August, 10 2005
Indian HR mills see price rise
IN line with the global trend, which has witnessed a price increase of 10-30$ in recent weeks, HR prices may go up marginally from September this year
SAIL official hope that "If the present situation continues, the price hike could be in the range of Rs 700-800 per tonne and if international prices move up by a few dollars more, the effective increase in domestic prices could be up to Rs 1,000 a tonne from September. The festive season would also lead to higher consumption levels and this could also help move up prices.
This would mean that the average domestic price of HR steel, which is currently around Rs 25,000 per tonne including excise duty, may touch Rs 26,000, the officials said.
Indian users import substantial volumes from the mills in Russia and Ukraine which are said to be fully sold out up to September and asking for an increase of up to $30 per tonne.
The HR price to US steel service centre are around $440-$460 PMT FOB per tonne up from $420-440 PMT FOB per tonne and Chinese prices have rallied in the past few weeks to $480 PMT per tonne as compared to $444 PMT average price in June this year. The trend is quite similar in Western Europe where the prices seem to have risen to Euro 360 PMT FOB form 320-330 PMT FOB during early July.
Scrap steel prices used for manufacturing steel have also increased sharply during July. Heavy melting scrap prices have moved up from $125 per tonne to around $180-$185 per tonne while automotive scrap prices have moved up from $165 per tonne in May to $215 per tonne at present.
Bhilai Steel to get Rs 250 crore slab caster
SAIL board has approved installation of a new slab caster for Bhilai Steel Plant (BSP) at an estimated cost of Rs 520 crore. The new single-strand slab caster with a capacity of 0.80 million tonne would help the plant to produce value added or special quality of steel besides ensuring higher utilisation the converters.
The installation of the slab caster would have associated facilities like RH Degasser and Ladle Furnace which would further augment BSP's capabilities to produce high quality plates and rails conforming to the specifications for Indian Railways. The steel produced in this shop is used as a feed stock for BSP's plate mill and rail and structural mill. The project is envisaged to be completed within 26 months.
Steel companies flouting deforestation laws in Orissa
Vedanta Alumina felled 35 trees to set up a one million tonne greenfield alumina refinery in the Lanjigarh area of Kalahandi district. Bhushan Group, which plans a 1.2 MTPA steel plant at Lapanga in Jharsuguda district, had cut 193 sal trees and encroached into the village forest land in Thelhoi. Calcutta-based Shyam DRI is in the dock as well for felling 132 sal trees in Nishabhanga village for its 0.27 MTPA steel plant in Pandloi in the Sambalpur district.
The chief minister, Naveen Patnaik, who also holds the forest portfolio, said the Forest offence cases under Orissa Forest Act have been registered against the erring companies.
MOIL to pick stake in Chinese co
Manganese Ore (India) Ltd (MOIL), has identified China as the first market to make its overseas foray by picking up majority interest in a manganese ore mining and marketing company. This is part of an aggressive overseas investment strategy charted by the state-owned company, where it is also looking at setting up joint ventures in markets such as Kazakhstan and South Africa.
The plan is still at the discussion stage and would require necessary government approval to move forward. After discussion on overseas investment plan of the company with Steel Minister, a committee would conduct a feasibility study for the project and high-level delegation would be sent to the three countries to strike a deal.
Surana Industries to raise funds for Raichur Steel Plant
The Chennai-based Surana Industries proposes to come out with a public issue next year to raise funds for its 1.5-lakh-tonne, Rs 500-crore integrated steel project that is coming up at Raichur, Karnataka with an equity of Rs 140 crore. The company has already raised Rs 30 crore through a private placement of shares with some Singapore-based NRIs in April.
Sources said that the Raichur project is awaiting mine allocation from the Karnataka Government.
Surana Industries produces construction steel from its rolling mill in Gummidipoondi near Chennai. Last year, its turnover was Rs 489.70 crore and net profit Rs 3.93 crore. In the first quarter of the current year, its turnover was Rs 151.53 crore and net profit Rs 1.57 crore.
Rail traffic in Orissa on track for big jump if MOUs happen
A status paper prepared by Railways on four of its major routes that connect the industrial pockets says how the rail traffic will witness an astronomical jump in next couple of years.
Jakhpura-Jaroli, Angul-Sukinda Road and Haridaspur-Paradip, the three routes are slated to become lifeline for States industrial boom. Their proximity to iron, manganese and chromite ore belts along Sukinda Road-Daitari-Bansapani section, abundance of coal at Talcher and connectivity to Paradip are factors that have added to their advantage.
Going by the number of MoUs signed - 36 - till this paper was prepared, rail traffic would be 238 million tonne a year of which 191 million tonne would be inward traffic while the rest will be outward bound.
The Railways have calculated the rail traffic in three different ways. The first scenario takes into account traffic from all steel plants excepting Posco, the Korean major.The second scenario includes Posco but assumes that it would not take coal from Talcher and depend on imports. The third one is a scenario where Posco is taking coal from Talcher for use.
Tata group undergoes brand valuation
Tata group brands, whose valuation is currently under way, are likely to be valued at about Rs 25,000 crore (about $6 billion), according to a senior Tata Sons official. "Currently, the UK-based Interbrand is involved in valuation exercise involving 17 group companies and its results would be out in the next few weeks," Mr R Gopalakrishnan, Executive Director, Tata Sons Ltd, said while making a presentation on the valuable corporate brands.
Mr Gopalakrishnan said that the market capitalization of the Tata entities is about Rs 1,00,000 crore and "I would not be surprised if brand value is around one fourth the market cap." The exact brand value would depend on the outcome of the valuation exercise, he added.
This is the second brand valuation exercise. The first valuation involving five group companies including Tata Tea, Tata Motors and Indian Hotels was carried out in 1997, he said adding, brands were valued at Rs 3,500 crore by inter-brands then.
WCL open cast production hit by rains
Coal production has been hit in the open cast mines of Western Coalfields Ltd (WCL) in Maharashtra due to heavy rains this year but the despatches had not suffered and adequate quantity of stock on hand with the thermal power stations had prevented any cut backs in power production.
Coal production of numerous open cast mines of the coal company have been hit to the extent of 30 to 40 per cent per day as the region has experienced five times more than normal rains. WCL is able to produce only 50-60 thousand tonne as against daily average of 105 thousand tonnes in normal conditions.
Coal India to evaluate e-auction system
The government would shortly engage an advisory institution to evaluate the system of recently initiated e-auction system to sell coal produced by Coal India Ltd. It might discontinue selling coal through the e-auction process if it does not receive enough response and if advised by the institution to do so.
The coal ministry recently said that it was considering different options of bringing about market determined price of coal instead of current system of notification by Coal India.
"The concept of e-auction has been implemented on a trial basis after taking into account the concerns of small coal consumers who were not getting adequate coal or did not have coal linkages, from officials channel of coal supply. These consumers can now participate in the bidding process, through e-auction to draw coal from preferred sources. a final decision on continuation or otherwise will be taken after independent evaluation by a reputed institution," said officials belonging to the coal ministry.
In a parallel development, the ministry has allotted two million tonnes of coal per annum to National Co-operative Consumers Federation of India Ltd, a government body under the ministry of consumer affairs and public distribution, on recommendations of the ministry to cater to the needs of small and tiny consumers.
China coalmine disaster
He Zhengba, mayor of Meizhou, and Zeng Xianghai, mayor of Xingning, were blamed for being incompetent for supervising the coal mine production in the area under their jurisdiction, according to the provincial government and are made responsible for the colliery flooding accident which trapped at least 123 miners in southern Guangdong Province, have been suspended from duties.
The accident occurred at 1:30 p.m. Sunday the Daxing Coal Mine in Ningxing City which is under the authority of Meizhou City. An estimated 15 million to 20 million cubic meters of water gushed into the shaft. only four miners escaped from the site. Previous report said the trapped number was 102, but 21 more miners were added to the missing list after the mine counted the number of miners working underground again on Tuesday. They are still trapped about 480 meters underground. The chance of survival for the trapped miners is slim after being stranded for more than 55 hours. At present, four pumps are working round-the-clock and five high-power ones are to be installed. But the rescue may require a long spell as the coal mine is feared to be full of water.
"The tragedy was caused by mine owners' greed for economic profits and malignant violation of safety rules," said Li Yizhong, director of the National Bureau of Production Safety Supervision and Administration, who was supervising the rescue operation and the investigation at the site. Li said the mine is illegal as it has no production licence. In addition, it continued its production despite that local government has ordered all mines in Ningxing suspended operation for safety examination after another flooding accident happened toa coal mine on July 14.
According to local government, the Daxing Coal Mine was founded in 1990 with a designed annual production capacity of 30,000 tons of coal. "However, investigation showed that the mine has produced around 60,000 tons of coal in the first half of this year," said Yi.
Guangdong currently has more than 260 coal mines, mainly small-sized ones, with a total annual output of 8.1 million tons of coal.
End ahead for slippage in global steel prices
Spot steel prices have declined for 10 consecutive monthswith benchmark hot-rolled sheet at $460/ton average in Julyand appear to be slipping in August close to an 18-month low of $400-420
Last week, Standard & Poor's analyst Leo Larkin told Wall Street investors that steel prices "should stabilize in the next three-to-four months." He bases this analysis on the suppositions that domestic distributor inventory levels are "much lower" than in recent months, producer reduced-supply discipline is gaining traction, and recovering demand from the Big Three automakers is imminent.
Following a booming 2004, market conditions in the U.S. steel industry deteriorated in early 2005, says the investment researchers semi-annual survey on the industrial metals industry. Larkin says this years declines in shipments, consumption and production "are due largely to accumulation of excess inventories in late 2004 at both distributors and original equipment manufacturers as well as less robust economic growth and weakness in the automotive sector." Based on its forecast of 3.5% economic growth in 2005 vs. 4.4% growth in 2004, Standard & Poors expects a decline of 4% to 6% in the volume of tons of steel shipped in 2005 to service centers, automakers and the construction sector. However, Larkin reckons that the steel industry bottomed for the year late in the second quarter, as distributors inventory levels decreased from the high levels reached in late 2004. Larkin thinks that "spot steel prices should at least stabilize through the rest of the year."
Thats because he believes distributors could be approaching a point where they will have to place more orders. He also expects that production cutbacks by steel producers and a rebound in demand from automakers "will likely help raise prices."
S&P reports on top 4 global steelmakers
Steelmakers around the world face continual challenges in adapting to the new circumstances resulting from the constant evolution of the steel industry, according to a report released today by Standard & Poor's Ratings Services.
The article, entitled "Peer Comparison: Global Steelmakers," compares four of the world's leading steelmakers, Arcelor S.A. (BBB/Stable/--) of Luxembourg , Shanghai Baosteel Group (BBB+/Stable/--) of China , Mittal Steel Co. N.V. (BBB+/Stable/--) of The Netherlands , and POSCO (A-/Stable/--) of South Korea .
"All steelmakers have some weaknesses and strategic gaps that need to be addressed in order to secure long-term success. Winners and losers can be unexpected," said Standard & Poor's credit analyst Tommy Trask. "It is vital for us to understand the trends that shape the industry when we make assessments of companies' credit quality."
Current trends identified by Standard & Poor's include temporary surpluses or deficits in finished steel inventories and a temporary shortage of iron ore and coke, leading to record high spot and contract prices. Longer term developments are also taking place, including steel industry consolidation, rising steel consumption in Asia, and increasing steel production capacity outside North America and Western Europe.
Traditionally, steel production and consumption has been centered on North America and Europe, but it is now rapidly shifting toward Asia. The fastest-growing steel producing countries include China, India, Russia, and Brazil. China and India are also the fastest-growing steel consumers. POSCO and Baosteel are taking full advantage of their position close to growth markets and both have ambitious plans to increase production capacity. The challenge for European steelmakers is that not only are steel consumers shifting their production centers to lower cost countries in Eastern Europe and beyond, but that it is also more economic to produce liquid steel close to sources of iron ore and coking coal.
The report considers the four companies in the context of the steel industry as a whole, their costs and profitability, market position, diversification, and operating strategy. It also examines their financial policies and cash flow and liquidity measures.
China to import 240m tons of iron ore
China is expected to import 240 million tons of iron ore this year, up about 15 percent over last year compared with a growth rate of 40.5 pct recorded last year, a source with the Ministry of Commerce said on Tuesday.
The ministry predicted that China's import of iron ore will not increase rapidly in the next few months and the price will go down by a large margin from last year's level. Chinese steel makers agreed to a 71.5 pct price hike in iron ore imports this year from foreign suppliers, Brazil CVRD and Australian BHP Billiton, to meet their surging production capacity. In the second half of 2005, the impact of state macro-control policies will go on to be apparent, which will bring the slowing-down of the growth of iron and steel industry and further ease the demand for iron ore.
On the other hand, the supply of domestic iron ore is going up, said the ministry, noting that the domestic iron ore output for the whole year is estimated at 370 million tons for the whole year, up 19 percent on a year-on-year base.
In the first six months this year, domestic iron output reached174 million tons, up 26.5 percent over the same period last year. In the January-June period, China imported 130 million tons of iron ore, up 34.5 percent on a year-on-year base. The growth rate was six percentage points lower than in the same period of 2004.
Average import price rose 3.2 pct from a year earlier for the first half. That compared with a 85.2 pct price increase recorded in the first half of last year.
China is now the biggest importer of iron ore in the world. In 2004, China imported 208 million tons of iron ore, accounting for one third of the world's total maritime trade volume.
Commodity strategists predict firm Iron Ore prices
Iron ore prices received by Cia. Vale do Rio Doce and BHP Billiton may stay near records next year as global demand continues to outpace supply of the steelmaking raw material, UBS AG analysts Glyn Lawcock and Fleur Grose said. Demand for the commodity could rise by 59 million tons this year, more than twice the expected 27 million-ton increase in supply, Lawcock and Grose said in a report. Iron ore contract prices jumped 71.5 percent to the equivalent of $40 a ton from April 1.
Iron ore prices have risen for three straight years as Chinese steel output doubled since 2001. Vale, Rio Tinto Group and BHP, which meet three quarters of iron ore demand, are spending a combined $8.5 billion raising output, though most of the new capacity isn't due to start up until 2006 to 2009. Iron ore prices are set annually in individual negotiations between producers such as BHP, and steelmakers, including Nippon Steel Corp. Prices are set for the year beginning April 1.
There is upside risk to our iron ore pricing on a fundamental supply and demand perspective given the market looks tight,'' Lawcock, 36, said today. Lawcock has worked for eight years as an analyst at UBS and was Australia's second-highest ranked commodities analyst in an October survey published by BRW magazine. The fact that steel prices have declined is likely to play some part in the negotiation'' between steelmakers and iron ore producers, Lawcock said. However, we believe the risks lie to the upside, based on our supply-demand projections.'' The annual contract price for so-called fines ore, which accounts for 60 percent of global trade in the commodity, jumped 71.5 percent to the equivalent of $40 a ton from April 1. The price of lump ore, which is easier to process than fines, rose to about $50 a ton. Spot iron ore prices are currently trading at between $58 and $61 a ton, Lawcock said. Global seaborne trade in iron ore could rise by 48 percent to 894 million metric tons in 2010, from 605 million in 2004, UBS said in the July 27 report. Supply may rise to just 800 million tons in 2010, according to BHP Billiton forecasts, Lawcock said.
UBS, Europe's biggest bank by assets, had previously said iron ore prices would drop 20 percent from April 1, 2006 as lower steel prices forced buyers to try and cut raw material costs.
The report compares with forecasts by Merrill Lynch & Co. and ABN Amro Holding NV for iron ore prices to rise as much as 10 percent in the next financial year. Merrill on July 1 revised its prediction of a 20 percent decline made in February to a 5 percent gain.
Melbourne-based BHP, the world's third-largest iron-ore exporter, told analysts in June that demand for the commodity may outstrip supply until 2008 and 2009. Rio Tinto, the No. 2, last week said tight market conditions,'' for steel raw materials are likely in 2006, driven by Chinese demand.
Rio Tinto CFO upbeat on iron ore market, reaffirms very tight supply just 4 months out from 2006 price talks. "He also confirmed unflagging demand for Rio Tinto's iron ore products, and dismissed press reports of slowing demand from China and Japan," it says. Keeps at outperform, target A$54.74 vs last A$50.94. Comments underscore "stronger for longer" market view that has boosted RIO and BHP in past year.
China, the world's largest consumer of iron ore, could more than double imports to 496 million metric tons in 2010, from 208 million tons in 2004, UBS said. China, which produces one-third of the world's steel, made 33 percent more of the alloy in the first half of this year than a year earlier.
Steelmakers including Mittal Steel Co., the world's biggest producer, and Arcelor SA have cut output this year to buoy prices as manufacturers run down inventories.
Benchmark European export prices for hot-rolled coil have dropped 33 percent to $397.50 a ton, from a record $592.50 in January, according to Metal Bulletin Plc. U.S. import prices have fallen to $430 a ton, from $630 at the end of 2004, according to the London-based publisher.
Steel prices may recover in the U.S. in the next six months, followed by European prices, as inventories are run down, Credit Suisse First Boston said this month.
Akhmetov Claims Law Obedience from Italy
Ukraines richest man, sought by prosecutors in connection with a criminal investigation in Ukraine, has said in an interview he gave in Italy that he has nothing to fear in his homeland as he has always obeyed the law.
The General Prosecutors office wants to question Rinat Akhmetov, whose fortune is estimated at $2.4 billion, about criminal cases into violence a decade ago in the eastern city of Donetsk, gripped by gangland warfare in the 1990s. No charges have been laid against him.
Akhmetov, president of Shakhtar soccer club, failed to appear before prosecutors last month. He told the Wall Street Journal newspaper he had not wanted to interrupt his holiday with his wife and two sons in Monaco.
We have a family tradition of coming here to relax in the summer, he told the newspaper in Milan. Akhmetov, believed to own a television channel and several newspapers, rarely answers questions from the media.
He said he was prepared to talk to prosecutors, when there is something serious to discuss. We invested in the Ukrainian economy under the rules that existed at the time, said Akhmetov, who acquired his fortune in the mid-1990s as did other oligarchs taking advantage of low prices in post-Soviet sell-offs.
Akhmetov backed ex-prime minister Viktor Yanukovichs run for the presidency last year. Liberal Viktor Yushchenko won a re-run of the election in December after weeks of Orange Revolution; protests against cheating in the original poll. I personally voted for Yanukovich but I never told anyone else to he said.
Akhmetov, whose empire includes steel and machine-building plants, telecoms companies and banks, has already lost a prominent asset, Ukraines largest steel mill, Kryvorizhstal. The plant was sold in June 2004 to Akhmetov and his partners for about $800 million, below other offers in a selloff denounced by Yushchenko as. Courts have overturned the sale and the new government is preparing a repeat tender in October. Akhmetovs lawyers are appealing the decision at the European Court of Human Rights.
CSN an attractive but difficult acquisition target for Mittal
Brazilian integrated steelmaker CSN fits the profile of the kind of smaller steelmakers that multinational giant Mittal Steel likes to buy, although the purchase would be complicated
"Mittal likes these kinds of companies, integrated steelmakers," Elaine de La Rocque said when asked about speculation that CSN is in acquisition talks with steelmaker Mittal. "CSN has its own source of iron ore and its integration would make it an attractive target for Mittal."
Despite CSN's attractive qualities, the Rio de Janeiro-based analyst does not see CSN president Benjamin Steinbruch exiting his high-profile position at the company. "I do not see him exiting the business, but that would depend on the price. Prices for steelmakers are really at a peak, so now would be a good time to sell if he wanted to sell," she said.
In addition CSN's structure makes the sale "complicated," considering holding company Vicunha Siderurgia has the Steinbruch family's controlling stake in CSN, La Rocque said.
A CSN spokesperson declined to comment Tuesday on market speculation about talks with Mittal.
CADE to decide fate of Brazil CVRD in antitrust case
Brazil's antitrust watchdog is likely to deliver a ruling largely favorable to mining company CVRD on Wednesday, allowing it to keep its iron ore mines acquired in 2000-2001, analysts said. Administrative Council for Economic Defense, known as Cade, may force the world's No.1 iron ore miner to sell part of its stake in MRS Logistica, a major railway connecting Brazil's three richest states. Cade is unlikely to force the mining giant, which is the biggest source of net export revenues for Brazil, to quit any of its mines, and some see the end of Casa de Pedra deal as a possible compromise as it will allow CSN to sell its iron ore abroad.
CVRD's stake there is higher than allowed by the law. Between 2000 and 2001 CVRD purchased mining firms Samitri, Socoimex, Samarco, Ferteco and Caemi, accumulating 80 percent of domestic iron ore production, most of which is exported.
Steel companies have joined forces against what they say is excessive CVRD's control of the market fearing monopoly-like prices increases, especially after CVRD hiked its iron ore prices globally by 71.5 percent earlier this year. CVRD argues that the prices are dictated by the international market. CVRD's excessive power over the market in mining and logistics is really unacceptable," said Marco Polo Lopes, vice president of the Brazilian Steel Institute industry lobby. He said that when there was local competition CVRD's ore prices for Brazil were lower than internationally but now they are at times higher than abroad for Brazilian suppliers.
Ukraines disputed Nikopolsky ferroalloy plant estimated at $1 bl
Ukrainian Prime Minister Yulia Tymoshenko estimates the value of the state-owned Nikopolsky ferroalloy plant at $1 billion according to some news sources.
Nikopolsky is the country's biggest producer of alloys such as ferro manganese, which is mixed with steel to make it stronger and the privatization done during last regime has been declared illegal by the new e Government and the plant is expected to be put for sale again.
SGS Buys Australian coal testing firm
Geneva-based SGS SA, the world's largest goods inspection company, acquired an Australian coal, agriculture and environmental testing company Casco Australia Pty Ltd. for an undisclosed sum to expand its operations.
Casco has sales of about AUS$10 million ($7.7 million) and employs 120 staff in the Eastern Australian states of New South Wales and Queensland.
The acquisition of West End, Queensland-based Casco will provide SGS with a fully-equipped testing lab for its coal testing business in Australia, as well as an agriculture testing facility.
Malaysias Masteel ties with Danieli to raise capacity by 10%
Malaysia Steel Works (KL) Bhd (Masteel) expects to increase its production capacity by 10% and reduce costs by 5% at its plant in Bukit Raja by the first quarter next year following a tie-up with Italy-based Danieli & C SpA to provide its oxygen technology, Supersonic Lancing System (SLS), and technical know-how by investing in a RM8.5 million contract via internal funds and borrowings.
"Through the acquisition of the SLS technology, we see a large portion of our production costs being reduced, thereby translating into lower cost of production and higher productivity," said its managing director and chief executive officer Tai Hean Leng. "The investment is in line with our goal of producing high quality steel products for our customers locally and regionally," he added. We hope to mitigate the impact of a potential electricity tariff increase, as proposed by Tenaga Nasional Bhd, and to ensure our production cost remains as competitive as possible, a move that will further enhance Masteel's position as the premier steel producer in Malaysia," said Tai.
The technology has proven to decrease the time required to melt raw materials, hence increasing the output and quality of steel billets produced, resulting in reduction in the overall conversion cost.
ThyssenKrupp to construct blast furnace at Duisburg
ThyssenKrupp AG said it won approval from the Duesseldorf district authority to construct a 200 mln eur blast furnace at its Duisburg-Hamborn hot metal base production facility.
After the work is complete, Duisburg-Hamborn will produce around 17 mln metric tonnes of hot metal annually.
ThyssenKrupp will invest a total of 340 mln eur in the overall modernisation of Duisburg-Hamborn. The modernisation will also 'pave the way for a significant improvement in emissions,' ThyssenKrupp said in a statement.
Shougang proposes 4 million ton steel plant in Thailand
The Beijing-based Shougang Group, a leading Chinese steelmaker, has recently set up a representative office in Thailand to explore business prospects and has applied for investment privileges to establish a 109-billion-baht iron smelting project in Map Ta Phut, Rayong Thailand
Under the project plan, Shougang would produce each year up to four million tonnes of slab, a key raw material for downstream steel products, as well as other steel products. Some 75% of the production is aimed at export markets.
The Thai Govt is reviewing Shougangs proposal as it has already approved two iron-smelting projects, one owned by G Steel Plc, controlled by Somsak Leesawatrakul, and the second by the Sahaviriya Group.
G Steel's 41-billion-baht project will be located in Rayong and produce 2.65 million tonnes per year of upstream steel products. The Sahaviriya project, envisioned to ultimately be worth 500 billion baht, will be located in Prachuap Khiri Khan and will have annual production of 3 million tonnes.
Mittal Steel invites steel analysts for a steel mills tour
Imagine if an industry leader such as General Electric Co. or Exxon Mobil Corp. reported quarterly earnings, and no one paid attention. That's the case with Mittal Steel Co., the world's largest steelmaker.
The Rotterdam based company, controlled by billionaire Lakshmi Mittal, will report second-quarter earnings today but there are no estimates by equity analysts. The only analyst to cover the company, Julien Onillon, quit his job at HSBC Holdings Plc in May to join Mittal as director of investor relations.
The Mittal family owns an 88 percent stake in the company, currently valued at about $17.9 billion. The remaining shares that are freely available, which trade on the Amsterdam and New York stock exchanges, are valued at about $2.5 billion. Lakshmi Mittal holds the title of chairman and chief executive officer at the company. His son Aditya, 29, is president and chief financial officer, while his daughter Vanisha, 24, sits on the board of directors.
In 2004, the company's profit almost quadrupled to $4.7 billion on sales of $22.2 billion on what the company said was a surge in global demand for the metal used in make cars, washing machines and to construct buildings.
Mittal, which operates plants in 14 countries and employs 160,000 people worldwide, is seeking to raise its profile with investors and as a part of that effort, the company will take analysts on a tour of its steel mills in Poland, the Czech Republic and Kazakhstan in September. More than 20 industry analysts have signed up for the trip on a private jet, London-based Mittal spokeswoman Nicola Davidson said in a telephone interview. We're quite confident that a number of analysts will cover the stock,'' she said. Onillon said the September tour of steel plants is part of an effort to attract more scrutiny of the company. Our size obliges us to be more transparent,'' Onillon said We have nothing to hide and we want the market to understand us.
Mittal is a superb company but it's a very complicated company,'' said Wayne Atwell, steel industry analyst at Morgan Stanley in New York. ``I would imagine there would be more coverage a year from now.'' Atwell doesn't cover Mittal.
It's really not on our radar screen,'' said Thomas Perkins, a Chicago-based partner at Perkins Wolf McDonnell & Co. and fund manager of the $4.7 billion Janus Mid Cap Value Fund.
Perkins sold shares in Richfield, Ohio-based International Steel Corp. shortly before Mittal bought the company for $4.5 billion on April 12. Normally we just invest in U.S. companies.''
When a family owns 88 percent you've got to figure out who they're working for,'' said Charles Bradford, a steel industry analyst at Soleil Securities Corp. in New York.
It's likely that Mittal's revenue will continue to decline as steel demand remains lower, said Highland Park, Illinois industry analyst Michelle Applebaum. I would expect that the third quarter guidance would be weaker,'' she said in an interview. The pain in the industry is really going to be in the third quarter.'' Applebaum said she plans to start equity analysis of the company later this year.
London-based Goldman Sachs Group Inc. analyst Edward Maravanyika said today he would probably'' start coverage of the stock because of the company's emergence as the world's largest steelmaker.
Mittal Steel's share price has fallen 23 percent this year, compared with the average one percent decline in the Bloomberg Iron & Steel Index, which tracks the world's 52 largest steelmakers.
CSN says environ case is history
Brazilian steelmaker CSN has announced an environmental case brought over alleged damage caused by its Volta Redonda plant in Rio de Janeiro state has been dismissed, correcting press reports stating the case was going badly for CSN.
CSN announced the news to S Paulo's Bovespa stock exchange to correct press reports on the 1988 case. Environmental authorities took legal action against CSN for damages caused by the Volta Redonda works, but the case was dismissed in 2000 after CSN and environmental regulators reached a deal, CSN said.
According to the agreement, CSN agreed to change its operations in a memorandum of understanding with environmental officials. CSN was ordered to clean up any damages caused to the environment in exchange for a suspended sentence.
CSN operates steel mills in Volta Redonda and Curitiba. and also owns and operates the Casa de Pedra and Pedreira da Bocaina iron ore mines.
Mexico ministry studying duties against Brazilian bar imports
Mexico's economy ministry has started studying whether to extend the timeframe of an antidumping duty against Brazilian concrete reinforcing bar imports, the ministry said in a statement.
The 25% ad-valorem duty will remain in effect during the ministry investigation.
Representatives from Mexican steelmakers Hylsa, a unit of Hylsamex (BMV: HYLSAMX), and Grupo Villacero unit Siderrgica Laro Cdenas Las Truchas went before the ministry on July 7 to request the investigation.
Mexico implemented a duty in 1995 against Brazilian concrete reinforcing bars, which are largely used in the construction industry. The North American country extended the duties for five years on August 11, 2000.
Chiles CAP approves US$83.5mn liquid steel expansion
The board of Chilean iron and steel company CAP has approved a US$83.5mn investment to expand production of liquid steel to 1.45Mt/y from 1.20Mt/y at its main Huachipato plant.
The project aims to meet higher local demand for steel products, especially concrete and grinding bars, CAP said in a statement to the Santiago stock exchange.
CAP plans to carry out the investment with cash in hand from 2005 to the beginning of 2007, newspaper El Mercurio reported. The investment will allow CAP to maintain its market share of 60%, according to the paper.
The Huachipato complex is in southern Chile's Region VIII. Chile's largest steelmaker, CAP posted a first half 2005 profit of US$122mn, up 123% year-on-year. The company also operates iron ore mines in northern Chile through its mining unit Minera del Pacico.
S&P assigns Brazilian As Villares brA rating
Credit ratings agency Standard & Poor's (S&P) has assigned Brazilian specialty steel producer As Villares its brA corporate credit rating, S&P said in a research note. The outlook is stable.
The rating is based on As Villares' favorable position in the market as a manufacturer of specialty steels for the mechanical construction industry and steel cylinders for the steel industry, S&P said.
In addition As Villares is less exposed to market volatility compared to other steelmakers, which focus on commodity steel products. As Villares' rating also reflects the company's shrinking debt load and minimal risk of refinancing, according to the report.
However, As Villares still suffers from its relatively small production stature compared to larger steelmakers. The company's lack of scale also means it has higher production costs related to its extensive use of metal alloys and faces more intense competition from domestic and foreign specialty steel makers.
Mexican Autl hires Boston Consulting to draft business plan
Minera Autl has hired the Boston Consulting Group (BCG) to help develop a new long-term strategic business plan, the Mexican manganese-ferroalloy producer told Mexico City's bourse. Autl created its own business plans for various decades to avoid suffering during industry downturns but this time has decided to bring in an outside perspective to help bolster the company's most promising sectors, the company said.
The Mexican company has created an internal working group to work with BCG, which will focus on areas such as energy, minerals, marketing and operations, among others.
Autl reported a second quarter 2005 net profit of 215mn pesos (US$20.2mn), five times higher than same-period 2004. But times were not always so good as imports flooded the market now and drastically cut into Autl sales. Since then Mexico's government has imposed duties to protect the company.
West Virginia's top coal producer to leave state Coal Association
Massey Energy Co., West Virginia's largest coal producer, is leaving the state's Coal Association for the second time in five years. "Massey Energy will not participate in activities of organizations that do not have the absolute best interest of West Virginia in mind," Chairman and CEO Don Blankenship said in a brief statement Tuesday. "Until the West Virginia Coal Association is ready to make the necessary changes to move our state out of 50th place in major economic ranking indicators, Massey Energy will not participate," he said.
Bill Raney, president of the Coal Association, did not immediately return a phone call seeking comment Tuesday.
Venezuelan PDVSA could import oil tubes from Brazil, Venezuela
Venezuelan state oil company PDVSA is developing plans to import from Brazil the type of tubes for oil transport that it currently buys from the US.
Venezuela's President Hugo Chez would not name the Brazilian company that would sell the tubes under the fledgling plan. The Brazilian company's tubes would "not only serve Venezuela but in the future we could produce them for half the world," said Chez.
China to end tax incentives to dampen Aluminium trade
Power-hungry China aims to cut output in energy-intensive industries, including aluminium, to spare more electricity for other sectors and to leave more metal at home and will abolish tax incentives on August 22 for imported alumina used to make aluminium for export, potentially cutting supply of the metal and driving up world prices. The tax breaks on the so-called tolling and processing provision allow aluminium smelters to import alumina duty free so long as they export the finished product.
China is one of major aluminium suppliers in Asia and its net exports of primary aluminium nearly quadrupled in the first six months of this year to 505,515 tonnes.
Prices for spot alumina have risen 8 per cent since late July to $US475 to $US480 a tonne to Chinese ports, including freight and insurance fees, partly due to the expected changes, traders said. China imported 3.7 million tonnes of alumina in the first half, up 28.7 per cent from a year ago.
A similar tax break on ferro-alloys, used to harden and strengthen steel, and the following ores and concentrates will be removed: bauxite, manganese, nickel, chromium, tungsten, molybdenum, molybdenum oxide, titanium, silicon and quartz sand, and vanadium.
U S Steel announces two new appointments
Frederick T. Harnack has been named General Manager - Research, and John C. Price has been named General Manager - Business Planning at the Pittsburg HQ of US steel wef August 1.
Mr Harnack will oversee all research and development activities at U. S. Steel's research center in Monroeville, Pa., and will oversee the transition of the research operations to a new facility in Munhall, Pa. He will report to Anthony Bridge, vice president - Engineering and Technology. Harnack joined U. S. Steel in 1976 as a management trainee at the Mon Valley Works' Edgar Thomson Plant, and has held various positions in the company.
Price will be responsible for planning and scheduling production at all of U. S. Steel's steelmaking and finishing facilities, ensuring the company's operations achieve maximum efficiency. He will report to James Kutka, vice president - Commercial. In 1969, Price began his career with U. S. Steel as an operations trainee at the company's Fairless Works outside Philadelphia, where he has held a series of tin mill operating and metallurgical positions.
Foundation Coal increases quarterly dividend by 25%
The Board of Directors of Foundation Coal Holdings, Inc. declared a quarterly dividend of $0.05 per share on the company's common stock, a 25 percent increase over the company's prior quarterly dividend. By increasing the quarterly dividend the Board affirms its confidence in Foundation's business plan for the future and the company's ability to further increase shareholder value.
Foundation Coal Holdings, Inc. is a major U.S. coal producer with 13 coal mines and related facilities in several states including Pennsylvania, West Virginia, Illinois, and Wyoming. Through its subsidiaries Foundation Coal employs approximately 2,700 people and produces approximately 65 million tons annually, largely for utilities generating electricity.
Arch Coal, ArcLight form a new company
Arch Coal Inc. plans to contribute certain mining operations and properties to a new company that would mine and market low-sulfur coal in the central Appalachian region. The company would be formed with affiliates of Boston-based ArcLight Capital Partners LLC. Arch will receive about a 37.5 percent stake in the new company, which Arch and ArcLight agreed to take public.
Arch said it would contribute four of its active Central Appalachian mining operations and a total of 455 million tons of reserves to the new company. ArchLight will contribute a collection of coal sales and mining companies known as Trout Coal, it said.
Paul Vining, who recently joined Arch as senior vice president of marketing and trading will be president and chief executive of Trout Coal, effective immediately, and will hold that position for the new company when established.
St. Louis-based Arch Coal Inc. is one of the largest coal producers in the country, providing the fuel for about 7 percent of the electricity generated in the United States.
Australian Precious Metals to reopen Vanadium mine
Precious Metals Australia could restart production at the troubled Windimurra vanadium mine in Western Australia within 12 months after receiving the final $10.5 million payment from former joint venture partner, Swiss based miner Xstrata.
The mine was controversially closed in 2003 when Xstrata said the vanadium price was too low to justify the operation. In an out of court settlement Xstrata agreed to pay Precious Metals in compensation after Precious Metals alleged Xstrata closed the mine prematurely. Precious Metals has received over $20 million in payments from Xstrata, including the court settlement.
Vanadium is mostly used to produce high strength steel and is used in the aerospace and nuclear industries. The vanadium price is enjoying a boom in price following the closure of another vanadium mine in South Africa and strong demand from China. Vanadium is trading between $US10 and $US12 per pound compared to $US1.40 it reached when the mine was closed.
Precious Metals would upgrade the project to produce ferro-vanadium, a product which fetches more in the market place than vanadium pentoxide, which the mine previously produced.
The previous mine had a nameplate capacity of 17.6 million tonnes a year but only ever reached production of 12 million tonnes a year. Precious Metals is now considering production of 20 million tonnes a year with development costs put at $100 million.
Mississippi in running for Kia plant
Mississippi is among the states Kia Motors is considering for a U.S. manufacturing facility as Mississippi Governor Haley Barbour is trying to convince Hyundai officials the state can meet the company's needs.
The size of the Kia plant hasn't been determined, but an extensive search is under way to find a U.S. site. Kia Motors is an affiliate of Hyundai Motors, which opened its first U.S. plant in Montgomery in May and it is expected that Kia begins a serious search for a new site until production at the $1 billion Montgomery plant increases.
Posco to supply Kia stronger steel to reduce 7% car weight
Posco, Korea's top steelmaker, said yesterday that it has a customer for its newly improved steel plate, which is 130 percent stronger than older versions The steelmaker said one square millimeter of the plating can hold up to 50 kilograms (110 pounds). Previous plates usually held only 35 kilograms per square millimeter. Research for the new plate began two years ago, and it received government approval in June.
Kia Motors Corp., the nation's second-largest automobile manufacturer, will use 100 tons of the steel plates for their passenger vehicle, the Pride.
Last year, Ford Motor Co. began using a plate with 50 kilograms per square millimeter. However, Ford's version uses electroplated coatings, while the plates developed by Posco are coated with zinc, which has better corrosion resistance.
Posco said the new plates will help car manufacturers lower costs and increase fuel efficiency. In the past, carmakers used more than one plate for safety purposes, but with Posco's improved steel, an additional plate is not needed, reducing the weight of plating on the car by about 7 percent.
Steel additives demand boosts Australia's Consmin profit
Australian metals producer Consolidated Minerals Ltd. said on Tuesday its annual net profit more than doubled on strong demand for stainless-steel minerals.
ConsMin reported an unaudited net profit of A$70.3 million, up from A$25 million a year ago, including a A$19 million profit on the sale of a stake in iron ore miner Portman Ltd. EBIDTA rose to A$104 millions up from A$106 million.
The price of manganese jumped to $4.00 a unit from $2.45 a unit over the period, while chromite prices rose to $150 a tonne from about $100 a tonne.
"We continue to see very high levels of demand for steel-related materials in China, which is now being complemented by a wave of urbanisation and levels of construction not seen since the post-war reconstruction era in Europe and Japan," said ConsMin Managing Director Michael Kiernan in a statement.
Kieren said the company had factored in a 15 percent fall in the manganese price and a similar fall for chromite, but it would benefit from profits from its Reliance nickel operations in the Kambalda region of Western Australia, bought earlier this year. Production of nickel, which gives stainless steel its shine, was projected to more than double to between 15,000 and 20,000 tonnes a year over the next two years, it said.
Mittal Steel focuses on auto steel in Eastern Europe mills
With Eastern Europe becoming a hub for all auto majors, Mittal Steel is investing in its steel mills in Eastern Europe to produce auto grade steel. Its planning an investment of up to $350m needed to become a producer of high-grade flat sheet for automotive bodies, one of the most technically demanding types of steel, and which commands high margins.
That would tie in with an expected jump in car production in Poland, Hungary, the Czech Republic and Slovakia, where volumes are likely to climb from just over 1m cars a year now to up to 2.7m in 2011.
Mittal Steel is already a big producer of this type of steel in the US, and is keen to transfer know-how in this type of steelmaking from the US to its Eastern European steel mills. It is thought Mr Mittal wants to produce, in one of his east European plants within the next few years, at least 1m tonnes annually of steel suited to car bodies.
The company is injecting funds into its steel mills in Eastern Europe at Poland, Czech Republic, Romania and Bosnia. These will produce roughly three quarters of the 20m tonnes of steel Mittal is likely to make in Europe in 2005.
Assuming Mr Mittal meets this goal, that would still mean his company is a long way in Europe behind Arcelor of Luxembourg. But crucially Arcelor has most of its plants in western Europe, where costs are a lot higher than in the sites Mittal has acquired in recent years in the eastern part of the continent. Other companies likely to monitor closely Mittal's efforts to expand in this area in Europe are ThyssenKrupp of Germany and Austria's Voestalpine as
both are important suppliers of sheet steel for car bodies in Europe and are interested in increasing their operations in the eastern part of the continent.
West Virginia mapping its Coal reserves
An ongoing state project tries to figure out how much of the mineral remains in the ground. No one seems to know, but an ongoing state project is working toward the answer.
Coal geologist Nick Fedorko told that the West Virginia Geological and Economic Survey has so far drawn highly detailed, computer-based maps of 53 coal beds that snake beneath 31 of the state's 55 counties.
A 1939 survey estimated that 116 billion tons of coal, in seams at least one foot thick, lay beneath West Virginia. How much of those resources remain -- or whether that number was on the mark -- remains to be seen.
Fedorko says the Coal Bed Mapping Project will also gauge how much of the resources can be considered reserves, meaning it can be mined economically at any given time. He estimated the survey will map the state's mineable coal within five years, and complete the overall project within 10 years.
Vietnam approves establishment of a Coal Group
The Government on August 8 approved a pilot project to establish the Viet Nam National Coal Group (Vinacoal), which will operate in the form of a holding company. The decision says Vinacoal will have its headquarter in Ha Noi and its statutory capital will be the amount owned by the Viet Nam Coal Corporation on January 1, 2005.
Decision which will take effect in 15 days, specifies that Vinacoal will be formed by restructuring the Viet Nam Coal Corporation and its subsidiaries into a robust economic group, with advanced technology, modern management methods and diversified fields of business, including the coal industry, energy engineering, mining, shipbuilding, the automobile industry, and mineral exploitation and processing.
Vinacoal - the mother company - will consist of 11 businesses, including three coal companies, a financial company, a mining company, a rescue centre for the miners, a human resources development centre, two coal project management boards and a clinic. The mother company will hold 100 percent of statutory capital of the 18 affiliates, over 50 percent of statutory capital of the 24 subsidiary businesses and less than 50 percent of the four other enterprises.
