Indian domestic steel price declines

Post Dusshera festival, the Indian domestic steel market tumble was revived without any let up. Long Product Price Index and Flat Product Price Index fell by 87 and 46 points respectively. The overall price index fell by 68 points.

LPPI – Long Product Price Index
FPPI – Flat Product Price Index
ISPI – Indian Steel Price Index

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Pencil ingot prices across India see major decline

Melting scrap
80:20
HMS

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Sponge iron

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Pencil ingot

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Rupee weakening reduces workability of steel imports into India

ET reported that the US financial crisis and a depreciating rupee are likely to arrest the demand for higher steel imports into India. The development comes at a time when the domestic steel industry is already facing a spike in imports with demand outstripping production at home.

An industry source said that “The US steel industry is facing the brunt of the crisis which originated in the real estate sector. The realty sector accounts for nearly 50% of steel demand in the US. The resultant slump in US steel sector would have led to flooding of steel into India. However a weak rupee has made imports costlier and may in turn, restrain unnecessary imports.”

A steel ministry official said that “This year, imports may be higher than last year. Global prices are softening and this has led domestic producers to cut down prices too. However the impact will take some time to get reflected on imports since it is always follows after a lag.”

Demand growth at 11.2% has far outstripped domestic production in India which has seen a growth of 5.5% this year. On a half yearly basis, steel imports have touched around 3 million tonnes, up 50% over imports in the same period last year.

But the falling global levels, especially FOB Black Sea, are likely to mitigate the effect of weakening of rupee.

Long products prices declines in India continues

Delhi

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Chennai

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Mumbai

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Kolkata

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Ahmedabad

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Kanpur

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Indore

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Raipur

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Mandi

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Bangalore

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Pro POSCO villagers on the run - Report

Statesman News Service reported that 5 pro POSCO people have fled Govindpur village due to intimidation and threat by the anti project groups who have now erected check gates to prevent police and project authorities from entering the village.

Several families who are perceived to be in favour of the project are living in constant fear of being attacked by the anti project activists said that villagers decrying the lack of security and insensitiveness of the state government.

Even police officers admit that there is trouble in Govindpur and some of the pro project activists had deserted the village due to threat and fine imposed by the anti project group.

The recent increase in activities of the POSCO Pratirodh Sangram Samiti, spreading the anti POSCO movement since 3 years has taken place due to the arrest of Mr Prakash Jena last month. This triggered angry reactions from the PPSS which alleged that those who had assaulted Mr Jena were yet to be nabbed by the police. They suspect that pro project activists of Govindpur village had attacked Mr Jena. Since then the PPSS has stepped up pressure on their rivals at Govindpur village. They targeted 5 people who fled the village on October 6th 2008.

Mr Abhaya Sahoo President of PPSS however alleged that it was the POSCO supporters who had created law and order problem in Govindpur village by assaulting Mr Jena. He also pointed out that 21 POSCO supporters who were arrested by Kujang police for Dula Mandal murder case have been released from jail.

Flat products price in India remain stable

Mumbai:

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Chennai

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Delhi

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Kolkata

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Indore

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Bangalore

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Ahmedabad

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Ludhiana

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Kanpur

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Indian Railways carry 401.89 million tonnes of freight in H1

It is reported that Indian Railways have carried 401.89 million tonnes of revenue earning freight traffic during April to September 2008. The freight carried shows an increase of 31.64 million tonnes over the freight traffic of 370.25 million tonnes actually carried during the corresponding period last year an increase of 8.55% YoY.

During the month of September 2008, the revenue earning freight traffic carried by Indian Railways was 65.89 million tonnes. There is an increase of 4.98 million tonnes over the actual freight traffic of 60.91 million tonnes carried by the Indian Railways during the same period last year, an increase of 8.18%.

Era Infra bags a contract worth INR 417.8 million

My Iris reported that Era Infra Engineering has informed that it has bagged a contract for construction of Sarita Vihar Depot cum Workshop in between Madanpur Khadar & Aaligaon on Mathura Road for Central Secretarial - Badarpur Corridor of Phase-II of Delhi MRTS by Delhi Metro Rail Corporation valuing INR 417.8 million approximately.

Recently, the company has informed that its joint venture had secured a contract worth INR 1.13 billion.

Container freight rate to Europe down by 30%

BL reported that container freight rate from India to Europe has dropped by nearly 30% in the last one year.

According to industry sources, the situation is even worse in countries such as Hong Kong and China with freight rates to Europe dropping by nearly 70% in the last one year. While this is good news for exporters, shipping lines are badly affected.

The source said that the freight rate from Chennai to ports in the UK and Antwerp and Hamburg is around USD 700 a twenty foot equivalent unit compared with around USD 1,000 and USD 1,100 a year ago. The situation is almost the same in other ports. On the other hand, a 20 feet container from Hong Kong to Hamburg could be shipped for around USD 350 compared with around USD 1,400 TEU a year ago. There is over capacity in the Asia-Europe route.

A source said that “We are better off than some of our competitors as there is overcapacity in other countries. For exporters, this is the best rate they can get from India. But for shipping lines, this is a bad situation with high bunker and fuel costs.”

The Source added that some of the major commodities from India to Europe include leather garments and textiles. Volume continues to be high.

Mr Baalu sanctions road improvement works in Maharashtra

It is reported that Mr Thiru T R Baalu union minister of shipping, road transport and highways has approved a sum of INR 120.87 crore for road improvement works in the state of Maharashtra under the Central Road Fund Scheme. This amount would be spent on 34 different stretches of State Highways and Major District Roads in various districts of the State.

Some of the major projects out of these 34 projects are:

1. An amount of INR 125 million has been approved for road improvement work on the stretches of SH-30 and SH-25 in the district of Nasik.

2. An amount of INR 80 million has been approved for improving stretches on SH-10 and MDR-12 in Pune district.

3. An amount of INR 77 million has been approved for stretches on SH-141 and also for construction of bridge at Tal Akkalkot in the district of Solapur.

4. An amount of INR 75 million has been approved for improvements works on MDR-71 in the district of Nanded.

5. An amount of INR 75 million has been approved in the district of Ahmednagar for improvement on stretches on NH-50 and SH-45.

6. An amount of INR 53.5 million has been approved for road improvement works on MDR-25, SH-75 and SH-61 in Satara district.

7. An amount of INR 50 million has been approved for road improvements works on SH-220 in Parbhani.

8. An amount of INR 50 million has been approved for stretches on SH-154 in Osmanabad district.

9. An amount of INR 50 million has been approved for improving MDR-34A in Dhule.

10. An amount of INR 500 million has been approved for improvement on stretches of SH-204 in Akola district.

11. An amount of INR 47.5 million has been approved for improvement on Aurangabad-Edlabad road in Jalgaon district.

12. An amount of INR 49.5 million has been approved for carrying out improvement works on SH-148 and SH-47 in Aurangabad district.

13. An amount of INR 42.5 million has been approved for improvement works on SH-219 in Hingoli.

The other Districts where the road improvement works have been sanctioned include Beed, Wardha, Washim, Jalna, Buldana, Raigad Sangali, Latur, Nagpur, Sindhdurg, Amravati and Ratnagiri.

It may be recalled that an amount of INR 176.37 Crore was sanctioned early last month also under CRF for carrying out road improvement works in Maharashtra.

Athani Farmer work to start next month

Project today reported that Athani Farmer's Sugar's 24 MW cogeneration power project at Madbhavi in Karnataka is expected to commence work sometime next month. The project is being built at an estimated cost of INR 90 crore and with Mitcon Consulting Services as consultant.

The company officials said that negotiations were in process with TATA Power Limited, Reliance Power Limited and PTC India Limited for a PPA which is likely to be signed in coming days. Out of 24 MW about 16 MW will be utilized for commercial purpose and the remaining for captive use. The project is expected to complete by the end of 2009.

Global bids for Sagardighi project soon

Project monitor reported that West Bengal Power Development Corporation Limited expects to start formal bidding process for the 1,320 MW Sagardighi power project this month.

Mr SK Roychoudhury advisor of West Bengal Power Development Corporation Limited said that bid documents were ready and would be formally issued by October 15th. He said that it would be the first power plant in West Bengal that would use supercritical technology.

Mr Roychoudhury said that "We are open to sourcing foreign technology and hence would float tenders on international competitive bidding basis. Coming up on 1,000 acres in Murshidabad district the Sagardighi coal fired plant, expected to cost around INR 3,200 crore will have two units of 660 MW. Land for the project is already in possession.

Mr Roychoudhury added that the state government power generation company has put on hold its plans for setting up a power plant at Katwa in Burdwan district due to land related issues. The corporation was to acquire 1,050 acres involving displacement of around 1,000 people. Although 4 meetings were held with political parties, the last being on August 27, no headway could be made. There was also a public hearing just before Section 4 was to be applied.

He added that however poor attendance at the public hearing coupled with social resistance forestalled the process. If land acquisition problems at Katwa persist, WBPDCL will consider further expansion at the Sagardighi site.

According to statistics available with Central Electricity Authority, during the ongoing 11th Plan period, WBPDCL has so far added 1,060 MW new capacity. This came from 600 MW at Sagardighi, 250 MW at Santaldih and 210 MW at Bakreshwar plants. Construction work for Brownfield expansion is under way at Bakreshwar and Santaldih with completion scheduled for March 2012. Including the recently commissioned units, the state government owned WBPDCL has a total installed capacity of 3,980 MW.

Power Generation in September 2008

It is reported that the overall growth in electricity generation in the country during the month of September 2008 has been 4.2% as compared to September, 2007.

The generation growth would have been more than this, had the rainfall in the catchments areas of major hydro power stations been sufficient. While, the decline in the hydro generation was of the order of 11.77%, nuclear generation also showed a marginal decline of 3.2%. However, the thermal generation registered a growth of around 9.6%.

Bellary City approves INR 100 crore for improving roads

The Bellary City Corporation Council on October 7th 2008 approved the INR 100 crore action plan for improving roads in the city. The plan proposes works including road widening, construction of side drains, pavements and road dividers, erecting streetlights and providing ducts for laying cables.

The list of roads in the city which are proposed to be developed includes:
1. Durgamma temple to SP Circle (INR 5.11 crore)
2. SP Circle to OPD Cross (INR .13.51 crore)
3. Mothi Circle to APMC Circle (Tank Bund Road) (INR 13.68 crore)
4. Durgamma temple to KEB head office (INR 6.98 crore)
5. Indira Circle to Satyanarayan Pet railway level crossing (INR 4.87 crore)
6. SP Circle to Avambhavi canal (on Sirguppa Road) (INR 6.29 crore)
7. SP Circle to Ambedkar Circle (INR 6.73 crore)
8. Cowl Bazar first railway level crossing to T B Sanatorium (INR 5.32 crore)
9. Vetarinary Hospital to biscuit factory (Kalamma street and Goldsmith street) (INR 5.61 crore)
10. Mothi Circle to Kanekal bus stand (Car street) (INR 4.88 crore)
11. Old Municipal office to Krishnamachari street (INR 3.27 crore)
12. Balaji Rao Road (INR 1.4 crore)
13. Car street to NH 63 (Deputy Commissioner's office) (INR 1 crore)
14. Tank Bund Road to Sudha Circle (Rangamandir Road and Radio Park Road) (INR 9.87 crore)
15. Cumming Road from Goldsmith street to Car street (INR 2.74 crore).

25 firms shows interest to advise on power sector reforms

Twenty Five national and international firms have evinced interest in offering consultancy services to Power Finance Corporation for implementing the government's INR 50,000 crore power sector reforms scheme.

PFC has been designated as the nodal agency for implementation of the Restructured Accelerated Power Development & Reforms Program during the XI Plan Period.

The program to bring the Aggregate Technical and Commercial losses to less than 15 per cent by the end of 11th five year plan will be undertaken in two phases. The first part will include establishment of baseline data and application of information technology for energy accounting and auditing. IT consultants and IT implementing agencies will be recruited for the purpose. Strengthening of distribution projects will follow in the second phase.

The process consultant will assist PFC in the bidding process for appointing the IT consultants and IT implementing agencies. The successful bidder will also help us in empanelling third party independent evaluation agencies to establish base line data system, verify AT&C loss figures, completion of part A projects and subsequent yearly AT&C loss figures as directed by the ministry.

The total fund flow of the R-APDRP scheme will be through PFC, which will also coordinate with all parties involved such as power ministry, Central Electricity Authority, NTPC, Power Grid Corporation and the state electricity utilities. According to the scheme, the entire amount of loan extended by the government for first phase of the project will be converted into grant after establishment of the required base line data system. Up to 50 per cent loan for the next phase projects to state utilities will be converted into grant in five equal tranches on achieving 15 per cent AT&C losses for a period of five years.

New chairman for Kandla Port

According to a recent order from the Shipping Ministry, Mr MA Bhaskarachar deputy chairman of Kandla Port Trust will function also as the chairman of the same port.

It might be noted, has been without a full time Chairman since February this year.

SCI to buy Capesize ships worth INR 1,600 crore

Press Trust of India reported that Shipping Corporation of India has planned an investment of about INR 1,600 crore to enhance its carrying capacity substantially. The company is looking to buy 4 Capesize ships having a carrying capability 100,000 tonnes each for which it had invited international bids.

A senior SCI official told PTI that "We have got the bids and we are talking to the company which has offered the most attractive price." Each vessel would cost about USD 90 million.” However the official declined to give the name of the top contenders for the order.

About 20% of the cost of acquiring these vessels would be met by internal accruals. The rest of the money would be raised through borrowings. The deliveries of these vessels will continue until 2014.

Capesize ships are cargo vessels, too big to transit the Panama or the Suez canals and must go around either the Cape of Good Hope or Cape Horn. These vessels typically have a cargo carrying capability of more than 100,000 tonnes.

The India government recently granted the Navratna status to SCI, thereby removing the restriction on the company to take investment decisions that involve expenditure of only up to INR 500 crore. SCI has already announced its plans to purchase 40 vessels worth USD 2.5 billion to USD 3 billion by 2011. By 2014, the total cargo carrying capacity of the state run firm would be about 10 million tonnes.

MV Nord Endeavour with 11 mater draft enters Vizag

BL reported that a vessel Nord Endeavour with 11 meters draft carrying 51,000 tonnes of coking coal entered the inner harbor of the Visakhapatnam port at 4.25 PM on Friday.

Nord Endeavour was first lightened at the general cargo berth in the outer harbor and then navigated into the inner one.

According to a press release issued by the Visakhapatnam Port Trust it was the first time that a vessel with 11 meters draft was entering the inner harbor, after the widening and deepening of the entrance channel at a cost of INR 19 crore.

In August, a vessel with 10.8 meters draft was navigated into the inner harbor.

European steelmakers brace for output cuts - Report

Reuters reported that European steelmakers are preparing production cuts by the end of 2008 in the face of a deeper than expected economic slump, although German companies are likely to cope better than their rivals with weaker demand.

The USD 700 billion steel industry looked immune to economic slowdown in the first half of the year, with prices rallying to record highs. But as the crisis deepened, European steelmakers who made hefty profits earlier this year have started signaling the future may not be so bright.

Euro zone manufacturing activity in September fell to a near 7 year low. Markit PMI showed contractions in France, Italy and Spain were sharper than that seen in Germany. The downturn in order books hit producers of capital goods the hardest.

Analysts said that the entire sector is set to benefit from this willingness to cut output rather than compete on prices.

Mr Ingo Schachel analyst at Commerzbank said that "There is a discipline on the supply side now that it is coming at the time of a softening in the cycle. Companies are showing a high willingness, such as ArcelorMittal and ThyssenKrupp, to cut production to meet falling demand."

Mr Peter Metzger analyst of Oppenheim Research said that spot prices have been falling for the past four to six weeks, with scrap roughly halved in Europe to around USD 300 per tonne.

Austria's Voestalpine shrugged off short term swings in steel prices as it has no spot sales of steel sheet. It said that "We therefore do not adjust our production according to price changes. We keep producing at full capacity to fulfill our contracts."

Germany's Salzgitter declined comment on its plans but its CEO Mr Wolfgang Leese had earlier said that the steel industry would not escape the impact of the financial crisis but his company would not particularly suffer because of its rather lower exposure to the car industry.

Finnish steelmaker Outokumpu said that it cut production in line with the demand in the third quarter and repeated that it expected third-quarter volumes to be below the level of the previous quarter partly due to demand weakness.

The German Steel Trading Federation has said that new orders for January to August 2008 period were 12% better than last year but the latest survey by research institute IFO showed steelmakers have become more cautious in their expectations.

JFE Steel eyeing USD 4 billion steel mill in Vietnam

Reuters reported that JFE Steel Corporation has submitted a proposal to invest USD 4 billion in a steel mill in central Vietnam.

As per report, the mill, which will have an annual capacity of 5 million tonnes, would be located in Dung Quat in the central province of Quang Ngai.

In September 2008, Malaysia's Lion Industries won approval to invest in a USD 9.8 billion steel mill joint venture with Vietnam's top shipbuilding group Vinashin.

Apart from the Malaysian venture, Hanoi has approved investments by foreign steel makers of at least USD 17.3 billion this year, including a USD 7.8 billion project by Taiwan's Formosa Heavy Industries and a USD 5 billion venture by India's TATA Steel

Analysts have said that most of the planned mills would serve both the domestic and export markets, especially in Southeast Asia because of strong demand from the auto and home appliance industries.

Japanese scrap steel auction draws no bids as Koreans sit out

Bloomberg reported that Japan's biggest export auction for scrap steel drew no bidders for the first time since the monthly sales began in 2001 as a plunge in the won in the past month and a credit freeze deterred South Korean buyers.

Ms Keiko Ueno a spokeswoman for Kanto Tetsugen said that Kanto Tetsugen, the Tokyo area scrap dealers' cooperative that holds the auction, will export no metal in November 2008.

Ms Sakio Norita director at Mitsui Bussan Metals Co said that scrap prices tumbled 14% for domestic buyers this week as a construction slump in Japan cut demand and a widening global credit crisis dimmed the outlook for global demand. The decline in exports also comes as some South Korean buyers may have been unable to obtain letters of credit.

She said that "There is no demand from South Korea and little demand from China because the plummeting won makes it too expensive for Korean mills. Some Korean traders are having difficulty opening letters of credit for importing steel scrap, given the plunging won.''

Scrap, the key raw material for mills that use electric arc furnaces, has dropped by 43% in Japan from the record set in mid July and is selling for about a fifth less than average for the past year.

ArcelorMittal SA to cut prices for both long and flat steel

ArcelorMittal South Africa has notified its customers that there will be another, even larger, price cut on both long and flat steel as from November 1st 2008, having last month confirmed an average 5% cut from October 1st 2008.

In a note to its customers, ArcelorMittal SA said that the base price for both long and flat products would decline by an average of ZAR 1,000 per tonne for orders confirmed for delivery from November 1st 2008.
Certain grades of flat steel, however, would decline by a more modest ZAR 500 per tonne, while the price of 5mm plate would remain unchanged.

News of the November cuts also came as initial talks resumed between the company and the Department of Trade & Industry over a possible developmental pricing model.

Mr Nimrod Zalk of Department of Trade & Industry confirmed that the department was in the process of reassessing the benchmarking model as it was being applied by ArcelorMittal South Africa and said that further technical discussions could resume once this work had been completed. He added that "There is no question that this is an outstanding matter for both of us, to which we would like to bring some resolution."

The November price cut is the second for 2008, and observers believe it could signal a trend rather than a seasonal adjustment, given that it appeared to be based on falling demand, particularly from the automotive industry, as well as the white goods sector.

The October decrease was viewed by some as a seasonal phenomenon, precipitated mainly by lower demand traditionally associated with the Northern Hemisphere's summer holiday period. But given the current turmoil on the financial markets, which many now speculate will lead to recessions in a number of developed economies, the outlook for steel prices is far less certain.

In South Africa, the ongoing infrastructure boom was providing something of a cushion against falling steel demand in other sectors and consumers would, no doubt, welcome the respite provided by yet another price decline. Sustained increases over the past eight months have been partly blamed for South Africa's high producer price inflation, while the higher prices have also put pressure on margins at factories and mines and have added to escalation pressures in the construction and building sector.

Global scrap export in Q2 hits fresh high - ISSB

According to statistics of Iron & Steel Statistics Bureau, global scrap export from 48 major countries and areas in the second quarter totaled 28.1 million tonnes.

US ranked as the largest exporter, with total 11.2 million tonnes growing by 38% YoY.

Statistics also reveal that for the first half of 2008, Turkey is the top buyer, increasing its intake by 27% YoY to reach 8.8 million tonnes. China comes to the next, with import of 3.8 million tonnes, up by 10% YoY.

(Sourced from Yieh.com)

Recession reports - Voestalpine may delay Black Sea plant

Reuters reported that Austrian steelmaker Voestalpine may have to delay a decision on building a new steel plant on the Black Sea due in part to the financial crisis.

It may be noted that Voestalpine is hoping to build a plant with a 5.5 million tonne capacity in either Bulgaria, Romania, Turkey or Ukraine, which investment analyst’s estimate will cost around EUR 5 billion to EUR 6 billion. But it said the financial crisis could now delay the decision on the plant.

Mr Peter Schiefer spokesman of Voestalpine, confirming remarks made by Mr Wolfgang Eder CEO in Washington, said that "We must look carefully at the financing. If the decision is delayed, it will be dealt with in one or two quarters' time. I think you can already see signs of an exit strategy."

Voestalpine said earlier that it has no liquidity or financial problems and is sticking to its full-year targets, denying a report it was forced to go to a government province to help finance a deal.

Japanese H Beam exports in August down by 39% YoY

According to announced trade statistics from Ministry of Finance, Japan's customs has cleared H beam exports totaled 21,700 tonnes in August 2008, up by 4.8% MoM and down by 39.1% YoY, when their values averaged JPY 130,000 per tonne FOB, up by JPY 13,000 from a month ago and up by JPY 52,000 from a year ago.

In the breakdown by main destinations, South Korea accounted for the largest quantity of 11,000 tonnes at JPY 124,000 per tonne FOB, up by JPY 10,000 from a month ago. The UAE took 4,200 tonnes at JPY 141,000 per tonne FOB and Mexico 1,000 tonnes at JPY 142,000 per tonne FOB. Also, a small amount of 15 tonnes was exported to the USA at JPY 182,000 per tonne FOB.

Meanwhile, Japan's customs cleared H beam imports totaled 9,400 tons in August 2008, down by 40% MoM and up by 86.5% YoY, indicate announced trade statistics from the Ministry of Finance. All the imports arrived from China.

GS POSCO alliance reshapes DSME bid to three way race

It is reported that the hotly contested bidding for Daewoo Shipbuilding & Marine Engineering took an unexpected turn, when the top two contenders POSCO and GS Group said that they would join forces to maximize their chances of snapping up Daewoo Shipbuilding.

The race has now turned into a three way, however, when GS board members decided that the industrial group would be better off teaming up with steel giant POSCO, considering today's shaky financial circumstances that could put their bid at risk.

Mr Kim Dong wan spokesman of POSCO said that the consortium will be a 50:50 JV, but details regarding who will have direct control over management will be decided at a later date. He added that POSCO will confirm the consortium at its board meeting soon.

POSCO led the bid with its solid financial standing and good corporate reputation. Complex constructions like drilling ships and offshore oil platforms were areas the steel maker said it wants DSME to focus on. However, critics still doubted strong synergy, and KDB's latest requirement of scouting foreign capital also worked against POSCO, which concentrated on domestic funding.

Meanwhile, GS Group's advantage was its foothold in the overseas plants sector, which could enhance DSME's competitiveness, and foreign investments from the oil-rich Middle East. However, it slipped behind POSCO considering the steel maker's capability to supply steel plates for ships.

Goldman Sachs downgrades US Steel, SDI and AK Steel

It is reported that Goldman Sachs has downgraded US Steel and Steel Dynamics from 'buy' to 'neutral'. It also downgraded AK Steel from 'neutral' to 'sell'.

Goldman Sachs cited the deterioration in demand and the effect of the global credit crisis.

Meanwhile, it has upgraded Commercial Metals from 'neutral' to 'buy', citing valuation.

IAS merged with Hatch Group - Report

It is reported that IAS has merged into the Hatch Group, a global engineering, consulting and technology firm and business will consequently be known as Hatch IAS.

Mr Glen Wallace global director of Hatch IAS said that "In recent years IAS has experienced significant growth and success and consequently have been operating at the limit of our resources. Whilst we have been growing our engineering capacity, it has been clear for some time that we needed to make a step change to better meet the rapidly increasing demand for our services and products. We recognized the need to find a global company with technical interests and expertise aligned to our key market niches. This was to ensure that local technical support could be provided effectively to all of our customers."

He added that "With that in mind, we have been in discussions with Hatch to construct a better solution for servicing our clients. The essence of this strategy is to grow the resources available to the existing IAS team and continue to build on the successes of the last 25 years. Elements of the IAS business model will also be introduced into appropriate areas of Hatch operations. This strategy will enable Hatch IAS to retain the core IAS Achiever philosophy in the provision of automation solutions, consulting and training services to the flat metals industry. Now that the merger has officially occurred, our clients will enjoy the benefits of a significantly expanded depth and range of experience along with worldwide local support."

Hatch provides process and detail engineering, technologies, business consulting and project and construction management services to the mining & metals, energy and infrastructure sectors. The company employs over 8500 staff globally and has its major offices in Canada, Australia, USA, Europe, South Africa, Chile and Brazil.

Wuppermann Stahl adopts a new galvanizing process

It is reported that, following a successful test phase, Wuppermann Stahl GmbH, has incorporated the Continuous Vertical Galvanizing Line into its Judenburg hot dip galvanizing line.

This process was developed by SMS Demag AG. Wuppermann is utilizing this innovative method for the development of new zinc alloys.

In addition to the quality related advantages of the CVGL process, a decisive factor in adopting this process is the great flexibility of CVGL as regards the ability to quickly change the zinc baths used in the process.

This makes it possible to test a great variety of Al Mg alloyed zinc baths with small volumes of molten metal at very short time intervals and, in this way, to determine the best product range obtainable from this examination of alloys.

Shapeline systems increase productivity in plate mills

Shapeline, the Swedish maker of online flatness measurement systems for the steel and metal industry, claims a leadership position in flatness measurements for quality steel plate production.

Shapeline systems have been used in the SSAB plate mill of Oxelösund in Sweden since 2001. With seven installed systems so far, the benefits in plate production are obvious for SSAB and other steelmakers who require a product with advanced qualities.

Mr Pär Kierkegaard CEO of Shapeline said that "We are no longer content with being a regional provider to the North European steel industry. We are now stepping up our activities towards plate mills all over Europe and the rest of the world to promote how Shapeline systems can improve production processes and deliver a documented higher quality than before."

By increasing knowledge about flatness parameters in different parts of production lines for plates, benefits are gained quickly some are easy to calculate, some are more difficult. Examples of benefits claimed by customers using Shapeline systems are numerous.

Shapeline plans to individually contact all plate mills in Europe, and later on, on other continents, to show how the systems can be used to improve the processes and end product.

Base metals prices to stay well above historical levels - Report

Kevin Norrish analysts at Barclays Capital said that current market turmoil is unlikely to push base metal prices below historical levels as global demand prospects look more price supportive than in previous downturns.

Mr Norrish said that while metals prices falling below the cost of production was not impossible, the downside potential for complex leaders copper, aluminum and tin was fairly limited. He added that "Copper is still very fragile. Changes in the structure of demand for these metals are very positive for prices and means that they are much less sensitive to what is going on in the industrialized world."

He said that the amount of value wiped off base metals assets in the past quarter was relatively insignificant. He said that "The flow of money out of base metals in Q3 had been very small in relation to the amount of activity which has been going on.

Base metals have seen an outflow of about USD 500 million. Commodities as a whole have lost about USD 60 billion, going from a value of from USD 270 billion in the second quarter of 2008 to a value of USD 211 billion in the third. In base metals there has been no significant flow in either direction in terms of investment, no net change."

Severstal North America workers await word on layoffs

It is reported that, while Severstal North America decides how to handle the economic downturn, steelworkers at several Ohio Valley plants will wait to see how long their layoffs last.

Mr John Saunders contract coordinator for the United Steelworkers said that Wheeling Corrugating is one unit that will keep working. Its busy filling orders for the storm socked Gulf Coast.

Mr Saunders said that a strong steel business requires strong auto and housing industries, as well as companies investing in capital improvements. Right now, all three are at all-time lows.

Meanwhile, Mr Dennis Halpin of Severstal said that it is re examining short term plans to balance production with orders, but nothing is finalized.

Usiminas secures loan for new hot rolled mill at Cubatao

BNamericas reported that Brazilian steelmaker Usiminas has obtained the 7 year loan from National Development Bank to supplement a USD 550 million loan from a Japanese bank consortium. It will fund a new hot rolled mill at Cubatao.

Starting in 2011, it will supply the domestic auto industry with 3 million tonnes annually, with a ramp up capability to 4.7 million tonnes.

Strategic Resource to put MTZ on temporary care

It is reported that base metals miner Strategic Resource Acquisition will place its Mid Tennessee zinc mining complex on temporary care and maintenance, after determining that the project was uneconomic at current zinc prices.

SRA officials said that "The decision follows an extensive evaluation of numerous scenarios and zinc pricing projections that leave little support for the continuation of operations under the current commodity pricing and credit market environments."

Strategic Resource announced in August 2008 that it had appointed Blackmont Capital, Haywood Securities and Paradigm Capital to conduct a strategic review of the company and its options, after the firm cut its production forecast for the year by about a million tons, as a result of delays and lower than expected productivity and mill recovery during the production ramp up at the MTZ.

A care and maintenance program would keep the mining assets in ready condition as the company's management and board pursue funding and strategic alternatives that could enable it to restart the project in a higher pricing environment and with access to funding.

Mr Victor Wyprysky president of SRA said that "We intend to restructure our obligations and capital requirements to facilitate restarting the operations when prudent. It is regrettable that the perfect storm in commodity and liquidity conditions has converged at this late stage of our ramp up."

It may be note d that SRA's decision to put its MTZ complex on care and maintenance follows an announcement in July by diversified miners Teck Cominco and Xstrata Resources that they would close their Pillar mine, in Australia, prematurely, because of slumping metal prices, which were compounded by a strong Australian currency.

Recession reports - Shipping loans to drop by third in 2008

It is reported that loans to ship owners will drop by at least a third in 2008 as frozen money markets curtail banks' ability to raise funds and shipping prices tumble.

Mr Ulf B Andersson head of shipping at Nordea Bank Plc said that banks will provide as much as USD 100 billion to ship owners this year, down from USD 150 billion in 2007. He added that the shipping industry needs about USD 300 billion over the next 3 to four years to fund construction.

Mr Guy Verberne economic research chief at Fortis Bank said that "We are in a vicious circle of financial turmoil affecting consumption and slowing down economies. We have to sit it out and wait for the dust to settle.''

BlueScope and OneSteel share price targets cut at Credit Suisse

Credit Suisse Group AG said that BlueScope Steel Limited and OneSteel Limited may rise less than previously expected in Sydney trading because of declining demand and negative sentiment.

Credit Suisse analysts led by Mr Michael Slifirski reduced the 12 month target price on BlueScope by 33% to AUD 8 and cut its forecast share price on OneSteel by 28% to AUD 6.50. The targets are above the October 9th 2008 closing prices of AUD 6.10 and AUD 4.10 respectively and Credit Suisse retained its outperform ratings on both stocks.

Goldman Sachs Group Inc cut its 2009 steel price forecast by 29% as stalling US and European economic growth and a slowdown in emerging markets curb demand. A 50% decline in spot iron ore prices, a steelmaking ingredient, and the weakening Australian dollar has helped offset the steel price drop.

Mr Slifirski said that the biggest risk to OneSteel's earnings is from further collapse in global steel prices and an over-supplied global market flooding the domestic market with distressed steel cargoes beyond cost.

Goldman Sachs analysts led by Mr Andrew Gibson cut his earnings forecast by 4.5% for BlueScope and 4% for OneSteel for 2009. He added that OneSteel is his preferred pick in the steel sector.

Material Sciences Q2 net sales up by 1.1% YoY

Material Sciences Corporation has reported results for the second quarter of fiscal 2009, ended August 31st 2008.

Net sales for the quarter were USD 56.8 million, up by 1.1% YoY as compared with USD 56.2 million in the second quarter of fiscal 2008. It recorded a net loss of USD 1.3 million as compared with a net loss of USD 1.7 million in the prior year's quarter.

Mr Clifford D Nastas CEO of Material Sciences said that "Further deterioration in the automotive and building industries continued to negatively impact our business in the second quarter. We anticipate that the weakness in these sectors will continue through fiscal 2010, if not longer. In the second quarter we achieved new milestones in our effort to transform MSC into a more efficient and diversified global provider of acoustical and coated metal solutions. We began shipments into our first Quiet Steel application with Subaru and won several new engine applications and brake programs around the globe. Amid difficult economic conditions, we're aggressively pursuing ways to improve our profitability."

He added that "This quarter we implemented a price increase across our products to counter the impact of rising manufacturing costs. Also, this week we announced a corporate restructuring plan that is expected to reduce our cost of sales and general and administrative expenses by a total of approximately USD 4.0 million in the third and fourth quarter of fiscal 2009. Also, we have achieved operational improvement through our 6sigma program leading to gains in productivity, and reduced claims exposure."

Sales of acoustical materials, which are primarily to automotive manufacturers, decreased by 1.5% to USD 25.7 million in the second quarter of fiscal 2009 from USD 26 million in the second quarter of fiscal 2008. Sales of coated materials, which are mainly to appliance, building product and automotive customers, increased by 3.3% to USD 31.1 million in the second quarter from USD 30.1 million in the second quarter of fiscal 2008.

Gross profit was USD 6.1 million as compared with USD 5.4 million. Gross margin increased to 10.7% in the second quarter from 9.7% in the second quarter of fiscal 2008. The USD 0.7 million increase in gross profit in the second quarter of fiscal 2009 was primarily due to favorable operating efficiencies relating to labor and overhead, claims, and other quality improvements, that were partially offset by unfavorable product sales price mix.

Material Sciences recorded a loss from operations for the second quarter of USD 3.3 million compared with a loss of USD 3.2 million in the second quarter of fiscal 2008. It recorded other income of USD 1.1 million versus USD 0.4 million in the comparable period, mainly due to a gain on the sale of Manulife Financial Corporation shares in the second quarter of fiscal 2009.

Net cash provided by operations was USD 5.6 million for the first six months of fiscal 2009 as compared with USD 2.8 million in the same period last year. Capital expenditures were USD 2.8 million for the first half of fiscal 2008 versus USD 3.3 million in the comparable period.

Tokyo Steel cuts scrap purchase prices by JPY 3,000

It is reported that Japan's largest electric steelmaker Tokyo Steel Mfg Co has reduced what it pays for locally available ferrous scrap by a uniform JPY 3,000 per tonne for all grades at its four works, effective with October 4th 2008 purchases.

As a result, the new delivered prices of number HMS are JPY 40,000 per tonne for seaborne and overland arrivals at the Okayama works, JPY 40,000 per tonne for seaborne and overland arrivals at the Kyushu works, JPY 38,000 per tonne for seaborne and overland arrivals at the Takamatsu works and JPY 40,000 per tonne for overland arrivals at the Utsunomiya works.

(Sourced from Yieh.com)

Minnesota builds 100 miles of steel barriers at roadsides

AP reported that Minnesota Department of Transportation is installing about 100 miles of steel cable fences along freeway medians to keep out of control vehicles from driving into oncoming traffic.

MnDOT said that the cable barriers will be installed by the end of 2008 along the state's most crash prone freeways and interstates.

Mr Kent Barnard spokesman of MnDOT said that "Any time you can keep opposing traffic from crossing over, it's a vast improvement in safety. The barriers are one part of Minnesota's Toward Zero Deaths program, a multiple agency attempt begun in 2004 to reduce traffic deaths."

The department said that 57 people have died in cross median crashes since 2004. It added that while concrete medians go a good job at about USD 400,000 a mile, the cables are cheaper at about USD 145,000 a mile.

Severstal layoffs to hit WCI Steel operations

It is reported that OAO Severstal's newly purchased WCI Steel Inc operations in Ohio have been added to the list of North American sites facing potential layoffs.

Mr Ron White VP of United Steelworkers union Local 1190 said that he understands WCI and the Sparrows Point plant have been added to the list of locations that will have to deal with layoffs.

It may be noted that Severstal executives were in meetings finalizing their plans, with between 700 and 800 layoffs estimated at a variety of locations, including most, but not all, of the former Wheeling Pittsburgh Steel Corp operations.

Erdemir expecting Turkish steel growth to slow

Reuters reported that growth in the Turkish steel market is expected to slow in 2008, steel major Erdemir.

Mr Oguz Ozgen CEO of Erdemir told reporters that despite lower growth expectations for steel, it is too early for Erdemir to revise its 2008 profit targets.

Mr Ozgen declined to say why steel growth would slow, but economists say the Turkish economy is already seeing an easing of growth and worsening conditions in the European Union are expected to trim Turkish exports.

Earlier Oyak Group, majority owner of Erdemir said that Erdemir's flat steel production capacity would rise to 8.8 million tonnes per year due to Isdemir in southern Turkey coming on line this month. Erdemir's total capacity stood at 5.3 million tonnes prior to Isdemir beginning production. Erdemir has invested some USD 3 billion to start producing flat steel products in Iskenderun.

PSL sees slower pipe demand in Middle East

Reuters reported that steel pipe demand from India and US will stay robust despite the global markets turmoil and lower oil prices, but Middle East orders may slow in the medium term.

Mr Ashok Punj MD of PSL told Reuters that "Pipeline projects don't react to immediate incidents. If there is a slowdown impact it will show 2-3 years down the road.”

He added that "The Middle East is more sensitive to day to day oil volatility. Unlike that, the U.S. market is very strong.”

PSL which supplies steel pipes used for transportation of oil and gas, has a total capacity of more than 1.4 million tonnes. PSL has a consolidated order book of INR 62 billion.

The credit crisis in the U.S. has spooked global financial markets in the absence of a coordinated policy response, which saw them touch multi year lows.

Taqa eying renewable energy firms

Trade Arabia News Service reported that the Abu Dhabi National Energy Company is planning to buy a number of renewable energy firms in a bid to make 50% of its operations eco friendly by 2023.

Mr Peter Barker-Homek CEO of Taqa said that “We are currently looking at two firms, one European and one North American.”

He said that Renewable energy includes power from solar, wind, tidal and geothermal sources

The two firms are finding it difficult to get financing due to current financial crisis. The company had earlier tied up with France's Theolia to work on renewable energy projects in Morocco. Taqa aims to make about seven per cent of its operations renewable by mid 2010 and further increase it to 50% between 2018 and 2023 through global acquisitions.

El Sewedy Cables to build USD 150 million factory in Yanbu

El Sewedy Cables has recently announced the launch of its factory in Yanbu Industrial City in Saudi Arab with an initial investment of USD 150 million.

Mr Tamer Elwa country manager of El Sewedy Cables said that the factory which has a capacity of 34,000 tonnes of copper and aluminum for electrical cables and overhead transmission lines up to 500 KV will be operational in the Q1 of 2009. He added that the factory will contribute to meet the needs of both the Saudi and other Gulf Cooperation Council countries as well.

El Sewedy Cables with headquarters in Cairo, Egypt has signed an exclusive agreement with Afkar International to promote its interests in the Kingdom by organizing four events in Riyadh, Dammam, Jeddah and Yanbu among others.

Mr Walid Helmi GM of Afkar International said that El Sewedy Cables’ factory in Yanbu is a manifestation of the company’s desire to tap the Saudi workforce. He said that El Sewedy Cables seeks from the beginning to recruit young talents from Saudi Arabia.

Specialized in the manufacture of cables and electrical equipment, El Sewedy Cables Holding Company has more than 20 factories located in 10 countries in Africa, Asia and Europe and exports its products to more than 110 countries in the Middle East and Africa, Europe, North America and Far East.

Currently its new transformer factory is the first of its kind in the MENA region in terms of quality and quantity of production of power transformers and dry type transformers.

Dubai will survive global financial crisis - Tatweer

Khaleej Times cited Mr Ahmad Sharaf CEO of Tatweer Investments as saying that Dubai will survive the repercussions of the world financial crisis and will continue to move on with its ambitious aims to be a global financial and tourism hub.

Mr Sharaf said that "It is a cautious time, no doubt. You got to have your eyes open. But I am very optimistic that we'll come out of this winning. Dubai will come out way ahead of everyone else through this.”

Mr Sharaf said that "The challenges that we have will be similar to any other investor globally." He added referring to the massive declines in stock markets at home and abroad and a worsening global credit crunch that has started to hurt locally as well.

He said that "But having said that, I am very positive with the opportunities that lay forth for Tatweer." He added that recent launches for Tatweer's property projects lead by Mizin have shown that investors were still very much interested in owning Dubai assets.

He said that "On the issue of global crisis, cash crunch and so forth whether the other parts of the economy will respond as robustly as they have in the past. I'll say not necessarily. They may not. But some of our offerings people can't ignore. Like Mizin's mid market real estate segment offering like Remraam. That's something missing from the equation right now. They can't ignore that. And we see now today the trade in the secondary market for Remraam is very strong."

He said that "Our business model is surrounded around the fact that you have land as your asset and we have to turn that land into something profitable. To build a business around it and also to provide an opportunity for investors to make some money. What we bring to the table is the thinking, the strategic part of it, the master planning, the content, the administration, the planning and so forth and boom. You set it out, the initial infrastructure into it, the investors come in, they have to buy into the vision and participate in the vision. And so the cycle starts with that. That's fundamentally how our business works."

Oil falls towards USD 86

It is reported that oil fell towards USD 86 on Thursday, pressured by expectations that demand will fall sharply if the credit crisis pushes the global economy into recession. Prices had dropped to 10 month lows this week, which prompted OPEC to consider holding talks to review output.

US light crude for November delivery was USD 1.85 lower at USD 87.10 a barrel by 1517 GMT. On Wednesday it hit a 10 month low of USD 86.05. London Brent crude was down USD 1.77 at USD 82.59 a barrel. Oil has dropped about 40 per cent from a peak of USD 147.27 a barrel in July.

OPEC oil ministers have said they are considering an extraordinary meeting to discuss the impact of the financial crisis. Mr Gholamhossein Nozari Iran’s oil minister told official IRNA news agency that “OPEC members will have an emergency meeting to review oil market conditions in mid-November in Vienna.”

Mr Edward Meir of broker MF Global said that “It will be interesting to see how the cartel juggles things in a down market. Much will ride on the Saudis and whether they will agree to restrain their massive production.”

Sinohydro to construct 1,100MW power project in Pakistan

The news reported that in a positive Sinohydro Corporation of China is to invest in 1,100 MW Kohala hydropower project. As per report top officials of the company came up with the offer on Thursday in a meeting with Mr Raja Pervez Ashraf federal minister for water and power.

The minister said that government would facilitate foreign investors to invest in the water and power sector in Pakistan as there are great opportunities. He said that foreign investment in hydel power generation would help to meet the country’s future power requirements at affordable prices. Mr Ashraf also informed the delegation that Pakistan is embarking on the construction of multipurpose dams which would meet power needs in the long term.

Earlier, the Chinese company gave a detailed presentation to the minister on its ongoing projects and briefed him on the expertise in construction of hydropower projects. The firm expressed interest in investing millions of dollars in Pakistan by constructing 1,100 MW Kohala hydropower project. They also informed that the company is working on 156 hydropower projects in various countries of the world. The company is already constructing Gomal Zam dam, Khan Khawar hydropower project and Dubair Khawar hydropower project in Pakistan.

Mr Pervez Ashraf said that the international consultants have been appointed for detailed engineering, designs and tender documents for the hydropower project, which is in its final stages. He expressed hope that the Chinese firm would take opportunity to participate in the international competitive bidding to be held for Kohala hydropower and various other water and power projects.

Moody downgrades GIC ratings

Moody's Investors Services has changed outlook on all of Gulf Investment Corporation ratings to negative from stable reflecting the enduring pressures on its performance in light of the prevailing international market conditions.

It has downgraded the baseline credit assessment of GIC from 10 to 11. At the same time, Moody's downgraded to A3/Prime-1 from A2/Prime-1 the company's long- and short-term deposit ratings and to A3 from A2 GIC's senior unsecured debt rating.

Mr Stathis Kyriakides AVP Analyst in Moody's Financial Institutions Group said that “The progressive and ongoing aggravation of the global credit crisis and the steep decline in both international and regional equity markets since July 2008 has caused GIC's position to weaken within the D+ BFSR range.”

He added that the negative rating outlook reflects that unless markets stabilise and/or the company halts the negative trend in its performance the downwards pressures on GIC's D+ BFSR will increase.”

As previously highlighted by Moody's, GIC lacks business diversification, has a narrow customer franchise, while its performance has been reliant on the high beta part of its balance sheet.

Emirates Shipping Line eyes top honors

TradeArabia News Service reported that Emirates Shipping Line has been recently nominated as one of the finalists of three prestigious international awards-giving bodies, reflecting the company's continued excellence in the global shipping trade.

Emirates Shipping Line is registered in Dubai Maritime City of UAE and commercially headquartered in Dubai and Hong Kong, two of the busiest commercial hubs in the world.

The award is handed out to the company with the most significant contributions to the shipping industry in the region of its operation.

A company official that the nominations, which the company was able to come by within a span of one week, automatically qualify Emirates Shipping Line for the 'Shipping Line of the Year' honors.

Emirates Shipping Line has been nominated for the “Ship Owner/Operator” award in the 'Seatrade Middle East' and 'Indian Subcontinent Awards 2008,' while it will vie for the 'Asia Pacific Shipping Liner Excellence Award' category at the Supply Chain Management Logistics Excellence Awards 2008.

The 'Lloyd’s List Asia Awards 2008' has also named Emirates Shipping Line as one of the candidates for the “Asian Shipping Line of the Year” award.

Seatrade Middle East and Indian Subcontinent Awards 2008, recognized as one of the most important maritime events in the region, will be held in Dubai; while Singapore will host both the prestigious Lloyd’s List Asia Awards 2008 and the SCM Logistics Excellence Awards 2008, an annual event held under the patronage of the Annual SCM Logistics.

Emirates Shipping Line now has a total of six nominations this year for various industry awards from different internationally acclaimed organizations.

IPIC drops plans to buy Spanish oil firm stake

Daily El Economista citing sources involved in the talks reported that Abu Dhabi fund IPIC has abandoned talks to buy 36% of Spanish oil group Cepsa from Banco Santander and Union Fenosa.

Cepsa and Banco Santander declined to comment on the report which said that IPIC decided not to raise its 45 euros per share offer for the stake due to the global economic and financial crisis.

Banco Santander holds 31% of Cepsa and was also negotiating on behalf of Fenosa, which has 5% of the oil group. IPIC already owns 9.5% and France's Total has 48%.

El Economista reported that Santander would only sell the stake at EUR 55 per share, an offer that IPIC's representatives took back to Abu Dhabi for the emirate to consider but which was finally rejected.-

Hebei Steel Group to cut output further on price dive

Hebei steel has convened its five subsidiary companies, Handan steel, Tangshan steel, Xuanhua steel, Wuyang steel and Chengde steel recently and held a conference on steel sales in Shijiazhuang, capital of Heibei province.

The major topics of the conference are on discussing the market dynamics, the proportion of output cut and price fixing.

Decisions made are as under

1. Cut output by 10-20% further on the basis of former 20% decrease

2. Adjust product mix and reduce the volume to Beijing and Tianjin market

3. Fix the lowest construction steel price in Beijing and Tianjin according to market situation and mill profit. They would take such measure as suspend production or stop supply if market prices are lower than the lowest level.

Market experts believe that such measures by Hebei steel group would bring positive impact on domestic steel market.

(Sourced from MySteel.net)

Recession reports - FerroChina can not repay loans

Bloomberg reported that Chinese steelmaker FerroChina Ltd is unable to repay loans totaling CNY 706 million because of the current economic crisis and a further CNY 4.52 billion in loans and notes may also be at risk.

FerroChina Ltd in a statement to the Singapore Stock Exchange, said that production at FerroChina's plants has been suspended and the mill is in talks with creditors and potential investors.

The statement said “Due to the current economic crisis, the group is unable to repay part of its working capital loans aggregating approximately CNY 706 million which has become due and payable. The management is seeking new equity and loan funding. It said that further loan facilities and notes of about CNY 2.03 billion and some other working capital loans totaling CNY 2.49 billion may potentially become due.

Mr Zhang Qin JPMorgan Chase & Co analyst said that “The Company has been having financing problems for a while. It has been looking for foreign strategic investors for a restructuring.''

The company, which has a market value of USD 436 million requested on October 7th that its Singapore listed shares be suspended from trade. The stock, which last traded at 54.5 Singapore cents has slumped 70% this year.

Chances of consolidation emerges from falling steel prices

It is reported that up to the end of September domestic main steel products has slumped by over CNY 1000 per tonne opposed to the highest level in June with a range of 16% to 23%. Earlier so-called light season and over rising prices can hardly stand up to explain the cloud over steel market for the past four months. However, it is such pinch that literally offers first tier steelmakers such as Baosteel and WISCO good chances of consolidation.

Mr Xu Lejiang chairman of Baosteel's said in two forums held in Beijing and Shanghai September that large scaled expansion will become the company's important step in its future development, given the emergence of turning point in the industry and stepping away of high speed growth.

As per report, China has developed into a net steel exporter with the capacity upsurge in the previous few years, whilst investment fever has greatly pushed up the number of steel mills, leading to a decline in industrial concentration, from 49% in 2000 down to 36.8% in 2007 compared to the world average level of 39.7%.

Analysts believed that two factors can blame for domestic major mills' difficulty in making any steps in acquisition. They lack of drive because of strong wills to develop and expand from all makers, encouraged by boosting demand and high return. Besides, cross-region profit allotment problem has always been a key. But things have changed following the diving prices. Against the backdrop of acquisition acceleration of BHP with Rio Tinto and threat from Vale coupled with weak demand from big steel consumers and intensifying consolidation, small mills, which feel feeble in resolving liquidity, technology and raw material purchase problems, has been pinched and making losses. Some in north China have been forced to connect the big ones for sale.

(Source: China Securities Journal)

Nanchang Steel Q3 net profit to tumble

It is reported that Nanchang Changli Iron & Steel Co Ltd has predicted its January to September net profit to fall in a large scale form that of some CNY 151.71 million in the same period of last year realizing a meager profit.

The detail data will be found in its Q3 report in 2008.

(Source: Shanghai Securities Journal)

Maanshan Steel plans closure of obsolete capacity by 2010

It is reported that 77 steel mills in Maanshan, Anhui need to wash out 9.04 million tonnes of outdated iron making and 2.08 million tonnes of obsolete steel-making capacity in the 11th "Five-Year" Plan based on calculation. Of which, Maanshan Steel, the largest one in local, needs to close down 4 350 cubic meters to 450 cubic meters blast furnaces, or 1.8 million tonnes per year of outdated capacity before 2010. The mill also needs to weed out 2 million tonnes per year of obsolete steelmaking capacity and 1 million tonnes per year steel rolling capacity by 2010.

As per report, in 2007, 59 mills in the city have closed a total of 2.69 million tonnes of outdated iron making capacity, 4.03 million tonnes of steelmaking and 0.25 million tonnes of steel-rolling capacity, meeting the target set for the period.

The city has stepped up efforts in obsolete capacity elimination so far this year, and has gained over CNY 60 million subsidies from the central government for capacity closure.

(Source: http://www.anhuinews.com)

Hebei Steel Group in transport deal with MOL

It is reported that Hebei Iron & Steel Group, a regrouping of Tangshan and Handan Steel Group has signed a 25 year iron ore transport contract with Japanese Mitsui OSK Lines Ltd September 19th. As a result, MOL agrees to provide safe, stable and economic transport service for the steel mill to realize its new round of strategic development.

Officials from both parties have introduced their company's briefing and development trend at the signing ceremony. And the contract will help Hebei Steel Group lower iron ore transport costs.

(Source: Hebei Iron & Steel Group)

Pangang Changcheng may post CNY 10 million loss in Q3

According to primary calculation, Pangang Sichuan Changcheng Special Steel, one of the three listed subsidiaries of Sichuan Pangang Group, have suffered net loss of CNY 65 million to CNY 68 million in the first nine months of this year and some CNY 8 million to CNY 10 million in Q3.
Detailed financial statistics will be released in Q3 earnings report. And the company has realized net profit of CNY 21.69 million during last January to September.

(Source: Shanghai Securities News)

Benxi Steel new BF ignited

It is reported that on October 9th Benxi Steel's new 1# blast furnace was successfully ignited. The BF is designed with 3.5 million tonnes of pig iron capacity per year.

(Sourced from MySteel.net)

Maanshan sewage disposal plant in successful trial production

It is reported that the Liufenhe Sewage disposal plant, in which Maanshan Steel has poured over CNY 0.1 billion, has improved its wastewater-treatment capacity from 1500 tonnes to 3000 tonnes per hour since its commissioning in later Sep, reaching 60% of the designed capacity.

Maanshan steel started to build the plant in last Nov to treat and recycle sewage which was drained into Liufenhe River by mills in its NO.3 factory district since energy saving and emission reduction became the key work for the mill to erect itself as a world competitive enterprise. The plant installed up to date facilities of DEFI France.

As per report, the plant is expected to treat sewage of 100,000 tonnes per day and is capable to lower 3 tonnes of fresh water consumption out of each crude steel tonnage for the mill, sending the steel maker’s fresh water consumption per ton of crude steel to below 6 tons. The plant will also save over CNY 10 million per year for the mill. Meanwhile, the No.3 district will realize non wastewater emission by then.

(Source: Maanshan steel)

Baosteel finishes installation of new BF shell

Baosteel’s branch finished installation of the lower section of a BF shell on October 5, marking the end of installing the three-section BF shell, as part of a major repair work in the company. The upper section of the shell was installed on October 1st.

Chinese metallic silicon market slips further

It is reported that current Metallic silicon market suffers greatly from sluggish demand, rare deals and falling prices. Quotations are mixed in Southwest area at CNY 118,000 per tonne to CNY 122,000 per tonne for 553#, at CNY 132,000 per tonne to CNY 134,000 per tonne for 441# and at CNY 147,000 per tonne to CNY 150,000 per tonne for 3303#.

More and more domestic plants have suspended the production. Some are working down the stocks, some who have run out of stock hold a wait and see attitude, and some have cut production already, thin trade has been closed despite reduced supply.

As aluminum alloy makers have slashed orders for Metallic silicon, and Indian traders hesitate to purchase, international market limps further at present. In Ukraine, shrinking demand and sufficient stocks have an adverse effect on the Metallic silicon price. Russian market also moves lower with slim purchase. A decrease of EUR 50 per tonne on Metallic silicon happens in European market, which is expected to dive for financial crisis.

As per report, the depressed situation in Metallic silicon market would spread into near future, because of global economic recession and financial crisis.

(Sourced from MySteel.net)

Severstal cuts October production in Russian, US and Italian plants

Russian steel major Severstal announced that as a result of slower demand for steel products due to recent changes in global economic conditions, it has decided to reduce production at its steel plants in Russia, North America and Europe for the month of October.

1. In Russia, Severstal will reduce production at its Cherepovets steel plant by approximately 25% for crude steel.

2. In the United States, Severstal will be adjusting production to balance with customer needs to an aggregate of approximately 30% across its facilities.

3. In Italy, Severstal is scheduling October production cuts of 30%.

Mr Sergei Kuznetsov CFO of OAO Severstal said that “We consider these measures to be prudent management in a time of rapidly changing market conditions. We are maintaining close discussions with our customers to support their near-term requirements. Likewise, the Company is communicating with suppliers so that we can optimize the supply chain and keep all stakeholders informed of production levels.”

The release added that “Severstal is reviewing its full year guidance as issued with the Company’s 1H08 results and will update the market in due course.”

Price decrease began at the market of steel welded pipes.

Rusmet.com reported that price decrease for steel welded pipes happened in September. It is necessary to note, that at the Russian market of steel welded pipes, changes of main price trends started already in the end of summer. Products prices for which were subject to stable growth for a long time, started to get cheaper. However, if in August, price change was insignificant, and the process was even similar to stabilization, in September decline was sufficient. In comparison with August indicators decline made up about 3.5%.

Changes of price trends at the market of welded pipes were caused by price stabilization at the market of strip. Sheet rolled metal for pipe sector got more expensive by the beginning of autumn price increase stopped. At that, demand change for welded pipe is not significant. Of course, in comparison with the same period of last year, there is sufficient consumption decline.

As far as the market of seamless pipes is concerned, the situation with price change here was smoother. According to the results of August, there was growth, and in September prices stabilized, they remained practically at the level of the end of summer. Similar price dynamics was demonstrated also by the market of steel pipe billets, where already in the end of summer we had a rise in price. In September prices stabilized, and there happened even negative correction.

In such a way, price growth at the pipe market practically stopped. Moreover, considering the analysis of the situation in consuming sectors and in the near future we can expect continuation of price decrease. Taking into consideration the fact, that price growth at the pipe market was not so intense, as at the markets of metal products, raw materials and scrap, expected decrease will be also rather smooth.

Considering outlook for price decline and their stabilization by the beginning of winter, annual average price growth at the Russian market of welded pipes, according to the results of 2008 will make up less than 30%, at the market of seamless pipes about 17% to 18%.

(Sourced from Rusmet.com)

Russia government seeks to end steel and scrap import duties

It is reported that a Russian government body has recommended ending import tariffs on some raw materials and steel products used in the car industry and metallurgy in order to contain rising prices, the government said on Friday.

The government's Commission for Protective Measures in Foreign Trade, in charge of drafting government resolution on customs tariffs, recommended abolishing the duty for ferrous metal scrap and waste, rolled steel for large diameter pipes and zinc-plated sheets, the government said in a statement.

Russia currently applies a tariff of 15% but no less than EUR 15 per tonne on imports of ferrous metal scrap used to make steel. Some types of steel waste are liable to a 5% tariff with no euro component.

To become effective, a government resolution setting or abolishing a tariff must be signed by the Prime Minister and officially published in the government gazette. Normally it becomes effective one month after the publication, unless the text of the resolution states otherwise. The government administration prepares the final version of the draft for signing, which may occur days to weeks after approval by the commission.

Welded pipes went down in value in Russia

Rusmet.com reported that in September a noticeable price drop for the steel seamed pipes took place. It should be mentioned, that at the Russian market of steel seamed pipes the change of the basic price trends has begun in the end of summer. The production, the prices on which were rising steadily for a long time began to fall in price. However, if in August the price change was insignificant and the process looked more like stabilization, but in September the price drop was more fundamental. In comparison with August indexes decrease form about 3.5 %.

According to the report, the change in price at the steel seamed market was to some extent due to the stabilization of the strip market. Flat steel for the pipe sector went up in price for quite a long time, in early autumn price rising stopped. At the same time the change of demand for seamed pipes can’t be called significant. Certainly, in comparison with the similar period at the previous year essential decline in consumption is observed, however it is caused by reduction in demand for LDP other kinds of production basically show growth.

As for the market of seamless drawn pipes, here the situation of price changing was more gradual. Following the results of August growth was still observed, and in September the prices stabilized, remaining practically at the level of the end of summer. Therefore, the price rising at the pipe market has particularly stopped. Moreover, taking into account the analysis of the current situation at the consuming field, a continuation of a price drop can be expected

Fitch rates Metinvest B.V 'BB-' and outlook negative

It is reported that Fitch Ratings has today assigned Ukraine-based Metinvest B.V long term foreign and local currency Issuer Default ratings of 'BB-'and a Short term foreign currency IDR of 'B'. The Outlook on the Long-term foreign currency IDR is Negative, while that on the Long-term local currency IDR is Stable. Fitch has also assigned the company a National Long term 'AA' rating with Stable Outlook and a National Short-term 'F1+' rating.

The ratings are driven by Metinvest’s scale as the sixth-largest global iron ore producer and the fourth-largest CIS crude steel producer in FY07. They also reflect its proximity to raw material sources and Black Sea ports, its self sufficiency in iron ore, its geographically balanced sales profile and its low cost core production assets. Metinvest’s satisfactory short term liquidity position and strong cash flow generation resulted in cash flow from operations of USD1,125 million at FYE07 up from USD 472 million at FYE06.

Constraints on the ratings include the company’s historically lower expenditure on plant modernization, which over the past five years has, on average, been 30% to 40% lower than at key CIS peers such as Severstal ('BB'/'B'/Stable) and NLMK ('BB+'/'B'/Stable). As a result, Metinvest’s production costs of basic products (slabs and coke, etc) are higher than those of its CIS peers. Fitch also notes the group is only 32% self-sufficient in coking coal, exposing it to price volatility. Despite several positive developments in corporate governance, Metinvest’s existing corporate governance practices and its disclosure framework are still below international standards.

At end H1 2008, Metinvest had total debt of USD3.9 billion against USD 0.6 billion in cash and USD0.6 billion in undrawn credit lines. Its FY 2007 debt/EBITDA stood at 1.3x below the company’s target of less