July, 27 2005
Indian steel mills likely to reduce prices on August 1st
Domestic steel prices are set to go down again by 5-7% early next month to match landed price of cheaper imported steel, sluggish international demand and continued fall of global steel prices. Price revision has also become necessary as government has indicated that it would not increase import duty on steel.
There are fears that imports would surge if domestic prices are not matched against international prices
Steel prices have already been reduced twice this year in June and again in July between Rs 500 and Rs 2500 per MT. The reduction in August may be ranging between Rs 500 and Rs 1,500 per MT.
The benchmark HR prices internationally are hovering around $410 or Rs 21,000 per MT, while the domestic prices are still in the range of about Rs 24,000 per MT requiring a price correction.
However the industry leaders feel that the outlook in the steel sector looked good with chances that prices may firm up again in October with a pick up in demand.
Indian National Steel Policy may be announced next month
According to steel ministry sources, the final draft of the policy has been submitted to a sub-committee of the Union Cabinet, which has put the matter before the Cabinet for clearance. Sources said that a Cabinet approval is expected next month.
The final draft of new steel policy focuses on two crucial aspects of the industry that would hold the key to its growth.
Firstly, it has given thrust of promotional aspects and improvement in delivery system of steel to increase its consumption in the country, which is amongst the lowest in the world.
Secondly, the draft policy has also sought to make fiscal incentives, which are available to infrastructure projects, also accessible to steel industry. This would mean that steel projects would also qualify for a 10-year tax holiday period and get concessional and zero duty import facility for capital goods.
Besides, the policy has also suggested development of risk hedging instruments like futures and derivatives to contain price volatility in the steel market. It has also suggested institution of mechanisms for import surveillance, and monitoring export subsidies in other countries
The policy is being formulated to achieve a goal of 110 million tonne steel production in the country by 2019-20 from about 35 million tonne at present.
Tata Metaliks to invest in billet caster
Tata Metaliks will set up a 0.5-million-tonne billet-making unit at Kharagpur in Bengal, adjacent to its existing facility.
A feasibility study has been commissioned and the report would be available within 8-10 weeks. M N Dastur will carry out the detailed feasibility report. Company has declined to put an investment figure saying it would be known only after the detailed report was made and the choice of technology will decide the final investment figure
Tata Metaliks makes a single product at present. In the long-term, the company wants to manufacture long products. Tata Metaliks is a low-cost producer of pig iron. The demand for foundry-grade pig iron in the country is robust and the company is going through the upside of the commodity cycle.
Tata Metaliks has doubled the capacity to 320,000 tonnes from 163,000 tonnes following the start of the second blast furnace. Going forward, Tata Metaliks will add fresh capacity of another 320,000 tonnes in the next two to three years. It will explore both greenfield and acquisition opportunities to achieve the target.
Mr Munda finally goes to London
Mr Arjun Munda has had his way with the Centre with the government allowing two state ministers to accompany the chief minister on his trip abroad. Confirming the Centres decision, Mr Munda said: We will chalk out our itinerary after discussing it with my Cabinet colleagues.
Finance minister Mr Raghubar Das and his mines counterpart Mr Madhu Koda have got the clearance and the home minister Mr Sudesh Mahto is yet to get clearance.
The tour was initially scheduled for July 15, but was deferred as the PMOs clearance had not come through. The next date was set for July 25, which too could not be kept as the Centre allowed only four senior bureaucrats, and no minister, to accompany Mr Munda. The chief minister refused to go without his colleagues and even announced cancellation of the trip.
The itinerary would include Switzerland and France also the main agenda is to hold discussions with Mr LN Mittal on his investment plans for his first greenfield project in Jharkhand where he proposes to set up a 10-million-tonne steel plant which is linked with the allocation of high grade iron ore mines in Chiria.
RSP to undertake 70,000 planting this year
The Rourkela Steel Plant (RSP) authorities will plant more than 70,000 saplings covering 100 acres of land in the current financial year with the help of the states forest department and other organisations.
Dr Sanak Mishra, managing director, Rourkela Steel Plant, gave an auspicious start to this massive plantation project, today morning by planting a Gulmohar seedling at the Bisra Maidan.
This years plantation will be a major addition to the existing 37 lakh trees already groomed by RSP in and around the Steel City.
2 Power plant JVs of SAIL & NTPC to merge
SAIL and NTPC are planning to merge two of their existing joint ventures into a single entity.
The two joint venture companies are NTPC SAIL Power Company Pvt Ltd (NSPCL) and Bhilai Electric Supply Company Pvt Ltd (BESCL). Both are 50:50 joint ventures. The first was created in March 2001, and the second was established in March 2002.
The merger proposal has a major hurdle to cross as the Union Government does not allow a `Navratna' PSU to invest more than Rs 200 crore in a joint venture and this limit needs to be increased for both SAIL and NTPC before they can go ahead with the merger.
Supporting the merger proposal, the SAIL official said that both ventures were in the same business of power generation and were run by the same management. Even the Chairman and CEO of the two companies are the same. The merger would also help the two companies reduce their operational, administrative, and management expenses. The combined entity would have stronger financial muscle.
The total capacity of NSPCL is 120 MW. It runs two 60 MW units located close to the Durgapur and Rourkela steel plants. BESCL's total capacity is 74 MW, spread over three units but all located at Bhilai Steel Plant.
BESCL recently started adding fresh capacity of 500 MW (2 x 250 MW) at Bhilai at an estimated cost of Rs 2,480 crore with two promoters chipping in with 30 per cent of the project cost, the remaining 70 per cent is funded through market borrowings.
Once the unit is commissioned, it will drastically reduce Bhilai Steel Plant's over-dependence on the Chattisgarh State Electricity Board (CSEB). Currently, the steel plant has an agreement with CSEB for contract demand of 197 MVA. The new plant will also reduce the plant's power expense from Rs 4.2/kwh to Rs 2.6-2.7/KWH
Nava Bharat Ferro Alloys plans Rs 200 crore expansion
Nava Bharat Ferro Alloys Ltd (NBFAL) is evaluating expansion plans involving around Rs 200 crore investment for its ferro alloys, power and sugar facilities.
This is part of the company's mega plan to attain control over power and ores in a bid to sustain long-term viability and be globally competitive, especially in the backdrop of recent violent swings in the prices of ores and finished products
The Hyderabad-based Rs 559-crore company currently has three furnaces in Andhra Pradesh with a total capacity of 75,000 tonne per annum and two furnaces in Orissa with a capacity of 50,000 tpa. Following Rs 20-crore de-bottlenecking programme taken up at Orissa furnaces, the capacity has been recently increased to 75,000 tpa.
NBFAL is evaluating a plan to add another furnace in Andhra Pradesh with a capacity of 50,000 tpa, involving an investment of Rs 35 crore. This would take the capacity in the State to 1,25,000 tpa.
The company is also evaluating expansion of its power facilities. It currently has 50 MW capacity in Andhra Pradesh and 30 MW in Orissa. It is planning to set up an Rs 80-crore power plant with 32 MW capacity.
Kremikovtzi kick-starts continuous casting complex
Sofia-based metallurgical plant Kremikovtzi said it completed successfully on Tuesday the pre-launch trials for its new continuous casting complex.
Underfunding had shelved the launch of the complex for nearly a decade. The official ribbon-cutting ceremony is scheduled for July 28.
The investment is the plant's biggest since 1999 when its first blast furnace was put into exploitation. According to the company's managers, the new equipment will raise the quality of the output and will bring down production costs
Kremikovtzi signed the contract for the supply of the continuous casting complex with Austria's voestalpine in 1988.
In end-June, Kremikovtzi announced it will reduce the output of finished steel products by 20% to 80,000 tons a month in the third quarter under pressure by the stagnant international market.
North American Steel producers face tough going
North American steel producers face several months of tough going because prices for their products are declining.
Both North American and European markets are showing price weakness, said U.S. Steel's chief executive John Surman.
"Operating results for the third quarter of 2005 are likely to be lower than in the second quarter, reflecting recent spot price trends in domestic and European markets for sheet products.
We have been encouraged by recent reports of lower service center sheet inventory levels and improved Flat-rolled order entry rates; however, market conditions will determine if these trends will be sustained throughout the third quarter and the remainder of the year, Surman said.
He also said his European unit's third quarter average realized prices are expected to be significantly lower than in the second quarter, primarily reflecting the recent decline in hot-rolled spot prices. The price decline should be partially offset by a significant decrease in raw material costs.
Chinese glut clouds Japanese steel firms' outlook
Japanese steel makers are expected to maintain steady earnings momentum but a supply glut in China is overshadowing the industry's outlook and results for the full business year may not be as strong as the first quarter suggests.
Despite robust demand for specialty steel from domestic manufacturers, Nippon Steel Corp and other Japanese producers are struggling to raise prices due to weakness in international markets.
Nippon Steel, JFE Holdings Inc, Sumitomo Metal Industries Ltd and Kobe Steel Ltd will report results for April-June, the first quarter of the business year, on Wednesday and Thursday. They are expected to show increased profit nearly due to strong demand for specialty steel from Japanese car makers and shipbuilders in the year beginning and high price levels
But analysts say a clear earnings trend will not emerge until after late August when the makers set prices for second-half shipments, including exports.
Japanese steel makers will announce revised earnings estimates for the first half and the full year in the first week of September every year.
Japanese mills have already cut output by 2-7 percent in the July-September quarter to protect margins. But some analysts say a production boost by Chinese mills may be short-lived and a turnaround in international steel prices is possible in the October-March second half.
Nippon Steel, Japan's biggest steel maker and the world's third-largest, forecast 12 percent growth in operating profit to a record 480 billion yen for the year to next March. JFE, the world's fourth-biggest steel maker, sees operating profit for the full year growing 11 percent to 520 billion yen.
Steel glut saps China nickel demand
Nickel imports by key buyer China will drop in the second half of 2005, after surging in the first half, as the market deals with a glut of stainless steel, analysts said on Tuesday.
China's nickel imports in the first half of 2005 rose by 200 percent, customs data showed, to a net 41,270 tonnes on a surge in output of stainless steel, which accounts for about two-thirds of world nickel consumption.
"China consumed about 12 percent of global nickel output last year, just behind Japan, which consumed around 15 percent," Bache Financial minerals strategist Angus MacMillan said. He said China would be the main driving force behind nickel consumption for the rest of the decade.
Nickel was over-imported into China in the first half and stainless production also rose, so there is a bit of a glut of stainless which was up almost 50 percent year on year in the first half
He added that the surplus of material in China was forcing stainless producers in South Korea, Japan and Taiwan that normally supplied China to cut back. That has resulted in some order cancellations for nickel from those countries.
Leading steel firms Baosteel and Taigang (Shanxi Stainless Steel Co)had said they would produce only to meet fixed orders, so July output might suffer.
Chinese stainless capacity would rise from 2.5 million tonnes in 2004 to 8.2 million tonnes in 2007 and nickel demand would surge as Chinese capacity competed for the metal with existing producers.
Northwest Pipe Company Announces $5M New Mexico Order
Northwest Pipe Company reported today that it has received an order to supply approximately $5 million of welded steel pipe to S.J. Louis Construction, Inc, Minnesota, for the Drinking Water Pipeline from Rio Grande to Paseo Del Norte for the City of Albuquerque, New Mexico.
Northwest Pipe will supply approximately 18,200 feet of 48-inch- and 72-inch-diameter steel pipe. The pipe is expected to be manufactured in the Company's Saginaw, Texas, division, with delivery scheduled to begin in the third quarter of 2005.
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 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, industrial and mechanical applications. The Company is headquartered in Portland, Oregon, and operates eleven manufacturing facilities in the United States and Mexico.
Evraz Group welcomes Fitch BB- Ratings
Evraz Group S.A. one of the leading vertically integrated steel production and mining businesses with operations mainly in Russia, welcomes Fitch Ratings upgrade of the guaranteed bonds of Evraz Securities S.A. to BB- Outlook Stable from B Outlook Positive.
Mr Pavel Tatyanin, Evraz Group Chief Financial Officer said: We are very pleased with the rating upgrade. We believe it reflects the achieved growth of our steel and mining platforms and enhanced financial strength of the business, as well as our ongoing efforts to increase transparency and accountability of our business.
Evraz Group S.A. is one of the largest vertically-integrated steel and mining businesses with operations mainly in the Russia. In 2004, Evraz Group produced 13.7 million tonnes of crude steel.
Evraz Groups principal assets include three of the leading steel plants in Russia: Nizhny Tagil (NTMK) in the Urals region, and West Siberian (Zapsib) and Novokuznetsk (NKMK) in Siberia.
Evraz Groups fast-growing mining businesses comprise Evrazruda (acquired in March 2005), the Kachkanarsky (KGOK) and Vysokogorsky (VGOK) iron ore mining complexes and NeryungriUgol coal company and an equity interest in the Raspadskaya & Yuku coal mines. The mining assets enable Evraz Group to be a vertically-integrated steel producer.
Evraz obtained over 70% of its iron ore requirements from Evraz Ruda, KGOK and VGOK in 2004 and also obtains the majority of its coking coal from Raspadskaya and Yuku.
Evraz Group also owns and operates the Nakhodka commercial sea port, in the Far East of Russia, which facilitates access to Asian export markets.
Ductil brings Otelu Rosu on recovery track
Ductil Steel-Buzau has transferred 6.1 Million USD to the State Assets Resolution Authority (AVAS) as payment for "Module 1" of Gavazzi Steel Otelu Rosu assets
Ductil Steelhad had bid for Module 1 of bankrupt Otelu Rosu's during an auction held by AVAS recently
The funds thus collected will be used to pay the security guards who guarded the factory over the past two years, the liquidator and to a number of local taxes authorities.
Future funds will be used to pay mortgage holders, overdue salaries and other debts to third parties.
In addition to the 6 million USD paid by Ductil Steel, the bankruptcy judge has also made available the sum of 1 million USD paid by Fil Invest for "Module 2" sold on the same occasion.
EESC to continue funding research for Coal and Steel
The European Economic and Social Committee (EESC) has supported the continuation of the Research Fund for Coal and Steel, and offered its support for the establishment of Technology Platforms in the coal and steel sectors. The EESC also sets out what it considers to be the research priorities for coal and steel for the coming years.
Collaborative research under the European Coal and Steel Community (ECSC) ended in 2002 with the expiry of the ECSC Treaty. The surplus capital contributed by the steel and coal industries during the Treaty's 50 year operation has, however, made it possible to continue funding this type of research. The Research Fund for Coal and Steel (RFCS) was therefore established in February 2003.
Almost three years after it came into being, the EESC believes that 'the spirit of ECSC collaborative research has been maintained'.
For both coal and steel, the EESC opinion supports the establishment of Technology Platforms (indeed, platforms in both sectors have already been set up), and emphasises that the priority themes identified by the platforms must also become EU priorities, to be implemented with different funding instruments, such as the RFCS and the framework programmes.
The EESC would also like to see a Joint Technology Initiative established within the steel sector. The committee 'foresees an essential need in the steel industry for collaborative research in order to maintain and even reinforce that industry's current global leadership position; a position that is both sustainable and competitive.
Stelco's Nanticoke workers vote in support of strike
Workers at Stelco's plant in Nanticoke, Ontario, voted overwhelmingly in support of their union's strike mandate Monday night. The workers represented by the United Steelworkers, who have been without a contract since last summer, voted 98 per cent in favour.
Local 8782, which represents the 1,000 workers, is currently battling Stelco's proposed restructuring plan and has thrown its support behind an offer from Tricap Management Ltd., a fund controlled by the Brascan asset management company.
The plant, which lies on the north shore of Lake Erie about 65 kilometres from Stelco's headquarters in Hamilton, is the steelmaker's newest steel mill and - together with the Hamilton plant - forms the core of Stelco's operations. It was designed largely for key automotive customers, including General Motors.
Stelco - operating under bankruptcy protection since January 2004 released a plan earlier this month outlining how it intends to pay creditors and emerge from court shelter under the Companies' Creditors Arrangement Act.
The plan aims to retire Stelco's $1.3-billion pension solvency deficiency by 2015, with an upfront contribution of $200 million followed by annual contributions of $98 million adding up to $900 million by 2012. But local 8782, and the union locals representing Stelco's subsidiaries, are still backing an offer from Brascan-controlled Tricap because it promises an initial pension contribution of $500 million.
But as both Stelco management and the company's bondholders have rejected the Tricap offer the steelworker have called the strike.
MPCA votes on Mesabi Nugget plant
The Minnesota Pollution Control Agency will decide today whether to issue permits for a proposed iron nugget plant in Hoyt Lakes on Minnesota's Iron Range The plant is expected to produce 600,000 tons of nuggets a year.
The Legislature put the controversial project on a fast track last year by exempting Mesabi Nugget from a full-scale environmental review as the company threatened to take its new technology to some other location where it could get permits faster.
The mining industry sees iron nuggets as the next generation of technology, one that will make mining more profitable. Iron nuggets are a more pure form of iron than the taconite The new nugget process combines four different steps in steel-making, and that makes it very efficient and very clean.
But this technology has never been tried before. No one is sure exactly how much pollution there will be. So the Pollution Control Agency wants the company to experiment with ways to cut emissions of mercury and other materials that cause acid rain and smog.The new plant could buy acid rain pollution credits from a nearby electric power plant.
Tyler Steelworkers Threaten To Strike
Close to 100 Tyler steel workers may not be going to work tomorrow, if they cannot reach an agreement with their employer, Vesuvius according to the local union president of the Steelworkers of America.
"If in fact our contract is not ratified by midnight, then we will be on strike," James Wilkins, of Local 58, said. "We believe that's our last option."
The union is not disclosing details of its proposed contract. The steelworkers have been in negotiations with Vesuvius for the past week.
Teck Cominco Ltd nearly doubles Q2 profit to $225M
Diversified miner Teck Cominco Ltd. nearly doubled its latest quarterly profit from a year ago to $225 million as the company benefited from strong prices for base metals and coal.
The Vancouver-based company said late Monday it earned $1.04 per diluted share for the three months ended June 30. That compared with a profit of $116 million, or 56 cents per share, in the same period a year ago. Quarterly revenue grew to $994 million, up from $777 million in the second quarter of 2004.
The second quarter results represent the company's strongest second quarter ever, despite unusually low seasonal sales from the Red Dog mine. Higher copper, molybdenum and coal prices helped generate a record operating profit. Realized coal prices averaged $94 US per tonne in the quarter, compared with $51 US per tonne in the second quarter of 2004.
Teck is one of Canada's best known mining companies, with major metals operations and a stake in the Elk Valley Coal Partnership, the world's second-largest exporter of metallurgical coal for steel mills. Elk Valley operates six coal mines and is a partnership between Teck Cominco and the the Fording Canadian Coal Trust.
US Steel posts 16 percent rise in 2Q
United States Steel Corp. said Tuesday its second-quarter earnings rose 16 percent on strong operating results in its European and tubular segments, as well as solid performance in the company's flat-rolled business.
Net income grew to $245 million, or $1.88 per share, in the April-June quarter from $211 million, or $1.62 per share, a year ago. Sales rose 4 percent to $3.58 billion from $3.45 billion last year.
"Considering global steel market conditions, we had a good quarter," company president and CEO John P. Surma said.
U.S. Steel predicted that its third-quarter operating income would be down slightly, based on recent prices in domestic and European markets for sheet products. In Europe, third-quarter prices are expected to be significantly lower, primarily because of falling hot-rolled steel prices but the price decline should be partially offset by a decrease in raw material costs.
For flat-rolled business, third-quarter prices are expected to be moderately lower than in the second quarter. In the tubular segment, third-quarter prices should be in line with second-quarter levels.
AK Steel second-quarter profit falls
AK Steel Holding Corp. on Tuesday said second-quarter profit fell sharply, hurt by a one-time tax charge, compared with year-ago results that included a large gain.
Net income declined to $9 million for the three months ended June 30 from $92.7 million in the year-ago period. The latest results included a non-cash charge of $29.5 million from tax law changes, while the year-ago results included a gain from the sale of assets and income from discontinued operations.
Excluding these items, second-quarter income would have been $38.5 million compared with $20.2 million in the prior-year quarter.
The company posted sales of $1.45 billion, up 11 percent from $1.31 billion last year. AK Steel said its average selling price rose to $903 per ton, 8 percent higher than the year-ago price of $835 per ton.
AK Steel posted operating profit of $74.2 million, or $46 per ton, compared with operating profit of $56.4 million, or $36 per ton, in the year-earlier period.
Looking to the third quarter, the company said it expects to report a $24 million increase for maintenance costs. Spot market prices should begin rising, although the average selling price should fall relative to the second quarter, due to lower prices.
Inco Ltd. swings to Q2 profit of US$215M
Inco Ltd. has swung to a second-quarter profit of $215 million US, versus a year-earlier loss of $14 million US, as nickel prices reached their highest level in more than 15 years and China continued to consume massive amounts of the industrial metal. Revenue grew to $1.19 billion from $992 million US
But the world's second-largest nickel company warned Tuesday that production will fall in the third quarter as costs rise, and it predicted that full-year profit will be below analysts' estimates. Higher energy prices and a longer-than-expected maintenance shutdown at its Ontario operation will push costs up for the second half of this year, chief executive Scott Hand said Tuesday.
Inco realized realized the third-highest average nickel price in our history during the Q2 and the highest in 15 years. The London Metal Exchange benchmark cash nickel price averaged $7.44 US per pound in the second quarter, seven per cent above the first quarter. That price has since fallen to about $6.50 US a pound,
Production will range between 110 million and 115 million pounds of nickel in the third quarter, compared with 111 million pounds in the second quarter. Previous guidance estimated production at 125 to 130 million pounds.
Peter Goudie, executive vice-president of marketing, told analysts during a conference call that "the current situation on the world stainless market...will mean even more volatility in stainless production and pricing, creating considerable volatility in nickel." He added that "greater stainless capacity in China and increased competition will help keep stainless more affordable for customers worldwide and will encourage even more usage of stainless steel in China.
Metals USA Reports Second Quarter Results
Metals USA, Inc. a leader in the metals processing and distribution industry, today announced results for the three months ended June 30, 2005. Net income in the second quarter of 2005 was $14.3 million. For the second quarter of 2004, net income was $33.7 million
Although average realized sales prices by the Flat Rolled and Plates and Shapes Groups were 18.7% higher than prices during the same quarter last year, margins were compressed because the cost of the inventory grew by 38.4%.
Demand in the second quarter was good, with $426.8 million of net sales, against $427.6 million during the first quarter and $383.6 million sold during 2Q04.
C. Lourenco Goncalves, President and CEO, stated, "Price declines in May and June have placed service center margins under near-term pressure. Under this scenario, Metals USA reduced our inventories by $55.8 million and total debt by $70.5 million during the quarter, while preserving our profitability." Mr. Goncalves continued, "We expect a rebound in activity and prices during the second half of the year."
Metals USA provides a wide range of products and services in the heavy carbon steel, flat-rolled steel, specialty metals, and building products markets.
Reliance Steel & Aluminum Co. announces Q2 results
On July 21, 2005, Reliance reported its best-ever quarterly sales of $816.3 million and net income of $49.0 million for Q2.
Reliance Steel & Aluminum Co., headquartered in Los Angeles, California, is one of the largest metals service center companies in the United States.
Through a network of more than 100 locations in 31 states and Belgium, France and South Korea, the Company provides value-added metals processing services and distributes a full line of over 90,000 metal products.
These products include galvanized, hot-rolled and cold-finished steel; stainless steel; aluminum; brass; copper; titanium and alloy steel sold to more than 95,000 customers in various industries.
