does not rule out to halt the plant's operations again.

ArcelorMittal keen to end pricing dispute in South Africa

Ms Nku Nyembezi Heita, the new head of ArcelorMittal South Africa, indicated earlier this month that she would be giving urgent attention to reaching agreement with the Department of Trade and Industry on a pricing mechanism acceptable to both sides.

Briefing editors in Johannesburg, Ms Nyembezi-Heita, who succeeded Mr Rick Reato as CEO on March 1, said it was working to re establish contact with government. She indicated that the two sides had, at one stage, been close to an agreement and that it was now time to come to a sensible arrangement for South Africa.

Ms Nyembezi Heita indicated that the company is keen to re engage at a Ministerial level, noting that, at one stage, an inter Ministerial task team had been formulated to interrogate the matter. So that is the most natural starting point.

She said that negotiations between Africa’s largest steel producer and the department have proceeded in fits and starts ever since a 2004 memorandum, concluded in London, which stated that the two sides would work together on the creation of a sustainable and competitive pricing model. She said that “The agreement also triggered DTI support for the then LNM’s, now the giant ArcelorMittal, merger application with the then Iscor, now ArcelorMittal South Africa. However, talks at all levels, but especially the technical level have effectively stalled.”

This impasse also appeared to coincide with a high profile Competition Tribunal hearing into whether or not the steel company was charging excessive prices on its flat steel sold in the domestic market.

In September, the tribunal ruled against the company, imposed a record ZAR 692 million fine and called for a range of structural remedies. But ArcelorMittal South Africa was appealing the decision and had not set aside contingent liabilities for any competition related penalties.

Kobe Steel plans JPY 92 billion CAPEX in fiscal 2008

Kobe Steel Ltd plans capital investments of JPY 92 billion in fiscal 2008 ending March 31st 2009 to carry out projects to improve its line up of upper end products and upgrade its manufacturing capabilities to increase the competitiveness of the company.

Most of the investments are in the steel segment.
1. At the Kakogawa Works, it plans to increase sintering capacity.
2. Increase the production capacity at the Takasago Works' Steel Casting and Forging Plant, which makes crankshafts for large ships
3. An environment related investment is the installation of denitration equipment at the sintering plant in the Kakogawa Works.

Capital investments in fiscal 2008 will be less than the JPY 114.6 billion spent in fiscal 2007. Much of the higher capital expenditure last year went to refurbishing and rebuilding two blast furnaces, one at the Kakogawa Works and the other at the Kobe Works.

Construction costs and outlays

(In JPY billion)

Investments by segment

Main projects for fiscal 2008:
1. Kakogawa Works

2. Kakogawa Works

3. Takasago Works:

Gerdau CCA purchase a strategic move – Mr Nascimento

BNamericas reported that Brazil steelmaker Grupo Gerdau's USD 180 million purchase of a 30% stake in Guatemalan steelmaker Corporación Centroamericana del Acero has tremendous strategic potential.

Mr Raphael Nascimento an analyst at local bank BRG Capital told BNamericas that the most significant aspect of the Gerdau purchase is CCA's importance in terms of distribution assets in Central America.

He said that "CCA is actually a small family owned company but offers great potential and should guarantee a solid introduction of Gerdau in Central America adding that CCA's facilities account for just 2% to 3% of Gerdau's total assets.

Mr Nascimento also said the purchase will avert the entrance of more competitors into the region. He pointed out that ArcelorMittal, for example, also showed some interest in acquiring CCA.

The analyst said that in the recent past Gerdau has been known for buying small and mid sized companies snapping up several firms in a number of countries last year and implementing different strategies. With the CCA deal, the company now has a strong presence in a fast growing market in terms of per capita consumption. He added that if all works out well for Gerdau, the group should increase its share at CCA.

CCA distributes and produces long steel supplying the construction, automotive and capital goods sectors. It is considered to be the largest manufacturer in the region and has an annual capacity to produce 500,000 tonnes of steel and 690,000 tonnes of rolled products.

Steel prices may fall in H2 of 2008 - MySteel

Mysteel believes that high steel prices, driven by speculation, may actually slip later this year.

It said that “As per report CIS HRC prices since December have increased by USD 380 per tonne to USD 970 per tonne and CIS Rebar up USD 350 per tonne to USD 925 per tonne. The major raw materials are now up by USD 155 per tonne and much less than the rise in steel prices. We thus believe steel will fall in H2 of 2008 by around USD 100 to USD 200 per tonne.”

It added that “Our forecast is inline with the Mysteel April 7th 2008 forecast, which states Chinese commodity grade HRC prices will fall back to around USD 700 per tonne FOB from USD 900 to USD 950 per tonne now. This will take place in the next three months from slower growth in the world economy, current high inventory levels and a saturated demand.”

(Sourced from MySteel.net)

Metalico secures USD 100 million private placement

Metalico Inc a rapidly growing scrap metal recycler and lead fabricator announced it has entered into a definitive purchase agreement with institutional accredited investors to raise USD 100 million of gross proceeds in a private placement of 7% notes which are convertible into shares of Metalico's common stock and warrants which are exercisable for shares of Metalico's common stock.

In connection with the private placement, Metalico will issue 7% senior convertible notes in the aggregate principal amount of USD 100 million, which notes will be convertible into shares of Metalico's common stock at an initial conversion price of USD 14.00 per share. The notes will mature in April 2028 and are subject to certain redemption, repurchase and anti dilution rights. In addition, Metalico will issue to the purchasers of the notes a total of 250,000 warrants for shares of Metalico's common stock with a term of six years. The initial exercise price of the warrants will be USD 14.00 per share, subject to adjustment.

The Company intends to use the remaining net proceeds from the offering to fund potential acquisitions and for working capital purposes.
Morgan Joseph & Co Inc acted as placement agent in connection with the placement.

Steel plant breaks ground at Lao Cai in Vietnam

VNA reported that construction of a 1 million tonnes per year steel plant began in Bao Thang district of the northern mountainous Lao Cai province on April 27.

As per report the 152 million USD plant is financed by the Vietnam China Minerals and Metallurgy Company a joint venture of the Vietnam Steel Corporation, the Lao Cai Minerals Company and the Kunming Iron and Steel Group Co Ltd.

The construction work is scheduled to complete by 2010.

Metalico agrees to Pennsylvania acquisition

Metalico Inc has agreed to terms of a definitive asset purchase agreement for a family owned multi yard fully integrated scrap metal recycling operation in Western Pennsylvania. It intends to use approximately USD 69 million of the net proceeds of the private placement for the purchase of the assets.

The total purchase price for the acquisition is USD 76 million subject to additional closing adjustments based on the value of the inventory on hand, USD 69 million of which will be paid in cash and USD 7 million of which will be in shares of Metalico's common stock having an aggregate value of USD 7 million determined at a price per share equal to 90% of the volume weighted average price for Metalico common stock on AMEX for the twenty trading days immediately preceding the closing date.

Recession reports - Automotive decline in US deeper than expected

Purchasing.com reported that North American motor vehicle production dropped 9% during the first quarter due to the overall drop in consumer spending and the ongoing strike at parts supplier American Axle & Manufacturing Holdings.

Mr David Leiker analyst at Baird Research said that this explains why bookings are in disarray for makers of automotive grade plain and zinc coated steel, common alloy aluminum sheet, copper wiring harnesses and lead for batteries. He said that about 3,600 United Auto Workers union members have been on strike at American Axle's five US facilities since February 26th2 008.

The Detroit News this week reported that, the auto assembly cutback is much higher than the 5% forecast earlier by numerous automotive analysts and is pinned to weaker than expected sales. It said that automotive sales are falling harder and faster this year than anyone anticipated because of a toxic combination of factors not seen since the oil shock of the 1980s citing a weak economy, sagging consumer confidence, record-high gasoline prices and hard to get credit. The report said that automakers, consultants and financial analysts have been cutting their forecasts after the weaker than expected start to the year. But they have not arrived at a consensus about this sales slump because it defies the usual patterns.

Mr Jesse Toprak, director of market analysis at online automotive research site Edmunds.com tells the Detroit newspaper that “It's an unusual downturn. It's probably the deepest since the 1980s, but technically, this is still not a recession. Nothing like this has ever happened before.”

Economists Mr Carlos Gomes at Scotiabank.com tells Purchasing.com that “the deterioration in the auto marketplace probably will continue until summer,” when his forecast suggests stabilization and a slight pickup in assembly and sales in the fourth quarter. However, he still sees a 5% slide in US and Canadian motor vehicle sales for 2008 to 15.3 million units from 16.1 million in 2007.

Normally, in a weakening economy, demand for oil falls and prices subside. And interest rate cuts usually encourage banks to lend more generously, enabling consumers to keep spending. But this time, there's no such relief to encourage car buyers. Oil prices keep rising, pushed by strong demand in huge emerging economies such as China. In the United States, the impact of high gas prices has been magnified this time around because light trucks make up half the market.

AK expects record income in Q2 of 2008

AK Steel Corp, whose Q1 net income surged by 60% YoY to USD 101 million in Q1 of 2008, despite reduced shipments, estimates the net profit of Q2 to be higher.

Mr James Wainscott president & CEO of AK Steel said that they expects second quarter shipments to increase about 8% to 1.7 million tons, with the per ton selling price rising of USD 100.

He said that "Our second quarter has the potential to be our best ever of any quarterly performance in the history of the company.”

Mr Wainscott said they expect more spot market price increases in the next quarter and as such AK Steel has announced seven carbon steel increases, pushing the average price to USD 1,135 per ton.

He said that "Obviously, what happens in the future with pricing will depend, in part, on the value of the dollar, the forward cost curve for steelmaking inputs, and a host of other factors, not the least of which is demand.

The steelmaker said it expects to generate record operating profit in the second quarter of 2008 of approximately USD 125 per ton. Mr Wainscott continued that "We continue to do what we can to position the company for future success. We are re investing heavily in the business to reduce our costs and improve our self sufficiency.”

Mr Alan McCoy spokesman confirmed that however, maintenance costs also will rise by about USD 40 million, mostly due to scheduled blast furnace maintenance at Middletown Works.

Quanex gets USD 270 million unsecured credit line

AP reported that Building components manufacturer Quanex Building Products Corp secured a USD 270 million line of credit following its spin-off earlier in the week.

According to a filing with the Securities and Exchange Commission, the senior unsecured revolving credit facility is guaranteed by Wells Fargo Bank and carriers USD 2.4 million in outstanding letters of credit.

Quanex Building Products was spun off from Quanex Corp.

Harsco receives new contracts of USD 24 million

Worldwide industrial services company Harsco Corporation announced two new international contracts totaling more than USD 24 million in projected new revenues as the Company continues to see strong market opportunities in key international market sectors.

Harsco's Access Services group has won a two year contract to provide rental scaffolding and concrete formwork equipment and services during the construction of a new 800 bed hospital in the central belt of Scotland. Already underway, the new Forth Valley facility ranks as Scotland's largest public sector construction project. Harsco's contract from UK construction giant Laing O'Rourke continues the Company's strong presence in the public works sector and follows a similar contract announced by Harsco last month with French construction leader Eiffage to support the construction of a major new hospital in France.

Harsco's Mill Services group has been awarded a multi-year extension of its ongoing services to one of Brazil's leading steel mills, the Gerdau Acominas mill in Minas Gerais state. Harsco's contract includes a significant expansion of responsibilities as the mill has completed an increase in its production output from 3 million tons to approximately 4.5 million tons per year. A long standing Harsco customer at several locations, the Gerdau Group is one of the agents in the consolidation process of the global steel business, the largest producer of long steel in the Americas, and the world leader in long specialty steel for the automotive industry.

APM Terminals signs USD 112 million Vietnam contract

Portworld.com reported that the Vietnamese joint venture of APM Terminals BV Cai Mep International Terminal has signed a USD 112 million contract to construct a container terminal southeast of Ho Chi Minh City. Cai Mep International Terminal inked the construction deal with a joint venture by South Korea's POSCO EC and SAMWHAN Corporation.

Cai Mep International Terminal was formed in 2007 as a joint venture between APM Terminals, the state owned port of Saigon and state owned Vietnam National Shipping Lines.

According to reports, the new terminal is due to come onstream late 2010 with a draft of 14 meters and a handling capacity of some 1.1 million TEUs per year.

Global operators such as APM Terminals have in recent months been answering the Vietnamese government's call for foreign investments in the country's infrastructure as part of the country's drive towards modernization.

Cai Mep International Terminal's project comes on the back of several other Vietnamese port developments, which have been integral to the government's initiative to spur national economic growth.

ABB Q1 net income up by 87% YoY

Swiss engineering group ABB announced that its first quarter net income reached USD 1 billion, an increase of 87% YoY as global demand for more reliable power and improved industrial efficiency continued to grow and the company’s efforts to improve operational performance generated further benefits.

Earnings before interest and taxes reached a record USD 1.4 billion, up by 65% YoY. The EBIT margin increased to 17% from 13.2% in the first quarter of 2007. Approximately one percentage point of the EBIT margin in the first quarter resulted from gains on the mark to market treatment of hedging transactions. The gains were related mainly to the sharp decline in the value of the US dollar and increases in commodity prices during the quarter.

Orders, revenues and EBIT increased in all divisions as market demand remained robust in all regions. Utilities continued to invest in new and refurbished power infrastructure while industrial customers, especially in the metals, minerals and marine sectors, further expanded capacity on the back of high commodity prices. Industrial demand for more energy efficient technologies also continued to be a key growth driver.

Mr Michel Demaré CEO & CFO of ABB said that "ABB experienced a very good start in 2008 across all businesses and regions. Demand from utilities and most of our major industrial markets remained strong around the world, especially in emerging economies, but also in the US Customers continued to invest in areas where we are market and technology leaders power infrastructure, energy efficiency and productivity.”

He added that "These excellent results also reflect our continuing strong operational performance. Lower cost sourcing, footprint optimization, better project execution and risk management, and more efficient capacity utilization all contributed to our improved results."

Transnet will still raise ZAR 37 billion for CAPEX plan

It is reported that state owned freight logistics group Transnet still planned to raise about ZAR 13.7 billion on the local and international capital markets during its 2008-9 financial year, as part of a bigger ZAR 37 billion, five year capital raising exercise, despite the considerable tightening in credit associated with the growing risk aversion in the wake of the US subprime debacle.

Speaking at a media briefing in Johannesburg, Ms Maria Ramos CEO of Transnet said that the bulk of the money would be raised in the domestic market, but added that the group would continually review its strategy in light of any new international market developments and the global credit crunch.

Ms Ramos said that the bulk of the capital would be raised over the next three years, with ZAR 13.7 billion penciled in for the current financial year and ZAR 10 billion for 2009-10, before tapering off to about the ZAR 3.5 billion to ZAR 4 billion levels in the two subsequent financial years. She said that the ZAR 37 billion would be used to fund part of an ZAR 80 billion capital expansion of Transnet's rail, port and pipeline businesses around ZAR 47 billion of this had been allocated for growth projects and the ZAR 33.7 billion balance for replacement capital.

She acknowledged that any debt rising would be more complex and difficult than it might have been a year ago, given the growing risk aversion globally. But she insisted Transnet, which had a good local and international track record and whose credit rating had improved materially over the past few years, should be favorably positioned relative to other companies seeking to raise capital.

Ms Ramos added that infrastructure companies, in general, were more likely to attract global investor interest, reporting that potential investors still demonstrated a strong appetite for Transnet business at a meeting she attended in the UK last week.

Transnet is also convinced that its balance sheet was now robust enough to withstand higher gearing levels and that even after raising the ZAR 37 billion its self imposed debt equity ceiling of 50% would not be breached.

LME launches steel futures trading

Trading in steel futures commenced on the London Metal Exchange Ring today following the successful test phase trading on its telephone and electronic market, LME Select.

Two regional steel billet contracts have been launched, for Mediterranean and Far East delivery. Each contract is for 65 tonnes of billet. During recent trading billet prices have been in the region of USD 950 per tonne, giving a contract value of over USD 60,000. In volatile markets billet prices have trebled since 2003, driven largely by the worldwide construction boom.

Mr Martin Abbott CEO of LME noted that “The LME derives its strength from creating contracts which meet the needs of producers, consumers and merchants in the metals business. We are confident the billet markets will find the LME contracts a useful and valuable tool which will in due course bring clarity and risk management capabilities where previously there were none. We also look forward to extending the contracts to other regions as required.”

Ms Liz Milan commercial director of LME said that the 131 year old LME has a 95% share of the non ferrous metals market and this launch marks an important shift into a new market for the Exchange. She said that “Billet has key commodity characteristics, in that it is a standardized, fungible product with numerous producers and consumers and a strong merchant element. We have worked closely with all these groups to produce a contract which meets their requirements and which will bring transparency, reference pricing and risk management to this important market.”

During test phase trading, since February 25th, almost 500 contracts have been traded on both Select and the telephone market with a value in excess of USD 27 million. From today the first prompt date for the new contract will be July 28th. On the July 24th Ring trading with a daily cash prompt date out to 3 months will commence.

The LME contract model for steel mirrors that for non ferrous, which allows for the option of physical delivery to or from LME authorized warehouses, although historically less than half of one percent of non ferrous contracts are settled in this way. The option of physical delivery ensures that the LME and Physical market price remain aligned. The LME authorizes producer brands that are then good for delivery into LME authorized warehouses.

The Mediterranean contract currently has 17 approved brands and delivery points in the Marmara region of Turkey and in Dubai. The Far East contract has 17 approved brands and delivery points in Malaysia and South Korea.

SABIC eyes investments in India

Reuters reported that Saudi Basic Industries Corporation is looking to build a petrochemical plant in India and has signed a pact this year to build an ethylene derivatives complex in China.

Mr Nasser Al Torki business development manager of SABIC said that "We are looking at investing in India's petrochemical sector. We are looking for production in India. We have interest and if you have interest, you do not have numbers. India is a big market. India is an important and growing market for SABIC."

It may be noted that SABIC and Sinopec signed in January 2008 a 50:50 JV agreement to build a USD 1.7 billion petrochemical complex in China's northern city of Tianjin, due to be completed by September 2009.

Update on crude steel production in Middle East in Q1

Details of crude steel production in Middle East countries in January to March 2008 period and in March 2008 are as follows

In ‘000 tonnes
Source - IISI

Turkey has produced 2.4 million tonnes of crude steel in March 2008 up by 8.7% YoY as against 2.2 million tonnes in March 2007. Iran produced 900,000 tonnes of crude steel in March 2008 up by 8% YoY as against 828,000 tonnes in March 2007.

India to import more cement from Pakistan

It is reported that the Indian government would import more cement, if necessary, to address the demand supply mismatch in the domestic market and check any rise in prices.

Mr Ashwani Kumar Indian minister of state for industry on the sidelines of a FICCI seminar in new Delhi, told reporters that “We have allowed cement import and already a substantial quantity of 0.13 million tonnes have arrived in the country from Pakistan. If further imports are necessary to address the demand supply mismatch, it will be done.”

Mr Kumar, however, did not give the quantity of cement that would be imported.

Indian government had banned cement exports to boost domestic supplies and keep a check on rising prices.

Iranian will to develop oil industry unalterable

IRNA quoted Mr Gholam Hossein Nozari Iran's oil minister as saying that "After many years of cooperation and studies we try to reach an agreement with these companies, but if they cannot continue their cooperation by any reason, there are many other companies which are ready to cooperate with Iran, especially in the field of liquid natural gas.”

Mr Nozari answering a question about date of final agreement with India and Pakistan concerning peace pipeline, said that "Considering the importance of the issue and since it is a huge project, it needs adequate time and its progress now is satisfactory."

Wind power and turbine manufacturing potential in Pakistan

The Dawn recently published an article highlighting the potential of wind power generation and manufacturing wind power equipments in Pakistan.

It said that Pakistan, which is presently short of 3500 MW of electricity, should adopt other means for the production of electricity. It said that India is producing more than 8000 MW of electricity by utilizing wind turbines and is manufacturing these turbines and exporting them.

It said “One would be surprised to know that in the region of Nevarra, 70% of the region’s energy needs are fulfilled by wind and solar energy. It’s a classic example of using renewable energy in any country. The question that automatically comes to one’s mind is “If it can be done in Spain, why can’t it be done in Pakistan?” The answer is a big yes.”

The article added that Pakistan can manufacture these turbines and also export them to other countries as it’s an emerging mode of generating electricity and the wind turbines are in short supply the world over. It said “One has to wait quite a bit for an order to materialize. So, if we have to choose the option of producing electricity from the wind, we will have to manufacture wind turbines in our own country.”

Iran and Finland sign MoU on geology and mining cooperation

IRNA reported that the chiefs of Iranian and Finnish geology organizations have inked a MoU on mutual scientific and research cooperation.

The two sides' geology organizations will cooperate in various fields including data analysis, exploration, petrology and training.

Referring to the designation of 2008 as Year of Planet Earth, Mr Mohammad Taghi Korehi said that the Earth needs to be protected by all nations and governments living on it. He added that furthermore, all geology organizations around the world should enhance their cooperation in achieving their geological objectives.

Aramco to raise output to 12 million BPD

It is reported that Saudi Aramco is planning to raise oil output to 12 million barrels per day by December 2009 from 10 million barrels per day now.

Mr Abdullah A al Naim VP petroleum engineering & development of Saudi Aramco said that "Our medium term goal is to raise production to 12 million barrels per day. Our goal is ambitious, but achievable." He added that another 25% can be recovered with the available technologies.

Mr Al Naim further added that oil companies across the world are facing challenges in developing appropriate technology, getting qualified people and proper governance of resources. Competition for attracting skilled professionals will be tough in the coming days.

Eni signs MoU with Qatar Petroleum

Eni has signed a MoU with Qatar Petroleum International to seek joint investment opportunities in international projects in the exploration and production sector. The MoU was signed on behalf of Qatar Petroleum International by Mr Abdullah Bin Hamad Al Attiyah Qatar's deputy premier and by Eni CEO Mr Paolo Scaroni.

According to the MoU, both parties will pursue opportunities of mutual interest in order to exploit new or existing resources of natural gas and crude oil. The MoU also envisages the development of joint projects in the petrochemical industry and power generation.

Mr Al Attiya Qatari energy minister said that "Today's signature marks another milestone in Qatar Petroleum's realizing our ambition of becoming a leading global energy company, a goal that depends on the development of key projects in Africa and the Mediterranean area through the cooperation with leading partners. This agreement with Eni offers new perspectives of investment, as Italy is one of the most important partner countries of Qatar."

Mr Scaroni said that "Eni is pleased to cooperate with Qatar Petroleum International on new initiatives. The development of a strong and stable relationship with Qatar, which holds the world's third largest gas reserves and plays a leading role in the LNG market, is really important to us."

The signature of the MoU with QPI for a long term partnership is consistent with Eni's strategy to re enter in Qatar. It has also opened a Representative Office in Qatar in order to foster its relationship with Qatari authorities and companies and promote a strong team work climate.

GDS wins supply order from Dubai Metro

Trade Arabia News Service reported that Gulf Dynamic Switchgear has secured a contract worth about AED 8 million to supply low voltage switchboards and AC distribution boards for the Dubai Metro Project.

Gulf Dynamic Switchgear will also supervise the testing and commissioning of the panel boards supplied to the project. The panel boards supplied by GDS will be used at various stations and depots of the Dubai Metro project.

Mr August Schmid GM of GDS said that "Over the past 25 years Gulf Dynamic Switchgear has been privileged to work with many prestigious projects including Dubai Municipality, Motor City, Anantara Palm Jumeirah, Jumeirah Lake Towers, Jumeirah Beach Residence and Al Raha Beach Resort. While these mainly comprised governmental, residential, commercial and industrial projects, this is the first time we are working on a transport-related project."

Mr Schmid added that "GDS has worked hard to build its reputation as an organization that provides top class offerings and superb customer support. To this end we have made considerable investments in cutting edge technology and the right resources. We are excited to be a part of the Dubai Metro project and look forward to being able to offer our expertise to other pioneering projects in the UAE and Gulf region, in the years to come."

Established in 1981, GDS designs and manufactures a comprehensive range of specialized electrical products that are used throughout the Middle East in the government and private sectors. A recipient of many industry awards, GDS has completed many prominent projects, including Al Awir Sewerage Treatment Plant Extension Dubai Municipality, Al Raha Beach Resort, Jumeirah Beach Residence, and the Head Offices for National Bank of Abu Dhabi and the Abu Dhabi Commercial Bank, Rose Rotana Tower, Al Hamra Village and Textile City in Al Aweer.

Daewoo Shipbuilding to develop tourism at Duqm in Oman

Bloomberg reported that Daewoo Shipbuilding & Marine Engineering Company has signed an agreement with the government of Oman to develop tourism in Duqm. The venture will develop the port city about 450 kilometers south of Muscat into a tourist and business area and the value of the project will be decided later.

Daewoo Shipbuilding may develop Duqm into a marine resort with condominiums and hotels as well as building homes for people working in the city, which will become an industrial and tourist area by 2020. The government also plans to build a refinery complex, a crude oil export terminal and a new airport and expand port facilities in Duqm.

Mr Yousuf Hussain Kamal finance minister of Qatar said that Gulf States including Saudi Arabia and the United Arab Emirates, plan to spend a combined USD 1.1 trillion to develop their economies. That may help South Korean contractors win record orders for a third year in 2008.

Daewoo Shipbuilding is turning to new businesses to benefit from increased spending in the Middle East. Economies in the Gulf region will expand 9.2% in 2008 as oil revenue spurs spending on airports, power plants and business parks.

Qatar tenders for oil field maintenance works

MEED reported the provision of miscellaneous maintenance works on a call off basis in the Dukhan fields.

It said that “The contractor will carry out all civil and building maintenance and small power industrial electrical maintenance works on a call off basis for all operating plant facilities, distribution network facilities, the Dukhan support services area, the Qatar Petroleum support facilities Area, the Dukhan training ground, the Dukhan township and Dukhan sewage treatment works within the Dukhan fields.”

The work will include, but not be limited to, demolition and dismantling, concrete and structural repairs, ground works, concrete works, block works, structural steel and FRP fabrication, roofing works, carpentry and joinery, ironmongery and miscellaneous fixtures, water supply, plumbing and drainage, sanitary fixtures and accessories, fencing works, painting, and electrical works including supply of materials and equipment. Bid bond is QAR 500,000.

Gazprom and Qatar discuss cooperation possibilities

It is reported that Berlin hosted a working meeting between Mr Alexey Miller chairman of Gazprom Management Committee and Mr Sheikh Hamad bin Jassim bin Jaber Al Thani Prime Minister of Qatar. The meeting discussed the prospects of Gazprom’s cooperation with Qatar in the energy sector, in particular, possible implementation of joint investment projects by Gazprom and Qatar Petroleum as well as the companies’ interaction in third countries.

Qatar is the world’s third largest country in terms of natural gas reserves after Russia and Iran and its proved reserves account for 25.8 trillion cubic meters. Indigenous gas production in Qatar considerably increased over the last 5 years to reach 43.5 billion cubic meters in 2006 and 49.5 billion cubic meters in 2007. All natural gas in Qatar is produced from the North field, on the continental shelf close to the Iranian border. Domestic natural gas consumption comes to 16 billion cubic meters, which is mainly used for power generation. Qatar Petroleum is the state monopoly in the oil and gas sector of Qatar.

Qatar is becoming increasingly important in the global natural gas market mainly due to the development of LNG production and export to the following key markets namely Asian Pacific region, EURope, North America.

Coal pollution at Karachi Port - Report

The News reported that mountains of powdery coal, stored in an open berth at the Karachi Port, are playing havoc with the health of people who live or visit the area, with some even saying that the air pollution is leading to a rise in TB and cancer cases in the vicinity. As per report, coal soot blows with the wind onto ships, boats, houses and people.

As per report, earlier, coal cargoes were handled by Port Qasim but it has been shifted to Karachi Port, which has allowed coal importers the freedom to load and unload this hazardous cargo at will in the port area which is surrounded by the densely populated localities.

The report said that cranes pick coal from vessels, lift this high in the air and then drop it from a height onto standing trucks that transport the cargo to OP 1 to 4, berths located next to the Oil Terminal and the high mounds which can be seen from a distance when entering the port from the sea.

The report however added that a project, which will be set up in the western backwaters of Karachi’s coastline, involving the construction of dedicated jetties for the handling of coal equipped with proper infrastructure and procedures would overcome this problem. The project’s feasibility study was conducted at a cost of PKR 9.1 million in February 2004. The phase I of the project is proposed across an estimated 330 acres while Phase II is proposed to see an additional 330 acres. The total estimated investment in infrastructure is expected to be PKR 2,200 million and the total investment is expected to be USD 400 million.

Gulf Extrusions to participate in Batimat

Trade Arabia News Service reported that Gulf Extrusion is set to showcase its vast experience in aluminum extrusion at the Envelope Gulf Exhibition. The event will be held from April 20th 2008 to April 23rd 2008 at the Abu Dhabi National Exhibition Centre, as part of the Batimat building show.

Gulf Extrusions, through its display of high quality aluminum extruded products, will look to leverage the event’s platform to reinforce its impressive market position in the Middle East.

Mr Modar Al Mekdad GM of Gulf Extrusions said that "The continued construction boom in the region has meant that several high profile industry-specific exhibitions are being organized across the Gulf countries, making it imperative for Gulf Extrusions, as one of the biggest players in its domain, to participate in such shows in a big way. We are currently focusing on significantly expanding our operations, in line with the growing demand for our products in the region, and our participation in events of this scale will help us reaffirm relations with our local and regional customers."

Gulf Extrusions recently announced that it had begun construction of a new plant in Qatar, which is part of an intensified expansion strategy. The demand for aluminum extrusion in the Middle East region as a whole is expected to reach an average of 450,000 tonnes per annum in 2008, with KSA, Qatar, UAE and Kuwait accounting for most of the demand.

The Envelope Gulf Exhibition, organized by Reed Exhibitions Middle East, will focus on the latest cladding and glazing products, joinery systems, solar protection systems, architectural facades, access control systems and doors and shutters. Four building related exhibitions namely Structure Gulf, HVAC Gulf, Envelope Gulf and Intelligent Building Gulf make up the Building Future Gulf by BATIMAT show, the first regional edition of the Batimat international exhibition.

Gulf Extrusions, which is part of the Al Ghurair Group of Companies, produces profiles ranging from architectural sections to components for household items, AC grills and customized products. It also extrudes products of several EURopean suppliers and companies under agreement. Nearly 70% of Gulf Extrusions' production is supplied to the domestic market to support the enormous construction projects in the UAE. The rest are exported to South East Asia, other GCC countries, EURope and Canada.

Baosteel may sell shares overseas to fund CAPEX

Bloomberg reported that Baosteel Group Corp may sell shares in New York, London or Hong Kong to help raise CNY 60 billion (USD 8.6 billion) to increase capacity by a third.

Mr Xu Lejiang chairman of Bao steel said in a Bloomberg Television interview in Shanghai said that Baosteel may seek to raise CNY 30 billion through loans and stock sales for the Zhanjiang project in the southern Guangdong province.

Mr Xu said “We are considering if we should combine our overseas listing plan with the Zhanjiang project. Raising capital for our expansion would only be one reason for us to seek an overseas listing. Our other aim would be to let ourselves be valued on the open market, as a Fortune 500 company.''

Mr Xu said that he has met executives from the New York Stock Exchange and discussed listing requirements. He told that “Baosteel right now still has ample funds, because we have seen very good growth in the past few years. Baosteel will probably fund half of the Zhanjiang project from its own capital.”

BaoSteel received government approval last month to start work on the 10 million tonnes plant in Zhanjiang, which will increase capacity by 33% to 40 million tonnes. The project could cost CNY 60 billion.

CISA sees high price in future steel market

According to a report issued by China Iron and Steel Association, though the global economy growth is slowing down, the steel market in the future will be still at high price, due to coming busy season of domestic steel consumption, low stock in European and American markets and in adequate supply. However, because the country enhances to eliminate obsolete capacity, the growth rate of steel production will be low.

According to the standards of 22 kinds of products with high energy consumption announced by National Development and Reform Commission, the country will eliminate 20% to 30% obsolete capacity in the sectors of steel, nonferrous metals and construction steel. Simultaneously, the price hike of raw materials and tight capital caused some medium and small enterprises to limit and halt production, which decreases the market supply of resources.

In the report, CISA said the reasons why domestic steel prices rise are stronger domestic demand, lower stock, lower level of steel production, and tight supply of resources. The steel export in March rose month-on-month, which eased the pressure for domestic market. Hike of raw material prices as well as large increase of international steel prices boosts the steel price increase.

Boosted by the tight resources and price hike of raw materials, international steel prices have been increasing. By the end of March, global composite steel index rose to 221.9 up by 10.5% or 21 points MoM and up by 38.1% YoY.

Due to the export decrease and price increase of raw materials, the steel prices in Asian market also soared up largely. By the end of March, the Asian composite index rose 11.1%, or 25.1 points among which the CIF price of section steel in Far East market rose 17.72%, and plate products rose by 11% to 15%.

Liugang 150 tonne converter put into production

It is reported that on April 22nd, Liuzhou Iron and Steel Group’s 150 tonne No1 converter formally put into production. MCC Shijiu Construction Company just used 11 months to complete this project, created a converter construction miracle in the history of China Metallurgical.

The total investment of Liugang 150 tonne converter and continuous casting project is CNY 1.8 billion which is the largest investment project for Liugang and is the most important project for Liugang in accordance with state industrial policy that eliminate backward capacity.

The project plans to build three converters and two continuous casting machines. MCC Shijiu Construction Company will continue to build No2 and No3 converter. The 150-ton No2 converter is expected to complete by the end of May this year.

Chunyuan Steel Industry joins CSC and SMI to build CR plant

It is reported that Chunyuan Steel Industry Company plans to invest USD 11.48 million to join China Steel Corp and SMI developing cold rolled galvanized steel electric steel project in Vietnam.

Contract person of Chunyuan Steel said the total investment of the cold-rolled plant was USD 1.15 billion with the annual capacity of 1.70 million tonnes. Chunyuan Steel will hold 2% shares, 51% stock rights for CSC and 35% for SMI. And it is predicted to be put into production in 2011.

SMI and CSC will supply most hot-rolled coil products and also responsible for the feasibility research of the project. It is predicted to be finished in December this year.

Erzhong makes first piece of rolling mill housing for WISCO CSP

It is reported that on April 8th 2008, the CSP rolling mill housing F3 made by China Erzhong was formally put on the line in WISCO.

WISCO and China Erzhong are the long term strategic cooperative partners. On April 29th 2007, WISCO and China Erzhong signed CSP rolling mill manufacturing contract, all the equipments are handed over to be produced by China Erzhong.

WISCO GSP project is the number one technical transformation project for WISCO this year, and will be completed and put into production in October. At that time, WISCO will form an annual output of 18 million tons capacity.

Baosteel branch commissions special quality billet mill

It is reported that Baosteel Branch steel bar mill has formally commissioned the special quality long products project and has succeeded in trial production special quality feed material.

After commission, the project would solve the feeding materials for high grade steel such as steel cord and alloyed cold heading steel but also supply 300,000 tonnes of billets for special steel branch and supply 220,000 tonnes of high alloyed high pressure boiler pipe steel and high chrome oil casting steel to Baosteel Branch steel tube plant.

Meanwhile, it could also provide 80,000 tonnes of high value added round steel each year to the market.

Shagang to build two sintering machines in the North

It is reported that Shagang’s 550 square meter sintering project is the largest sintering project that North China Metallurgical Company undertakes and also the largest sintering project in China.

According to the “11th five year plan”, Shagang will build two 550 square meter sintering machines in North and then adjust the product structure. After the completion this project, it will help Shagang promote the elimination of backward technology.

In order to meet Shagang’s production requirements, North China Metallurgical Company organized professional and technical personnel to actively research and develop.

FerroChina appoints Merrill Lynch as strategic advisor

FerroChina Ltd. announced that Merrill Lynch has been appointed as its exclusive financial advisor to assist with a review of potential strategic alternatives available to the Company.

Shanghai Port partners Chongqing for Yangzte project

The Shanghai International Port Co Ltd has announced a partnership with Chongqing's municipal government to build 13 new ship berths along the Yangzte River.

SIPG in a statement to the Shanghai Stock Exchange said an agreement has been signed with the municipality to jointly develop 13 berths that can each handle 3,000 tonnes of cargo along a 2,300 meter stretch of the Yangzte.

The CNY 2.4 billion projects to build 12 multi purpose berths and one RO RO terminal is currently awaiting government approval and the two sides will seek other investors. This latest agreement with SIPG forms part of Chongqing's on going five year development plan which could see the municipality spend up to USD 930 million on port expansion projects.

City officials say extra capacity of about 80.16 million tonnes would be added to the port of Chongqing by 2010. Reports estimate that upon successful completion of all the proposed expansion projects, the port's handling capacity could be raised to a total of 146 million tonnes by 2010.

ENMZ starts construction of new BF

According to Metinvest's press release, Yenakievo SW has started the USD 260 million construction of new blast furnace No 3.

Millennium capital analyst said that “The launch of this BF in 2010 will allow ENMZ boosting pig iron output to 1.2 million tonnes up by 57.7% by that time. The BF will be equipped with pulverized coal injection unit which will help the plant to reduce coke usage to 466 kilogram per tonne of pig iron down by 11.7%.”

(Sourced from Millennium Capital)

Gazprom may unseat GE to take 4th spot

Bloomberg reported that Russia's OAO Gazprom is poised to unseat General Electric as the world's fourth largest company by market value after energy prices rose to records and GE's first earnings decline in five years erased USD 50 billion from its stock.

As per report, Gazprom, the world's biggest natural gas producer, increased 21% on Moscow's MICEX Exchange to USD 318.8 billion in the past year as the fuel rallied 43 % where as GE dropped by 11% to USD 322.7 billion on the New York

Crude steel in CIS countries in Q1 of 2008

It is reported that the crude steel production for CIS countries in first 3 months of 2008 with Russia topping the production of 19.206 million tonnes up by 4.8% YoY.

(In tonnes)
Source - IISI

Nytva conducts tests in powder metallurgy area

Interfax reported that Nytva Metallurgical Plant is conducting test survey in the powder metallurgy area.

The report added that the plant is testing new technologies. Changes in design of seating and sealing units of submersible pumps will enhance use properties of the products. It is also testing a new composition of enamel slip, which would make it possible to reduce manufacturing process, particularly to reduce time spent on drying bonded units.

JSC Nytva is now undertaking tests with the assistance of the Powder metallurgy research centre to streamline production of metal powder parts.

VPSDP to expand capacities and builds up output in 2008

It is reported that Volgograd plant of small diameter pipes is nearing completion of installation of its new modern rolling mill which is designated to manufacture thin wall hard wrought pipes to make condensate panels for refrigerators and hydraulic systems for cars. The equipment is scheduled to be put into pilot production in June.

Firstly, the plant will master production of pipes of 4.76mm, 6mm and 8 mm in diameter to the amount of 110 tonnes. It plans to reach installed capacity of 400 tonnes per month in November to December this year. With launching of the new mill, monthly output of refrigerator tubes may be raised to 650 tonnes.

Simultaneously, the plant is expanding its range of shaped tubes. Thus, TESA “19-63.5” mill started to produce tubes of 20x20x0.7; 25x25x1.0; 30x20x1.2 mm. The mill was launched in last November and is designated to produce shaped tubes of hard wrought metal for furniture industry and electrical products.

According to the plant, it will proceed with expansion of its product range. Standard sizes and mastering period will be set in near future.

VPSDP produced about 9,500 tonnes in January to February which is 36% YoY higher as compared to the previous year.

TMK outlook revised to negative by Moody

Thomson Financial reported that Moody's Investors Service cut the outlook on pipe maker TMK's ratings to negative from positive and confirmed the Russian steel maker’s 'Ba3' corporate family rating.

Moody's said the negative outlook reflects the integration and control challenges for the geographically diversified company and the reliance on cash flow and a large 15 month bridge facility for refinancing of maturing debt.

The ratings agency added the confirmation concludes the review for possible downgrade for TMK' ratings initiated on March 17 after the company acquired assets and subsidiaries of IPSCO Tubular's US business from Russian steel maker Evraz Group SA for around USD 1.2 billion.

The confirmation reflects Moody's view that the recent acquisition was in line with the company strategy.

GM to launch car plant at St Petersburg in November

RIA Novosti cited Ms Valentina Matvienko governor of St Petersburg, when delivering the annual address to the Legislative Assembly of the city, as saying that General Motors will launch its new plant at St Petersburg on November 5th 2008.

Ms Valentina Matvienko said “The second automobile plant of General Motors will be launched on November 5th 2008 and that laying the foundation stone of Hyundai has been slated for June when St Petersburg hosts the Economic Forum.”

The report added that General Motors, will launch in St. Petersburg the plant worth roughly USD 300 million with the annual capacity of 70,000 cars. Captiva off highway vehicles are amid the models to be made by GM in that city of Russia.

General Motors is represented in Russia already. The company has a joint venture with local automobile giant AvtoVAZ. GM-AvtoVAZ was set into motion September 2002 and it currently makes Chevrolet Niva off highway vehicles and Chevrolet Viva cars.

UC Rusal sells Pikalyovo Alumina refinery to BaselCement

Platts reported that Russian mining giant UC Rusal is to sell off its Pikalyovo aluminium refinery to cement producer BaselCement.

UC Rusal said that production of alumina at the Pikalyovo aluminium refinery had become unprofitable following significant hikes in the price of nephelione concentrate one of the primary raw materials used in the refining process at the plant in 2006.

Rusal said in a statement that it aims to be one of the most effective energy and metals corporations in the world and that a technical audit conducted last year found that the company should seek opportunities to convert the plant into use with other core products.

BaselCement is planning on investing USD 83 million into the restructuring of Pikalyovo which is expected to result in the plant's production of around 1.8 million tonnes of cement per year becoming one of the world's largest producers of the building material. It is expected that much of Pikalyovo's new cement output will meet demand from infrastructure projects around St Petersburg in 2009.

The deal is expected to close once it has passed clearance by the Russia's competition authorities.

Gurievsk reports 5.5% increase in rolled steel output in 2 months

Estar Group’s JSC Gurievsk Metallurgical Plant produced 18,643 tonnes of Martin steel in February 2008, which is a 103.6% of the target volumes. Over two months 2008, GMP produced 35,370 tonnes of Martin steel up by 14.3% YoY.

In February, the plant also produced 16,466 tonnes of bar stock, 5,323 tonnes of steel grinding balls.

Its sale revenues reached RUB 281,180 million in February, which is a 1.3% of the target value and sales climbed to RUB 596,486 million YTD up by 10% YoY.

Vostok named for investment projects in Eastern Russia

It is reported that Gazprom invest Vostok has been named as customer of Gazprom’s investment projects as part of the Development Program for an integrated gas production, transportation and supply system in Eastern Siberia and the Far East taking into account potential gas exports to China and other Asia Pacific countries.

Mr Alexander Ananenkov, Deputy Chairman of the Gazprom Management Committee said “Eastern Siberia and the Far East are to become one of the main Russian gas centers in future. The implementation of large scale projects in these strategically important for the gas industry regions envisages a significant concentration of efforts and resources of Gazprom.”

He added that “At the same time it is crucial to provide a united approach to the implementation of our projects based on high quality and timely fulfillment of Gazprom’s requirements. The mission of Gazprom invest Vostok, our subsidiary company, is to accumulate all the potential of Gazprom in the eastern Russia and to come out as a centralized customer in the region.”

Gazprom approves gradual increase of gas prices

Ukrainian News Agency reported that the board of directors of Russia's Gazprom gas monopoly has approved a gradual increase of the prices at which it sells natural gas to CIS countries and the Baltic States to the current levels on the European market.

Gazprom board of directors directed the management of the company to continue the work aimed at improving the formation of gas prices for these countries, including through market approaches.

The pricing policy of Gazprom in relation to CIS countries and the Baltic States during delivery of Russian and Central Asian gas is based on the following:

1. Gradual transition to market prices, which involves consistent increase of prices to economically justified levels
2. Taking account of intergovernmental agreements with importer countries during determination of the terms of gas contracts with partners
3. Categorization of contracts based on type of business.

As Ukrainian News earlier reported, the price at which Russian gas is sold to Ukraine and the changes for transporting Russian gas on transit through Ukraine have not been linked since 2006.

Stainless fundamentals intact but uncertainty growing – Outokumpu

Finnish steel producer Outokumpu said that uncertainty resulting from the global economic turmoil has increased but has so far not had any major impact on stainless steel fundamentals, but there is an increasing risk that the uncertainty might affect both demand and price development of stainless steel going forward.

Underlying demand for stainless steel remains healthy, with end user demand, demand for special grades and projects and demand for standard grades from the distribution sector expected to continue to be at a good level.

Distributors' inventories for standard grades are currently at normal level and Outokumpu is now selling for deliveries in June 2008. In the first quarter of 2008, growth in the apparent consumption of stainless steel flat products is estimated to have been 6% in Europe and 5% globally compared with Q4 2007.

The average base price for 2 mm cold rolled 304 stainless steel sheet in Germany was EUR 1,243 per tonne in Q1 2008 up by 17% YoY from Q4 2007, while in March 2008 the base price