May, 26 2008
Non renewal of Chiria leases is a bottleneck for SAIL
Delay in renewal of Chiria mines leases in favor of Steel Authority of India Limited is proving a bottleneck for SAIL to proceed full fledged with its proposed 12 million tonnes Greenfield steel project in Jharkhand.
Mr Ram Vilas Paswan union steel minister said that "The attitude of the Jharkhand government is indifferent on the vital Chiria mines issue. This is affecting the development prospects of the mineral rich state and the steel sector as a whole."
Mr Paswan said that the Jharkhand government should give a clear picture to the centre as to what percentage of iron ore it intends to give to SAIL from Chiria mines.
He added that "During one of the meetings on the issue with the Prime Minister, we proposed that SAIL be allotted 1 billion tonne of iron ore from Chiria mines and a MoU be signed for another 1 billion tonne. The rest could be given to private players."
Chiria mines is said to have iron ore reserves of around 3 billion tonnes. Of this, 2 billion tonnes fall within the working and non working mining areas of SAIL for which it and the Jharkhand government are into a legal battle.
EEPC wants clarity on export duty codes for steel
BS reported that Engineering Export Promotion Council has urged the government to clarify the ITC HS codes on which export duty has been levied on iron and steel items.
Mr Rakesh Shah chairman of EEPC said that the council had earlier requested the government of India to impose export duty on primary steel products and raw materials as China had done in order to stabilize prices of raw materials required by the engineering industry.
EEPC has contended that the notification has been badly drafted since it describes only the goods but not the respective ITC HS code classifications. This has led to duties being imposed even on value added items, when the government’s intention was to stabilize the prices of primary steel products like billets and pig iron.
SAIL SEZ in Tamil Nadu to be ready by 2010 – Mr Roongta
IANS quoted Mr SK Roongta chairman of Steel Authority of India Limited as saying that the special economic zone of SAIL at Salem in Tamil Nadu will be ready by 2010. He added that "It will be spread over an area of 230 acres of land and will be ready by 2010."
Mr Roongta said that SAIL has the requisite permission of the Board of Approvals of the ministry of commerce and industry to develop the SEZ exclusively meant for the steel sector.
Regarding the quantum of investment steel SEZ would attract, Mr Roongta said that such details had not yet been worked out. He added that "It will take some to make an assessment for investment. These units will manufacture architectural facades, railway applications, dairy plants, chemical and pharmaceutical plants, machines for the food processing industry, tubes and pipes, auto components, panels for lifts and so on."
It may be noted that SAIL has already signed a MoU with Infrastructure Leasing & Financial Services Limited for forming a special purpose vehicle to develop, operate and maintain the SEZ.
Essar Steel launches TMT bars as Essar Heera
PTI reported that Essar Steel today has launched its branded thermo mechanically treated rebars as Essar Heera.
Mr Vikram Amin director sales and marketing of Essar steel said that “Initially, Essar would sell the product in Gujarat and within six months of the roll out, it will introduce the product in other parts of the country.”
He said Essar Steel would not produce TMT bars on its own, but would source it from mills owned by others, but make sure that these are made according to its specifications.
He said that "Our TMT bars will have much higher yield strength and tensile strength values compared to normal TMT bars. This ensures higher material savings in construction.”
TMT bars would be sold only in steelhypermarts, the retail outlet of the company. Essar has 63 steelhypermarts in India and two in Indonesia.
SAIL BSL MD calls for increasing production volumes
Mr VK Srivastav MD of Steel Authority of India Limited’s Bokaro Steel Plant has asked employees to step up production to keep profit levels intact.
He said that unless BSL went for a massive reduction in expenses and a hike in production, it might start making losses as it is not allowed by the government to raise steel prices.
BSL posted a profit of INR 2,830 crore in 2007-08 and announced a hike in salaries in spite of being scalded by spiraling raw material costs.
SIIL sees assured iron ore supply post merger with NMDC
It is reported that the merger of Sponge Iron India Limited with National Mineral Development Corporation will ensure supply of desired quality and quantity of iron ore to SIIL's plant in Andhra Pradesh.
Mr VK Uppal CMD of SIIL said that it has been facing acute raw material shortage for a couple of years as the private firms in Karnataka that sell iron ore demand 100% advance and without bills. He added that it is difficult for a public sector firm like SIIL to obtain the raw material under such conditions.
Mr Uppal said that the merger of the company with NMDC would ensure desired supply of the raw material to the company's plant in Khammam district. He added that the merger would pave the way for implementation of the proposed sponge iron plant expansion at Paloncha by utilizing surplus land and manpower of SIIL and financial resources available with NMDC.
It may be noted that the union cabinet has approved the merger of the two PSUs under the ministry of steel in its meeting recently. The merger would be carried out within 6 months through acquisition of SIIL shares by NMDC in the public interest.
SAIL DSP 2007-08 PBT up by 62% YoY
For the first time in history, Steel Authority of India Limited Durgapur Steel Plant has posted a four figure profit before tax on its operations in 2007-08.
During the year ended March 31st 2008, it recorded a profit before tax of INR 1,009 crore up by 62% YoY as against INR 624 crore in 2006-07.
DSP has also achieved the highest ever sales turnover of INR 5,275 crore in 2007-08 up by 23% YoY as against INR 4,288 crore in 2006-07. Production of hot metal in 2007-08 stood at 2.19 million tonnes and saleable steel at 1.72 million tonnes.
Steps taken by Indian steel ministry in last 4 years to promote steel use
1) A National Steel Promotion Campaign has been launched by the union steel minister on March 20th 2007 to create mass awareness about common uses of steel and raise per capita consumption of steel to international standards. This promotion campaign is supported by SAIL, RINL, TATA Steel, JSW Limited, Jindal Steel, Essar Steel and Ispat Limited.
2) Forum of Steel Consumer Council to facilitate regular interaction of producers and consumers.
3) A Steel Price Monitoring Committee has been constituted in the ministry of steel. The Committee monitors price movements of various categories of steel product; discuss and analyze the variations, formulate strategy regarding future price, based on an adaptive model and recommend strategies vis a vis steel production, consumption and trading.
4) In order to coordinate and facilitate speedy implementation of major steel investments in the country by way of a better coordination mechanism, the government has approved constitution of an Inter Ministerial Group to monitor and coordinate issues concerning major steel investments in India. The IMG was constituted on July 19th 2007 and is chaired by secretary steel with secretaries of DIPP, mines, environment & forest, road transport & highways, shipping, member railway board and chief secretaries of concerned state government as its members. The first meeting of the IMG took place on October 30th 2007 and thereafter it has been conducting regular interactions through Inter Ministerial Group as well as separately with the various State Governments. Pursuance to the decisions held in the IMG meetings, a number of railway projects have been sanctioned during the Railway Budget 2008-09, particularly concerning the iron ore and steel investment regions in Orissa, Jharkhand, Chhattisgarh and Karnataka.
5) Quality control order on 17 selected steel products issued on November 12th 2007 under which production, sale or distribution and storage of sub standard products would be an offence after August 12th 2008.
6) Report on utilization of iron ore fines, brought out by the ministry in September 2007. Ministry will encourage usage of iron ore fines in the country and outline steps to promote its use.
7) Study on infrastructural deficiencies and requirements in the major steel producing areas, particularly with reference to Orissa, Jharkhand and Chhattisgarh has been completed.
8) For resolving Infrastructure Bottlenecks Coordination Committee, consisting of representatives from steel industry, ministry of steel and railway board has been constituted.
Indian economy riding a construction wave
India's construction industry has expanded at a compounded annual growth rate of about 10% in the past 5 years, a rate that is expected to be maintained on the back of massive infrastructure investment and rapid rise in housing demand.
Kuwait based investment bank Global Investment House, in its latest report, said that "Strong investment boom, favorable regulatory policies, a rapidly growing middle class and emergence as a low cost manufacturing destination has led to accelerated economic growth. India's GDP growth rates are the highest among the major economies of the world. The GDP from construction activity at constant prices has increased from INR 1,052 billion in 2000 to INR 1,775 billion in 2006."
According to recent estimates by the Central Statistical Organization, GDP from the construction sector is expected to increase by 9.4% during 2007 to around INR 1,941.84 billion. The GDP growth from construction has increased at a faster rate than the overall growth in real GDP.
The government of India projects a total fund flow of USD 456 billion in the 11th five year plan that runs till 2012. The resources will be mobilized from public sector funding and private investment. Of the total projected investment, it is estimated that power could get 28%, roads 19.7%, railways 14.5% and telecom about 12.3%. Power sector can see investment of INR 5,257.2 billion in the 11th plan.
An estimate from the Indian Prime Minister's Office has said that around INR 14,500 billion of investment is needed to develop infrastructure to cater to growing needs of the economy. The present size of construction industry in terms of annual monetary value is estimated at INR 3,100 billion, with an employment status of 31 million man years.
Steel hub in Orissa to get airstrip
PTI reported that, in a bid to provide air connectivity to Orissa’s steel hub Kalinga Nagar industrial complex, the state government has decided to set up an airstrip and develop road connecting to the area.
According to state finance minister Mr Prafulla Ghadei, the airstrip would be developed on the public private partnership model. He said that "The secretary of steel & mines department is asked to identify land required for the airstrip and coordinate with other departments and agencies for setting of the facility."
Besides, Mr Ghadei said that an over bridge would be constructed at Manpur railway station at an estimated cost of INR 40 crore. The cost would be equally shared by the centre and the state government. He added that the Industrial Infrastructure Development Corporation had been asked to shift its water pipeline from Jajpur Duburi road to facilitate four laning of the road.
This apart, he said that the work for the INR 320 crore Duburi Keonjhar road has already started which would help transportation of iron ore from Keonjhar to Kalinga Nagar.
Earlier, the industrialists of Kalinga Nagar which housed steel units including TATA Steel, Nilachal Ispat Nigam Limited, Jindal Stainless Limited, Mesco and others had pointed out several problems like bad connectivity to the area.
Anti POSCO activists drop immolation plans
SNS reported that the families residing in the transit colony of POSCO, who had threatened to commit self immolation in front of Naveen Niwas, the residence of the chief minister, have abandoned their plans.
Much to the relief of the district administration, the families changed their minds and were dissuaded from the extreme step. The decision of the families changed in the wake of assurance by the district administration for providing all facilities as per the rehabilitation and resettlement policy within May 24th 2008.
It may be noted that the 52 families of the transit colony had announced the drastic step after a few of the houses of the colonies collapsed in rain and squall recently.
CII-SR to form task force for steel sector in Vizag
FE reported that Confederation of Indian Industry Southern Region is planning to set up a task force for the steel sector in Visakhapatnam. The task force is primarily to drive a steel cluster in that area. About 12 to 15 steel companies are coming together to form the proposed task force for assisting in formation of a cluster besides efficient marketing as well.
Mr BVR Mohan Reddy chairman of CII SR said that the move would help to form a cluster consisting of both big and SMEs in Vizag. This apart, 6 new cluster projects for various products are also being planned for this fiscal at Vizag, Trichy, Bangalore, Chennai, Hosur and Kochi.
POSCO unit after viability is confirmed – Report
SNS reported that POSCO's Greenfield steel mill project near Paradip in Orissa will take off only after all concerns are allayed and the parties involved are convinced about its viability even if there is a delay in meeting the proposed deadline.
While claiming that only a small section of villagers are objecting to the project, a POSCO spokeswoman pointed out that it would provide jobs to thousands.
POSCO has also set up a plant based on Finex technology at Pohang that replaces conventional blast furnaces, eliminates the use of coking coal and drastically reduces emissions of pollutants. The Orissa mill, too, will be operated with Finex technology in a bid to allay Indian environmentalists’ worries on this score.
RINL makes a mark again
5S, an integrated approach for work place management has been adopted in Rashtriya Ispat Nigam Limited Visakhapatnam Steel Plant since 2004 for ensuring proper organization, neatness, cleanliness, standardization and discipline in work place for sustained manufacturing and maintenance practices.
As a mark of successful implementation, 5S certification was awarded to 4 departments namely, WRM, Utilities, CMM and Central Stores, in phase I in February 2007 by Quality Circle Forum of India, Hyderabad. Subsequently, 10 departments each have been awarded 5S certification in phase II &III in October 2007 and in February 2008 respectively.
VSP, being the first organization implementing 5S in public sector steel industry, has added another feather in the crown of its glory by receiving 5S certification for 10 more departments in phase IV. 5S is being implemented in VSP under the guidance and expertise of external auditors from Quality Circle Forum of India, Hyderabad.
Ten departments which have successfully implemented 5S were awarded 5S Certification by the certification audit team from the Quality Circle Forum of India.
During the closing function of 3 day certification audit, chief auditor Mr S Srinivasan had announced the certification and handed over the certificates to the respective departments through ED (works) Mr PVS Prasad Rao and GM Mr SDS Sambyal. Mr. Prasad Rao has congratulated all the 10 departments and appealed to all the employees to sustain the achieved status.
Indian Railways to increase container freight trains to JNPT
It is reported that Indian Railways is planning to increase the number of freight trains serving the Port of Jawaharlal Nehru to 21 per day from an average 18 at present, to cope with projected growth in container volumes.
The decision follows a meeting of the port authority with stakeholders, including Container Corporation of India and private train operators, to assess the situation based on latest traffic estimates.
The rail authority said that inland volume is expected to reach 1.1 million TEUs in fiscal 2008-09, requiring 24 trains a day and it has asked Container Corporation of India to provide more trains for main inland destinations by curtailing services covering minor depots.
Terminal operator DP World of Nehru's largest box facility said that it requires additional rail service to handle estimated volume of 1.6 million TEUs in 2008-09.
JNPT port handles about 60% of India's containerized traffic. In fiscal 2007-08, throughput increased by 23% YoY to 4.06 million TEUs from 3.3 million TEUs in 2006-07 fiscal. Based on current growth trends, it is expected to handle 4.52 million TEUs in 2008-09.
Ennore Port to finalize bidders for new terminal
BS reported that Ennore Port Limited has attracted 22 domestic and international bidders to build the INR 1,300 crore container terminal inside the port, which will have an annual capacity of 1.5 million TEUs.
Mr S Velumani CMD of Ennore Port said that, till May 20th 2008, the last date for submission of initial bids, 22 bidders have applied. The port will select only 6 bidders to submit financial bids for the facility and are likely to be selected in the 3 weeks. Once short listing process is over request for proposal and investment documents will be sent for public private partnership approval to the cabinet and finance ministry.”
Mr Velumani said that Ennore Port is also planning to build a four lane road linking the new terminal with national highway V. The National Highway Authority of India had prepared the project report and was awaiting the shipping ministry's clearance. This will help free movement to and from the container terminal.
Work on the project would commence in the next 6 to 7 months. The terminal is likely to start operations by mid 2011. The project will be built on the PPP model.
The new terminal will come with 125 acres of container yard adjoining the kilometers wide berth, which Velumani claimed was the first of its kind in India. Once the terminal starts operations, it will be able to simultaneously handle three mainline vessels with capacities of 8,000 TEUs each, as well as 4 feeder vessels. The terminal was expected to handle around 1.5 million TEUs in its first year of operations.
India eases ban on cement export to Nepal
Exim News Service reported that the Indian government has relaxed the export ban on cement to Nepal.
As per report, directorate general of foreign trade has issued a notification stating that the existing ban on export of cement and cement clinker would not be applicable on exports to Nepal.
It may be noted that the government had banned export of cement in the second week of April 28th 2008 to increase domestic supplies. It had also waived the ban for supplies made from the domestic tariff area to units in special economic zones from the export ban.
Forex reserves of India crossed USD 341 billion in 2007-08
Mr Ashwani Kumar union minister of state for commerce & industry, while addressing at India Investors’ Summit, said that foreign direct investment inflow has risen to over SD 25 billion in 2007-08 and the foreign exchange reserve crossed USD 341 billion.
Around 500 of the world’s leading boardroom executives and steering industry professionals had gathered in London to map out the core areas of investment and discuss the opportunities and challenges presented by India at the investors’ summit.
Mr Kumar highlighted the union government initiatives that had made growth more inclusive. He added that the next wave would be in the skill based manufacturing sector. He gave a background to the reform process and explained the key drivers of economic growth.
He stressed that domestic demand and investment were the key drivers of growth and, therefore, they insulated the economy to a large extent from the sub prime crisis. He calculated the growth potential of the services sector to be USD 200 billion, that would offer employment to 40 million.
Mr Kumar was confident about the sustainability of growth, as no reform measure had been reversed so far. He said that "Despite an imported inflation arising from high oil and food prices, we have been able to handle the global pressure well. We have managed the political economy."
Indian steel ministry owned units widen rural reach
This is an update on rural distribution network of steel for last 4 years
1) A decision was taken to have at least one dealer in each district in order to make available steel items to common man. SAIL and RINL are expanding their distribution networks at a fast pace
2) SAIL has 1897 dealers as on March 31st 2008 in place covering 602 districts in India. RINL has appointed 141 district level dealers so far.
3) To safeguard the interests of the common man in accordance with the UPA’s Common Minimum Program, the steel PSUs have made available items of common steel consumption in the rural areas through their dealer network at the same price as applicable in Metros. This is providing relief of about INR 600 to INR 1000 per tonne to the individual customer in the rural areas.
CSR update on Indian state owned units under steel ministry
This is an update on corporate social responsibility for last 4 years
1) All profitable steel PSU’s have earmarked at least 2% of their distributable surplus for CSR activities.
2) Steel plants to adopt villages around their plant and as part of CSR, help develop these villages as model steel villages. SAIL has selected 16 villages as steel villages in the vicinity of the steel plants; RINL has adopted one village as a model steel village.
3) CSR identified as an important parameter in the MoUs drawn up by all the PSUs with the Ministry for 2007-08, CSR activities monitored closely by the ministry.
3) Total budget of INR 230 crore allocated for carrying out CSR activities by the steel ministry PSUs during 2007-08.
4) 155 villages are being developed as model villages under CSR activities by SAIL. These villages will be developed and provided with facilities like roads, electricity, water, schools, community centers etc.
5) More than 400 health and medical camps organized by SAIL and other PSUs covering more than 500,000 people in 11 states of Bihar, Jharkhand, Chhattisgarh, Orissa, West Bengal, Tamil Nadu, Karnataka, Maharashtra, Madhya Pradesh, Haryana, Himachal Pradesh providing free health check up, pathological laboratory treatment, common medicine, immunization, etc.
6) SAIL, NMDC and RINL contributed INR 5 crore, INR 4 crore and INR 2 crore respectively towards the flood relief measures in 2007.
Financial bids for ONGC Tripura power project to be opened by June
It is reported that ONGC Tripura Power is likely to open financial bids for implementing the 750 MW gas based power project at Udaipur by mid June 2008, after receiving bids from BHEL and Alstom for the contract.
The INR 3,000 crore power project is the single largest proposed industrial investment in the entire North eastern region.
Kerala cabinet clears tender for Vizhinjam by Lanco
BL reported that Kerala cabinet has approved the tender submitted by a consortium led by Hyderabad based Lanco Kondapalli Power Limited for the development of an international container transshipment terminal at Vizhinjam. The proposal will now be sent to the centre for security clearance.
Mr VS Achuthanandan chief minister of Kerala said that the project, estimated to cost INR 5,348 crore, would create 5,000 direct and 150,000 indirect employment opportunities. Being developed on a build operate transfer basis, the project will be operated by the consortium for 30 years and then handed over to the state government.
Mr Achuthanandan added that a special purpose vehicle will be floated for the implementation of the project.
Sims JV in US acquires Pacific Coast Recycling
Sims Group Limited announced that SA Recycling, a JV between Sims Group and Adams Steel, has purchased Long Beach California based Pacific Coast Recycling LLC from Mitsui & Co Ltd and its 100% subsidiary Mitsui & Co (U.S.A.), Inc. The financial terms of the deal, including price, were not disclosed.
Pacific Coast Recycling operates seven facilities in California, including locations in the Port of Long Beach, San Diego, Fontana, and South Gate, processing both ferrous and nonferrous scrap metal with annual shipments of approximately 1 million tonnes.
Lion and Amsteel plan revamp
Malaysian steel majors Lion Group announced that its companies Lion Corporation Bhd and Amsteel Corporation Bhd are proposing to undertake a corporate and debt restructuring scheme to address their respective debt obligations.
The proposed plan which will allow the Lion Group to restructure and reduce its debts, will entail the conversion of Lion Corporation Bhd bonds/debts into Lion Corporation Bhd shares/redeemable convertible secured loan stocks, disposal of properties and Lion Corporation Bhd bonds by Amsteel Corporation Bhd, disposal of 11.1% stake in Megasteel Sdn Bhd by Lion Corporation Bhd, rescheduling of the Amsteel Corporation Bhd and Lion Corporation Bhd bonds/debts, and issuance of new warrants by Lion Corporation Bhd to its existing shareholders.
Bulgarian economy minister holds meeting with ArcelorMittal
Novinite reported that Bulgarian minister of economy and energy Mr Petar Dimitrov held a meeting with representative of Arcelor Mittal last weekend.
The meeting was at the company’s request. The company informed the minister about the course of the negotiations with the majority owner Mr Pramod Mittal for acquiring Kremikovtzi steel mill.
Representatives of Arcelor Mittal at the meeting said that “Our intentions are serious. We not only give promises but we also take real actions. That is why we provided for the loan of EUR 30 million to the steel mill so that the salaries can be paid off, raw materials can be delivered and urgent environmental problems can be solved.”
Recession reports – Mr Buffet says US is already in recession
The world's richest man Mr Warren Buffet said that the US is already in recession although some economists reject the idea for the moment.
Mr Warren Buffet in an interview with German magazine Der Spiegel said that "It is perhaps not a recession in the way that economists would understand it but people are already feeling the effects and it will be deeper and longer than people think.”
He also blamed financial institutions for introducing instruments they can no longer control and said that “the 'genie can no longer be put back in the bottle.”
US economic growth has slowed dramatically in recent months and many economists said that the US economy will experience a recession during 2008 amid a housing slump and related credit crunch.
Prices of HRC and rebar imports into South Korea increase
South Korean hot roll coil and rebar price has continued to rise, as the import price of HRC from China and Japan has been quoted at USD 1,000 per tonne.
Elsewhere, the rebar import price from China’s Rizhao Steel is about USD 940 per tonne, USD 20 to USD 30 per tonne higher than last month. Paltry quantities were provided by other mills.
South Korea's cold roll steel mills are planning to increase their July price by about USD 200 per tonne. However, they may face difficulty in passing on this price rise because buyers are expressing their dissatisfaction.
(Sourced from YIEH.com)
Metalrax to close Down & Francis business
SmallcapNews.co.uk reported that specialist engineering group Metalrax has been trying to reorganize itself during the last 12 months is preparing to close its Down & Francis structural steel business. The move comes at a time when Metalrax is attempting to streamline its core divisions.
Down & Francis was part of the group’s old Engineering Support Services operation but has been sapping profits for the last three years because of flagging sales.
Despite efforts to boost management and systems at the King Norton business, Metalrax said that its efforts had been fruitless. In the year ended December 31st 2007, Down & Francis incurred an operating loss before interest and central charges, but before exceptional costs, of GBP 0.5 million and after exceptional costs of GBP 2.4 million.
Metalrax said that savings from the continued losses incurred by Down & Francis would significantly strengthen its own financial outlook as well as free up space at the factory.
Mr Andrew Richardson CEO of Metalrax said that the company is simplifying its operations into two divisions, namely Consumer Durables and Specialist Engineering. He added that the proposed closure of Down & Francis would be another step forward in the strategic and structural turnaround of Metalrax following the review of the business announced in January 2008.
Eriez lifting magnets for steel handling
Eriez announced that its new SafeHold EPL Series Permanent Lifting Magnets can lift and transfer steel and iron without slings, hooks or cables and without marring surfaces.
Eriez said that its new SafeHold EPL are designed for a variety of machine shop operations including carrying semi finished products with flat surfaces such as machine parts, press molds for forming and steel plates.
Eriez said that its permanent lifting magnets require fewer operators and helpers and when properly installed and operated, provide greater safety than other mechanical material handling devices.
The lifting magnets turn on and off manually to provide smooth operation for hundreds of lifting and positioning applications. Electricity is not needed, so power failures cannot interrupt the operation, and they provide continuous magnet power until the magnet is turned off. They do not need DC power supply or batteries to recharge or replace.
Eriez said that several lift magnets can be combined as needed to conform to the specific shape and weight of complex work pieces.
Citi sees strong EBITDA growth for Sidenor in Q2
It is reported that Citigroup reiterates the Buy/High Risk rating on Sidenor on strong Q2 of 2008 EBITDA margins. The price target is set at EUR 14.30.
The broker notes that coupled with sales of rebar in Bulgaria, Q2 of 2008 should be stronger and if steel demand is strong in the second half of 2008 then Citi notes that it could start talking about upside to these numbers for 2008’
Citigroup analysts believe that they have another 27% to go towards the target price. According to the broker, the target price would put the shares on 10.9x 08E PE and with upside risk to the EPS if steel demand is resilient in H2 of 2008.
NASTC completes Border Story on internal trade barriers in North America
It is reported that the North American steel industry has just completed the steel border story detailing common challenges and areas for potential improvement in the movement of steel products across borders within North America.
The border story is a key deliverable developed as part of the North American Steel Trade Committee a government led body in support of enhanced cooperation on trade and competitiveness issues affecting the steel producing industry in Canada, the United States and Mexico.
The work of the North American steel industry also supports the broader Security and Prosperity Partnership of the three governments. Progress on border issues that facilitates trade while respecting security concerns will improve the overall competitiveness of the steel industry, as well as many other key economic sectors in the region. The “border story” identifies specific impediments that the proper authorities can work to address.
Petroleo finds huge offshore oilfield in Brazil
Canadian press reported that Brazil's state run oil company has struck oil in ultra deep waters off the Atlantic coast, near the huge Tupi field it discovered last year.
Petroleo Brasileiro SA reported new deposits of medium grade crude at a depth of 6,773 meters in the Santos Basin, 250 kilometers off the coast of the state of Sao Paulo. But Petrobras did not specify how much oil had been found.
The discovery lies in a deep water area near the Tupi field, which Petrobras said in November could have recoverable reserves of eight billion barrels of oil.
Tupi was the largest reported oil find in the Western Hemisphere since the Cantarell field was tapped in the Gulf of Mexico in 1976.
Petrobras has a 66% stake in the new offshore find, while Royal Dutch Shell PLC holds 20% and Portuguese oil company Galp Energia has 14%.
Furukawa to hike Aluminum prices by 10% for July shipment
Japan’s Furukawa Sky Aluminum announced that it has raised the selling price of commodity grade aluminum products.
The firm increases the rolling margin by averaged 10% or around JPY 30 per kilogram for July shipment.
North Sea oil platform evacuated after oil leak
AP reported that about 200 people were evacuated from an oil platform in the North Sea on Saturday as workers tried to contain an oil leak that occurred during maintenance work.
Operator StatoilHydro ASA said that “Oil is leaking from one of the shafts of the Statfjord A platform in the North Sea. The situation is serious and confused. The oil leak occurred during maintenance work on a pipe in one of the platform’s three shafts and that oil was leaking from one or several storage cells. The storage cells hold 1.3 million barrels of oil.”
StatoilHydro said that there were 217 people on the Statfjord A platform when the oil leak occurred. Most of them were airlifted by rescue helicopters to nearby platforms Saturday morning adding that about 60 emergency workers remained on Statfjord A.
Mr Ola Morten Aanestad a company spokesman said that two people were exposed to gas during the incident, but none was seriously injured.
He said that oil was being discharged into the sea from the platform for safety reasons and repair vessels were heading to the area to contain the spill.
StatoilHydro said that the platform began production in 1979 and is one of three being operated by StatoilHydro in the Statfjord field, located about 125 miles west of the coastal city of Bergen.
TEPCO to raise electricity prices
Reuters reported that Japan’s Tokyo Electric Power Co Ltd may consider raising electricity rates as it tries to cope with sky high oil prices and the shut down of its biggest nuclear plant.
As per report TEPCO had to close down its Kashiwazaki Kariwa plant, the world's biggest plant following an earthquake, forcing it to buy more oil and gas to generate electricity raising its thermal power costs.
Oil prices CLc1 topped USD 135 earlier this week and have risen by around a third since the start of the year, forcing companies from airlines and car makers to food companies to rethink price and other business strategies.
The closure and relentlessly rising oil prices led TEPCO to post its first annual net loss in 28 years in the business year ended in March and it expects more losses for at least the first half of the current year.
Mr Yoshinori Mori a TEPCO spokesman confirmed reported remarks made by Mr Tsunehisa Katsumata president of TEPCO that a review of rates was a topic that had to be looked at.
Goldman Sachs releases forecast on Vietnamese economy
It is reported that the US leading bank Goldman Sachs recently released the Asia Economics Flash report including a part concerning Vietnamese economy titled Vietnam Rising Inflation, growth setback and a likely roadmap of policy response.
According to the report, Goldman Sachs bank's researchers assessed, inflation is the outstanding problem as for Vietnamese economy at the moment. Last month, Vietnam's CPI rose by 21.4% relatively year-on-year, which was much higher than the last August's 8.6%.
The report said that “High inflation has threatened Vietnam's macroeconomic stability as well as the foreign capital flow into the newly emerging market, and due to this, the FDI disbursement regarded as the power for growth could be interrupted. If the situation gets worse, the result can be the considerable unbalance in the payment scale in the near future.”
The foreign bank predicted Vietnam's GDP growth could decline within this year and 2009 down to 7.3% and 7.8% in turn against the 8.5% growth rate of 2007. Meanwhile, the country's inflation will continue standing at high with the forecasted levels of 19% and 10% in 2008 and 2009 against 8.3% of last year.
In addition, according to Goldman Sachs' point of view, the sharply increased money supply is mainly to be the key reason causing the highly rising inflation in Vietnam, which has appeared since 2006 and been boosted by early 2007. Asian Development Bank's statistics showed that Vietnam's M2 money grew from 34% in 2006 to 54% in 2007 along with the lending growth also rising from 29% up to 54%.
To keep the dong/US dollar forex rate at a stable level, the State Bank of Vietnam purchased a large volume of US dollar in and pumped extra dong into the economy. Meanwhile, in a bid to avoid the US dollar glut, the central bank also issued compulsory T bills and increased the mandatory reserve ratio, however a huge volume of abundant money still exists in the economy.
As another measure, Vietnam quickly expanded the banking system, especially commercial joint stock banks and foreign banks. Apart from boosting lending market share, Vietnamese banks also sought ways to increase outstanding debts to ensure the compulsory reserve ratio of 3% for securities mortgage lending by the end of 2007.
The report provides that now is the very important time for Vietnamese lawmakers to have reasonable forward steps to help the economy soft landing. Based on the above analysis on inflation, the foreign bank's experts said that monetary policy must be Vietnam's key anti inflation tool at the moment.
Nine power plants to begin operation in Vietnam
VNA reported that Electricity of Vietnam will put into operation nine power plants with a total capacity of nearly 2,700 MW in 2008.
Electricity of Vietnam said that the new plants, including Tuyen Quang, Pleikrong, Ba Ha River, Buon Kuop power plants and Hai Phong 1 thermal power plant, will join the national grid at the end of May. In addition, the O Mon thermal plant and the A Vuong power plant’s No 1 generators are scheduled to connect to the national grid on October and December, respectively.
Electricity of Vietnam said that it is supervising and speeding up other works to enable the company to quickly put them into operation.
Taiwanese H beam prices continue to rise
Taiwan’s H beam domestic price is very likely to reach as high of TWD 40,000 per tonne in line with the constant rises in steel plate prices
New offers for H beam exports to Middle East and Europe have smashed through USD 1,200 per tonne and some large size section are between USD 1,300 per tonne to USD 1,400 per tonne.
H beam export price to Asia is about USD 1,240 per tonne CNF few days ago. Current price is approaching USD 1,300 per tonne CNF now due to tight supply. Meanwhile, A572 import price in Taiwan from China has reached USD 1,230 per tonne.
(Sourced from YIEH.com)
Japanese H2 scrap prices continue to soar
With Tokyo Steel increasing its scrap purchase price on May19th 2008 most mills have also increased scrap purchase price by JPY 1,000 per tonne. The move saw the H2 scrap basic price increase to JPY 63,500 per tonne.
Scrap market price remains strong in the Kanto region at present, as the highest H2 scrap price was JPY 64,500 per tonne and the lowest price was JPY 61,500 per tonne with the basic price being JPY 63,500 per tonne.
Newly produced scrap basic price was in a margin between JPY 66,000 to JPY 66,500 per tonne.
(Sourced from YIEH.com)
Choo Bee Q1 revenue up by 52%YoY
Malaysian Steel manufacturer Choo Bee Metal Industries said that its first quarter net profit more than doubled as it managed to sell its products at higher prices and the company expects to do well for the rest of the year thanks to rising international steel prices.
Choo Bee said that it made a net profit of MYR 16.3 million for the quarter to March 31st 2008 as compared to MYR 6.7 million for the same quarter a year ago. Revenue jumped by 52% YoY to about MYR 156 million.
Choo Bee in a statement to Bursa Malaysia said that "The current high selling prices in the domestic steel industry are expected to be sustainable given the positive outlook for domestic demand from the building and construction industry.”
It said that “We continue to broaden our export markets and are also working towards obtaining certification of line pipes by the American Petroleum Institute.”
Subsea 7 buys pipe laying vessels for USD 62 million
Reuters reported that Norwegian offshore services group Subsea 7 has bought pipe lay and construction vessel Skandi Navica for USD 62 million.
Subsea 7 said that the vessel, to be renamed Seven Navica has been under charter with Subsea 7 for eight years. But did not specify who was the seller.
Mr Mel Fitzgerald CEO of Subsea 7 said that "This investment is further evidence of our belief in the future rigid pipe lay market.”
POSCO says not shown interest in Krakatau Steel
South Korean steel maker POSCO said that it had not expressed interest in a stake in Indonesian state steel firm PT Krakatau Steel.
A POSCO spokesman said that "The Indonesian government has not announced details of a privatization plan for the company yet and we have not expressed interest in the company,"
Earlier, Mr Sofyan Djalil Indonesia's state enterprises minister said that POSCO had expressed its interest to take part in the privatization of Indonesia's biggest steel firm.
Hyundai Mipo may add a block plant in South Korea - Report
Reuters reported that South Korea's Hyundai Mipo Dockyard Co Ltd might invest KRW 190 billion (USD 181.1 million) in a new block assembly factory, where ships are part assembled, south of Seoul to expand its capacity.
Hyundai Mipo in a filing to the Korea Exchange said that it had reached preliminary agreement with a local government authority to build the factory in Ulsan where the shipbuilder has a shipyard.
Hyundai Mipo and Hyundai Heavy Industries Co Ltd the world's top shipbuilder have shipyards in Ulsan about 300 kilometre southeast of Seoul.
Hyundai Mipo did not give further details saying the agreement needs approval from its board of directors.
voestalpine to choose between Ukraine and Romania
The Viennese daily Der Kurier without citing any sources reported that Austrian steel group voestalpine AG likely will choose between Romania and Ukraine as the site of its EUR 7 billion steel plant in the Black Sea region
The newspaper reported that the Austrian group's supervisory board will address the site options at its meeting in September.
According to Der Kurier, Ukraine is a good candidate due to its proximity to voestalpine's iron ore providers in the Ukraine and the country's favorable carbon dioxide emissions regime, while Romania's status as a fellow EU member state would provide greater legal security and political stability for the plant.
Vorskla Steel unveils offer for Kremikovtzi
Dnevnik daily reported that the race for a controlling stake in Bulgaria's Kremikovtzi steel mill entered a new stage with Mr Konstantin Zhevago’s Vorskla Steel unveiling the parameters of its offer.
The paper said that Vorskla Steel is ready to spend USD 500 to USD 650 million on capital expenditures and USD 60 to USD 120 million on environmental upgrades.
In an interview with Dnevnik daily, Mr Viktor Demeniuk MD of Vorskla Steel said the strategy entailed decisive measures aimed at the mill’s financial overhaul and at attracting and training staff. Vorskla also plans to introduce a new sales policy, which eliminates mediation and relies on direct sales agreements with end customers. The offer also includes residential and social perks for Kremikovtzi’s staff.
According to Demeniuk, Finance and Credit has been in talks with the mill’s bondholders and the bank representing the five largest bondholders of the mill. According to him, ArcelorMittal was in parallel talks with the bondholders. He argued the final winner of the deal would depend on the outcome from the talks with bondholders.
The paper said that like ArcelorMittal, the other candidate for the mill, Vorskla also wants to buy Kremikovtzi once it emerges from bankruptcy proceedings and undergoes full audit into its assets to ensure that the future owner found no hidden liabilities or non existing assets.
Alstom Ecotecnia to supply wind turbines to Iberdrola Renewables
Alstom’s wind activity Ecotècnia announced the signing of a frame agreement to supply around 300 MW worth of wind turbines to Iberdrola Renewables marking Alstom’s first large agreement of this kind in wind energy since it acquired Ecotècnia in November 2007.
Under the terms of the agreement, worth around EUR 300 million, Alstom will supply Iberdrola Renewables with the turbine models Eco 74, Eco 80 and Eco 80 2.0 totaling around 300 MW, over a period of four years.
Mr Philippe Joubert executive vice president and president Power Systems of Alstom said that “This agreement clearly shows the confidence of Iberdrola Renewables, the world leader in the wind industry, in our renewable energy technology. In the wake of the EU’s call for a 20% share of renewables in overall energy consumption by 2020, we expect an ever-increasing demand for Alstom’s wind turbines in the years to come.”
Over 20 GW of new wind turbines were installed worldwide in 2007, boosting global installed capacity to over 100 GW. Europe made up 60% of this total.
Dry bulk shipping driving inflation – Report
Forbes reported that as soaring shipping rates drive the prices of dry bulk commodities higher, investors wonder what the breaking point will be.
As the delivered costs of raw materials rises the importers of those raw materials especially China and India are negatively impacted by the inflation. Eventually higher prices are passed on to the end users of those products, the consumer.
At the same time China exports a significant amount of finished products to the US which means the US consumer will ultimately pay higher prices on consumer goods imported from China, as well.
Mr Urs Dur analyst of Lazard Capital Markets said that in some cases the shipping prices for iron ore from Brazil to China have gone as high as 100 times the price of the iron ore itself. He said that with a good portion of the iron ore delivered to China delivered on the spot market, rates on Capesize ships which are the largest vessels have skyrocketed. Currently, the freight cost for a tonne of Brazilian ore to China is about USD 108 per tonne higher than the USD 80 per tonne price for iron ore from Brazilian miner Vale.
Feng Hsin to hike all product prices
Taiwan's Feng Hsin Iron and Steel announced to increase prices to cover the substantial rises in the costs of scrap and billet.
Feng Hsin Iron decided to increase by TWD 700 per tonne for their rebar after remaining the prices unchanged last week.
Feng Hsin is also adding its section steel prices by TWD 1,000 per tonne. Consequently rebar new price is at TWD 31,700 per tonne and section steel price is between TWD 31,000 to TWD 31,500 per tonne.
(Sourced from YIEH.com)
Dubai World to build ports and logistic parks in Thailand
Gulf News reported that Dubai World has signed an agreement to look at building 2 ports and a logistics park in Thailand. The MoU with the Thailand government enables the parties to undertake a feasibility study over the next year.
Dubai World said that the ports on the coasts of Andaman Sea and the Gulf of Thailand in southern Thailand will be linked by a land corridor, which will have a free trade zone or business a park. It added that "The corridor could operate as a logistics centre and may include road and rail to handle the transfer of cargo."
Mr Sultan Ahmad Bin Sulayem chairman of Dubai World said that "This is an important first step in developing world class supply chain services that will serve Thailand and the region far into the future. We are very pleased to be working with Thailand on this feasibility study."
Dubai World's port operator DP World manages Laem Chabang International Terminal at Laem Chabang Port in Thailand.
PSMC Privatization – Cause of judicial crisis in Pakistan
The Post quoted Mr Abdul Qayyum former chairman of Pakistan Steel Mills as saying that main reason behind the clash between President Mr Pervez Musharraf and former chief justice Mr Iftikhar Muhammad Chaudhry was the Supreme Court's decision to stop the privatization of the Steel Mills.
Mr Qayyum said that Mr Shaukat Aziz suddenly took the decision of privatizing the Steel Mills. He said that when the case was being heard by a full court of the Supreme Court, President Musharraf called Justice Iftikhar and asked him that the case should be decided in a manner that it does not cause any loss to the country. To this, Justice Iftikhar said, “You shouldn’t worry. I will decide the case in the best interest of the country.” The next day when the Supreme Court judgment in the case came, it was totally against the expectations of the president. It was then that a row between the president and the then chief justice ensued.
Mr Qayyum, who also heads the Pakistan Ordnance Factory, said that the deposed judges were men of character and took the decision after deeply analyzing the case.
Danube to invest USD 13.6million in Ajman plant
Arabian Business reported that Danube Building Materials is planning to invest USD 13.6 million into a new building materials facility in Ajman. The facility is expected to supply construction materials to high profile developments in the emirate, including Emirates Commercial City, Ajman Eye City, Al Helio Downtown, Al Zorah Beach project, Marmouka City, Wafi City and Ajman International Airport, along with other UAE projects.
Danube's arm Danube Contracting Company won the contract for the project, worth between USD 4 million and USD 5.4 million. M Sirajuddin has been appointed project manager. Details of the architect and MEP have not been finalized.
As the demand for grade ‘A' building materials continues to drive up regional construction costs about 30% in the past year alone, Danube wants to establish a new hub to add to its factories in China, Bahrain and the UAE.
The new plant will span over 1,114 square meters in Ajman's Al Jarf area and will be completed within 6 months.
Arabtec picks up major construction contract in Amman
It is reported that Arabtec has picked up a USD 14.5 million contract to construct the Business Heights tower in Amman. The 20 storey commercial tower will be built in Jordan's Abdali master plan development. It will be located at Naboulsi Gate within the Abdali area. It is part of a mixed use development that includes a business lounge, health club and retail stores.
The project is one of several in Amman that will change the city's landscape in the next decade. Business Heights coincides with the 200 meters tall Limitless Towers development that is also being constructed in Amman.
Mr Riad Kamal CEO of Arabtec said that "We are proud to be recognized as the main contractors for Business Heights. This comes at a perfect time for us, a time when we can see ourselves contributing fruitfully to the development of Jordan's national economy."
Arabtec recently signed an agreement with the Abu Dhabi based Tourism Development & Investment Company to design and build phase one of the USD 544.5 million Saadiyat Beach Residences community on Saadiyat Island.
Twelve firms line up for consultancy contract
A dozen local and international firms have lined up to bid for a contract to advise the government on the dualization of the Bid Bid Sur road, one of the most important carriageways linking the capital region with major wilayats in the Sharqiyah region and beyond. Dualization of this key blacktop comes in response to the directives of the sultan and fulfils a long felt need expressed by motorists and communities served by this vital carriageway.
In the race are
1) Conser & Partners
2) Consolidated Consultants
3) Renardet Ingenieurs
4) Hamza Associates
5) National Engineering Office
6) Parsons International
7) National Engineering Services Pakistan
8) Dar al Handasah
9) Khatib & Alami
10) LEA International
11) Cowi & Partners
12) BOTEK
The ministry of transport & communications is overseeing the dualization project, which when implemented next year will rank among the largest road undertakings in hand.
Presently the only lifeline into the Sharqiyah region, motorists plying the single laned Bid Bid Sur road often encounter lengthy tailbacks, particularly as people working in Muscat head home for the weekend break. Slow moving heavy vehicles can also impede the smooth flow of traffic along stretches where the carriageway twists and turns through rugged countryside.
According to officials, dualization of the Bid Bid Sur carriageway will present formidable technical challenges, given its current route partly through mountainous terrain crisscrossed by several major wadis. The 259 kilometers long single carriageway starts from the Bid Bid Interchange on the Rusayl Nizwa dual carriageway and ends at Bilad Sur roundabout in Sur town.
It is expected that the dualized road will be partly built along new alignments, designed to reduce the number of sharp bends and curves that are characteristic of the existing carriageway. The dualization project will be undertaken in two phases, the first covering a 105 kilometer stretch from Wilayat Bid Bid to Wilayat Ibra, while the remainder 155 kilometer stretch to Wilayat Sur will be implemented in the second phase. In bids that opened last month, 12 firms submitted firm offers for the contract to provide consultancy services linked to the design and supervision of the dualization project.
The selected consultant will be required to study the alignment of the dualised route, prepare the detailed design and cost estimates, and supervise construction work. A contract award is likely in the next few months, while actual construction of the first phase is due to commence only in 2009.
Five firms pre qualified for Andalusia Square Towers project
MEED reported that five local companies have been pre qualified for the main construction contract on the USD 560 million Andalusia Square Towers project in Jeddah.
The companies are
1) Saudi Binladin Group
2) Saudi Oger
3) El Seif Engineering & Contracting
4) Saudi Freyssinet
5) Al Mabani
Tender documents are being drawn up for the work and are expected to be finalized by July 2008.
Andalusia Square Towers is a 268,000 square meter mixed use development, at the intersection of King Abdullah and Andalus streets. It will include offices, residences, a five-star hotel and retail outlets.
Kinan International Real Estate Development Company is the developer. Japan's Nikken Sekkei is the consultant and the US' Hill International is the project manager. The project duration is about 3 years.
Emirates Shipping start services at Pipavav
It is reported that Emirates Shipping’s Hyper Galex II service has started calling at Pipavav port. With the fixed day weekly sailing from Pipavav, Emirates Shipping now provides shippers in Gujarat and India with direct connections to various ports in China and West Asia like Xingang, Qingdao, Shenzhen, Hongkong, Singapore, Port Klang, Colombo, Dubai and Bandar Abbas.
In all, 6 vessels of the capacity ranging from 2,500 to 3,100 TEUs are being deployed on the services to offer one of the best transit times between North China and Dubai.
Pipavav port is run by APM Terminal, one of the world’s largest container terminal operators.
Construction industry in Dubai hit by delays
UAE daily The National reported that the construction industry in Dubai is blighted by red tape, shortages of materials and a lack of skilled workers, with just one in five projects set to finish on time.
Builders said that a handful of the 4,000 projects currently in progress would be completed to schedule as residential and commercial developments compete with infrastructure projects for the same resources.
Mr Kez Taylor MD of Alec building firm said that "Only one in five projects are being completed on time. Because of bureaucracy, nobody wants to stick their head out and make a decision. But it is vital that the client takes the lead."
Mr Emil Rademeyer from research firm Proleads said that more than 90% of projects in the emirate are two months late. He added that "I do not think I have ever heard of a project being handed over early."
Delays in connecting power, water supplies and telecommunications also hamper developments, while problems were also caused by culture clash between foreign and local firms.
Iran Khodro inks automobile contract with Tunisia
IRNA reported that Iran and Tunisia have signed an agreement on cooperation in the auto industry as well as production and export of spare parts.
Mr Parviz Kazemi head of Iran Khodro Investment Company said that the two sides also agreed to produce over 1 million light and heavy vehicles in Tunisia. He added that Iran made car Samand has been welcomed by many foreign countries and expressed hope that the car could enter in the Tunisian markets in the near future.
Chinese rebar and wire rod export prices further increase
It is reported that Chinese construction steel prices seem to have stopped its downward correction and start to move up again this week.
On Shanghai market, construction steel prices have rebounded this week HRB335 20mm rebar is being quoted at 5330 to 5340 per tonne, HRB400 at CNY 5590 per tonne to CNY 5620 per tonne down by CNY 130 per tonne from peak levels. Price for commercial wire rod has returned to CNY 5850 per tonne that for hi speed materials go up by CNY 50 per tonne to 5900 per tonne.
Steel makers told Mysteel that allocation for rebar and wire rod exports is quite tight and most of them only arrange 20,000 tonne to 30,000 tonne for monthly tonnage since they normally first meet the domestic demand.
Lower output and robust demand from domestic construction are believed to be two major drivers for further price increase. Export offers are expected to witness another rise of USD 100 per tonne in the next two months.
(Sourced from MySteel.net)
Sinosteel not to take stake in BHP Billiton
According to Mr Huang Tianwen president of Sinosteel Corporation, it did not join in domestic steel enterprises to bid for BHP Billiton, but they said they are likely to buy shares from Australian iron ore mines Fortescue Metals.
It is reported that Sinosteel Corporation, Chinalco and Baosteel are bidding for stock rights of FMG now. As for this, Mr Huang said they did not exclude this possibility and expressed his optimistic attitude about the bid for Midwest.
Chinese companies investment in Australia increasing gradually at present. Sinosteel proposed AUD 5.6 per share cash acquisition for Midwest on March 31st this year and gained approval from FIRB already.
Why Baosteel postponed Q3 price announcement
Baosteel did not announce the ex works price for Q3 on May 20th 2008 and most believe that it will postpone it to end May or early next month.
If that's the case, what is the reason behind it and whether there would be change in policy?
Normally Baosteel issues price on time, but once in a while it will postpone the date. For example, it delayed by five days when announcing Q2 price. However, current market situation is quite different with that in March.
1. High steel prices have brought great cost pressure on downstream buyers and some even could not endure it.
2. May 19th to 21st 2008 is National Mourning Day for Earthquake in Sichuan province and it is not proper to announce new price during that period.
3. Market participants are worried that there probably would be market intervention by government taking into account current high price level and strong demand in earthquake hit area. That is to say, Beijing is likely to suppress market price directly or adjust export policy again.
Baosteel seems to be in a dilemma and it needs to weigh the current situation before setting the price. Market sentiment is that Baosteel would reduce the extent of increase and some even expect flat price. But we conjecture that it will raise Q3 price in the end, but the range is smaller than expectation.
(Sourced from MySteel.net)
Baosteel to supply SBQ plates for Waigaoqiao drilling platform
It is reported that the 3000 meters deep water semi submersible drilling platform, which was ranked into the national 863 high-tech development plan and on behalf of the world’s advanced level, recently started the construction by Shanghai Waigaoqiao Shipbuilding Company.
As per reports, Baosteel is designated as the only one supplier to supply the ship plates. At present, the first batch of ship plates has been delivered to the manufacturing site.
In June, 2006, since the start up of the drilling platform project, Baosteel actively communicated with the users and gained all the order forms to supply ship plates in March 20008. Since April 22nd, Baosteel had delivered 2,500 tonnes of ship plates to Waigaoqiao Company.
Deep water semi submersible drilling platform has high requirements on the ship plate’s corrosion resistance yield strength etc technical performances, at present, there are only a few advanced steel enterprises can produce this ship plate.
Tangshan Steel reveals strategic plans for coastal areas
According to Mr Wang Tianyi board chairman of Tangshan Steel Group, Tangshan Steel would construct steel sheet and high grade shipbuilding steel bases in coastal areas in Tangshan.
He said that heavy pollution enterprises including iron and steel, cement and porcelain should be moved away from the city, so the program is the best choice in Tanshan Steel and it complies with the developing strategy in the city of Tangshan.
Tangshan is already constructing the first phase of Caofeidian Project together with Shougang, which would produce 9.7 million tonnes per year high quality flat products and would be partly commissioned on October 18th 2008. The first phase of the project should be fully completed in 2010.
Secondly, Tangshan Steel should take Jingtanggang Port as the base for mergers and acquisition strategy, in order to depress iron and steel capacity in province Hebei, to eliminate outdated capacity and to raise product grade. Tangshan Steel will actively boost the construction of high grade shipbuilding steel base.
Thirdly, Tangshan Steel would speed up iron ore resources exploitation in order to form a capacity of 5.2 million tonnes per year of refined iron ore by the end of 11th five year plan and to form a capacity of over 10 million tonnes per year of refined ore during 12th five year plan.
Mr Wang Tianjin said that Tangshan Steel Group is able to achieve the aim of 30 million tonnes per year steel by 2010. In 2007, Tangshan Steel produced 22.75 million tonnes of steel and the output in 2008 is expected to be 25 million tonnes to 26 million tonnes.
Chinese FDI surges in the first four months
Xinhua quoted China Ministry of Commerce said China saw USD 35.02 billion worth of foreign direct investment utilized in the first four months up by 59.32% YoY from the same period last year.
Mr Zhang Hanya director of the Research Institute of Investment with the National Development and Reform Commission said the latest figure showed that China remained a favorite destination for overseas investment, especially big investors like the top 500 multinationals, which saw the market potential as the most important priority.
He said that China's new policies on foreign investment and rising labor costs may have deterred the establishment of some small scale foreign funded companies, but large companies could have accelerated their investment in China recently to beat the appreciation of the yuan.
China's FDI utilization has been increasing steadily this year, despite a fall in the number of newly approved foreign funded enterprises, since a raft of new measures were introduced to regulate foreign investment.
China has leveled the corporate income taxes for foreign companies with that for domestic companies. It also published a new catalogue to encourage overseas investors to invest more in high tech or environment friendly projects.
Chinese crude steel production in April up by 10.2% YoY
According to latest figures from the National Bureau of Statistics China, China's crude steel production in April 2008 up by 10.2% YoY to 44.68 million tonnes. Crude steel output for the first four months of the year was 169.78 million tonnes up by 9.1% YoY.
Steel products output for the month reached 51.62 million tonnes which was 11.7% more compared with the same month in 2007. Steel products output between January and April totaled 192.35 million tonnes 12% YoY.
China also produced 41.27 million tonnes of pig iron in April which was an increase of 9.1% YoY from a year ago. Pig iron production in the four month period totaled 159.31 million tonnes up by 8.3% YoY from the year earlier period.
Baotou Steel supplies steel for Beijing Olympic playground
It is reported that up to early of May 2008, Baotou Steel had accumulatively provided 3,300 tonnes of steel for the construction of Beijing Olympic Games playground and the varieties involved seamless steel tubes and galvanized sheets.
Seamless steel tube is the leading product of Baotou Steel, the seamless steel tube used in the construction of Beijing Olympic Games playground is low alloy seamless steel tube, mainly be used in supporting steel structure.
In 2003, Baotou Steel 1,000 tonnes of seamless steel tubes were successfully used in the construction of Beidaihe football training ground.
China produces 1 million automobiles in April
According to latest figures from the National Bureau of Statistics, China produced 1 million automobiles in April up by 22.2% YoY.
China produced 3.59 million automobiles in January to April 2008 up by 17.4% YoY.
Jinxi Steel inks EPC contract for coke project
It is reported that China Metallurgical Jingtang and Jinxi Iron and Steel Company formally signed 2.2 million tonnes per year coking project EPC general contract.
Mr Wang Xiufeng board chairman and Mr Han Jinyuan board chairman of Jinxi Iron and Steel Company were present at the signing ceremony.
Jinxi Steel 2.2 million tonnes per year coking project is the EPC project with the largest single contract amount for China Metallurgical Jingtang, the total contract prices is CNY 1.34 billion. China Metallurgical Jingtang holds the engineering design, equipments supply and the installation work.
As per reports, the project divided into two phases, the phase contract period is 15 months and the second phase contract period is 11 months.
Investment in mineral resources of Xinjiang surges Q1
According to Xinjiang Uygur Autonomous Region Development and Reform Commission, investment in mineral resources of Xinjiang grew rapidly in the first quarter of 2008.
The investment in coal was CNY 416 million up by 54.5%, in ferrous metals was CNY 112 million up by 56.7%, in nonferrous metals was CNY 177 million an increase of 1.25 times and in non metallic minerals was CNY 256 million an increase of 41 times.
The investment of ferrous metal metallurgy industry, nonferrous metals metallurgy industry and non metallic metals processing industry increased 82.9%, 69.2%, 3.1 times respectively.
Xiniiang is rich in natural resources with its geographical advantage increasingly prominent. By the end of last year, Xinjiang had attracted more than 20 large scale companies and groups from home and abroad like Zijin Mineral Industry Company, Baosteel, Shandong Lunneng Group Company and Shenhua Group Corporation etc to invest in the development of local mineral resources.
China takes measures to stabilize building material prices in quake zone
Xinhua reported that China's top economic planning agency has urged local pricing authorities in quake zones and other places of the country to strengthen monitoring on relief materials prices to better serve reconstruction in disaster areas.
The National Development and Reform Commission urged authorities in Sichuan, Chongqing, Gansu and Shaanxi, which were affected by earthquake, to stabilize prices of building materials by limiting profit margins or issuing guideline prices in the run up to the country's biggest post quake reconstruction project since 1976. Such intervention measures will cover tents and construction materials including steel, cement, glass and timber.
NDRC spokesman who declined to give his name said the agency also banned local authorities from raising prices of commodities, including electricity, oil and gas, which were set by the government.
The spokesman said any trader who jacks up prices in the quake region would be fined or banned from doing business according to the national Price Law.
Chinese HDG export prices on upward trend
It is reported that hot dipped galvanized coil price are still going up in China. On Shanghai market, 1.0mm HDG by Anshan steel is being quoted at CNY 7150 per tonne; 0.5mm material by private steel mills at CNY 7280 per tonne an increase of CNY 250 per tonne and CNY 30 per tonne respectively.
Export offers are still mixed. The range is from USD 1000 per tonne to USD 1150 per tonne FOB for 1.0mm HDG. A tier two steel maker in north China tells Mysteel that it is exporting DX51D/SGCC 1.0mm HDG at about USD 1070 per tonne June production and July shipment. There is an extra of USD 65 per tonne and USD 100 per tonne for 0.55mm to 0.59mm and 0.5mm to 0.54mm material respectively.
While a tier one steel mill in North East China is offering DX51D/SGCC 1.0mm HDG at around USD 1130 per tonne to USD 1150 per tonne FOB as base. By comparison, a Tangshan based steel mill is only quoting at USD 995 per tonne FOB for the same product. At the same time, Shougang is said to have started its HDG exports with 0.4mm at USD 1125 per tonne FOB.
Chinese HDG price is expected to remain strong in May and export tonnage for May shipment would see further rise.
(Sourced from MySteel.net)
Sumitomo Metals donates JPY 20 million for Sichuan earthquake
It is reported that Sumitomo Metal Industries, Ltd has decided to donate JPY 20 million for victims of Sichuan earthquake in China through Kansai Economic Federation to Japanese Red Cross Society.
Sichuan power structure unlikely to change in the future - official
Interfax China reported that Sichuan Province's electricity supply structure is unlikely to change in the wake of the earthquake. The report added that the earthquake, which severely damaged many hydropower plants in the region and led to electricity shortages, has prompted many to voice concern that the province is over reliant on hydropower which accounts for 62% of its energy output.
However, according to Mr Niu Li an analyst with the State Information Center of the National Development and Reform Commission hydropower is an appropriate source of power for Sichuan due to its local abundance and a 7.8 magnitude earthquake would likely have similar effects on any kind of power supply structure.
Mr Niu said "Sichuan's power consumption can be supported by upstream hydropower plants, and local coal-fired power plants can transport in coal from nearby provinces such as Yunnan."
He believes that the central government will be more cautious in selecting sites for nuclear power plants in the wake of the May 12 earthquake, but said that Sichuan's nuclear power prospects will be less influenced by the disaster than the government's macroeconomic plans.
Mr Niu said "When selecting a nuclear power plant site, the government needs to consider if the move is in line with the country's power distribution needs."
According to the NDRC, over six provinces, including Sichuan have proposed plans to the central government to establish nuclear power plants. Pengan county in northeastern Sichuan has been selected as the province's first nuclear power plant site.
Chinese railway sector to see investment gap in 3 years
China Securities Journal quoted UBS Securities in Shanghai as saying that Chinese railway sector will see an annual investment gap of CNY 200 billion in three years.
Mr Wei Qiang vice director of UBS Securities said railways need CNY 1.25 trillion in capital over the five years between 2006 and 2010 but capital expenditures will exceed CNY 300 billion annually over the next three years resulting in an investment gap of CNY 200 billion for the period.
Mr Wei said the Ministry of Railways will inject more capital in three listed companies Daqin Railways, Guangshen Railways and Tielong Container Logistics and attract more commercial capital including private capital.
He said that “It is impossible to issue bonds or loans to fill the gap, explaining that in 2006, the Ministry of Railways’ capital and interest repayments totaled CNY 56 billion far higher than the profit of CNY 3.2 billion.
Chinese refined lead, zinc and tin exports dip in 4 months
Interfax China reported that China's refined lead exports sank 69% YoY to 27,063 tonnes for the first four months of 2008, while refined zinc exports slumped 82% to 275,649 tonnes and refined tin and tin alloy exports plummeted 97% to 381 tonnes.
Baosteel forecast 9.6 million tonnes demand for SBQ steel
According to Baosteel, steel demand from Chinese shipbuilders is projected at 9.6 million tonnes in 2010 against a forecast of 7.5 million in 2008.
Mr Dai Zhihao VP of Baosteel Group said the projections reflect strong orders for new ships and repair work received by domestic shipyards.
Mr Dai said Baosteel's market share in 2007 fell to 14% from 29% as new players entered the market and existing competitors raised capacity.
Container shipping sector on consolidation path
According to a report by the French shipping market research firm AXS-Alphaliner, world’s top 10 ocean carriers account for more than 60% of the global container shipping business.
As per report, between 2000 and 2007, the container volume handled by these carriers tripled to 7.08 million TEUs and their market share rose from 49.3% to 60.6%.
The report added that the world shipping business thus is getting increasingly concentrated in a few hands. This is because large carriers keep expanding their capacity, while the smaller carriers with focus on regional markets and limited financial strength. Larger carrier acquisition of smaller carriers has also led to their higher market share.
Angang ties up with Bekaert
It is reported that Liaoning based Anshan Iron and Steel Group Corporation has recently signed a strategic cooperation memorandum with Belgium based Bekaert.
Angang and Bekaert are complementary in wire rod supply and processing and the cooperation would satisfy the soaring domestic demand for quality steel wire more effectively.
Angang is a leading steelmaker in China boasting 16 million tonnes per year of steelmaking capacity while Bekaert is a major multinational wire rod producer, which has established advanced steel wire production platform in China.
China primary aluminum imports down by 9%YoY
Interfax China quoted General Administration of Customs statistics said that China imported 16,419 tonnes of primary aluminum in April up by 203.05% from the previous month while imports for the entire first four months down by 9% YoY to 48,993 tonnes.
MCC and Jiangxi Copper ink copper mining pact with Afghanistan
It is reported that China Metallurgical Group and Jiangxi Copper Corporation signed agreement of Aynak Copper project with Afghanistan government officially.
According to the agreement, MCC and Jiangxi Copper hold 100% mining rights of this project.
Aynak Copper Mine located in Middle East of Afghanistan, is about 35 kilometers from its capital Kabul. The ore reserve of Anyak Copper Mine was 705 million tonnes containing 1.56% copper, the copper metal of this mine was 11 million tonnes.
The annual copper fines capacity of the mine was 220,000 tonnes and plans to expand to 300,000 tonnes. The construction period of this project is 5 years with the production period of 30 years. The total investment of this project was USD 4.2 billion.
Chinese HR strip price decrease a bit
It is reported that China’s strip steel market remained stable although the volumes were on lesser side.
Some traders said strip steel price declined in some areas, such as 2.5mmx183mm strip steel price in Hangzhou market in middle of May was CNY 5850 per tonne down by CNY 50 per tonne than last week and the price of same specification in Wuxi market was CNY 5780 per tonne down by CNY 20 per tonne.
Strip steel market price dropped slightly too in South China, dropped by CNY 50 per tonne to 60 per tonne and the turnover rate was not good.
Insiders predicted that the overall strip steel market will remain stable in short period and will fluctuate in some areas due to the weak demand from end users and traders selling products at lower price as well as raw material price change. Some insiders said domestic strip steel market will continue to rise later after its adjustment.
Chinese section market remains steady
It is reported that Chinese section steel price has been increasing steadily for several months, but if the demand from end users decreases due to high price pressures, current high price would lose support.
As per report market price of I-beam and channel steel in Shanghai is CNY 5,500 per tonne to CNY 5,600 per tonne as steelworks raise EXW prices, so purchase cost in traders surges as well which causes distribution price lower than purchase price.
As a result, orders for May from traders decline significantly which may influence future market trend.
Anshan to maintain targets for 2008
It is reported that Anshan Steel Company Limited indicated that the company would not raise steel output aim for 2008, although steel demand increases after the earthquake in province Sichuan.
An official from Anshan Steel revealed that the company is under full capacity now and it is unlikely for the company to further increase production plan.
Since strong demand from domestic market, Anshan Steel has already cut export plan from 3.1million tonnes in last year down to 2.5million tonnes in 2008.
Anshan Steel aims to produce 18 million tonnes of steel in 2008 up by 16 million tonnes than in 2007. The company is the listed subsidiary company of Anshan Steel group.
Update on medium plate market in China
It is reported that in 16mm medium plates from Yingkou are being offered at CNY 6580 per tonne to CNY 6600 per tonne in Shanghai and from second tier steelmakers at CNY 6240 per tonne to CNY 6250 per tonne.
In Beijing 16mm to 20mm medium plate is mainly quoted at CNY 6350 per tonne; low alloy plate at CNY 6650 per tonne.
In Tianjin prices for16mm to 20mm medium plate provided by Tianjin Steel is offered at CNY 6350 per tonne to CNY 6370 per tonne.
In Guangzhou price for 14mm to 28mm plate is posted at CNY 6700 per tonne that for 30mm heavy plate at CNY 6800 per tonne that for low alloy plate at CNY 6890 per tonne.
(Sourced from MySteel.net)
CNOOC eying Talisman and Santos -Report
Reuters quoted Hong Kong's South China Morning Post newspaper reported that Chinese oil firms are considering investing in Canada's Talisman Energy Inc and Australia's Santos Ltd.
The paper said China's No 3 oil firm, CNOOC Ltd was in talks that could lead to asset sales or a complete takeover of Talisman, Canada's No. 3 oil explorer. It also said PetroChina was considering taking a stake in Santos, Australia's No 3 oil and gas producer.
Santos said earlier this month it was considering strategic initiatives, which analysts have said could be a decision on a joint venture partner for a USD 7.7 billion, 3-4 million tonne per year liquefied natural gas plant that uses coal seam gas.
Last week Talisman said it would sell operations in the Netherlands, Trinidad and Denmark, raising about USD 2 billion and allowing it to focus on higher quality assets.
Analysts have said firms with experience in LNG such as Royal Dutch Shell, BP Plc and ConocoPhillips would be likely candidates.
Chinese steel demand to remain firm - CISA
Finance and Pricing Committee of China Iron & Steel Association has released latest monthly report on China's steel market, noting that current strong steel demand won't dwindle bolstered by reconstruction demand for infrastructure and buildings in the aftermath of the Sichuan quake.
The report points out that EU and US economy looks set to retreat this year while developing countries like China would continue to drive robust global steel demand. China's dynamic economic growth is to steam ahead, propping up steel demand growth. Meanwhile domestic steel output expansion would fall back this year as a result of spiking input costs, eliminated obsolete capacity, tight power supply, transport bottleneck and credit squeeze.
That would help restore the fundamental steel market supply and demand balance and help stabilize the steel price in turn. Moreover, rising production costs of raw materials, environmental protection and financing would also lend support to steel market.
CISA believes the underlying reason behind domestic steel price rally includes booming demand, declining production growth, steep raw materials prices and expanding price spread with global market.
The report also adds that surging steel prices have increased the purchase cost of end-users significantly. Therefore, market participants should jointly reinforce the market balance and guard against drastic price fluctuations.
(Sourced from MySteel.net)
Russian steelmakers may face price fixing probe
RusMet reported that although price of steel is going through the roof across the world, mainly because the cost of transporting it and buying the raw materials used to make it have risen dramatically, Russian Antimonopoly Service believes some Russian steel producers could be acting together to further drive up prices.
As per report, Russian Federal Antimonopoly Service is wrapping up an investigation into metals producers’ price hikes. Mr Aleksey Ulianov of FAS said that Russia would not sit back if it is found prices have been fixed. He said that “Naturally, if steel prices in Russia are rising faster than costs or if several producers simultaneously raise their prices in similar terms, signaling that there might be a cartel we will take action.”
Russian steel producers are following suit in raising prices, putting pressure on industries from construction and shipbuilding to energy exploration and oil companies. But the hike is hitting Russia’s oil companies the hardest. Pipeline costs have gone through the roof.
Mr Gennady Krasovsky deputy director of Lukoil said that “Metal component in our cost takes a significant part of the total cost. It can put us into difficult situations if the prices crucially go up.”
Severstal letter to Esmark on Wheeling Pittsburg sale
Russian steel major Severstal has written a letter to US steel maker Esmark's board on May 20th 2008 a letter justifying their offer for Wheeling Pittsburg.
The letter is re produced below
Dear Mr. Bouchard
While we were disappointed to learn of the acquisition and financing agreements that Esmark Incorporated and Essar Steel Holdings Limited announced on April 30th 2008, we appreciate being invited to continue to consider the acquisition of Esmark. Therefore, we would like to reiterate our strong interest in acquiring Esmark and believe our proposal set forth below is so compelling that it is important to make it public.
Severstal is best positioned to strengthen and grow Esmark’s current assets that fit well with our North American operations. The addition of Esmark to Severstal’s North American business will further unlock the synergistic opportunities between our facilities in Dearborn, MI, Sparrows Point, MD, and SeverCorr in Columbus, MS. For instance, the supply of slabs from Sparrows Point could substantially increase the utilization of Esmark’s hot strip mill, while the supply of wide hot band from Esmark to Dearborn could substantially broaden the customer value proposition of the combined companies. The potential synergies could be even further enhanced upon successful closing of our recently announced acquisition of WCI in Warren, OH, pending necessary regulatory approvals.
Our restructuring plan for Esmark is based on Severstal’s extensive experience in the industry, which combined with the United Steelworkers support, makes us best suited to unlock the potential of Esmark’s current operations. This acquisition solidifies our position as the fourth largest steel producer in the US by raising Severstal’s current US capacity to 11.3 million tonnes per year. It further improves our product capabilities and brings greater opportunities for increased profitability, thus enhancing value to the benefit of all stakeholders.
We propose to acquire all of the outstanding shares of common stock of Esmark for USD 17.00 per share in cash. In addition, we are also prepared, if necessary, to enter into interim liquidity substitute financing arrangements upon entering into a mutually acceptable definitive merger agreement.
This proposed transaction is not subject to any financing contingency. Consummation of the transaction would be subject only to customary conditions, including receipt of necessary regulatory approvals.
In stark contrast to the USW’s unequivocal position regarding your proposed transaction with Essar Steel, our proposal has the full and enthusiastic support of the USW, and Severstal and the USW have entered into an agreement that satisfies the successorship clause of your collective bargaining agreement. We also have been informed by the USW that it will waive its right to bid provisions in the collective bargaining agreement with respect to our proposal.
We believe our proposal could be consummated within 40 days after entering into a mutually satisfactory merger agreement. As you know, we had substantially finalized the terms of such an agreement, as well as the terms of interim Esmark liquidity financing arrangements, on April 29th 2008.
Given the USW's support of our proposal, its rejection of the proposed Essar Steel transaction and the market reaction to the USW’s position, and even assuming the enforceability and viability of the Essar Steel proposal, our proposal clearly constitutes a "superior proposal" under the publicly available terms of the Essar Steel proposal.
In addition, we would strongly encourage you to make available to us or file publicly the actual acquisition agreements entered into with Essar Steel as soon as possible.
We look forward to hearing from you and concluding a transaction expeditiously.
Sincerely,
Gregory Mason
CEO Severstal International
COO OAO Severstal
Russia and China close to deal on ESPO oil pipeline branch
RIA Novosti reported that state owned Russian oil firm Rosneft and China's CNPC are in the final stages of talks to build an oil pipeline branch from Russia's Far East to China.
Under an agreement signed between China National Petroleum Corporation and Transneft, the oil pipeline operator, the construction of the pipeline branch will be funded by China.
Mr Dmitry Medvedev Russia’s first deputy prime minister said "We have a basic agreement on this. We hope that all the main provisions, the main parameters for future cooperation will be agreed."
The ESPO pipeline is slated to pump up to 1.6 million barrels of crude per day from Siberia to Russia's Far East and then on to China and the Asia-Pacific region. The pipeline's first leg estimated at USD 11 billion was expected to be commissioned in December 2008. However, Transneft said that the commissioning of the project would be delayed from late 2008 to late 2009. The second leg will stretch for 2,100 kilometers from Skovorodino to the Pacific. It will pump 367.5 million barrels of oil annually. The capacity of the Taishet-Skovorodino pipeline, being built as part of the project's first leg, is also expected to increase to 588 million barrels from the initial 220.5 million barrel.
MMK increases export offer for CR
It is reported that Russian steel major Magnitogorsk Iron and Steel Works has increased its export offer for CRC by USD 30 per tonne to USD 1165 per tonne on CFR Turkey basis for June production.
Avtovaz to close acquisition of Izhavto in August
Interfax cited a high ranking source at Russia's biggest carmaker as saying that Avtovaz plans to close a deal to acquire Izhavto in August barring any unforeseen circumstances.
He said that due diligence will be completed in June and the deal will be prepared in July and closed in August. He added that “If no unforeseen circumstances arise.”
He also said that Avtovaz plans to utilize most of Izhavto's capacity at least 300,000 automobiles per year of the plant's design capacity of 350,000 vehicles on a three shift schedule.
Avtovaz official said when asked about the fate of Izhavto's project to assemble South Korean Kia automobiles "This is not our project and I think that the owners of the plant will take this into consideration."
He also said it was too early to talk about the price of the acquisition.
CPC shareholders undecided on expansion plans
Interfax reported that shareholders in the Caspian Pipeline Consortium have so far been unable to reach a common position on issues related to the expansion of the pipeline to 67 million tonnes from 32 million tonnes.
The report added that CPC shareholders discussed the terms of a memorandum on mutual understanding on the principles of the project to expand the CPC pipeline from May 20th to 22nd 2008. The parties were only able to come up with further steps aimed at forming a common position among the consortium shareholders on the parameters of the project's development.
The shareholders approved annual reports and an accounting report on the Russian and Kazakh branches of the CPC for 2007 and also distributed the profit received last year. They also approved audit companies for this year.
Mr Viktor Khristenko Russian Industry and Energy Minister and Mr Sauat Mynbayev Kazakh Energy and Mineral Resources Minister reached a common position on the expansion of the CPC's throughput capacity in early May.
The expansion of the CPC, which is to be carried out in two phases before 2012, will increase throughput capacity to 67 million tonnes of oil from 32 million tonnes. As part of the expansion, an additional 17 million tonnes of Kazakh oil are to be shipped to the Burgas-Alexandroupolis pipeline.
Ukrhazvydobuvannia inviting investors to develop 4 gas deposits
Mr Borys Syniuk first deputy board chairman of the company while speaking at the International Energy Summit in Kyiv said that Ukrhazvydobuvannia is planning to draw investors in the development of four natural gas deposits in 2008.
He said he implied development of Kobzevske deposit, where it is planned to drill a test hole of 6,300 meters.
The company is also planning to develop Kamyshnianske deposit in Kirovohrad region, where it is planned to drill two wells of 5,660 and 6,130 meters for further prospecting of natural gas and gas condensate reserves.
Ukrhazvydobuvannia is planning to draw investors from Berezivske deposit in Kharkiv region to drill 6,250 meter deep Test Well #205, and to prospect Vorobievsko-Vidradnenske deposit in Poltava region with an expected resource of 21.7 billion cubic meters of gas.
Ms Tymoshenko awaiting to ink gas agreement with Russia
Ukrainian News Agency reported Ms Yulia Tymoshenko prime minister of Ukraine is waiting to sign a strategic agreement with Russia on gas supplies to Ukraine.
Ms Tymoshenko made a corresponding announcement at a meeting with Mr Vladimir Putin prime minister of Russia during a session of the council of the CIS government heads in Belarus.
Mr Putin had thanked Ms Tymoshenko for timely settling debts for gas. He had said that "The Russian Federation's government is grateful for the Ukrainian government in time settled the problem of clearing debts for the delivered gas." Mr Putin had recommended that Ms Tymoshenko give an order to relevant structures concerning timely payment for deliveries of Russian gas.
In her turn Ms Tymoshenko marked Ukraine anticipating a beneficial effect of the gas talks with Russia, under results of which a strategic contract on supplies of gas to Ukraine will be signed. She said that "I think that such a strategic contract would be a stabilizing factor in the gas issue."
Ms Tymoshenko also pronounced confidence in that the Ukraine and Russia relations will be further developing more dynamically.
Ukrainian 2008 GDP growth rate at 5.9%
Ukrainian Journal reported that Moody's Investors Service projects gross domestic product growth in Ukraine in 2008 at 5.9% with inflation at 14.5%.
According to Moody's, in 2009 Ukraine's GDP is expected to grow by 6.5%, while inflation is forecasted to drop to 12%.
Moody's predicts Ukraine's nominal GDP in 2008 at USD 162.7 billion and in 2009 it is projected at USD 194.1 billion.
Azovstal proposes statutory fund increase
It is reported that shareholders of Azovstal will vote increase the statutory fund to USD 216.7 million up by 0.2% at the AGM scheduled for July 4th 2008.
Azovstal plans to issue 9.70 million new shares at par of USD 0.05 per share. The new shares will be sold in a private placement between September 17 and October 3rd 2008.
This minor change in share capital goes in line with the process of restructuring of System Capital Management/Metinvest Holding. We remain positive on the stock and recommend participating in the share issue.
(Sourced Millennium capital)
Lundin Petroleum starts offshore drilling in the Caspian Sea
Interfax reported that Sweden's Lundin Petroleum, which holds several Russian assets, has commenced drilling of the Morskaya-1 well in the Lagansky block in the Caspian Sea. The well's planned depth comes to two kilometers.
Under Lundin's initial license agreement, the first well at the Lagansky block was to have been drilled in 2006. However, the shallow water in the drilling area dictated construction of a special drilling complex with a jackup-platform and a shallow draft vessel. The complex was completed by the end of 2006 but drilling was postponed due to the approach of ice.
In 2007 Russian subsurface resource agency Rosnedra ordered Lundin's license revoked. However, the Swedish company was able to retain the license after signing on Gazprom to the project having offered the gas giant an option to acquire a controlling stake in the block.
In addition, Lundin Petroleum also owns 50% stake in the Russian development projects at the fields Sotchemyu-Talyu, North Irael, Caspian and Ashirov. Lundin's acquired its Russian assets in August following its acquisition of Canada's Valkyries Petroleum Corp.
UES seeks USD 425 million for TGK-12 stake
Reuters reported that the Russian government's stake in regional power producer TGK-12 KZBE.RTS will be sold on June 25th 2008 with a starting price of RUB 10.03 billion.
Russia's former state power monopoly RAO UES is selling its power generating firms such as TGK-12 as part of a sweeping reform that will see the Soviet-era monopoly dismantled and mostly privatized by July 1st 2008.
The sale organizer Renaissance Capital said in a statement that TGK-12 KZBE.RTS is located in southern Siberia and is also known as Kuzbassenergo. UES will sell 13.38 billion shares.
The sale will represent 18.9% of the enlarged share capital of TGK-12, in which Siberian Coal and Energy Company already has effective control.
Ford to build a second plant in Russia
Reuters cited Mr Jim Tetreault vice president of Ford European as saying that Ford Motors plans to build a second auto plant in Russia.
Mr Tetreault said the site for the new plant will be chosen next year. He also said the capacity of the Ford plant in Vsevolozhsk, Leningrad Region will be brought up to 125,000 vehicles to meet the demand for Ford cars in Russia.
Mr Tetreault did not specify what models would be made at the new plant. Experts suggest that the Fiesta family car and Kuga crossover SUV may be chosen.
Russian JV building USD 100 million terminals
It is reported that Russian container shipping company TransContainer and railway operator Transgroup have signed an agreement to build a container terminal at a cost of over USD 100 million at the Zarubino seaport in the Primorsky region.
The companies plan to set up a joint venture to implement the project.
The terminal, covering over 18 hectares will have an annual capacity of 400,000 TEUs and is expected to be completed in five years.
Ferrochrome price could rise above USD 4 per pound in Q3 – Report
Market players attending the ICDA’s annual meeting in Paris said that the ferrochromium price could rise above USD 4 per pound in the third quarter of 2008 on tight supply from South Africa and strong demand.
Mr Robert Yildirim president of Yildirim Group said that "All bets are off on how high ferrochromium prices and particularly high carbon ferrochromium prices could go in 2008."
Mr Yildirim said that the contract price for Eti Krom material could rise by up to 25 cents per pound in the third quarter from USD 3.45 to USD 3.50 per pound in the second quarter. He expects South African benchmark prices to rise by 50 cents per pound to USD 2.42 per pound in the third quarter.
Macquarie analyst Mr Adam Rowley agreed with Mr Yildirim’s optimism and predicted that the price of high carbon material will average USD 3 per pound in 2008. He also said that there could be a 33.3% increase in the price of ferrochromium in 2008.
Mr Vanessa Davidson of CRU noted the soaring costs of freight and coking coal, and said that ferrochromium producers could begin buying their own ships for transport in an attempt to combat the rising freight costs.
JSL aims for 2.5 million tonnes stainless capacity by 2012
As per reports, Indian stainless steel major Jindal Stainless is planning to have around 2.5 million tonnes per annum capacity of stainless steel by 2012. It will invest INR 60 billion over the next 2 to 3 years to expand manufacturing facilities.
JSL is establishing a Greenfield stainless steel plant in Jajpur district in Orissa and has already ordered equipment for the second phase of the project that will double capacity to 1.6 million tonnes per annum. Cold rolling capacity at the plant in Hissar will be expanded to 400,000 tonnes per annum from 275,000 tonnes per annum.
Chromex Mining buys remaining 49% of Ilitha Mining
Chromex Mining Plc recently announced that it has acquired the remaining 49% stake in Ilitha Mining Pty Limited, from Hernic Ferrochrome Pty Limited for ZAR 45 million, which includes the repayment of all Ilitha shareholder loans.
Chromex Mining Plc also said that it is very optimistic about the near term production potential of the 15 million tonne Stellite chrome project, particularly in view of the current strong market for chromite with a new order mining right in place encompassing the entire 271 hectare Stellite property.
Mr Russell Lamming CEO of Chromex Mining said that "Our strengthened operations team looks forward to bringing both Stellite and our original Mecklenburg project into production as soon as possible."
Stability is the watchword as chrome market gathers - ICDA
Stability was the keyword as the chromium industry met in Paris for the annual meeting of the ICDA. Producers, traders and consumers are hoping that the conference will help to calm market sentiment.
The ferrochromium price has soared in recent months as a result both of the strong growth in the Chinese stainless steel industry and the power crisis in South Africa that has left producers operating at 90% of capacity.
The market has welcomed the current consolidation in high carbon ferrochromium prices but some consumers are already suggesting a rollover in the current price of USD 1.92 per pound for the third quarter of the year. Simultaneously, there are rumors in the market that the contract price could be settled as high as USD 2.50 per pound for the third quarter.
Meanwhile, the producers have dismissed the talk of a rollover in the price. They, and traders, have also downplayed talk of cuts in demand from Chinese stainless steel mills. They are confident that demand will remain strong.
IFM not to expand furnaces without confirmation from Eskom
It is reported that International Ferro Metals will not begin constructing the furnaces to expand ferrochromium production without confirmation from Eskom that it will be guaranteed the necessary power for the project.
IFM announced in July 2007 that it would expand ferrochromium production capacity by up to 150% to 665,000 tonnes per year. IFM expects Eskom to honor its commitment to the project, but says that the utility has a poor record of both delivery and meaningful communication with the industry. It expects confirmation of the necessary power supply by August 2008.
If the expansion of ferrochromium production fails to materialize, IFM will still be able to increase its production of chromium ore from its Skychrome project. Chromium ore is currently selling at USD 350 per tonne. Sales of chromium ore are expected to realize almost as much as their ferrochromium.
Mining from the Skychrome project will start in September 2008. The Skychrome deposit will produce 500,000 tonnes in 2010, rising to 2.4 million tonnes per year by 2014.
IFM’s production of ferrochromium fell by 13% in the first quarter of 2008 to 52,420 tonnes due to power cuts, interruptions in water supply as a result of load shedding and some maintenance issues. Sales of ferrochromium totaled 56,900 tonnes for the quarter as the company worked off its stockpile from 2007.
IFM is currently producing at 87% of capacity. It expects to be producing 12% of its own power by July 2009.
Chinese price cut not to effect stainless steel makers in EU
Traders and analysts say that the recent price cuts in Chinese stainless steel are unlikely to have an impact on the European stainless steel market.
The narrowing price gap between European and Asian stainless steel prices is widening again, but buyers are unlikely to risk Chinese exports because of the current anti dumping investigation into Chinese cold rolled stainless exports.
Market observers said that the current situation in the European stainless steel market is normal, stable and unexciting. Lead times from European mills are eight to twelve weeks. Price cuts are not anticipated.
However, a Swedish trader has reported weak end user demand for stainless steel in the Nordic region compared to demand over the previous two years.
Lockley Stainless opens new service centre in Wolverhampton
UK stainless trading and distribution company Lockley Stainless Steels has expanded into a custom built service centre in Wolverhampton that will house coil to sheet processing and polishing facilities.
This is the first such investment by a UK owned stainless steel distributor for many years and Lockley intends asserting its position as a major player in UK stainless steel distribution.
Lockley has two other service centers in UK, in Dewsbury and Cambridge.
Power crisis in South Africa to get worsened – Xstrata Alloys
Mr Jeff McLaughlan marketing director of Xstrata Alloys, while speaking at the ICDA annual meeting in Paris, said that the power crisis in South Africa will get worse before it gets better.
Mr McLaughlan has warned that 2012 will be the year in which the market will see power in critically short supply. The power shortage has cast doubts on expanding ferrochromium capacity. He added that Xstrata is well placed to deal with the power shortage as the technology at its Lion project is extremely energy efficient.
He warned that producers in South Africa should brace themselves for sharp increases in power costs, which could double by 2012.
Chinese stainless steel demand to reach 9.5 million tonnes by 2012
According to Baosteel, stainless steel demand in China is projected at 9.54 million tonnes in 2012 as 6.76 million tonne in 2008.
Mr Dai Zhihao VP of Baosteel Group said that Baosteel's stainless steel capacity is around 1.8 million tonnes, around half of market leader Tangshan, but added that he expects Baosteel to