July, 29 2005
Sail profit soars to Rs 1,123 crore
Close on the heels of announcing the best ever annual profit for the just concluded financial year, Steel Authority of India Limited (Sail) today announced record breaking performance for the first quarter, with the profit before tax (PBT) surging to Rs 1,701 crore. This accounts for a growth of 41 per cent over the corresponding period last year
The companys upward trend in financial performance is attributed to improvement in production and techno-economic parameters.
The profit after tax (PAT) at Rs 1,123 crore grew marginally as compared to Q1 of the previous year. This was because of significantly higher tax outgo, which soared to a level of Rs 578 crore against 94 crore during the corresponding period last year (CPLY). Till last year, the public sector steel major was under the ambit of Minimum Alternative Tax (MAT). Wiping out all the accumulated losses, Sail has now come under the fold of regular corporate tax.
Continuing its status as a virtual debt free company, Sail further reduced its interest charges by around Rs 57 crore, achieving a reduction of 30 per cent over April-June 2004. The debt-equity ratio for Sail stood at 0.53 at the end of June 2005 as against 0.58 as on 31 March 2005.
Commenting on the companys financial results, Sail chairman, Mr VS Jain, said: Sail has acquired the competence and the strength to withstand downturn as steel industry is cyclical in nature. The company has assumed the right ambience to encash future growth potential, particularly in areas of infrastructure development.
The production of saleable steel at 2.76 million tonne (MT), recorded a growth of 19 per cent during April-June 2005 over CPLY. The hot metal production increased by 22 per cent to 3.3 MT and the finished steel with 2.2 MT recorded a growth of 13 per cent during the period.
The production of special steel from Sails three specialty steel plants increased by 22 per cent.
The thrust on maximising revenue through value added products enabled Sail to increase the production of GP/GC sheets by 22 per cent, plates by 17 per cent, HR coils/sheets by 14 per cent, CR coils/sheets by 14 per cent, railway products by 9 per cent, and PET (pipes, electrical steel and tinplates) by 7 per cent during the period.
The production of steel through the energy efficient continuous cast route increased by 4 lakh tonne, recording a growth of 11 per cent during April - June 2005 over the same period last year.
Continuing with its improving trend, Sails integrated steel plants achieved a reduction of 1.5 per cent in its coke rate, recording a figure of 530 kilogram per tonne of hot metal (kg/thm) during the period.
Essar Steel profits for Q1 soars up by 300%
Essar Steel has reported a 300 per cent jump in net profit at Rs 207.71 crore during first quarter ending June, up from Rs 50.44 crore in the same period last year.
The company, with an annual capacity of three million tonnes, recorded a turnover of Rs 1,652.89 crore and registered a growth of 24.5 per cent against the corresponding period last year. Essar produced 6.46 lakh tonnes of HR coil in the fiscal, recording a 16 per cent jump from last year's 5.59 lakh tonnes.
The company's strong financial performance has been helped by the acquisitions it completed of Sterncor (51 per cent) in Hy Grade Pellets Ltd and 100 per cent stake of Sterncor in Steel Corporation of Gujarat Ltd, according to a company release here.
Essar Steel also introduced shot blasted and primer coated steel plates for use in the fabrication and ship building industries, the release said.
It also introduced a range of hot rolled, pickled and oiled products, cold products and galvanised items, having application in auto and auto components industries.
Neelachal Ispat set to enter SAIL fold
The government has given SAIL the green signal to buy Neelachal Ispat, the Orissa pig iron plant that has been set up by metal trading giant MMTC.
A committee of secretaries has cleared the proposal to buy MMTCs 51 per cent stake. This was followed up by an inter-ministry meeting at Udyog Bhawan, where it was decided that a merchant banker will fix the fair value of the plant.
SAIL has promised to turn Neelachal into an integrated steel plant that will convert the pig iron it makes into finished high-grade steel. It will also expand capacity. Though SAIL officials would not say how much they would pay for the plant or what their investment would be after the acquisition, analysts feel the steel major would pump in close to Rs 2,000 crore in the first year itself.
SAILs bid for Neelachal was mired in a controversy with the commerce ministry, which owns MMTC, resisting the move. However, with the committee of secretaries breaking the deadlock, the sale is now in the pipeline.
Neelachal Ispat, which owns a lucrative iron ore mining block in Orissa, has attracted several suitors in the past, including Vizag steel and the Tatas. However, it was SAIL that appears to have stolen a march over others.
TATA Tinplate to invest Rs 500 cr
The Tinplate Company of India (TCIL) has lined up an investment of around Rs 500 crore over the next three years. The investment programme would cover capacity expansion and installation of new lines as the company ventures to enter downstream activities.
The capacity expansion would be in two stagesthe first phase in the current financial year from 145,000 tonne to 170,000 tonne and then in the second stage to 350,000 tonne.
Bhushan Raina, managing director, TCIL said, the first phase would require an investment of Rs 60 crore which entailed capacity enhancement from 145,000 tonne to 170,000 tonne per annum. This also includes an investment of Rs 16 crore in printing and lacquering in the current year.The board had also given an in-principle approval for investment of Rs 400 crore for further doubling of capacity, which would be completed by 2007-08
At present, the company was in the process of detailing the funding of the investment plan.The company would take a decision in conjunction with Tata Steel. Raina said, the company was well poised to make fresh borrowings. However, the details were being worked out
The additional capacity could also come up at a location outside Jamshedpur. Raina said, he was not ruling out the possibility of setting up additional capacity outside of Jharkhand.
In addition, the company was considering opportunities in steel beverage cans business in India. TCIL would invest in installing a new line possibly in strategic alliance with some other parties. The company also planned to set up a solution centre which was expected to be functional by 2005. The facilities would be expanded subsequently to include further features for offering consumer convenience in metal packaging.
TCIL had been focusing on technology enhancement and capacity expansion for the past few years. This was being done in conjunction with Tata Steel and in collaboration with Nippon Steel Corporation, Japan.
Indo-Pak land route for trade to revive steel companies in Punjab
The opening of the land route for trade between India and Pakistan through Wagah Border could help revive Punjab's ailing steel and engineering business, industry experts said.
"There is a huge demand for engineering items such as sewing machines, hand tools, machine tools and bicycles and bicycle parts in Pakistan. Once the trade of these items through land route is opened, Punjab's engineering industry would be put on the right track," Engineering Export Promotion Council's regional chairman, SC Ralhan said on Thursday.
"We have found that price of steel products are expensive by Rs 6000 per metric tonne in Pakistan as compared to prices of steel in India. If we export steel products through land route, then Pakistan would get cheap steel for construction purposes," said Steel Re-Rolling Mills Association of India's zonal chairman Rattan Paul Bhatia.
Allowing trade of steel products, traders said, would benefit both sides, as Pakistan would get cheaper items as well as revive the industry here, which is reeling under a crisis following closure of several units.
Industry representatives have suggested that a warehousing facility could be set up at Wagah Border so as to store steel and engineering items.
At present, majority of trade between India and Pakistan is being done via countries like Singapore or the UAE, which increases the cost of products because of freight charges.
Infrastructure sector grows 10.2% in June
The growth rate in the six infrastructure industries stood at 10.2 percent for June 2005, up BY 2.4 percent compared to the same period last fiscal. Cumulative growth of the six infrastructure industries during the first quarter stood at 5.5 percent
This was mainly because of the buoyancy in steel, cement, and power sectors.
The improved performance in these three sectors was able to offset the slowdown in crude oil, refining, and coal sectors to take the overall growth in the six core industries to 10.2 percent, according to an official release.
Finished steel output improved by 21.9 percent during the month compared to a decline of 1.8 percent in June last year; cement production jumped 13.3 percent against a negative growth of 3.9 percent earlier. Simultaneously, power generation rose 9.3 percent compared to 4.6 percent a year back.
Petroleum refining production went down by 1.1 percent while production of crude petroleum increased by a marginal 0.4 percent during the month against growth of 9.6 percent and 1.1 percent respectively in June 2004.
Coal sector growth also slowed down during the month to 3.2 percent from 6.6 percent.
Vizag port posts 21% growth in cargo handling
Visakhapatnam port registered a growth of about 21 per cent in cargo handling in the first quarter of the current fiscal.
During April-June 2005, the port handled 133.09 lakh tonnes of cargo, as compared to 110.05 lakh tonnes in the corresponding period of the last fiscal, up by 23 lakh tonnes.
In the first quarter of the current fiscal, Vizag port handled 36.06 lakh tonnes of POL products, 35.08 lakh tonnes of iron ore, 19.26 lakh tonnes of coking coal and lam coke, and 7.54 lakh tonnes of fertilisers and fertiliser raw materials, as compared to 30.66 lakh tonnes, 26.31 lakh tonnes, 14.21 lakh tonnes and 3.03 lakh tonnes respectively in the corresponding period of the last fiscal.
Several mine owners are relying on Vizag port for iron ore exports. Owing to this, iron ore exports too increased significantly in the first quarter, he added.
18 Iron ore mines of OMC unable to start
Despite increased production and profit during the last five years, the Orissa Mining Corporation (OMC) is unable to raise minerals from 25 new mines because of lack of forest and environment clearance.
The State Government had leased out 30 new mines including 18 iron ore mines to OMC. However, 25 mines are stuck up at different levels for clearance.
Expressing his displeasure over the inordinate delay in getting clearance for the new mines, Naveen directed officers concerned to constantly pursue the matter for getting clearance expeditiously. He also directed the Forest and Environment department to ensure that clearance is given to OMC as soon as possible.
Iron ore production of OMC has increased almost four times during the last five years. The company, which had raised iron ore of 11.44 lakh tonne in 2000-01, had increased the production to 41.50 lakh tonne in 2004-05.
The turnover of the company has increased from Rs 198.38 crore in 2001-02 to Rs 725 crore in 2004-05. Accordingly, it has registered a profit of Rs 435 crore in the last fiscal as against Rs 20 crore in 2001-02.
The meeting decided that 60 percent of the total iron ore production will be supplied to the upcoming steel plants while the remaining 40 percent will be given to the sponge iron units.
Jindal Steel net up 24%
The net profit of the Jindal Steel and Power Limited rose 24 per cent for the quarter ended 30 June to Rs 150.21 crore, compared with Rs 121.50 crore in the same period last year
The net sales in the same period rose 14 per cent to Rs 629.61 crore fromlast year's Rs 554.18 crore. The company has showing growth in production of all its major products, led by 49% in sponge iron and 37 per cent in steel products.
KEC net up 17%
KEC International (KEC) has posted a 17 per cent increase in its net profit at Rs 11.82 crore for the quarter ended June 30, 2005 compared with Rs 10.12 crore during the corresponding quarter in the previous year.
Net sales were up by 57 per cent at Rs 378.62 crore for the first quarter against Rs 241.41 crore during the corresponding quarter in the previous year.
Vedanta Resources EBITDA $155 in Q1
EBITDA increased to $155 million compared to $79 million for the first quarter of 2004, an increase of 97 % (an increase of 32 % excluding KCM).
This strong growth has been driven by higher production and higher prices across all metals, which have more than offset tariff reductions and higher energy costs. During this quarter our copper and zinc expansion projects were brought on stream and production is building at both. The 250,000 tpa Aluminium smelter project at Korba is on course for its completion in March 2006 and the first 72 pots out of 288 will be fully online in August 2005.
Japan Plans to Impose Tariff on Steel from US
Japan plans to impose retaliatory sanctions against the steel products from US, a Japanese trade official said Thursday.
Local media reported Thursday that Japan was planning to impose a 15 percent retaliatory tariff in September on about 10 products as a countermeasure to duties imposed by the United States on Japanese steel products under the so-called Byrd amendment passed in October 2000 and named after West Virginia Senator Robert Byrd, an antidumping law ruled illegal by the World Trade Organization.
Ikuyo Katsuta, a tariffs official at the Japanese Trade Ministry, confirmed that Tokyo plans to go ahead with the tariffs, but she would not give a timetable.
Japan imports secondary steel products, such as ball bearings, from the U.S. and other countries.
Arcelor to combine Brazilian operations in a single company
Arcelor will combine all its Brazilian long and flat carbon steels businesses CST, Vega do Sul and Belgo in a single company. With the majority stake held by Arcelor, the new company will be listed on Brazil's S Paulo stock exchange.
Arcelor CEO Guy Dollsaid: "This move consolidates our role as Latin America's leading steelmaker and generates new opportunities for all stakeholders. It is a strong symbol for Arcelor's massive, long term commitment to Brazil and a clear expression of our global growth strategy."
CST, flat carbon steelmaker, and world leader in the slab market used for semi-finished products for flat carbon steel production. Vega do Sul specializes in cold rolling, pickling, and galvanisation and is a major supplier to the Brazilian car manufacturing industry and household goods manufacturers. Belgo is the largest producer of long carbon steels in Latin America, specializing in particular in the production of drawn wires, rods and rolled steel products for the civil engineering and building sector.
By becoming the preferred vehicle for Arcelor's growth in this area, the new Brazilian operation will consolidate the group's role throughout Brazil and Latin America and prepare the ground for its expansion on the North American markets in the downstream business.
Nippon Steel Q1 profit up 160.9%
Nippon Steel Corp. posted a 160.9 percent gain in quarterly profit on strong demand from car makers, but the globe's third-largest steel producer kept its 12 percent annual profit growth outlook as world prices retreat.
Nippon Steel, which has benefited from strong worldwide sales of Japanese cars, reported a group operating profit of 146.09 billion yen ($1.30 billion) in the first quarter to June, compared with 55.99 billion yen in the same period a year ago.
Booming demand for high-quality steel sheets, which accounts for up to 85 percent of their business, has helped Japan's steel makers fend off excess inventories and slowing demand that have dogged rivals such as world leader Mittal Steel Co. and second-largest producer Arcelor
But Japanese mills would find it tough to raise prices this year, analysts said, as growing world supply -- especially from China -- has stripped more than 30 percent from the value of some steel grades this year.
Arcelors announces record Q2 results
Arcelor delivers very strong results in Q2 by declaring net result of EUR 1.9 billion, more than doubled compared to EUR 865 million for the first half of 2004, despite a more difficult business environment.
Weak European demand and a surge of imports forced Arcelor to reduce shipments and production during the first half of the year. In order to adjust its market supply to the bare needs of an overstocked market and accelerate depletion of inventories, Arcelor cut back production in Europe by 1.5 million tons in flat and long carbon steels. These production cuts were more significant in the second quarter than in the first three months of 2005. Inventory levels for flat carbon steels are expected to come back to normal levels by the end of the summer.
Arcelor was able to structurally improve its profitability level despite significant increases of raw materials costs which occurred progressively starting April 1st, 2005 and a more difficult economic environment.
At June 30, 2005, consolidated net result, group share, was EUR 1,937 million, versus EUR 865 million for the first half of 2004.
With EUR 16,778 million for the first half of 2005 compared to EUR 14,593 million for the same period last year, consolidated revenue increased
Geographical breakdown of revenue was as follows: total Europe: 76% (EU 25 and others Europe), South America: 10%, North and Central America: 9%, Rest of the world: 5%.
Consolidated gross operating result amounted to EUR 3,383 million for the first half of 2005 versus EUR 1,779 million for the same period last year, or a 20.2% margin compared with 12.2% last year despite very significant cost increases due to high raw materials prices incurred progressively as of April 1st.
Consolidated operating result amounted to EUR 2,643 million for the first half of 2005 versus EUR 1,237 million for the same period last year, which corresponds to a 15.8% margin versus 8.5%.
After a financial result of EUR-79 million, a contribution from associates of EUR 165 million (including Dillinger Huette (DHS), for EUR 78.4 and Acesita for EUR 27 million) and income tax of EUR 519 million, the consolidated net result, group share, at EUR 1,937 million,.
Revenue for the Flat Carbon Steel sector was EUR 9,665 million 25.7% more than that of first half of 2004, the 25.7% increase (12.7% on a comparable basis) being essentially due to the consolidation of CST (EUR 1,003 million). Total shipments decreased by 10% to 15,116 thousand tons from 16,644 thousand tons for the first half of 2004 (CST accounted for 2,420 thousand tons for the same period of 2004 and 2,337 thousand tons for the first six months of 2005).
Revenue for the Long Carbon Steel sector was EUR 3,186 million, which compares with EUR 2,927 million for the first half of 2004 (6% on a comparable basis). This was primarily due to the integration of high-quality assets (Acindar, consolidated as of May 1st, 2004) for the full six months of 2005 and an average selling prices increase of 19% compared to the first half of 2004.
Revenue for the Stainless Steels and Alloys sector for the first half year 2005 was EUR 1,975 compared to EUR 2,401 million for the same period of 2004, after several divestments (Thainox, Techalloy, TEVI, Matthey US and J&L for 210 million) as well as the transfer of the Specialty Plate activity to the sector "others". The positive effect (+ 3.6% on a comparable basis) is mainly due to higher alloy surcharges while base prices have been under strong pressure these last months.
Revenue of the A3S (Arcelor Steel Solutions and Services) sector was EUR 4,403 million for the first six months of 2005 compared to EUR 3,997 million for the same period last year. This variation is due to positive price effects which have compensated negative volume and mix effects due to low activity levels and shipments.
Iran smuggling steel for nukes
Iran has been using front companies to import a type of steel that can be used for the casing of a nuclear bomb and for machines that can enrich uranium to weapons-grade, an exile group said on Thursday.
Mr Mohammad Mohaddessin of National Council of Resistance of Iran (NCRI) told a news conference in Paris that Iran was seeking to produce its own maraging steel and skirt international export controls by importing it.
Mohaddessin said Iran used front firms to import maraging steel from Malaysia. Mohaddessin said Iran was conducting research on maraging steel production at Malek Ashtar university in Tehran, a centre affiliated with the defence ministry.
The NCRI is the political wing of the People's Mujahideen, an armed guerrilla movement listed as a terrorist group by the United States.
Maraging steel, a high-strength alloy harder than normal steel, is a controlled substance with both civilian and military uses. Maraging steel is an essential component of advanced P-2 centrifuges.
Ukraine rivalry stalls reform of the economy
President Viktor Yushchenko, who swept into power last January on promises that he would stamp out corruption and press ahead with economic reforms in Ukraine, is making so little headway that foreign investors are staying away and growth is falling sharply.
Economists and analysts say the delay is the result of government infighting as well as a shortage of competent personnel in state administration and the courts. The biggest casualties so far, economists say, have been the process of privatization and efforts to clarify property rights and to make the banking system flexible and transparent. Much of the problem, they say, is within the government and the courts, which are struggling with disputes over the privatization and renationalization of enterprises. Although a new, reform-minded elite has emerged, it so far is mostly remaining outside government, stepping forward only as advisers.
Yushchenko, who wants to integrate Ukraine into the world economy as soon as possible, defeated Viktor Yanukovich, his conservative archrival, amid huge protests demanding free and fair elections. After taking office, Yushchenko said he would not pursue a witch hunt against those who had bought enterprises under dubious circumstances from the former government.
Prime Minister Yulia Timoshenko, however, has started to renationalize some of the companies. Her aim, economists say, is to curb the powers of the oligarchs, most of whom supported Yanukovich in the presidential elections.
One recent renationalization was that of the profitable steel maker Kryvorizhstal. It was sold in June 2004 to a consortium controlled by Viktor Pinchuk, one of the six oligarchs and a son-in-law of Leonid Kuchma, who resigned as president late last year. Pinchuk's $800 million bid beat out one of $1.5 billion from U.S. Steel and its Dutch partner, Mittal Steel.
Pinchuk, a member of Parliament and chairman of Interpipe, has been fighting in court to get the plant back but suffered another setback this week. A Ukrainian appeals court on Tuesday upheld a decision declaring the original auction illegal, The Associated Press reported.
The court ordered the controlling stake to be returned to the state and told the government to return his purchase price after the steel maker is resold. Timoshenko announced last month that it would be reprivatized.
China Import Growth Slowdown
As the growth rate of exports reached 32.7 percent and imports merely 14 percent, China reported an unexpected trade surplus of 39.6 billion US dollars in the first half year, almost equal to the total trade surplus for the whole year of 2004.
The restrained domestic investment demand, which was caused by a series of economic macro-control policies, is the main factor leading to the deceleration of China's import growth, according to analysts.
For a long time, China's imports were boosted by domestic investment, which slowed down its growth rate this year due to the macro-control policies, said Zhao Jinping, an economist with the State Council Development and Research Center, quoted by the China Economic Times. Since late 2003, China began to adopt a series of macro-control policies to cool down its overheating economy and curb the wild growth of fixed asset investment, including raising interest rates for reloans and rediscounts and tightening land use.
In the first half of this year, the urban fixed asset investment only grew 26.4 percent year on year, 8.4 percentage point lower than the same period last year. Meanwhile China's import growth rate was only 14 percent, much lower than that of the first six months in 2004, which stood at 43 percent.
For those sectors such as iron and steel, which witnessed rapid growth in both investment and import in the past two years, the import growth rates slumped this year, which demonstrates the achievement of the macro-control policies, said Zhao.
Zhang Yansheng, director of the Foreign Economic Institute of the State Development and Reform Commission, agreed on this point of view. Due to the cooling down of domestic investment, Zhang said, the import growth of raw materials including crude oil, iron ore and copper geared down this year.
In the first half of this year, China's import of crude oil grew 5.1 percent year on year, and that of refined oil decreased 21.6 percent.
Meanwhile, China only imported 64,000 automobiles and 10.7 million tons of rolled steel, down by 33.6 percent and 31.5 percent, respectively. Some business people, expecting the country's currency, Renminbi, to be appreciated this year, chose to reduce imports so as to avoid risks, which also led to the slow growth of China's imports, Zhang said.
The devaluation of US dollars from last year to the first quarter this year is another cause, said Zhu Baoliang, an economist with the State Information Center.
Since the Renminbi was pegged to the US dollars at that time, the devaluation of US dollars meant the devaluation of the Renminbi, which restrained China's imports and stimulated its exports, Zhu said.
The rapid development of some domestic industries such as the automotive industry also contributed to the deceleration of imports, according to analysts with China's Ministry of Commerce.
Both Zhao Jinping and Zhu Baoliang predicted China's import for the whole year to grow by around 20 percent. The appreciation of the Renminbi would help imports to grow faster in the latter half of this year, Zhu said.
Ukrainian court ruling freezes return of ferro alloy plant
A top Ukrainian court on July 28 froze a lower court's ruling that found the 2003 sale of a key state-owned steel plant was illegal.The decision by Judge Mykola Handurin of Kyiv's High Economic Court means that the fate of the Nikopol Ferroalloy plant will remain in limbo for at least another month.
The Nikopol plant was sold to Viktor Pinchuk, the son-in-law of former President Leonid Kuchma, in an 2003 auction derided as rigged. The plant, which produces high-quality ferroalloys, serves the some of the world's largest steel producers.
Earlier this week, a Kyiv appeals court ordered Pinchuk to return his controlling stake in the plant to the state. But the High Economic Court put that order on hold until another court rules on the matter, expected Aug. 16.
The new government has already stripped Pinchuk of another important asset, the Kryvorizhstal steel mill. The mill, which is the country's most profitable, was sold at auction last year to a consortium owned by Pinchuk and another tycoon for what other bidders said was an artificially low price. After a long legal battle, the government annulled the mill's sale and announced a new sale for late October.
In an interview published July 28 with France's Les Echos magazine, Pinchuk blamed "biased court decisions" for the Kryvorizhstal seizure. Pinchuk also said that the government's review of major privatization deals is "bringing irreversible harm to the investment climate.
China to cancel Mn export rebate to support SS sector
The Chinese Government will cancel the 13% export tax rebate on unrolled manganese and scrap manganese of tax code of 81110010 starting from August 1 2005.
Analysts say the change will have a huge impact on the manganese tolling business, especially on medium and small companies. On the other hand, it may benefit large companies as well as downstream stainless steel production. 80% of China's manganese exports are from tolling.
"There is a large possibility that the government will impose an export tax on manganese exports in the future if it is not satisfied with the effects of canceling the rebate. This is what the government did to control the primary aluminum tolling business," he said.
The move may also presage further cancellations of rebates on other nonferrous metals used in stainless steel production. The government would probably cancel the export tax rebate of chrome and other resources used to produce stainless steel.
Some policies to secure resources for stainless production have already been issued. The government has also cut the import tax on refined nickel imports from 3% to 1% and canceled the export tax rebate of ferrochrome and ferromanganese as well as ferrosilicon, ferrotungsten, ferrotitanium, ferrovanadium, and ferro-niobium on January 1 2005.
The Chinese government has issued the Ferroalloy Industry Standardization at the end of 2004 and the Steel Industry Development Policy on July 20 as general guidelines, both of which have clauses designed to support the stainless steel industry and conserve relevant resources
Chinas policy no dampener for Mittal Steel
Chinas latest steel policy has resulted in Mittal Steel, the worlds largest steel maker, to accept the request of authorities in Beijing for reducing its stakes in Hunan Valin based in the countrys central province of Hunan from 37% to 32%. The company had initially offered $300 million for a 37% in Hunan Valin.
The Hunan Valin deal caused a stir in Chinas steel industry, and prompted the government to take on a protective stance as Chinese authorities feel that Chinas steel sector is not lacking in market potential, capital or professionals.
Chinas new steel policy, announced after its State Development and Reform Commission approved the acquisition proposal in mid-July, bars foreign investors from acquiring controlling stakes in a domestic steel company.
But Mittal Steel is considering other proposals for investments in the Chinese steel industry. "Quite a few companies are knocking at our doors. We are evaluating different offers. But it may take some time for us to decide on future investments in China as we would like to focus on Hunan Valin for the time being," Krishnamurthy country manager of Mittal Steel said.
SA - 'Filthy 50' to be named and shamed
Former Green Scorpions chief Peter Lukey is on a mission to identify and rank 50 industries which produce the largest and most poisonous volumes of air pollution in South Africa. Rather than a simple "naming and shaming" affair, the purpose of the "Filthy Fifty" exercise is to scrutinise the operations of more than 4 000 major industries in order to rank, review and then rewrite their air pollution permits.
Lukey, who took over recently as head of air quality management in the department of environmental affairs, on Wednesday would not speculate on which companies would head the list.
However, the state power goliath, Eskom, is likely to win the race hands down, because of the huge volumes of poor grade coal it burns daily to generate electricity. Other favourites include fuel refineries such as the Shell/BP and Engen refineries in Durban, Caltex in Cape Town and the Natref
and Sasol refineries in Secunda and Sasolburg. Pulp and paper giants Sappi and Mondi, along with Ispat Iscor and other steel mills can also be counted among the front-runners.
According to Lukey, regulators will not focus solely on the most visible sources of pollution. "Quite often, it is the pollution which you cannot see or smell which is most dangerous from a health perspective." These include chemical compounds such as benzene and dioxins, which have been linked to health problems in numerous medical studies.
Polluters would be ranked according to a matrix method which takes into account pollution volumes, the type of pollution and proximity to densely populated residential areas.
Molybdenum prices fall below $30/lb
Transaction prices for molybdenum oxide have declined by more than one-fifth since mid-June, slipping under $30/lb last week, as compared with $39 a month ago. The slippage is explained by the recent slide in world stainless steelmaking as mills try to narrow the gap between rising supply and sluggish demand. Type 316 stainless, for example, contains up to 3% molybdenum.
Molybdenum prices are averaging $28/lb so far this month, which still are significantly higher than they were a year ago. In fact, sales prices have soared this year an average $33/lb, double the 2004 average of $16.
Still, the price run for the metal oxide used as a hardening agent in steelmaking appears to have stalled. Pricing generally is keyed to expanded raw steel smelting worldwide. In the first six months of this year, world steel production of 546.3 million metric tons is 7.6% ahead of the same period of 2004, the International Iron and Steel Institute reported last week. However, merchants keep talking about "summertime blues" to describe the lack of interest by ferroalloys buyers at steel mills in North America, Europe and Asia outside China. That's why world ferromolybdenum prices (sold in kilogram units) are down under $78 in European trading, as compared with $84 as month ago.
Group Imsa announces Q2 results
Grupo Imsa today announced results for the second quarter of 2005.
The revenues of USD 878 Millions revenues in Q2, increased 7.2% compared to the same period of the previous year .
Second quarter EBITDA totaled US$81 millions, a reduction of 37.8% compared to the second quarter of 2004.
IMSA ACERO, through Steelscape, began a project to strengthen its position in the U.S. market. The first stage of this initiative involves relocating the company's painting and metal coating lines from Richmond, California to Shreveport, Louisiana. In May, Volkswagen de Mexico recognized IMSA-MEX, a subsidiary of IMSA ACERO, as one of the best steel suppliers of its plant in the state of Puebla, Mexico. During the second quarter, Metl-Span, a U.S. subsidiary of IMSATEC, inaugurated a new insulated steel panel plant in Nevada, increasing its production capacity by 30%.
Rautaruukki doubles operating profit in H1
Net sales for January-June 2005 were 1,953-mil ($2,342-mil) up from 1,705-mil in January-June 2004 and operating profit nearly doubled from 199-mil for the first half of 2004 to 381-mil for January-June 2005.
"Construction activity in our main market areas is good, and especially on the central eastern and eastern European markets the growth of demand is strong. The price level of steel products has been strong in our main market areas and prices are at a significantly higher level compared with the same period of last year," said president and CEO Sakari Tamminen.
Tamminen noted that "primary factors of uncertainty for the earnings trend relate to the normalization of wholesale inventories in Europe as well as the trend in demand in the Asian market and its impact on the market prices of basic steel products."
Due to destocking among wholesalers the steel product prices are expected to decrease somewhat in the third quarter, Finnish steel producer Rautaruukki said Wednesday.
S.Africa's Kumba says port woes over, exports resume
South Africa's biggest iron ore producer, Kumba Resources, said on Thursday that ore exports at Saldanha Bay had resumed after repairs to a ship loader that broke down last week.
The breakdown had delayed Kumba's iron ore export programme but trains from its Sishen mine remained operational, feeding the Saldanha Bay stockpiles as the ship loader, run by South Africa's Port Operations, was being fixed.
The interruption had given Kumba an opportunity to replenish its stockpiles at the port and the miner would make up for the shipping delays in coming weeks, he said.
Kumba also has interests in base metals, heavy minerals and coal, and is majority-owned by mining giant Anglo American Plc.
BlueScope branding program a success
Australian steel maker, BlueScope Steel, has embarked on a major exercise aimed at aligning customers with its brand. Launched several months ago, the national program aimed to target steel distributors, rollformers and their collective customers through to small family companies in a wide range of manufacturing businesses.
More than 500 companies, with close to 1000 operating sites, have so far signed up to the Steel By BlueScope Steel brand partnership program, and the company believes thousands more will join in the months ahead.
The only criterion for membership is that these customers source 80% or more of their flat steel products, based on annual volume, from BlueScope Steel, or manufacture products whose flat, sheet or coil steel component is 100% BlueScope Steel material.
CST records US$197mn Q2 profit, upbeat on demand
Strong sales of hot rolled coils and "no sign" of a dip in demand fueled positive second quarter 2005 results for Brazilian steelmaker CST, company investor relations director Leonardo Horta told BNamericas.
"There is a new level for prices negotiated in the market, but we do not have any weakness in demand," Horta said, referring both to the company's slabs and hot rolled coils.
CST posted net profit of 483mn reais (US$197mn) in 2Q05, down 18% from 592mn reais in 2Q04. But 2Q04 results include a 293mn-real "Plano Verao" tax credit compared to a 41mn-real credit in 2Q05. Not including the credits, net profit was 442mn reais in 2Q05 compared to 299mn reais in 2Q04.
Net revenue climbed 35% in 2Q05 to 1.7bn reais while Ebitda was up 43% to 885mn reais.
CST produced 1.2Mt of steel slabs in 2Q05, a decrease of 3% from 1.24Mt of slabs in 2Q04 as the company continues to shift produced slabs to its hot rolled coil line.
In addition there was an "operational instability" at no. 1 blast furnace. CST took advantage of the stoppage to perform maintenance work originally scheduled for August. The stoppage is expected to cut overall production by 150,000t of slabs for 2005.
Coil output surged 31% to 571,000t in 2Q05 compared to 437,000t in 2Q04. Sales volumes of slabs and coils followed the same trajectory in the quarter, with slab sales volume sliding 19% to 653,000t while coil sales volume rose 24% to 578,000t.
But CST lowered its guidance for slab prices for 2005 to US$410-430 from US$440-460. The price guidance for 3Q05 was US$345-365/t, down from guidance of US$510-530 for 2Q05.
"Unfortunately the market fell more than we forecast" during 2Q05, Horta said. "In comparison, when you say the market is in decline, it is in decline for the third quarter. But today prices are bottoming out and the natural tendency is for better prices in the fourth.
Minnesota Steel gets support
The city council approved a motion to support the Minnesota Steel project, a proposed fully integrated steel project, which would be located at the former Butler Taconite mine, west of Nashwauk. This was after Howard Hilshorst, executive vice president of Minnesota Steel, gave an update of the project to the city council Wednesday at the council meeting.
He gave an outline of the approximately $1.6 billion dollar project, which he said uses the latest technology and meets stringent environmental permitting. He said the project features a highly effective operation, in which it will take 36 hours from the point of digging ore to shipping the steel product. It is expected to produce 2.5 million tons of steel annually.
Hilshorst went over the map of the proposed site to the councilors. He said there are 1.4 billion tons of mineral resource located west of Nashwauk in the mining area, which would give them in access of 107 years at the site.
This is a very long term project, he said, pointing out the have committed on a 20-year basis.
Cuba's iron and steel industry undergoes diversification
Cuba's iron and steel industry has benefited from diversification by producing new items that are highly demanded in the domestic market.
According to experts, the new items are welding electrodes, wires, rods, and galvanized and black steel sheets. That way, the raw materials are imported and processed in the country, thus making better use of the installed technology.
In that regard, the Industrial Group ACINOX grew 50 percent during the first semester of 2005, compared to the same period last year. The experts said that 80 percent of ACINOX's output goes to the health, education, sport and cultural sectors, which have received 38,700 tons of steel rods.
Production of corrugated and non-corrugated rods, and wire byproducts increased significantly during the first semester of the year, in contrast to the same period of 2004.
26 Chinese traders in Fujian establish bonding company
The owners of 26 local private steel traders in Sanming, Fujian Province have established a bonding company with the support of the local branch of the Agriculture Bank of China, a senior director surnamed Luo at the bank told Interfax Thursday.
Private entrepreneurs in southern China have begun to use this type of company to expand their access to capital, using close relationships and local knowledge to minimize risk.
The company, named Mingxin Bonding Co., Ltd. (Mingxin) with a registered capital of RMB 53 mln (USD 6.5 mln), is the largest bonding company in the city, Luo said. It was established to provide guaranteeing services for traders, like its 26 founders, to secure bank loans.
Luo said although most of the founders were clients of the bank, these small firms could not get large credit lines from the bank individually. The new bonding agency could resolve this problem and allow them to expand with more financing.
Highveld Steel shuts operations as strike bites
The world's biggest producer of vanadium, South Africa's Highveld Steel & Vanadium has shut its steel and vanadium production processes after a strike over wages, a top official said on Thursday.
More than 2,000 union workers went on strike at the country's No. 2 steelmaker Highveld, majority-owned by mining giant Anglo American Pl, on Wednesday, and officials on both sides said there was no resolution in sight.
Highveld said it had also withdrawn an offer to increase wages by 5.5 percent after unions staged the strike, and reverted to its previous offer of a 5.0 percent rise.The unions had rejected the 5.5 percent offer from Highveld after demanding an 8 percent increase.
"We have since stopped production. The steel and vanadium processes have been shut as a precautionary measure as long as there is no solution to the strike."
The strike has been called by the National Union of Metalworkers of South Africa (NUMSA) and Solidarity trade union workers. Contracted non-union workers had also downed their tools, union officials said.
Olympic Steel Posts Lower 2Q Earnings
Steel products supplier Olympic Steel Inc. on Thursday said second-quarter profit plunged on depressed carbon flat-rolled prices and declining overall sales volume.
Net income fell to $3 million from $18.5 million in the year-ago quarter. The latest results include a bad-debt write-off of $1.7 million after two customers filed for bankruptcy protection in June.
Sales rose 8 percent to $241.5 million from $222.8 million, although tons sold declined 7 percent to 319,000 from 344,000 in the same period. The cost of materials outpaced sales growth, rising 35 percent to $205.4 million from $152.2 million.
Looking ahead, Chairman and Chief Executive Michael D. Siegal said softness in carbon flat-rolled prices should persist in what is expected to be seasonally a slower third quarter. He said the company has seen "a meaningful drop" in the industry's June inventory levels and expects further reductions in July, possibly allowing pricing pressures to subside later this year.
Belgo Q2 profit up 9.5% to US$136mn
Brazilian steel company Belgo-Mineira posted second quarter net profits of 328mn reais (US$136mn), 9.5% higher than year-earlier earnings.
Net revenue climbed 26% in the same comparison to 2.04bn reais, while Ebitda rose 21% to 606mn reais.
Belgo's Ebitda margin declined to 36% from 37% a year before.
Operating profits amounted to 637mn reais in the second quarter, up 15% from the same period last year.
Ahmsa Q2 bottom line up 8.7% to US$31mn
Mexican steelmaker Ahmsa recorded 325mn pesos (US$31mn) in second quarter 2005 net profit, up 8.7% year-on-year thanks in large part to its own iron ore and coal mining operations, the company told Mexico City's bourse.
During the quarter Ahmsa saw operating profit grow 19% to 1.04bn pesos, Ebitda increase 15.9% to US$146mn pesos and sales jump 18.6% to 5.78bn pesos.
During the January-June period liquid steel production increased 11% to 1.59Mt while finished product grew at a similar rate to 1.41Mt.
Ahmsa's coal and iron ore mines helped company margins as the cost of steel inputs grew and steel prices dropped on average 18% compared to past quarters.
Acesita Q2 income jumps 107% to US$77mn - Brazil
Brazilian stainless steel producer Acesita posted a 107% surge in second quarter 2005 net profit on higher prices and the effect of a stronger real on the company's US dollar-denominated debt, the company said in a statement.
Specifically, Acesita reported net profit of 188mn reais (US$77mn) in 2Q05 compared to 91mn reais in 2Q04. Net revenue dipped 1% to 812mn reais in the quarter compared to 821mn reais in 2Q04.
Sales volume tumbled 24% to 156,500t while Ebitda totaled 208mn reais, down 16.8% from 2Q04.
For the first half of 2005, net profit rose 91.2% to 365mn reais compared to 191mn reais in 1H04. Sales volume slid 9.5% to 344,200t in 1H05, while net revenue climbed 15.5% to 1.72bn reais on higher prices compared to 1H04.
Brazilian imports of stainless steel also increased during the quarter and became more competitive, affecting sales volume for Acesita's product line, the company said. The devaluation of the US dollar also resulted in lower export revenue.
Nucor Nu-Iron DRI plant to start ops 2H06
US steelmaker Nucor expects to begin operations at its Nu-Iron Unlimited direct-reduced iron (DRI) plant in Trinidad & Tobago in the second half of 2006, company CEO Dan DiMicco told.
The project involves Nucor relocating its existing DRI plant in Louisiana to Trinidad, where it is building the new 1.8Mt/y complex.
"The Trinidad site will benefit from a very cost-competitive and long-term supply of natural gas as well as favorable logistics for receiving iron ore and shipping DRI at our sheet mills in the US," DiMicco said. Roughly 70% of the equipment from the Louisiana plant has so far been transferred to Trinidad, where construction of the new plant is "well underway," he added.
Meanwhile Nucor expects the furnaces at its new Ferro Gusa Caraj pig iron joint venture in Brazil's Parstate to begin operating toward the end of third quarter 2005. The US$80mn plant is a JV with Rio de Janeiro-based mining giant CVRD is expected to produce 400,000t/y of pig iron, primarily for export.
Hylsamex Q2 net profit falls 28% to US$89mn
Mexican iron and steel company Hylsamex reported a net profit of US$89mn in the second quarter of 2005, a 28% reduction on same-period 2004
Hylsamex's sales volume grew during the quarter courtesy of higher domestic sales and exports. Overall shipments rose 5% to 824,500t during the quarter compared to 2Q04.
But the cost of sales rose 17% to US$550/t during the same period. Ebitda fell 32% to US$150mn, while free cash flow for the quarter was US$87mn.
The company said it was pleased with its results and had succeeded in increasing its cash flow despite lower steel prices.
"In a high-cost environment for the global steel industry, Hylsamex continued to capitalize on its vertical integration and its modern production plants in order to keep costs relatively stable," the company said.
Hylsamex is in the process of being taken over by Buenos Aires-based industrial giant Techint Group. In May, Hylsamex's parent company Grupo Alfa accepted an offer from Techint for its remaining 42.5% share in Hylsamex.
