July, 18 2005
U R Rao rues hypocrisy of developed countries
Thanks to indiscriminate exploitation, the current mineral resources of the world will exhaust in about 300 to 400 years, said eminent scientist Prof U R Rao on Saturday.
He was delivering the keynote address at a national seminar on Sustainable Mining Development organised by the Kudremukh Iron Ore Corporation.
Dr Rao, expressing anguish at the rate of consumption particularly in developed countries, pointed out that fossil fuels will last us barely 100 years, a short span in human evolution.
We all saw what happened at the last (2001) Group of Eight (G-8) summit; US President George Bush withdrew from the Kyoto Protocol, which asks developed countries to curtail their fuel consumption and developing countries to increase their consumption. Mining started just 600 years ago but weve already exhausted so many of our resources that it wont last over 400 years, assuming we find new sources and optimise efficiency, said Dr Rao.
He observed that the fuel consumption of one American is equivalent to that of two Germans, 15 Chinese, 30 Indians, 100 Africans and 300 Nepalese. Our major problem is wasteful use of minerals in rich countries.
The world population will be 10-15 billion by the end of the century, Indias alone about 1.6 billion by 2050. At this rate of energy consumption, we are going to be responsible for the wiping out of the human species by not following rules of sustainable living, he said.
He said space scientists must next think of exploiting resources from Mars and Moon. Minerals and energy available there are enough to run all the nuclear reactors in the world. We just have to find a way to put up our stations 36,000 kms above the earth, he said.
Chief Minister N Dharam Singh said sustainable development meant development that meets the needs of the present without compromising the needs of the future. Stating that development of the mining industry faced several challenges in both conservation hazards and adherence to safety and ecology standards, he said a health mineral sector is essential to meet the needs of a globalised world
Jindal Steel plans to set up integrated plant overseas
Jindal Steel and Power Ltd (JSPL) is planning to set up an integrated steel plant abroad, after announcing two greenfield projects in Orissa and Jharkhand, reports Business Line.
The company is evaluating locations for the above project such as Iran, South America and Australia where iron ore and coal mines are available.
JSPL plans to acquire coal and iron ore mines initially and eventually set up an integrated steel plant. According to sources, the company is looking to invest around $2 billion for setting up a greenfield steel plant abroad, subject to necessary approvals.
JSPL has announced two greenfield ventures for setting up steel plants in Orissa and Jharkhand. The company recently appointed SBI Capital Markets Ltd for financial appraisal of its proposed two-million-tonne plant in Orissa.
Indian Steel producers face dishonor by Chinese banks
Steel manufacturers exporting to China have reported that Chinese State-owned banks are going back on their Letter of Credit (LC) commitments.
Following, the recent decline in global steel prices, Chinese buyers are increasingly adopting the practice with support from their banks. As a result, these companies are being forced to offer heavy discounts on the price that had been agreed upon at the time of entering into the contract.
It is being reported that China buyers 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.
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
Court orders liquidation of Rajendra Steel assets
The Allahabad High court has ordered liquidation of all assets of Rajendra Steel which had raised close to Rs 600 crore from the financial institutions and banks and small investors before its promoter disappeared from India.
According to a public announcement on Saturday, the official liquidator of the company has put up the companys Kanpur and Raipur units for sale with a reserve price of Rs 30.5 crore. The bidders have been asked to submit a financial bid and an expression of interest which will give all the financial details about them.
The assets at Kanpur and Raipur can be bid separately also with a reserve price of Rs 8.5 crore and Rs 22 crore, respectively. The last date for submitting the bid is August 16 and the proposal of successful bidder will be sent to the high court for confirmation.
This is a classic case of borrow-and-disappear game played by a promoter. Darminder Singh Batra, the main promoter of Rajendra Steels group is not traceable now.
The group which raised a huge amount from the market and public was affected by the dip in international steel prices in the late 90s. The group has two companies in the defaulters list with Rajendra Steels taking the lions share of Rs 468 crore out of the total group NPAs of Rs 620 crore.
The company, which went public in September 1986, last issued fully convertible debentures in April 1994, to part-finance its projects of hot-rolled coils and to expand the capacity of the tubes mill from 35,000 tonnes per annum (TPA) to 60,000 TPA.
Investors who have put money in the group companies have lost their investments. The scrips of both the companies were delisted from the exchanges.
The companys offices and plants are closed. Though FIs led by IDBI tried to bring in new promoters, they did not succeed due to the huge liabilities of the group. However, critics blame faulty project appraisals and cost overrun for the groups debacle. None of the officials who cleared the faulty proposal and which resulted in huge losses to IDBI and other banks have been booked till date
Price squeeze to hit steel makers margins
Margins of all leading steel companies may shrink by 8-10 per cent in the first two quarters of the current fiscal compared with the corresponding period in the previous fiscal, said leading steel analysts.
This is because steel prices have come down to Rs 22,000 per tonne from Rs 29,000 per tonne three months back. Analysts have attributed the decline to an over-supply situation and they expect further reduction in steel prices at least for another quarter. They see an upturn coming only after that.
Prices of raw materials such as coal and iron ore have shot up in recent past, adding to steel makers woes. However, integrated steel manufacturers such as Tata Steel and SAIL is less likely to be affected by increase in raw material prices compared with non-integrated manufacturers such as Jisco, Essar, and Ispat, said a leading steel analyst.
For the whole fiscal year, the margins are expected to decline by 5-6 per cent compared with the fiscal ended March 2004, they added.
There has been a price erosion of 25-30 per cent on steel over the last couple of months. The ill-effect will be visible on the margins of leading steel manufacturers, which are likely to be impacted by 5-6 per cent, said Sridhar Iyer, cement analyst at Batliwala & Karani, a leading Mumbai-based equity research outfit.
Sheshagiri Rao, director-finance, JSW Steel, admitted the over-supply situation has resulted from a significant dip in demand for steel in Europe, especially from France, Germany and Italy, due to low economic growth over the past few months.
The situation has somewhat been saved by a 35 per cent growth in China over the last five months. However, a pressure on the margins of Indian steel companies is certain, he added.
As a result of the demand, the prices of steel coil and steel scrap in China has increased by 16-20 per cent over the past 10 days, he said.
Tata Steel, Steel Authority of India Ltd (SAIL), Jindal Iron & Steel Co (Jisco), Essar Steel and Ispat are the leading steel manufacturers in the country. Last week, SAIL, Tata Steel, Jisco, Ispat and Essar Steel reduced prices by Rs 2,000 to Rs 3,000 per tonne.
This was the second cut in recent months. In April, some of these companies had their first round of price cut by about Rs 2,000 per tonne.
The global steel prices have come down to $400 per tonne from $700, few months back. Global steel companies such as Mittal Steel, ThyssenKrupp and Arcelor have cut their steel production to limit inventory build-ups and the resultant decline in prices.
Indian companies are continuing with their existing despatches. They are currently liquidating the steel inventory, which has been accumulated during the demand season. Domestic steel industry is believed to have inventory enough to meet demand till October.
The players are trying their best to increase volumes when the prices are not working, said an analyst. Steel companies are seeing some positive signs by October. Domestic demand coupled with Chinese demand should make the situation better, said JSWs Rao.
The current decline in steel prices is just a correction. An improvement is expected by October, said a senior Ispat official. However, a sector analyst pointed out that even if there was a correction in steel prices, the margins of the steel companies would remain flat.
Tata Metaliks targets Rs 1,000 cr turnover
Tata Metaliks has set a target of achieving a turnover of Rs 1,000 crore by 2006-07, an increase of 212 per cent from the current level, by foraying into new businesses.
The company hopes to reach its target by entering downstream businesses. Tata Metaliks was in the process of charting its roadmap and was weighing manufacture of billet and alloy steel varieties complementary to Tata Steels product range, which was moving up the value chain. Tata Steel happens to be the parent company of Tata Metaliks.
The move to diversify was part of Tata Metaliks conscious effort to graduate from a one-product company.
The company has mentioned in its annual report that castings was another area that was under consideration.
Castings capacities in the developed world were being replaced by new capacities in China and India. Automobile castings were being increasingly outsourced from India by international automobile giants and Tata Metaliks believed that it possessed a rich insight into the business.
For the purpose of implementing business extensions, Tata Metaliks has already requested the West Bengal government to allot land nearby location of the plant at Kharagpur.
At present, Tata Metaliks plant was spread over 260 acres and it was understood that the company had indicated an additional requirement of around 500 acres.
The company recognised that while considerable value was created in core manufacturing, the business value would need to be created upstream and downstream for long-term competitiveness.
The company was evaluating both the extensions. Tata Metaliks was looking at backward integration through acquisition of iron ore mines and coal blocks for which it has applied for government permission.
This would help the company save costs and also enhance its business flexibility to play either the-end product or the intermediate products markets.
However, pig iron would continue to be the core product. The output was expected to touch 3.20 lakh tonne in 2005-06 from the present level of 1.63 lakh tonne. The newly installed blast furnace would make this possible.
The company installed the new blast furnace in 13 months against a prevailing industry benchmark of 16-18 months.
Vizag Steel Plant`s sales slip in Q1
Visakhapatnam Steel Plant (VSP) registered a decline in sales during the first quarter of the current fiscal. This has resulted in piling up of inventories and according to the current prices estimates, more than Rs 800 crore worth of finished steel products have been lying at different yards for the last one month.
Despite this, VSP is continuing its production as usual, said KK Rao, director (operations), VSP.
We have reduced the prices of our products recently. So the company is expecting good demand for the products in the coming days. Moreover, in spite of our inventories, we have not cut down the production, he added.
VSPs sales declined by more than one lakh tonnes during the first quarter of the current fiscal as compared to the corresponding period of last fiscal.
During the first quarter of last fiscal, VSP sold 9.92 lakh tonnes (3.31 lakh tonnes in April, 3.27 lakh tonnes in May and 3.34 lakh tonnes in June) of steel products, whereas during the first quarter of the current fiscal, steel sales reduced to 8.88 lakh tonnes (3.08 lakh tonnes in April, 3.19 lakh tonnes in May and 2.61 lakh tonnes in June).
VSP registered a sales turnover of about Rs 1,362.31 crore during the first quarter of the current fiscal as against about Rs 1,454.44 crore during the corresponding period of last fiscal, thus posting a negative growth of about Rs 92 crore.
The main reason for this fall was the abnormal hike in the prices of steel products in the beginning of the current fiscal, Krishna Rao, director, Vizag profiles, a leading steel trading company, told Business Standard.
It may be recalled that VSP increased its steel products prices by about Rs1,750 per tonne in the beginning of April. It further raised its prices by Rs 400-500 in May.
Order book to drive Man Ind growth
A robust order book, stable input costs and increased capacities are expected to drive Man Industries (India) Ltd's turnover two-fold this fiscal.
The company is a manufacturer of submerged arc welded (SAW) pipes and coating systems for high-pressure oil and gas applications. "Last year was an abnormal year because input costs were erratic and margins were severely under pressure. This year should be good," Ramesh Mansukhani, Chairman, Man Industries, said.
The company's new manufacturing facility at Anjar in Gujarat is expected to result in substantial logistics savings because of its large export orders as well as imports of inputs. "About 75 per cent of our order book of Rs 1,000 crore is for overseas orders. Besides, we import some of the inputs especially high-grade steel. As the ports of Kandla and Mundhra are close to the manufacturing plant, we will save a lot on transportation," he said, but declined from quantifying it.
For the year ended March 2005, Man Industries had reported a profit after tax of Rs 19 crore on turnover of Rs 500 crore. This fiscal, the margins should be better as steel prices have edged down and are showing signs of stabilising. Besides, turnover is expected to double on higher production.
The Anjar facility would make longitudinally submerged arc welded (LSAW) pipes and helically submerged arc welded (HSAW) pipes. It will push up the company's production capacity to over 2,000 km of line pipe and over 5 million square meters of coating per annum.
The company along with its domestic competitors is benefiting from the increase in global spends on pipe laying projects.
"Pipelines are the lowest cost of transportation and in the next five years pipeline projects totalling two lakh kms have been identified worldwide. Indian companies should be able to get orders for at least 5,000 km," Mansukhani said.
The domestic market is also robust with 25,000 km of oil and gas pipe laying projects.
Man charged with fraud in Iron Ore
Decks were cleared for the Tamil Nadu Crime Branch police to produce before the Court Mr Bhagbat Prasad Kwartia, accused in a fraud and forgery case involving the swindling of Rs 41 lakh.The Court of the Additional Sessions Judge, Cuttack refused to grant him interim bail for a month. Mr Kwartia was arrested by the Tamil Nadu Crime Branch sleuths with the help of the Orissa police from the College Square area here on 7 July.
Officials said Mr Bhagabat Prasad Kwartia, proprietor of the Chennai-based Prem Enterprises had opened another firm - Messrs Gold Rock - in the name of his wife Premlata Kwartia and set up branch offices of the two firms in Chennai.
Later, Mr Kwartia had approached a businessman there for finance by presenting documents on purported export orders worth Rs 1.8 crore involving iron-ore supply to China. He had also offered the businessman partnership in the deal, while receiving Rs 41 lakh from him.
Iron ore market to remain in balance till 2010
THE biggest bull market in iron ore history culminated in a 71.5 per cent rise in iron ore fines prices in 2005. Steel prices have recently started to fall and spot freight rates have collapsed.
What is the iron ore outlook? Is it all over for the market? "Definitely not," according to Mr Jim Lennon, analyst with Macquarie Bank, who made a presentation at the annual dry bulk shipping market outlook conference in London recently. The expert said China and China alone has driven the bull market in iron ore since 1990.
The sea-borne market has grown by 305 million tonnes, of which China has accounted for 250 million tonnes (mt) or 82 per cent; and since 2000, the country has accounted for as much as 93.5 per cent of growth, he pointed out, adding that China will continue to dominate iron ore sea-borne growth.
Forecasting that iron ore market will remain balanced to short up to 2010, the analyst said the market would be impacted by how quickly new projects can ramp up. Capital cost overruns and shortage of equipments and people would remain an issue.
While falling steel prices and more supply of iron ore will lead to lower iron ore prices in 2007 and 2008, high prices would attract (albeit, temporary) surge in Chinese and Indian iron ore supplies.
There has been a huge leap in world steel growth since 1999 - 268 mt during 1999-2004 versus fluctuating growth /degrowth during the previous five-year periods. China is the main, but not the only reason, for this growth.
China represented 56 per cent of growth since 1989, India 2.9 per cent, other Asia 11 per cent, Former Soviet Union 8 per cent, Latin America 4.7 per cent and Japan, West Europe and the US combined 10 per cent.
There has been a phenomenal growth in Chinese steel (crude steel production up 37.5 per cent year-on-year in May to annualised rate of 350 mt per annum), but it is now balanced between demand and supply.
Currently, world supply of steel exceeds demand, leading to production cuts and falling prices. Steel production cuts have now started to come through, but not in China, yet.
Chinese demand is unlikely to collapse anytime soon, according to Mr Lennon. He said growth rates are adjusting down as the Chinese Government puts the economy on a more sustainable footing to ensure continued growth. Due to quality problem and market saturation, China is unlikely to become a major exporter, but exports will rise despite government attempts to stop them.
Also, Chinese mills are unlikely to slash production between now and end of the year, but the pace of growth will slow as some loss making plants close.
Govt spurns duty cut on steel imports
In a major setback to primary steel producers, the government has spurned their demand for a hike in customs duty on steel.
Finished steel imports surged 34% during April-June this year to about six lakh tonne mainly due to cheap steel coming from CIS countries. The industry had asked for increasing the duty, which was cut in phases from a high of 30% a year-and-a-half ago to 5% now.
Steel ministry sources, however, said the quantum of steel imports was still not alarming to warrant duty intervention. The ministry has decided to first assess the extent of damage to domestic steel producers before recommending any change in import duty, they said.
Early this month, primary steel producers under the banner of Indian Steel Alliance had submitted a memorandum to the steel ministry urging an immediate hike in import duty on the grounds that global steel prices had declined necessitating duty intervention. It is understood that the industry wanted a quadrapling of the duty to 20%. Primary steel producers had also asked for an increase in the DEPB rates.
The ministry sources said both the propsals were rejected since it was felt that the present gap between the international and domestic steel prices did not make imports a threat. Moreover, the industry itself had demanded that domestic prices be aligned with global prices when the sector was in an upswing.
Despite a 18% cut in domestic steel prices this fiscal, Indian steel continues to be priced higher than prevaling global benchmarks. According to sources, the government also feels that soft steel prices would have a positive impact on inflation, under pressure from rising oil prices.
Talking to FE, Moosa Raza of ISA, however, said a hike in customs duty had become esential as rising imports was affecting companies ability to keep producing at lower margins
Warwick Versity confers honourary PhD to Ratan Tata
Ratan Tata, Chairman of the Tata Group and the outstanding Indian industrialist of his generation, today received an Honorary Doctorate from the University of Warwick.
Ratan Tata's early passion was for architecture, receiving a BSc from Cornell University in Architecture in 1962. He also completed the Advanced Management Program conducted by Harvard University in 1974-75. Over the past 14 years, he has applied all his vision, flair and skill to the transformation of the Tata Group, an icon of Indian industry. In the process, he has turned "one of India's most stodgy conglomerates into a global business player", said Forbes Magazine on naming him Asian Businessman of the Year for 2004.
POSCO War: BJP-BJD coalition may split
The BJP today hit back at its coalition partner Biju Janata Dal over the Posco MOU controversy accusing the party's Secretary General Damodar Rout of pursuing an "anti-coalition attitude".
'When Rout himself has been opposed to the POSCO project, he had no moral right to read sermons to the BJP over the latter's reservations over the South Korean steel project,' BJP spokesman Nayan Kishore Mohanty said here in a statement.
The BJD leader, who is also the state Panchayati Raj Minister, had accused state BJP Chief Jual Oram of "violating the principles of coalition politics" by raising questions on the June 22 POSCO deal.
"When the BJD and BJP decided to enter into an alliance, Rout was in another party and had been criticising both the Chief Minister Naveen Patnaik and BJP Chief Oram", Mohanty said
Jindal Steel plans to set up integrated plant overseas Myiris dated July 16th 2005
Stelco restructuring
Stelco Inc. unveiled a long-awaited $1.16-billion restructuring plan yesterday that it said would entail a much smaller up-front payment against a massive employee pension deficit than under a union-backed plan. The new plan would require a payment of $200-million, $300-million less than the union's proposal, which the steel maker and its bond holders have already rejected.
That's the same target date as that set in the $1.35-billion restructuring plan put forward by the United Steel Workers and Tricap Restructuring Fund, a unit of Brascan Corp. of Toronto, although that plan calls for annual payments of $80-million.
USA Union refuses final Mittal offer
Hopes for a new labor agreement for production and maintenance workers at Mittal Steel USA's Indiana Harbor East's plant were crushed Thursday when almost two weeks of negotiations ended with the union refusing the company's final offer.
TopOutlook dims for steel suppliers for Auto makers in US
Big Three output drops GM, Ford and Chrysler have slashed North American output this year, squeezing parts suppliers
Though new cars are debuting and steel costs are lower, they'll need to rely less on automakers.
The outlook for U.S. auto suppliers will remain gloomy this year even as Detroit automakers introduce important new models, steel prices fall from record highs and consumer spending on new cars and trucks stays strong, according to a new report from Wall Street credit ratings agency Standard & Poor's Corp.
While the situation could improve slightly in 2006, major suppliers in the near term are likely to post weaker profits and see more credit downgrades as industry challenges continue.
The grim forecast comes as more bad news to a U.S. supplier industry that has been hit hard since the second half of 2004 by high raw material costs and production cuts at General Motors Corp. and Ford Motor Co.
New steel policy of China out next week
CHINA, the worlds No. 1 steel manufacturer and consumer, is expected to change the rules governing foreign investment in its fast-growing steel sector.
The nation will forbid foreign steel producers from taking controlling stakes in domestic steel companies, Qi Xiangdong, deputy secretary-general of China Iron and Steel Association, said yesterday.
Foreign steel producers, if they want to invest in Chinas steel sector, must have independent intellectual property in steel-making technologies and have an annual output of 10 million tonnes, Qi told China Daily. These restrictions will be included in a national steel industry policy, which is to be released next week, he said.
They come as foreign steel giants are speeding up mergers and acquisitions in Chinas steel industry, and even seeking majority stakes in domestic steel mills. Mittal, the worlds biggest steel group, will buy a 36.67% stake in Valin Iron and Steel Co Ltd a Shanghai-listed steel maker in Central Chinas Hunan Province, the Chinese company said last month. The figure will be less than it previously intended.
In January, Mittal and Valins state-owned parent agreed to each having a 37.17% stake in the firm.
Arcelor, the worlds No 2 steel company, has also been seeking a controlling stake in Laiwu Iron and Steel Co Ltd a Shanghai-listed steel maker in East Chinas Shandong province. Both Valin and Laiwu are among Chinas top 20 steel makers.
Mittal Steel Included in Fortune Global 500 for the First Time
Mittal Steel Company N.V. ("Mittal Steel") has been included for the first time in Fortune Magazine's Global 500 list, the ranking of the world's largest corporations.
Mittal Steel is ranked the world's 253rd largest company in terms of revenues (US$22.2 billion) and 55th in terms of profits (US$4.7 billion).
In its sector, Mittal Steel ranked number 1 for profits, with a profit margin of 21%.
The Company was also ranked number 1 globally for the biggest increases in revenues, the biggest increases in profits and the highest returns on assets.
About Mittal Steel
Mittal Steel Company is the world's largest and most global steel company. The company has operations in fourteen countries, on four continents. Mittal Steel encompasses all aspects of modern steelmaking, to produce a comprehensive portfolio of both flat and long steel products to meet a wide range of customer needs. It serves all the major steel consuming sectors, including automotive, appliance, machinery and construction. For 2004, Mittal Steel had revenues of US$22.2 billion and steel shipments of 42.1 million tons.
Bankruptcy Judge Approves Havens Steel Plant Sale
A federal bankruptcy judge on Friday approved the sale of Havens Steel Co.'s plant in Ottawa, Kan., setting the stage for the liquidation of the Kansas City steel fabricator.
Schuff Steel Co. of Phoenix, which has been running the Ottawa plant since the beginning of the month, acquired the facility for $4.5 million, according to a court order signed by U.S. Bankruptcy Judge Jerry Venters.
The proceeds will go to St. Paul Fire and Marine Insurance Co., the bonding firm that has financed Havens since it filed for bankruptcy in March 2004. St. Paul Fire and Marine also held the lien on the Ottawa plant.
Schuff Steel emerged last month as the leading candidate to buy Havens' Ottawa plant, which had been the company's only operational facility for many months. Havens had been leasing the Ottawa facility to Schuff while the bankruptcy court gave other companies an opportunity to make a higher offer, but no new bidders emerged, according to bankruptcy documents.
Schuff Steel kept the work force at the Ottawa plant intact and employs more than 100 people, said Scott Sherman, the company's vice president and general counsel.
Bayou Steel plans to recapitalize
Bayou Steel Corp. today announced plans to restructure its balance sheet by entering into a $50 million credit agreement and increasing its existing revolving credit facility from $45 million to $65 million.
In addition, the company said its board of directors is considering the declaration of a special dividend of approximately $35 million, or $17.50 per share. A final decision as to whether to complete the refinancing and declare the special dividend is expected within the next month.
If approved by the board, proceeds of the $50 million secured debt offering, together with borrowings under the upsized revolving credit facility, will be used to refinance the company's outstanding $30 million of 9. percent First Mortgage Notes and to pay a special dividend of approximately $35 million to the Company's stockholders.
Jerry Pitts, chief executive officer of Bayou Steel, said that since emerging from bankruptcy in February 2004, the company has enjoyed very favorable steel market conditions. Margins on metals have been high and demand strong, he said.
Yanion plans US$600m steel plant
Yanion International, a Hong Kong-listed drug manufacturer turned steelmaker, plans to invest US$500 million (HK$3.9 billion) to US$600 million producing thick steel plates despite potential government measures to further curb growth in the industry.
The estimated annual production of the new plant will be 2.3 million tonnes and the company may sell bonds to fund it. The expansion plan is subject to government approval.
We expect to start building the plant in mid-2006 and it will be finished by the end of 2007,'' said executive director Nathan Zhang after the company's special general meeting Wednesday.
China to eliminate substandard steel alloy makers
The NDRC (National Development and Reform Commission) announced Tuesday that it would select the first series of qualified steel alloy makers, and will announce the list at the end of this year. The policy was launched to clean up the chaotic steel alloy sector, protect the environment, and conserve energy.
According to the document, NDRC will choose the first batch of steel makers that meet previously laid out specifications stipulated in the Steel Alloy Sector Qualifications issued by NDRC. It will also complete an inspection of the many steel alloy producers in China based on total assets, sales revenue, profits, equipment, pollution, and product production capacity by June 2006.
All the companies that fail to meet the qualifications will have to upgrade production equipment and pollutant treatment facilities before the deadline set by the government. If they fail to do so, they will be cut off from power supplies, loans, and be forced to close.
China has been restricting the steel alloy sectors for more than one year, similar to its attempts to control the carbide and coking industries. However, steel alloy output is still increasing remarkably, most of which is from substandard plants. Unhealthy competition between these plants has caused prices to decline continuously on the domestic market.
The plan also aims to stabilize the steel alloy price. According to the National Bureau of Statistics, China produced 3.64 mln tons steel alloy over the first five months of this year, jumping 17.1% year-on-year. In May the output volume was 817,700 tons, up 14.10% yoy.
Iran's Mobarakeh Steel Mill eyes global spot
Mobarakeh Steel Mill will soon turn into a top international steelmaker thanks to its plans for producing 4,2 mln tons of steel in the year to March 2006.
According to ILNA, Mahmoud Eslamian, who heads the board of directors of the mills, said on Tuesday that the mills implemented 16 major projects by investing a billion dollars over the past five years, stressing that the Mobarakeh unprocessed steel production capacity has jumped from 2.5 mln tons to 4.2 mln tons.
He said the mill has managed to reduce production costs as well as fuel consumption, turning from a loss making entity to a profit-making one.
He said the company has exported 900,000 tons of steel products to 23 countries since March earning $440 mln. Exports will reach over a million tons this year, he said. According to a recent report by International Iron and Steel Institute, Iran ranked 21st in the world in the production of unprocessed steel in 2004.
The 2005 IISI report put Irans unprocessed steel production at 7.9 mln tons in 2003, which it said rose by almost 10% to reach 8.7 mln tons in 2004.
In 2003, Iran also ranked 21st in the world steel industry.
World steel production increased from 969 million tons in 2003 to 1,056 million tons in 2004. China, Japan and the United States were the worlds top three steel producing countries, respectively, last year.
Iran imported 8.1 million tons of unprocessed steel in 2004, said the same IISL report.It added that Iran is the fifth largest steel importing country in the world after China, the United States, Taiwan and Thailand. Irans steel consumption has increased from 5.7 million tons in 1998 to 12.2 million tons in 2004, showing a rise of 115%.
Gehry venture to buy Inland Steel building
A joint venture that includes prominent architect Frank Gehry has signed a contract to acquire the landmark Inland Steel building.
The venture also includes investor Alfred D'Ancona, president of the Chicago firm that bears his name, and Harvey Camins, chief executive of Chicago real estate brokerage Camins Tomasz Kritt LLC.
D'Ancona confirmed that the venture, Freddy Steel LLC, has made a non-refundable deposit on the deal, which is expected to close in August. "It exemplifies the greatness of Chicago architecture," he said.
Built in 1957, the 232,450-square-foot structure at 30 W. Monroe St. is owned by St. Paul Travelers Cos.
D'Ancona declined to comment on the price, which sources said is less than $200 a square foot. That would put the price at roughly $40 million. The price is less than reported in April, when Gehry confirmed his interest in the 19-story icon.
AK Steel Announces August Surcharges
AK Steel has advised its flat-rolled carbon steel customers that a $183 per ton surcharge will be added to invoices for products shipped in August 2005. AK Steel has also advised its electrical steel customers that a $115 per ton surcharge will be added to invoices for electrical steel products shipped in August 2005.
AK Steel's surcharges are based on reported prices for raw materials and energy used to manufacture the products, with the June 2005 purchase cost used to determine the August 2005 surcharges.
Headquartered in Middletown, AK Steel produces flat-rolled carbon, stainless and electrical steel products, as well as carbon and stainless tubular steel products, for automotive, appliance, construction and manufacturing markets.
Thai steel giant plans $1 billion project
Thailands largest wire producer said it is considering investing US$1 billion in a steel refining and rolling plant in the central province of Quang Ngais Dung Quat Industrial Zone.Tycoons Worldwide Group (Thailand), a subsidiary of the Taiwan-based Tycoons Group Enterprise, the worlds leading screw manufacturer, said it will build a furnace steel refinery plant and a heatproof rolling plant with an annual capacity of 5 million tonnes of billet.
TopWCI Steel, Inc. Names Walsh Vice President-Operations
WCI Steel, Inc. announced today that James F. Walsh has been named vice president-operations, effective July 1, 2005. Walsh has served as a consultant to WCI since April 2005 and has worked in a wide variety of managerial and officer-level positions in the steel industry for 30 years.
Patrick G. Tatom, WCI's president and chief executive officer, said that Walsh's broad background in steel operations will be invaluable to WCI as it emerges from Chapter 11 reorganization.
Walsh, 51, graduated magna cum laude from the University of Notre Dame with a bachelor's degree in electrical engineering in 1975 and earned a master's degree in business administration from Indiana University-Northwest in 1982.
Nippon Steel Sumikin to Cut Output of SS
Nippon Steel & Sumikin Stainless Corp., Japan's largest stainless steelmaker, plans to deepen output cuts for the quarter started July 1 to support prices.
The company, known as NSSC, will produce 35 percent less in the quarter from a year earlier, Kiyotaka Mishima, group manager at the planning division said in an interview on July 13.
NSSC joins rivals ThyssenKrupp AG, the world's largest stainless steelmaker, and Posco, Asia's biggest, in making cuts amid rising supplies from China. Global stainless steel output rose 7.4 percent in the quarter ended March 31, according to the Brussels-based International Stainless Steel Forum.
Prices of stainless steel hot-rolled coils imported into China have dropped 14 percent to $2,200 a ton from $2550 a ton on Jan. 14, according to U.K.-based Metal Bulletin. Prices fell 5 percent in June, the most in a year, according to Bloomberg.
Posco said on June 27 it will reduce stainless steel hot- rolled coil production by 80,000 tons in July and August, the first cut since it began production in 1989. The steelmaker cut prices of the product by 300,000 won a ton in May to reflect a drop in Asian rates.
Japan June crude steel output rises 0.4 pct
Crude steel output in June rose 0.4 pct from a year earlier to 9.46 mln tons, the fourth straight month of increase, the Japan Iron and Steel Federation said.
Month-on-month, output declined 5.7 pct.
Crude steel production at blast furnace operators rose 2.1 pct from the previous year to 6.99 mln tons in June, the fourth consecutive monthly rise, while crude steel output at electric furnace operators dropped 4.1 pct to 2.47 mln tons from a year earlier, marking the fifth straight month of decline.
From January to June, cumulative crude steel production reached 56.73 mln tons, a rise of 1.7 pct over the corresponding period the previous year.
S Korean Hyosung, Michelin Sign $650 Mil Contract
Hyosung Corp., a South Korean textile and industrial material producer, said yesterday that it signed a $650 million deal with French tire manufacturer Michelin.
Under the deal, Hyosung will supply Michelin with steel cord, used to reinforce tires, for 10 years, the company said.
Hyosung also acquired Michelin's steel cord plant in Scottsburg, Indiana, the United States, which it will run from next month.
It expected its U.S. market share of steel cord to grow from 7 percent to 14 percent.
The deal will help cement our position as a leader in the tire reinforcement market, Hyosung president Lee Sang-woon said.
Minor metals market expects further stainless cuts
European raw material suppliers to the stainless steel industry expect further
steel cuts in the fourth quarter, completing a hat-trick of quarterly moves by the steel industry against weak demand and oversupply.
Dealers in molybdenum and ferro-chrome, used to deter corrosion in stainless steel, said falling orders from steel makers signalled further depression in the stainless steel market for the rest of this year and beyond.
"We are in regular contact with major European and North American steel mills and some have told us they will cut production for the fourth quarter and possibly longer," a major London-based dealer of molybdenum said.
The degree to which minor metals prices are falling is widely viewed as a market bellwether for the stainless market, which enjoyed soaring prices through 2004 and early 2005.
Worst is over for nickel, say analysts
Nickel prices have taken a beating recently, but it now seems that the worst is behind. According to analysts there are several factors to ensure nickel prices receive solid support above $14,000/t, while they could once again rally sharply in the event of a strike or positive surprises to demand.
Over the past month nickel prices have corrected some 10%, trading around $14,400/t on Friday. Reduced demand from nickels main end-use sector, stainless steel, has been the prime reason for this downward price pressure. Stainless steel makers across the globe have reduced output in an attempt to safeguard prices in the wake of slack demand. Along with European steelmakers, including ThyssenKrupp, Japanese steel mills are cutting output in this quarter due to stagnant demand from the construction sector and higher imports of stainless steel, and Taiwanese steelmakers were the latest ones to announce output cuts, by up to 30% in H2.
Chinese Coke producers reduce output
China's coke producers are aiming to cut production in order to maintain profit margins following recent oversupply. They also want the government to tighten controls over the fragmented industry.
Coke producers in Shanxi Province, who supply 40 per cent of the world's coke, recently reached a self-imposed agreement within the Shanxi Coke Industry Association to cut coke output by 20 to 40 per cent.
The move aims to cushion the recent sluggish market that has been plagued by unregulated investment over previous years.
Turkish Businesses Unite to Block Sale of Erdemir to Foreigner
Turkish politicians and trade unions who oppose the sale of the national steel company to a foreigner are getting support from a group of local businessmen.
As many as two dozen Turkish companies, including Cemtas Celik Makina Sanayi & Ticaret As are planning a joint bid for Eregli Demir & Celik Fabrikalari TAS, or Erdemir, which had 4.4 billion liras ($3.3 billion) in annual sales. The government is set to announce a shortlist of potential buyers today.
The planned sale of Erdemir, the dominant employer in the Black Sea coastal town of Karadeniz Eregli, has sparked protest meetings and marches around Turkey, and has been on the front pages of the country's biggest newspapers.
Erdemir's products are the main inputs for our growing auto and home appliance industries, and a local owner will give these more emphasis,'' said Nuri Ozdemirel, chief executive of Cemtas Celik, a car parts maker based in Bursa, north-western Turkey. ``At least let's make steel under our own brand name.''
Turkey's efforts to sell state-run businesses have foundered before. Local courts last year overturned the sale of Tupras Turkiye Petrol Rafinerileri AS, the biggest oil refiner, after the government agreed to sell control to buyers including Russia's OAO Tatneft. Saudi Arabia's Saudi Oger Ltd., which won a July 1 auction for state phone company Turk Telekomunikasyon AS with a bid of $6.6 billion, is facing legal challenges from unions.
Northwest Pipe Company Announces Second Quarter 2005
Northwest Pipe Company announced today that it will broadcast its second quarter 2005 earnings conference call on Wednesday, July 27, 2005, at 8:00 a.m. PT via live internet webcast.
Northwest Pipe Company manufactures welded steel pipe in two business segments. Its Water Transmission Group is a leading supplier of large diameter, high-pressure steel pipe products that are used primarily for water transmission in the United States and Canada. Its Tubular Products Group manufactures smaller diameter steel pipe for a wide range of construction, agricultural, energy, industrial and mechanical applications. The company is headquartered in Portland, Oregon and operates eleven manufacturing facilities across the United States and Mexico.
POSCO to Export Steel Plates to Toyota
Starting this fall, POSCO, Korea's largest steelmaker will be supplying five thousand tons of steel plates to Japanese automaker, Toyota Motor Corp. every month. After more than 20 years of lobbying, POSCO was chosen one of Toyota's suppliers for steel plates to be used to make pick-up trucks and multipurpose vehicles.
The Korean steel giant has exported steel plates to other Japanese automakers including Honda, Nissan and Suzuki since 1994. But Toyota has rejected POSCO's supply offer due to its tight relationship with Nippon Steel Corp., Japan's representative steelmaker. POSCO has not revealed how much the latest deal is worth.
Steel company to pay penalty on alleged clean air violation
The U.S. Environmental Protection Agency has reached an agreement with CSN, a steel company in the Vigo County Industrial Park, to pay a penalty on alleged clean air violation and buy equipment for environmental and public health.
Companhia Siderurgica Nacional LLC, or CSN, has been assessed a penalty of $15,793 and the company has agreed to a $34,273 purchase of environmental equipment.
"CSN will buy a thermal imaging camera and up to six laptop computers for the Honey Creek Fire Department to help the department respond better to hazardous waste accidents," said Bharat Mathur, acting regional administrator for EPA's Region 5.
French June steel production down 10.1 pct YOY
Production of raw steel in France fell 10.1 pct in June from the same period a year earlier, the FFA steel trade association said.
Production had already fallen 9.63 pct in May and by 5.6 pct in April.
First half production was down 5.8 pct to 10.153 mln tonnes.
European steelmakers have recently announced cuts in production in response to a slump in Chinese demand for steel after a bumper 2004.
JFE Steel counters price erosion from China
JFE Steel, Japan's second-largest steelmaker, said on Tuesday it would cut its exports of hot-rolled coil steel by 500,000 metric tons 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 of the heels of similar decisions taken by rivals Posco, Mittal Steel and Arcelor, in the face of cheap competition from China.
Chinese prices for hot-rolled steel coil, a benchmark grade, have dropped 26 per cent this year as production soared and the Government limited investment in real estate. China, the world's biggest steelmaker, boosted output by a record 38 per cent in May, adding tonnage almost equal to the
supply of Germany, France, Spain and the UK combined
Severstal to Invest Over $180 Million in BF Upgrades
Severstal North America, Inc. announced today that it has filed a permit to install application with the Michigan Department of Environmental Quality to expand and enhance the larger of its two iron-producing blast furnaces. The Company will invest more than $180 million to add capabilities that will improve furnace productivity, efficiency and reliability and significantly reduce particulate emissions associated with the iron making process in its Dearborn-based steel making operations.
TopISG Retirees Still Waiting For Checks
Several hundred people who retired early under ISG-Weirton will be getting their buy-out checks nearly two weeks later than originally thought. Mittal Steel, who promised to issue the remaining $20,000 checks, now says it won't issue the checks until July 29th.
TopOfficials to discuss DRI plant of Minnesota Steel
An open house is being held Tuesday to give the public an opportunity to learn about current and upcoming projects related to the Direct Reduction Iron (DRI) plant proposed by Minnesota Steel. The proposed taconite mine and steel plant would be located west of Nashwauk.
Representatives from Minnesota Steel, Itasca County and the City of Nashwauk will be on hand to discuss project details.
The infrastructure includes natural gas, water supply, railroad and waste water treatment facilities connected with the mine and steel complex.
Coal International - First Significant Coal Assets Acquired
Coal International is pleased to announce that it has completed the first stage of its plan to build an international portfolio of metallurgical and thermal coal assets in, or close to, production stage, which will form the foundation of a new global supplier to steel producers and utility customers.
King-Coal owns approximately 35 million tons of metallurgical and thermal coal reserves contained in two surface and two underground operations capable of producing over 2 million tons per annum of clean coal over a mine life in excess of ten years.
Xstrata has healthy twins at Newlands
Formerly an MIM asset Newlands coal mine in Queenslands Bowen Basin, 130km west of Mackay, began open cut operations in 1983 switching to underground development in 1996 under a contract with Thiess.
As a joint venture partner with MIM, the principal shareholder and operator, one year later NCA took over from Thiess.
Over the period January to December 1999 Newlands was Australias highest producing underground coal mine winning the Queensland and Australian Minerals Export Awards.
During 2000/01 production of thermal coal increased by 15% and coking coal by 23% with the mine producing over 7Mt of coal from open cut and underground longwall operations.
Newlands estimated resources of 345Mt of thermal coal include reserves of 81Mt. In 2002 Suttor Creek resources were calculated at 177Mt including reserves of 25Mt. The mine uses the modern Internally Drained Rehabilitation (IDR) technique.
Mittal Steel & Vitokovice
Hardball tactics by Mittal Steel subsidiary VPO and a drop in global steel demand could mean thousands of layoffs for already-struggling Ostrava
Ostrava, the third-largest city in the country and the heart of Czech industry, could see thousands of layoffs in coming weeks affecting the mining, metallurgy and transport industries.
When the privatization of Vkovice Steel (VS) was launched late last year, it looked set to boost the prosperity of the citys already robust industrial sector. At the time, steel was selling for record prices, demand was exceptionally strong and numerous interested parties were clamoring for the mill.
But demand for steel has decreased by 10 percent to 15 percent worldwide so far this year, and the VS privatization process is now under threat since one potential bidder, Mittal Steel, was excluded from the process and is claiming discrimination.
On May 1, Mittal subsidiary VysokPece Ostrava (VPO), the sole supplier of pig iron to VS, will halt deliveries of the raw material, saying it has had enough after two years without a contract. The stoppage will render VS unable to produce any of its rolled steel products, effectively shutting it down and resulting in layoffs for many of the mills 1,580 employees.
Moreover, without VS as one of its major customers, VPO would be forced to shut down one of its own blast furnaces, cut production by 25 percent, stop buying coke from external suppliers and, most painfully, lay off 25 percent of its own 2,800 staff, said Frantiek Chowaniec, a member of the VPO supervisory board and CEO of Mittal Steel Ostrava.
Were a strong company and well survive, he said, but it is a catastrophe for the region.
Pak Govt to lease indigenous iron ore deposits
Government has decided to give on lease all the indigenous iron ore deposits to private sector to boost the steel production aiming to meet the domestic requirements.
Sources said that Pakistan's steel Industry would be thrown into private sector to meet domestic steel demand and import of iron ores and steel would be stopped as this had raised the cost of steel production.
The sources further said that private sector would be allowed to install iron ore plants and steel mills at Kalabagh as it contained a huge reserve of the iron ore. Private sector will also be asked to install plants and steel mills at all the high grade iron ores like Chiniot, Naukandi, Dilbund and Chitral.
Kumbas earnings set to treble on iron-ore boom
Higher commodity prices, strong demand and the benefits of its business improvement programme will see Kumba Resources post a near-trebling of earnings for the first half, compared with a year ago.
In a trading statement released yesterday, Kumba said that earnings for the six months to June would be 275% to 295% higher, while headline earnings would be 185%-205% higher.
The group, which is two-thirds owned by Anglo American, is due to release its results on August 3.
Kumba said an average increase of 71,5% in seaborne iron-ore prices came into effect at the beginning of April and would apply to end-March next year.
This more than offset the stronger average rand value of R6,20 to the dollar in the latest six-month period, compared with the rate of R6,38 to the dollar for the same period last year.
Lands, Mines And Energy Ministry Opens Up Liberia's Resources
For the first time in many years, the Ministry of Lands, Mines & Energy has commented publicly on the numerous statements in the press, discussions in every quarter and the belief that Liberia is extremely rich in mineral resources, which, if exploited and managed properly, every Liberian would be rich.
"While Liberia has several billion metric tons of combined iron ore reserves and resources, most of the remaining reserves at LAMCO, Bong Mines and some of the former mines are of low grade ore, as well as unconfirmed resources at Wologisi, Putu and so forth. Only significant improvement in global iron ore prices, like the surge experienced in mid 2004 to early 2005, will enhance foreign investment in the iron ore sector. The recent drop in iron ore prices has begun to make us nervous", the Assistant Minister said.
New Hope confirms US$405 million sale
In an update of their trading conditions, New Hope Corporation Limited (NHC) have confirmed the US$406 million sale of their international coal asset, completed June 21 2005. The sale consisted of a 40.8% interest in Adaro coal mine and a 50% share of Indonesian Bulk Terminal.
The company said that their operations now consisted of three mines in South-East Queensland, including a 50% share of Queensland Bulk Handling.
MD, Graeme Robertson has decided to stay in South-East Asia to manage his business interests and has resigned from the company, confirmed New Hope.
The Australian operations will continue to be managed by the present team headed by Mr Rob Neale who has over 20 years experience in the coal mining industry.
The directors of New Hope advised that for the 10 months to May 2005, the Australian operations net profit after tax is some 160% higher than the corresponding 10 months to May 2004.
The improved result reflects the benefit of higher export coal prices, said the company
BHP hits coal milestone
Global resources group BHP Billiton on Friday announced that its coal venture, the BHP Billiton Mitsubishi Alliance in Queensland, had shipped its billionth ton of coal.
The billion-ton achievement comes after 38 years of coal mining and marketing in the central Queensland region by BHP Billiton Mitsubishi Alliance and its predecessors.
BHP Billiton Mitsubishi Alliance also announced the approval of phase two of BHP Billiton Mitsubishi Alliance's expansion programme at its Hay Point coal terminal, which will lift capacity by four million tons per annum (Mtpa) to 44 Mtpa, and the commencement of a detailed assessment for phase three and phase four expansions.
Approval of these further phases would increase capacity to an estimated 55 Mtpa to 57 Mtpa, and in support of this, a process to obtain environmental approvals for phases three and four was already underway.
BHP Billiton Mitsubishi Alliance was created in June 2001 as a strategic partnership between BHP Billiton and Mitsubishi Development. The alliance owns and manages seven coalmines in the Bowen Basin and the Hay Point Coal Terminal. It also manages the South Walker Creek Mine on behalf of BHP Mitsui Coal.
Fortescue ore upgrade
FORTESCUE Metals has upgraded its iron ore reserves amid scepticism over its ability to deliver on its ambitious iron ore project in the Pilbara.
Fortescue now puts its Chinchester Range resources at 2.1 billion tonnes, including 730 million tonnes at Cloud Break and 1.19 billion tonnes at Christmas Creek.
However, just a third of the total reserves, or 659 million tonnes, has been given "indicated" status, according to the Joint Ore Reserves Committee code scale.
Mr Forrest is fighting to break the BHP Billiton-Rio Tinto stranglehold on the Pilbara with a $2 billion-plus project that includes building a port, processing facility and railway line from Port Hedland to Fortescue's proposed mine site in the Chichester Ranges.
And an agreement with China Metallurgical to build the port, processing facility and railway line has also fallen through, with Fortescue yet to name a new backer.
Confusion Over Coal Price Dont Be Fooled
UBS points out that a sell-off in coal stocks triggered by an unusually low-priced tender put forward by Australia to an Indian steel mill was a matter of misunderstanding
Australias US$115/t offer seemed to well undercut the Chinese offer of US$138 and the US offer of US$125, leading to fears of a price collapse amongst coal investors. However, after speaking to Australian coal companies, UBS now believes the tender was for semi-soft rather than hard coking coal. As the current price for semi-soft is US$80-95, this is actually a good price, reflecting tightness in the market.
Thus, the opposite is true, says UBS. Coal companies are still experiencing very strong demand for their products, and UBS does not see any basic change in supply and demand for coking coal for at least two years. The analysts are, however, forecasting a hard coking price of US$110 in the next annual negotiation
Putin to discuss Eragli with Turkish Prime Minister
Turkish Prime Minister Recep Tayyip Erdogan will meet Russian President Vladimir Putin in Russian holiday resort of Sochi
According to diplomatic sources, Erdogan and Putin will discuss bilateral and international issues, especially Cyprus, terrorist organization PKK, relations with the European Union (EU), investments and commercial relations.
Erdogan is expected to mention imbalance of bilateral trade volume between Turkey and Russia during this meeting, the same sources stated.
Turkey exerts efforts to close this imbalance against Turkey, stemming from natural gas and oil, with construction and trade. However, Russia argues that tourism and shuttle trade eliminated this imbalance.
Erdogan and Putin will also focus on privatization of Erdemir (Eregli Iron & Steel Enterprises) and Tupras (Turkish Oil Refineries Corp), active participation of Russian companies to communication and transportation projects, and investments of giant energy company Gazprom in Turkey.
The Kremlin, which was deliberate about its political relations with Turkey, has changed this policy after Erdogan's visit to Moscow and increasing cooperation between Turkish and Russian businessmen.
