July, 13 2005
Chinese to come shopping for iron ore in Aug
Chinese steel millers are planning a late-August visit to their second largest supplier, India, to seek term supply contracts for the raw material, a leading industry official said on Tuesday. The news comes as the Chinese steel industry, the worlds largest, slows down iron ore purchases due to a slump in domestic steel prices.
India, the worlds third-largest producer of iron ore, supplied about 25 percent of Chinas total imports of 208 million tonnes in 2004. Unlike ore from Australia, Chinas top supplier, almost all Indian iron ore shipped to China last year was sold on spot basis. It is our ultimate goal (to have term deals), Liang Ruodong, director at the China Chamber of Commerce of Metals, Minerals and Chemicals Importers & Exporters, told Reuters.
A sharp increase in spot prices last year and in the first quarter of 2005 squeezed margins for Chinese mills and encouraged an increase in global term prices by the worlds largest miners. We found (the visit) is necessary as India is the second largest market after Australia, but the market is in high mobility, both in terms of quality and prices, said Liang.
Indian spot ore prices have fallen by nearly 40 percent since early April, after weakening steel prices slowed down purchases of the raw material by Chinese mills. But prices for spot ore are still $8 to $6 per tonne above those for term ore from Australia
Arcelor puts off India unit plan
The worlds second largest steel producer Arcelor has decided to put off its proposed greenfield project in the country. Before LN Mittals whirlwind steel acquisitions, Arcelor was the worlds largest steel maker.
Steel ministry sources say the Luxembourg-based steel major has indicated that it will expand its presence in India as a technology and support system provider before committing funds to a greenfield project.
Arcelor is already present in the country through JVs and technology tie-ups with Indian manufacturers. They want to first grow this business here. The company wants to watch the committed investments flow into the country before looking at its own steel plant here, ministry sources said. Arcelor is present in India through Imphy Ugine Precision, a stainless steel make
Chinese banks dishonour LCs
Steel manufacturers exporting to China have found that Chinese State-owned banks are going back on their Letter of Credit (LC) commitments. This is a practice increasingly being adopted by Chinese buyers with support from their banks following the recent decline in global steel prices.
Consequently, these companies are being forced to offer hefty discounts on the price that had been agreed upon at the time of entering into the contract.
Chinese buyers, it is learnt, are forcing Indian companies to renegotiate the price once the consignments reach Chinese ports. If the Indian exporter is reluctant to offer a discount and approaches the bank concerned to encash the LCs, they are being told that the LC is invalid.
In the past few weeks, a number of publicly listed steel companies have faced such a situation and have had no choice but to agree to the discount demanded. Otherwise, their consignment is at risk of being attached by the courts as the importer, Chinese State-owned Minmetal, raises other issues.
Industry sources said that Steel Authority of India Ltd (SAIL) has not yet faced this problem as it insists on LCs from international banks, but private players have not been spared. Moreover, private companies are reluctant to publicise their predicament apprehending that it may "hurt future business interests."
According to Indian exporters, the banks that have gone back on their commitments include Bank of China, Industrial & Commercial Bank of China and China Commercial Bank. The pretext being used by these banks is that discrepancies have crept into the letters that were issued.
Also, in almost all cases, a Chinese version of the LC is attached with the English version of the LC. "The Chinese version has a clause that in case of any dispute the Chinese version would be final, as they are not comfortable with the English language," a senior official in one of the affected companies told Business Line.
"It is also seen that though the shipment made by Indian exporters is under LC, very rarely are the documents 100 per cent as per LC terms. Therefore, even if there is a minor discrepancy, it would require approval/acceptance of the documents by the Chinese buyers as the banks refuse to honour the same," a company official said.
"We would be discussing the problem among ourselves and are planning to take up the issue with the Government as banks cannot simply go back on their LC commitments in case of international transactions," a steel manufacturer said.
"During such circumstances if the product price are downwards, Chinese buyers take advantage of the market situation and demand discount. And then Indian exporters have only two choices: to either recall the goods (which would again attract customs duty) or sell them at a discount, even though the documents are under LC," said the official who is also a board member in the company.
"However, in a reverse scenario if the prices go up, even though the documents may have discrepancies the Chinese buyers accept the documents and make the payment," he said
WB Sponge iron units voice grievances
The sponge iron or direct reduced iron (DRI) industry in West Bengal has formed an association to mitigate the problems currently facing the units and to collectively take up the issues with the state government.
West Bengal Sponge Iron Manufacturers Association (WBSIMA) has alleged that the sponge iron units in the state have contributed Rs 300 crore to the exchequer without getting even a rupee as return for the development of the sector.
The association has laid out a charter of demands for the state government. According WBSIMA, frequent power failure is a big problem for sponge iron units and the association has sight help from the state government to develop its own power generation plant. Some of the plants had not been given power as yet.
Local road transport had become a menace for the sponge iron industry. Transporters were forming small associations forcing the units to work on their own terms and conditions. Moreover, many DRI plants were not supplied with adequate water.
Among the list of of recommendations, the sponge iron also mooted framing a proper minimum wages scheme for the DRI industry. This stemmed from the move that some local people were forcing to sign agreement with individual units.
The association highlighted the importance of the role of sponge iron units. WBSIMA pointed out, the availability of scrap for the huge quantum of steel proposed to be produced would be inadequate and therefore scraps would have to be replaced more and more by DRI.
With resourced available in India, the sponge iron-electric arc furnace route is the most viable option for steel making said WBSIMA sources .
According to estimates by the World Steel Dynamics (WSD), the global shortage of scrap would reach 68 million tonne in the year 2010, which implied that the scrap price would go up and availability would be a problem
Steel rush at Chiria Hill: SAIL feeling left out
For over a century, it was a one-company monopoly. But now Chiria Hill in West Singhbhum district is becoming Jharkhand's corporate hotspot, and the cause of a legal battle between the state government and the Steel Authority of India Ltd (SAIL).
Chiria Hill is home to over 2,000 million tonnes of iron ore deposits, making it India's single largest repository of the commodity. With steel demand galloping in the country, it is estimated to grow from 34.5 million tonnes a year now to 110 million tonnes in 2020, steel companies are eyeing Chiria.
The Indian Iron and Steel Company (IISCO), now a SAIL subsidiary, began mining in Chiria in 1870. Now the state government is wooing investment, attracting TISCO, Essar, the Jindals, Monet Ispat and the London-based L.N. Mittal to the Hill.
Eighty companies have filed applications with the district Mining Department seeking mining leases. Of them, at least 35, including Essar and Jindal Steel, have already signed MoUs with the state government agreeing to set up steel plants in Jharkhand. Investments worth Rs 80,000 crore have been promised.
In June, L.N. Mittal's technical experts flew down from London to appraise the Hill. The steel baron telephoned Chief Minister Arjun Munda. He indicated, sources say, a mining lease would help him decide on Jharkhand as the location of the 11 million tonne steel plant he is planning as his first Indian investment.
Says Santosh Kumar Satpathy, Jharkhand's industry secretary, With their (the steel companies') entry, Chiria will pave the way for the state to become a new cradle of industry.''
Satpathy's optimism is not baseless. The IISCO facility here has fed SAIL's plants in Rourkela (Orissa) and Burnpur (West Bengal). Hamare liye to yeh sone ki Chiria hai,'' says S.S. Dhar, IISCO's local manager.
Between 1947 and 1982, IISCO obtained leases for 10 mines in Chiria, covering a potential 2,244.59 million tonnes reserve. Three leases, 454.84 million tonnes reserve, were cancelled by Munda on January 9. The government said IISCO had not taken recourse to scientific mining to exploit the huge reserve. It also said applications for lease renewal had not come in time.
The state government wants to sign fresh lease agreements with private companies. IISCO has moved the Jharkhand High Court. The notification was based on erroneous facts,'' read the IISCO petition, the company had filed applications for renewal in time and it was carrying on mining as per the law.''
The Chiria Hill controversy has divided the ruling NDA. Inder Singh Namdhari, speaker of the assembly, has sided with SAIL. The local MLA, Joba Manjhi, has criticised Munda. We want private companies to exploit the Chiria mines,'' Joba told this websites newspaper, this will bring employment. But we will not allow the state government to lease them at the cost of a public sector unit.''
On February 22, the court ordered that the physical status of the three mines not be tampered with for the moment. Arun Kumar Singh, state secretary, mines, doesn't see this as a problem: The litigated mines are just a minuscule part of the reserve at Chiria.'' Indeed, an iron treasure trove lies in the forested area beyond IISCO's 10 mines.
Right now all you hear beyond the IISCO zone are wild elephants and the silent steps of barefoot Adivasis tilling small patches of land. The metal that lies below may spell a different future
Bellary Steels implements 2.5MW Power Plant
Bellary Steels & Alloys Ltd`s following developments have taken place in the company recently.
Firstly the company has done away with job work and resumed own manufacture of sponge iron resulting a quantum leap in the turnover of sponge iron .
Secondly additional facilities in Steel Melt Shop will produce billets, using captive sponge iron. The value addition in respect of the additional facility will be substantial.
Thirdly , the Bar Rolling Mills are also being refurbished and modernized, in such a manner to produce Wire Rods
Fourthly it also implemented a 2.5 MW Power plant, as a part of 12 MW project, to counter the high cost of state supplied power.
Orissa Govt draws up master plan for roads
The state government has come up with a master plan for coming five years keeping in view the requirement of road infrastructure for upcoming industrial/mining projects and providing connectivity to places of tourist importance.
Works secretary-cum-engineer-in-chief, Mr Ratnakar Dash, said the main thrust of his department was improvement of road network from mining hubs and industrial belts to ports and other economic centers, connectivity to places of tourist importance and improvement of road network in tribal and extremist prone-zones.
The department also plans for integrated closed loop road network for the state roads for achieving connectivity between the sub-divisional headquarters with district headquarters and state capital and other strategic locations.
Patnaik to sort out Posco deal
Orissa Chief Minister Naveen Patnaik has sought a discussion with the Bharatiya Janata Party (BJP), a key ally in his coalition government, on a rift over the deal inked with South Korean steel giant Posco.
Jual Oram, president of the state unit of BJP, had written a letter to Patnaik expressing doubts over the deal signed by the state government with Posco for a 12-million tonne steel plant in Orissa.
Oram's letter had sought 12 clarifications from Patnaik regarding the deal. He had objected to the government proposal of allowing Posco to export 30 percent of the ore allotted to it to Brazil.
Patnaik Monday replied to Oram in a letter seeking a discussion on the matter, reported www.odisha.com, the state's only Oriya news portal.
"Instead of writing a letter, you could have discussed your doubts with me, which is more conducive in a coalition government. Had you done so, all your doubts and misconceptions would have been cleared," Patnaik was quoted as writing in his letter.
"I would like you to come over for a discussion at a time convenient to you with prior intimation to me so that all your doubts can be fully cleared," Patnaik reportedly said.
Though Oram was not immediately available for comment, BJP officials confirmed that he had received Patnaik's letter.
"Patnaik did not reply to the questions raised by Oram. He should have replied that to clear the doubts that have been raised and are in the public's minds," a BJP leader said.
According to the deal, Posco will build a steel complex including a 12-million tonne steel plant costing $9 billion, a 30-million tonne iron ore mine and a mill for hot-rolled coils near the port town of Paradeep in the coastal district of Jagatsinghpur as well as a seaport along Orissa's coast.
The state government has also granted Posco mining lease rights for 30 years to supply a total of 600 million tonnes of iron ore to the new plant.
JSW to invest Rs. 3,000 cr. in Al plant in Vizag
Jindal South West (JSW) Steel Ltd, a leading integrated steel maker, is hopeful of achieving financial closure for its proposed aluminium plant at Visakhapatnam in three to six months. The company had recently entered into a memorandum of understanding with the State Government for the project with an investment of Rs. 9,500 crore.
JSW is planning to invest Rs. 3,000 crore in the first phase, raising resources from internal accruals and financial institutions and go for a public issue in the second phase. "We are hopeful of completing the second phase of the 1.25 million tonnes project in four years,'' the JSW Executive Director, Vinod Nowal, has said.
Speaking to reporters, who visited the JSW plant here on Sunday along with another Executive Director, J. P. N. Lal, Mr. Nowal said the company would take up bauxite mining as a joint venture with the Andhra Pradesh Mineral Development Corporation, the latter being the majority shareholder (51 per cent).
Govt to decide on Vitkovice privatisation on Wed
The Czech government will decide on the privatisation of its 99 percent share in steelworks Vitkovice Steel on Wednesday, PM Jiri Paroubek told CTK yesterday.
He also denied press reports that he had discussed the privatisation with Russian President Vladimir Putin. He said he had met with Alexander Abramov last Friday, the owner of Russia's Evraz Holding, the company recommended as the winner of the tender. They "agreed that they could agree," Paroubek added.
Paroubek said Abramov had promised further investment in the unemployment-stricken region of Ostrava, where the steelworks are based. Abramov also repeated that he would not curb output at Vitkovice.
A steering commission has recommended Evraz as the winner with a bid worth CZK 7.05 billion.
Czech-Slovak group Penta offered CZK 9.03 billion and international group Mittal Steel said it would pay CZK 9 billion for the government stake, but both were eliminated from the tender
China's June Steel Imports Rise 3% to 2.51 Million Tons
China's imports of steel products rose 3 percent in June from a year ago as high prices in first four months of the year attracted more shipments to the world's biggest consumer of the alloy.
China imported 2.51 million tons of steel products in June, according to figures derived by deducting first five-month imports from figures for the six months announced by the customs office. Imports fell 27 percent to 13.2 million tons in the first six months from a year ago, the customs office said on its Web site.
"June imports stayed high probably because of the higher steel price earlier this year," said Luo Wei, steel analyst at China International Capital Corp., the nation's biggest investment bank, by telephone. "Steel shipments usually arrive two to three months after placing orders.'"
Cold-rolled coil, zinc-galvanized sheets and other steel sheets and plates made up 85 percent of China's steel imports in 2004
The import volume of auto vehicles and steel products have declined obviously in the first half of the year, statistics from the General Administration of Customs (GAC) revealed here Tuesday. The import of steel products was only 13.22 million tons, down 26.5 percent
JFE cuts some exports to Asia to maintain prices
JFE Steel, Japan's second-largest steelmaker, yesterday said it would cut its exports of hot-rolled coil steel to Asia in the July-September quarter, in a bid to avoid price erosion.
The company's move to curtail exports of lower-grade, commodity-type steel products, its first in nearly four years comes on the heels of similar decisions made by rivals Posco, Mittal Steel and Arcelor, in the face of cheap competition from China.
The supply glut in the Asian market has been caused primarily by a flood of Chinese exports. Over the past three years China has increased production capacity by 90m tonnes, almost all of which is lower-quality steel used in construction.
JFE said it could cut its exports by 500,000 tonnes, or 7-8 per cent, compared with the same period last year.
Krakatau Steel expands hot-rolled-coil production
State-owned steel manufacturing company PT Krakatau Steel will expand its hot-rolled-coil production by one million tons with an additional investment commitment of US$350 million to $550 million, an official of the firm said on Tuesday.
"The completion of the project, expected by the year 2008, will raise the company's production capacity to 3.4 million tons of hot-rolled coils per annum," Krakatau Steel's secretary Doni Sugihmukti said.
The expansion of the existing production capacity of 2.4 million per annum would be done to meet rising demand for the product on the domestic market, he said.
Doni explained that the expansion plan was part of the company's effort to become a dominant steel player with production capacity of 10 million tons per year by the year 2013.
Stelco to file restructuring plan outline July 15
Stelco Inc. has finally put together its own restructuring plan outline, which it will file on Friday with the court overseeing the steelmaker's rocky 17-month bankruptcy protection process.
Stelco's plan outline will describe how the now-profitable Hamilton company intends to raise funds, pay its creditors and emerge from protection.
The company also said Tuesday that it will seek an extension of its bankruptcy protection order until Sept. 9. It will appear in court on July 18, the day its current protection expires.
On Tuesday, chief executive Courtney Pratt declined to comment on details of the restructuring plan, which remains confidential. Stelco's stakeholders had not yet seen the document.
Wuyang Steel to build US$724 million special steel base
Wuyang Steel, located in central China's Henan Province, plans to invest 6 billion yuan (US$724 million) to build a special steel production base in 2005. Of the amount, 4.5 billion will be spent on a one-million-ton medium plate operation.
It will spend 960 million yuan on iron ore mining while 145 million yuan will be used to construct a one-million-ton pure iron powder project. When completed, the facility is expected to book sales revenue of 16 billion yuan annually
SMS Absorbs Tippins in Joint Venture
SMS Demag, the German plant engineering group, has formed a joint venture with U.S. mill builder Tippins Technologies Inc. that it says enhances the extensive know-how of SMS Demag in the area of Steckel and heavy-plate mills.
Tippins is the Pittsburgh-based company founded in 1923, and notably headed by the late George Tippins who established it as a leading designer and builder of wide slab mills. George Tippins was also the former majority owner and chairman of Allegheny Ludlum Corp., and the founder of the former Tuscaloosa Steel Corp. (now Nucor Steel-Tuscaloosa.)
SMS Demag Tippins L.L.C. was established July 1 by SMS Demag and Tippins Technologies owner/chairman John Thomas. Thomas will be contributing his trademark rights, patents, and process know-how, which are installed at 23 Steckel mills around the world
CVG, Danieli join for steel project in Venezuela
Venezuela's state heavy industry holding company CVG and Italian equipment and steel plant manufacturer Danieli have signed an agreement to develop the Qualimetal steel project.
Danieli and CVG subsidiary FMO (Ferrominera Orinoco) will create special company Qualimetal, which will carry out the Qualimetal steel project feasibility study. Project investment requirements are estimated at US$572mn.
CVG will hold 51% of Qualimetal with Danieli holding the 49% balance. Project financing will depend on the performance of the financial market, he added.
Plant construction is due to start within two years. The plant would be fed directly with briquettes coming from the Minorca plant in Venezuela, Iglesias explained.
Qualimetal would manufacture naval-quality steel to meet the local shipbuilding industry's needs. The project would create 500 jobs, not including workers needed during the construction phase.
Corus steel plant inquest latest
Two pumps supplying water to a steel plant blast furnace had stopped the day before an explosion that killed three men, an inquest heard today.
Molten metal and super-heated gases were showered down on workers when blast furnace number five, at the Port Talbot plant of steelmaker Corus, erupted on November 8, 2001.
The inquest heard how on November 7, planned maintenance work was being carried out which required taking a transformer out of service. Electricity to pump water was supplied by another transformer while repairs were being carried out. But the switching operation resulted in a drop in voltage, which caused an electrical pump to trip, losing 45% of the water supply to the furnace.
Ukrainian court seizes control of factory
A Kiev court seized control of a major metal plant owned by the son-in-law of Ukraine's former presidentIn a statement, the Kiev Court of Appeals said it had taken control of 50 percent plus one share of the Nikopol Ferroalloy Plant, owned by Viktor Pinchuk. The court also banned shareholders, including Pinchuk, from performing any activity involving the shares.
The plant, which is a key asset for Pinchuk's Interpipe manufacturer, was acquired in 2003 at prices whose legality have been questioned by prosecutors. The factory is a major producer of ferroalloys and serves at least 15 of the world's largest steel producers.
Last month, Prime Minister Yulia Tymoshenko warned Russian metals and oil tycoon Viktor Vekselberg not to buy Pinchuk's shares in the Nikopol factory. Tymoshenko said the plant's privatization was in the process of being rolled back.
Yushchenko has pledged to review dozens of enterprises suspected of being privatized under shady circumstances during the 10-year tenure of his predecessor, Leonid Kuchma. Much of Kuchma's term was marred by corruption, nepotism and alleged government links with organized crime
Mastervich named GM of operations at V&M Star
Joel Mastervich has been named General Manager of Operations for V&M STAR. V&M STAR, formerly North Star Steel, is the steel manufacturing arm of V&M Tubes' new North America OCTG division.
Mastervich will oversee operations of V&M STARs facility in Youngstown, Ohio. He has more than 26 years experience in the steel industry.
Prior to coming to V&M STAR, Mastervich was Vice President Operations at Ispat Inland Steel Company in East Chicago, Ind., where he served in various capacities from 1979-2001.
