August, 11 2005
5% cess likely on domestic coal to give import a boost
Coal ministry is planning to levy between 3% and 5% cess on domestic coal to make coal imports for consumption an attractive option for power plants. The move would relieve Coal India Ltd that has not been able to meet coal requirements of power plant as lower domestic coal prices make sourcing from local markets attractive for consumers.
At present domestic coal prices are marginally lower than imported coal, which makes sourcing from local markets attractive for consumers.
According to government estimates, against the planned imports of 10 million tonnes of coal for power generation, only 4.5 million tonne was imported in 2004-05 due to high international coal prices.
Indian Government eases export documentation procedure
The Finance Ministry has eased the export documentation procedure to help the exporting community. The Revenue Department has now abolished a number of declarations, relating to various export promotion schemes, that were found to have outlived their utility or were not serving any purpose.
After a careful scrutiny of the export documentation requirements under the electronic data interchange (EDI) system, the sub-committee found that only five documents were required for Customs purposes. They are commercial invoice, packing list, ARE-I, self-declaration form, and declarations pertaining to various export promotion schemes.
The move follows representation from trade and industry that the current requirement of submitting a large number of documents and declarations to the customs authorities causes delays and adds to their transaction costs.
Ajanta Soya to acquire 50 pc stake in Nigerian co
Ajanta Soya Ltd on Wednesday said that it is acquiring 50 per cent stake in Nigeria-based Phoenix Steel Mills Ltd. The Rajasthan-based company, manufacturing edible oil, vanaspati and alloy steel castings informed BSE of this decision.
The company belongs to an existing profit-making group, which includes Guru Proteins Ltd and G D Ferro Alloys (P) Ltd. The company, owning refined oil brands Dhruv and Anchal, seems to be interested in diversifying into steel sector.
SEIL eyes 30% growth in turnover
Vizag-based Steel Exchange India Limited (SEIL), which is into steel trading, steel making and software business, is aiming at a growth of 25-30 per cent in turnover during this fiscal The company posted a turnover of Rs 66.58 crore during the first quarter of the current fiscal. The budget for the financial year is close to 400 crores.
During the first quarter, the company posted a net profit of Rs 3.78 crore as against last fiscals net profit of Rs 8.29 crore on a turnover of Rs 328 crore. In the current year, it is expecting a net profit of Rs 10 crore.
SEIL, which has a 60,000- tonne capacity re-rolling mill to produce TMT bars at Visakhapatnam, is investing Rs 1.5 crore in its modernization for producing superior grade Thermex Re Bars by the end of the year.
SEIL is also spending Rs 8 crore on expanding its steel melting shop at Ravulapalem in East Godavari district, which has a capacity of 60,000 tonnes a year to reach 90,000 tonnes by March 2006.
SEIL is also planning to set up a sponge iron plant at an investment of about Rs 350 crore. The proposal will materialise during next fiscal.
SEIL imported about 30,000 tonnes of scarp to meet the raw material requirement of the Ravulapalem unit during the first quarter. The company saved about Rs 4,000 on each tonne with this imports, he said, adding.
CIL may become JV partner in CoalJunction
MetalJunction, a joint venture between Tata Steel and SAIL for E Trading of steel, recently decided to float a joint venture to carry out the e-auction of coal on behalf of CIL in May.
The joint venture proposal of 50% sharing came from CIL following unexpected success of CoalJuncton as CIL was initially apprehensive about the benefits of such a venture.
The Cabinet Committee of Economic Affairs had allocated 10 million tonnes of coal for sales through CoalJunction during 2005-06. A large number of medium-scale companies especially mini cement plants, brick-kiln and coke-oven operators who were otherwise not offered linkage by coal companies, joined the race for booking their provisions through e-auction, with the result that the 10-million-tonne allocation was exhausted in just two months. The coal companies were happy because they got a 50 per cent increase in realisation on an average. Sources said that normally such customers get their supplies through middlemen who pocket a large part of the margin.
The coal companies have persuaded the Government to release another 10 million tonnes this month which, say sources, may not be sufficient for the year as the off-take is expected to increase in winter. The MJSL Managing Director, V. Oberoi, said that he expects CoalJunction to trade a minimum of 30 million tonnes this year alone.
Gangotri Iron opts for Thermex Technology
Gangotri Iron & Steel Company Ltd has placed an order to THERMEX for Thermex Quenching System, for its existing plant for modernization and expansion in Bihar. The proposed project is being planned to have 12 x 2 Tons Induction Furnace along with continuous cast billet plant with a 300 TPD THERMEX TMT plant for manufacture of international quality TMT Bars.
The capital outlay towards the proposed project will be approximately Rs 35 crore. Land for the proposed unit has already been identified and negotiations for acquisition are in progress.
THERMEX has brought this cutting-edge technology to India in collaboration with world-leaders Hennigsdorfer Stahl Engg. GmBh of Germany.
ONGC Mittal Energy Limited to explore jointly in 22 countries
ONGC Mittal Energy Limited, the newly-formed joint venture company of ONGC Videsh Limited (OVL) and the LN Mittal steel group, has identified 22 countries to pursue oil and gas projects relating to exploration, development, production, pipeline transportation and refining of hydrocarbons. These 22 countries have further been categorized under Schedule I and II territories.
Ten countries including Azerbaijan, Bosnia, the Czech Republic, Kazakhstan, Kyrgystan, Liberia, Macedonia, Poland, Romania and Uzbekistan have been put under Schedule I. Here OVL and the Mittal group will work together on an exclusive basis i.e. as ONGC Mittal Energy, except for offers that are made to OVL on a government-to-government basis. For the remaining 12 countries, both the parties would identify projects on a case-to-case basis and work jointly based on mutual consent.
Schedule II countries are Angola, Canada, China, France, Germany, Indonesia, Mexico, South Africa, Trinidad and Tobago, Turkmenistan, the UK and the US.
Mr Mittal were confident of developing good business interests in Angola, a hydrocarbon-rich country where OVLs efforts to get a foothold have not succeeded so far even though Mr Mittal does not have any operations there.
CERC rejects Power Grid's appeal for higher outlay
THE Central Electricity Regulatory Commission (CERC) has turned down a revised petition filed by the state-owned Power Grid Corporation of India Ltd (PGCIL) seeking ratification of higher cost estimates for a transmission project in Madhya Pradesh. Against the Rs 617 crore sanctioned by the regulator for the Bina-Nagda-Dehgam transmission line project, PGCIL has sought Rs 686.32, citing increased steel prices and other raw materials. The regulator has, however, allowed the utility to pass on any cost escalation arising out of interest rate fluctuations to the tariffs.
CERC had earlier come down heavily on PGCIL, directing it to execute the transmission link at a "benchmark cost" suggested by it earlier, which had formed the basis for rejecting a proposal from a private consortium.
The project dates back to early-2003, with PGCIL identifying the Bina-Nagda-Dehgam transmission link to evacuate power from National Thermal Power Corporation's Sipat power station, for implementation through the Independent Power Transmission Company route. A consortium of Tenega Nasional Berhad (TNB) Malaysia, and Kalpataru Power Transmission Ltd made a techno-commercial and tariff proposal for a transmission licence to execute the link at a final cost of Rs 657 crore.
When the case came up for hearing, PGCIL, in its capacity as the Central Transmission Utility, advised the CERC that the total cost of the project was around Rs 557 crore, and could not exceed Rs 617 crore. The TNB-Kalpataru proposal was rejected and PGCIL was, instead, asked to execute the project.
Mittal Steel Q2 net down by 18%
Mittal Steel, the world's biggest steelmaker, posted an 18 percent drop in second-quarter operating income on Wednesday and signaled a fall in third-quarter profit as oversupply weighs on prices. As a result, shares fell drastically during the day.
Mittal Steel said operating income fell to $1.39 billion in the three months to June 30 from $1.69 billion in the same period of last year and $1.72 billion in the first quarter.
Shipments rose 17 percent to 12.2 million tons in the second quarter from 10.4 million in the first quarter, but were down 10 percent excluding ISG.
The cost of goods sold per ton was up 14 percent on the quarter, mainly due to higher raw material and energy costs, as well as a reduction in production.
Net income fell to $1.09 billion, down from $1.15 billion in the first quarter and $1.28 billion in the same period of 2004.
Operating income was hit by higher costs for raw materials such as iron ore, as well as lower production. "The industry has been experiencing an inventory de-stocking in Europe and the U.S., as a result of which demand and prices have softened," Chairman and Chief Executive Lakshmi Mittal said in a statement. "Looking ahead to the third quarter, we are expecting conditions to remain difficult," he added.
Australian scientists use plastic to add carbon in making steel
Australian scientist Professor Veena Sahajwalla of the University of New South Wales has developed a technique to use waste plastic in steel making for which she has won a prestigious Australian science award. She calls it "the hottest research in town," which she hopes will turn an environmental headache into a valuable resource.
Under the process, waste plastics are fed into electric steel-making furnaces as an alternative source of carbon and heated to super-hot temperatures of 1,600 degrees Celsius. Carbon is used to add strength to steel. The higher the carbon content, the stronger but less ductile it is.
I dont think the coal industry would see it as a threat. Its more an environmental angle, I think," she said. Sahajwalla said her process did not replace all of the coal and coke, but still used a mix of plastic and coal.
She said PVC was one of few plastics not suitable for the process because of potentially carcinogenic emissions when burned.
Four fronts formed in Turkey on sale of Erdemir
The government is in favor of selling Turkey's biggest steel producer, Erdemir, while the main opposition and unions consider the sale a serious mistake, there are businessmen also who are against the sale of Erdemir to foreigners. Four fronts have emerged in Turkey with different views regarding the sale of Erdemir and all are working full time to influence the decisions.
The first group consists of Republican People's Party, Confederation of Turkish Labor Unions and some former employees. Republican People's Party leader Deniz Baykal says that he would never allow the sale of Erdemir. Confederation of Turkish Labor Unions (Trk-İş) Chairman Salih Kılısaid he was against the sale of Erdemir to foreigners and added that foreigners should make new investments in Turkey but not purchase Erdemir. Tuğrul Kutadgobilik, a former manager at KoHolding, said he was not against privatization in general. But Erdemir is strategic, it should not be sold, he added.
Professor Mustafa Aysan and columnist Mehmet Ali Kışlalı constitute the second group. They are against the block sale of Erdemir shares and recommend a public offering.
Those people forming the third group oppose foreign control of Erdemir, but not necessarily its sale. Hamdi Akın from the private Tepe-Akfen-Vie (TAV) enterprise said Erdemir, like other important state companies, should not be sold to foreign investors.
The fourth group is in favor of the privatization of Erdemir giving government company. Aydın Ayaydın, former head of the Competition Board, said the sale of Erdemir would boost its productivity no matter whether it's sold to local or foreign investors.
Kriviorog sale to decide fate of Ukrainian government
Ukraine is selling the country's biggest steelmaker for a second time after a court on Feb. 17 annulled the first auction by the former regime. The government in Kiev will announce the terms of the offering of the 93 percent stake today, First Deputy Prime Minister Anatoly Kinakh said that the starting price would be $ 2billion. The State Property Fund also said in a statement that the winning bidder for the Kryvorizhstal steel mill will be obligated to invest $2.3 billion between 2006 and 2013 for unspecified improvements. The mill is due to be auctioned in October.
The prime Minister Tymoshenko told a news conference suggested the sale could bring in more than $3 billion and "Kryvorizhstal will be sold beautifully,". "There will be at least five bidders with prominent names. Only the auction will reveal who will buy and at what price. Fifteen billion hryvnias ($3 billion) is not a maximum."
At least one steel analyst seemed to agree. "I think that, on value for money, $2 billion is perfectly fair," Timothy McCutcheon of Aton brokerage in Moscow said, referring to the starting price. "I don't think the Ukrainian government is going to have a problem getting people to bid."
The government, which has no investment adviser on the sale, said it will accept applications up to Oct. 17. The State Property Fund said bidders would have to provide proof of long-term activity in Ukraine's metals industry. It ruled out offshore buyers and demanded disclosure of ownership structures.
Revenue from any sale is key for a government saddled by huge social obligations. It will also show whether foreign investors are willing to come to Ukraine after months of disputes within the administration and confusion over economic strategy. "This is an important event from various viewpoints, above all the legal situation. The old owners are still pursuing the case in courts and raises the question whether putting it up for auction could be a bit premature," said Zsolt Papp, market strategist at ABN AMRO in London.
Contested post-Soviet privatization has proved to be one of the most divisive issues tackled by Yushchenko's administration. Ministers have been bickering for months over what to do with sales conducted in dubious circumstances under the previous government. Courts are deliberating over dozens of cases, and no clear official strategy has been presented.
A successful sale would help the government offset expenditure linked to the doubling of pensions during last year's campaign. The current government, its eyes firmly on a general election next March, introduced a pensions increase of its own.But privatization revenues, a major source to cover the budget deficit, have so far failed to materialize. "This year's privatization target is $1.4 billion, and so far they have only raised a 10th of that. Obviously the market would love it if they sold the steel assets," Frank Gill, emerging markets strategist at IDEA Global in London.
There may be few takers. One Ukrainian analyst called the new starting price "exaggerated"--for want of a euphemism--in light of the political and economical instability in Ukraine. Vasiliy Yurchyshyn, an analyst with the Kiev's Razumkov think tank, said the new starting price was exaggerated "taking into account current political and economical instability in Ukraine." "I don't think that any rational investor will come here and pay such a money," he said.
Kryvorizhstal, based in Krivoi Rog in the south of Ukraine, last year produced 7 million tons of crude steel and 6 million tons of rolled steel. Steelmaking accounts for about a quarter of Ukraine's $60 billion gross domestic product. It is the country's most profitable steel mill with last year declared earnings of more than $400 million.
Kryvorizhstal was first sold in June 2004 to Investment Metallurgical Union, a company run by Kuchma's son-in-law, Viktor Pinchuk, and Renat Akhmetov, Ukraine's richest man, for $800 million. Ukraine is reselling the steelmaker as it tries to combat corruption and lure foreign investors after a fraud-ridden election sparked a popular revolution that toppled Kuchma's chosen successor Viktor Yanukovych and led to the election of Yushchenko.
Mittal Steel and Arcelor, Evraz, US Steel and Severastal some of the world's largest steelmakers, are among the companies that may bid for in the biggest-ever auction of a former Soviet company to a foreigner. Mittal Steel and Arcelor have confirmed their interest but it isn't clear yet whether Severstal or US Steel planned to bid again for the mill.
Brazilian investment broker says Mittal in talks to buy CSN
Amid the reports in Brazilian media, earlier this week, that markets were buzzing with speculation of the Mittal-CSN talks, and although Mittal has declined to comment, Brazilian integrated steelmaker CSN is the target of a takeover bid by Dutch steel giant Mittal Steel Group, cited a Brazilian investment broker Socopa
Scoopa, in a research note said that Mittal, the world's largest steelmaker, is in talks with CSN to purchase control or a sizeable stake in the Brazilian steelmaker. Socopa affirmed its belief that a takeover or participation by Mittal in CSN would be positive for the steelmakers operations "However, we prefer to wait for clarification from CSN on this assumption."
In addition, a favorable decision for CSN by Brazil's leading antitrust agency (CADE) with regard to the company's Casa de Pedra iron ore mine could also make the steelmaker more attractive to foreign buyers, Socopa said.
Currently, Rio de Janeiro-based iron ore miner CVRD has first dibs to buy excess iron ore produced at the mine. One of the conditions proposed by agencies as part of Cade's antitrust review is the elimination of the contractual clause that grants CVRD right to the iron ore. A decision favorable for CSN would mean the company could negotiate directly with consumers to sell its iron ore.
Nucor CEO asks China & India to slow down expansions
Daniel DiMicco, chief executive, of steelmaker Nucor has called on China, India and other countries to stop subsidizing local steel industries that might deplete crucial raw materials and then flood world markets with excess mill products. "The governments of the world need to stop such foolishness," he says in speech delivered at a steel conference in New York.
In his presentation, DiMicco says steelmakers in China, India, Malaysia, Iran, Brazil, and other countries were bringing on line or planning massive amounts of steel production that were way above their domestic needs. "This is capacity which, if built, will outstrip not only the resources, but will have the potential to flood the world markets with subsidized steel."
He tells the Steel Success Strategies conference in New York that steelmakers should be more disciplined and responsible for using the precious resources needed to make steel and more responsible about how they create new capacity that could flood the global marketplace.
The American Iron and Steel Institute has been complaining for years that global overcapacity results mostly from government ownership, heavy subsidies and outdated, extremely inefficient steel-making capacity. For some time, the international steel community has been meeting periodically to find a common ground that would consolidate an extremely fragmented global industry. However, DiMicco complains that "many governments around the world are supporting, through direct ownership or indirectly, through huge subsidies the addition of massive new capacity."
Australia's coal export capacity may rise 39 pct by 2010
Australia's east coast coal export port capacity could increase by 100 million tons a year, or nearly 39 pct, by 2010 from its current capacity of 259.6 million tons annually, following expansion at key export terminals, Energy Economics said in a report.
The private coal industry watchdog said the rise in capacity will largely be driven by expansions of the Haypoint and Dalrymple Bay export terminals which service the state of Queensland's world class Bowen Basin coal province along with expansion at the Port of Newcastle in the state of New South Wales, the world's largest coal export port.
Last month the BHP Billion Mitsubishi Alliance, which owns the Hay Point facility near the city of Mackay, approved phase two of its expansion program, which will lift capacity by four million tons a year to 44 million tons. BMA also announced a detailed assessment study for the proposed phase three and phase four expansions, which would increase capacity to an estimated 55-57 million tons a year.
Energy Economics said the nearby Dalrymple Bay terminal, owned by Babcock & Brown Infrastructure, is expected to add one million tons a year annual capacity from November 2006, taking capacity to 60 million tons a year. It said Babcock & Brown Infrastructure is also investigating numerous expansion options to further increase capacity to levels ranging from 72 to 90 million tons a year.
Energy Economics said the preferred expansion path is to increase Dalrymple Bay terminal capacity to 65-68 mln tons a year by July 2007 and then to 80-85 million tons by August 2008.
At Newcastle, it said coal export terminal operator, Port Warratah Coal Services (WPCS) has unveiled plans to boost overall capacity to 120 million tons a year after formally approving expenditure of A$170 million in April to expand throughput capacity from 89 million tons to 102 million.
The firm said some early benefits of PWCS's expansion will start to flow through next year, with planned port throughput being around 90 million tons in 2006 and 'in the low 90s' in 2007.
As well, Energy Economics said, the Queensland State Government has approved a capacity expansion of the RG Tanna coal terminal at the Port of Gladstone, from 40 million tons a year to potentially over 60 million tons annually by early 2007 as part of a staged expansion which will see capacity lifted to around 54 million tons by May next year.
The firm said the Barney Point coal terminal, also at Gladstone, is to be upgraded with a rise in capacity to 6-7 million tons annually by the end of 2005 from the current 4-5 million tons.
Energy Economics said the Ports Corporation of Queensland is also currently studying a potential new 60 million tons a year coal port at Wiggins Island to service the potential new thermal coal mines to the south of Gladstone.
The firm said there is also potential to double the capacity of the state-owned Abbot Point coal terminal over the long term through the construction of a second berth with a second ship loader.
Abbot Point, the northern most coal export terminal on Australia's east coast, has a current capacity of 17.5 million tons a year.
CVRD ordered to reduce dominant position in Brazil
Cia. Vale do Rio Doce CVRD, the world's largest iron-ore producer, was ordered to reduce its control of the Brazilian market and cut its stake in a railway used to transport steel and other commodities to ports for export. The ruling by Brazil's antitrust agency stems from a complaint from steelmakers that Vale had too much power over the country's iron-ore and rail-transport industries. CVRD supplies about a third of all ore on world markets and 61 percent of what's consumed in Brazil.
Regulators voted 4 to 3 in Brazil to let CVRD decide how to limit its dominant position in Brazil. Vale may either abandon its rights to sell ore from the Casa de Pedra mine owned by steelmaker CSN and cut it stake in railroad MRS Logistica SA or sell Ferteco, an iron-ore mining company it acquired in 2001 that owns a stake in the railway.
The decision comes as CSN is in the process of an $800 million expansion plan for Casa de Pedra that envisions selling ore both in Brazil and overseas. Vale had won a 20-year right to sell all ore from CSNs Pedra Mine not used by the steelmaker, when CSN sold control of mine to CVRD in 2001.
Vale do Rio Doce has no plans to comment on the agreement until it studies it fully, said Fernando Thomson, CVRDs spokesman. Vale's lawyer, Pedro Freitas, declined to comment on the ruling as he left the hearing in Brasilia. Vale has 30 days to comply with the ruling or face a fine of 53,200 reais.
Asian steel mills oversupply to drive prices down
Global steel researcher MEPS reports global markets continue to be oversupplied. At the half year point, world output of steel was 7.6% up on the same period a year earlier. This factor is almost entirely the result of continued over production in Asia - mainly China, says MEPS, as steel supply has been reduced recently across Europe, North and South America.
The situation is now recognized as being so acute that South Korean, Japanese and Taiwanese steel makers are also cutting back in an effort to prop up prices. The oversupply situation across the globe has resulted in the MEPS World Average Flat Product Transaction Price falling for four consecutive months. An appreciation of the Asian currencies could lead to a small rise in August, says MEPS, however further decreases are anticipated, albeit at a more modest pace, until March next year.
The analysts detect no signs that the Chinese steelmakers will bring output more in line with domestic demand in the near term. The actions in Europe and the Americas will almost certainly be offset by higher Chinese supply.
A global steel price revival could be expected in the second quarter of 2006, says MEPS, if the Chinese authorities undertake more stringent fiscal measures to stifle output and reduce or eliminate export rebates. Substantial flat products capacity is scheduled to come on stream in the short term-adding to an already difficult situation.
The MEPS World Average Long Products price fell once again in July - the seventh consecutive monthly decrease. The rate of reduction has been much slower than in the flat products segment because the panic buying was less intense in 2004 in the long products' categories, says MEPS.
The analysts forecast further price reduction over the next few months to March 2006. Oversupply in Asia is likely to lead to further decreases in scrap costs. Asian excess material is expected to put downward pressure on prices around the world as suppliers try to export their oversupply.
Mr Harak Bhantia joins Mittal Steel SA as CFO
Subsequent to the resignation of CFO of Mittal Steel SA Mr Vaidya Sethuraman on Monday to take up an assignment with one of the other companies in the parent Mittal Steel Company NV, Mr Harak Bhantia has been has been appointed as CFO of this unit.
Mr Banthia was previously Chief Financial Officer of Mittal Steel Galati and headed the finance function of the group's operations in Romania and Macedonia. Mr Banthia has been with the Mittal Steel Group since 1995 and worked in the United Kingdom, Ireland and Romania.
Energy coal prices forecast to fall 8pc
Asian contract prices for coal used in power generation may fall about 8percent next year on slowing growth in demand and increased production, said Goldman Sachs JBWere, an Australian affiliate of the US investment bank.
Japanese utilities may agree to pay US$48 a tonne for Australian thermal coal next year, down from a record of about US$52 this year, said analysts Malcolm Southwood and Paul Gray in an August 5 report. That would be the first decline in three years.
Spot coal prices at Newcastle, the world's biggest coal-export harbor, have fallen below US$50 a tonne after reaching a record US$63 in mid-2004 as the global economy expanded and utilities switched to the fuel amid surging oil prices.
Recent weakness in the Asia-Pacific thermal coal spot market is consistent with our view that contract prices will fall in the 2006-07 Japanese fiscal year,'' said Southwood and Gray in the report. ``Demand growth is slowing. Supply constraints are easing.''
Coal is the world's second-largest energy source, behind oil and ahead of natural gas. Australia is the world's biggest exporter of the fuel burned in power plants. Contracts between Australian producers and Japanese utilities, which run from April 1 to March 31, are benchmarks for other markets.
Australia's two biggest coal export ports, Newcastle and Dalrymple Bay, have introduced export quota systems to help reduce shipping queues. The ports are used by miners such as Zug, Switzerland-based Xstrata - the world's biggest thermal coal exporter, BHP Billiton and Rio Tinto Group.
Growth in global seaborne trade in thermal coal is expected to slow to about 2 percent this year, down from almost 9 percent a year for the past five years, said Southwood and Gray. Falling consumption in Europe and Japan will reduce the effect of continued strong growth in demand from China, India and North America, they said.
Increasing prices over recent years have stimulated investments in mine production and transport infrastructure, the analysts said. That should start to result in more exports this year and have a greater effect next year and beyond, the Goldman analysts said. As a result, contract prices for the Japanese business year starting April 1, 2007, may fall by another US$4 a tonne to US$44.
Indonesian coal miners plan to boost output by 9.7 percent next year to 170 million tonnes to meet overseas demand, Jeffrey Mulyono, chairman of the Indonesian Coal Mining Association said this month. About 70 percent of the production is expected to be exported, he said.
Indonesia's expansion plans are still being constrained by shortages in equipment such as tires, said Tony Haggarty, managing director of Excel Coal. Australia's exports are being constrained by congestion at some ports and by miners who are able to take the option of exporting higher-priced coking coal instead, he said.
Court freezes Vitkovice shares, hinders privatization
The Regional Court in Ostrava has issued an injunction against the handling of Vitkovice Steel shares, which may hinder the steel maker's sale to Russian group EvrazHolding even though the government signed a contract with Evraz for the sale of 99 percent of Vitkovice Steel shares at the price of CZK 7.05 billion.
By issuing the injunction, the court met the request of MP Consult, once the creditor of state-owned Vitkovice. MP Consult had filed a complaint against the sale of Vitkovice Steel four years ago to the state-owned company Osinek which is now selling Vitkovice to Evraz.
Osinek is likely to file an appeal after analyzing the situation with legal experts.
Russia prolongs anti-dumping investigation of UKR steel pipe imports
Russian Minister of Trade and Economic Development German Gref signed an order to extend the anti-dumping investigation into steel pipe imports from Ukraine until November.
Simultaneously, the ministry is taking similar protective measures with regard to large-diameter pipes imported not only from Ukraine, but also from Turkey, Japan, Germany, and Italy. This investigation is to be completed in October.
Maxim Medvedkov, the director of the ministry's department of trade negotiations, said earlier that Kiev would host talks August 18-19 on regulating mutual pipe supplies and the possible signing of a three-to-five-year agreement.
Gref is expected to visit Kiev to discuss not only the problems of pipe supplies but also other issues of trade cooperation, including conditions for Russia and Ukraine joining the World Trade Organization.
China makes achievement in regulating iron ore import
China has made remarkable achievements in regulating the iron ore import through a series of macro-control policies since the beginning of this year, Yu Guangzhou, Chinese vice minister of Commerce, said Harbin Tuesday. China, the world's largest iron ore importer, has many problems in iron ore import, including blind import and weak bargaining ability, he said.
The Ministry of Commerce has made joint effort with other departments to enhance regulation and management over iron ore import, including import license management, tax adjustment of steel product import and export as well as macro-control of steel industry, he said. Now the iron ore import order has been improved greatly, with monthly import quantity and price having dropped and port stockpile decreasing, he said.
Figures showed, China imported 208 million tons of iron stone in 2004, accounting for about one third of the world's iron ore shipped by sea.
Mr Mittal urges more steel mergers to avert collapse in prices
Mr Lakshmi Mittal, said it wanted to encourage its rivals to consider mergers to stabilise the world market for the metal. Aditya Mittal the company's finance director said: "We are encouraging all steel companies to consolidate. The second-quarter results demonstrate how consolidation has helped but we are far from the end of the process."
The world's top 10 steel producers account for only about 30 per cent of global steel output compared with an industry such as car making where the top 10 manufacturers account for 70 per cent of output. Mittal has just a 6 per cent share of the world steel market.
Global iron ore demand expected to rise
World seaborne iron-ore trade should rise by 8% to 636 million metric tons this year and by another 8% in 2006 to 686 million, according to the latest forecasts by Abare, the Australian governments commodities research bureau. The latest quarterly report suggests that Australia and Brazil will capture a larger share of this trade, while Indian iron ore exports will decline.
Most of the increase in shipments will go to China, whose demand for seaborne ore is forecast to increase from 208 million metric tons in 2004 to 247 million this year and then to 291 million in 2006. Thats because Abare predicts Chinas steel production will rise from 272 million metric tons in 2004 to 316 million metric tons in 2005, and then to 348 million in 2006.
In the European Union, now ahead of Japan as the worlds second largest market for imported iron ore, demand is forecast to be unchanged this year at 135 million metric tons and then to rise to 138 million in 2006.
CVRDs Q2 profit doubles on higher iron ore prices
Cia. Vale do Rio Doce, the world's largest iron-ore producer said profit more than doubled in the after the company raised the price of the main ingredient in steel by 72 percent.
Consolidated net income at the Rio de Janeiro-based company rose 107 percent to 3.48 billion reais ($1.53 million) from 1.68 billion reais a year ago.
The second quarter is the first for which the new price increases will be fully realized in the results,'' said Pedro Galdi, a steel and mining stock analyst with the Sao Paulo unit of ABN Amro Bank NV, a Dutch Bank. ``Most expect record profits.''
The gains come as chief executive Roger Agnelli, 46, fights charges that Vale has too much control over Brazil's iron-ore market and transport system. The country's anti-trust agency plans to rule today whether the company must give up control of some of its iron-ore mines and railroads. Vale is Brazil's biggest railroad operator.
Mr Mittal awards himself a $61.6 million paycheck
Mr Lakshmi Mittal, the London-based billionaire and world's third richest man, has paid himself a $61.6m dividend from his Mittal Steel empire for the second quarter of the year.
Despite disappointing results for the three months that saw the shares drift down 6pc in Rotterdam, the company paid a $70m dividend. Mr Mittal, the chairman and chief executive who is said to be worth 12billion, owns an 88pc stake.
Mittal Steel says it plans to bid for Kryvorizhstal
Mittal Steel Co., the world's largest steel producer, plans to bid for Ukraine's most profitable steel mill in an upcoming auction. The PBN Company, which represents Mittal Steel in Ukraine, said in a statement the company had "declared an intention to bid" for the Kryvorizhstal steel mill in the auction scheduled for Oct. 24.
Mittal Steel was not ready to comment "on the starting price and form of participation in a Kryvorizhstal tender at such an early stage," the PBN's statement said.
Pinchuk Fumes As Ukraine Asks $2B For Steel Mill
Viktor Pinchuk, the billionaire son in law of the former Ukrainian president Leonid Kuchma and Rinat Akhmetov, the richest man of Ukraine, whose consortium was sold Kryvorizhstal last year for $800 million and than the sale was annulled by the new Government after a long legal battle in June, have taking recourse to legal means.
Mr Pinchuk has lodged a complaint with the Ukrainian Supreme Court earlier this year, and another with the European Court for Human Rights, claiming that the court proceedings were violated. Both cases are pending.
Neither Pinchuk, Akhmetov nor their lawyers were available for comment.
Mexican Govt declares strike at Villacero illegal
Mexico's federal arbitration and reconciliation council has declared illegal the strike action undertaken by the national mining and metalworkers union STMMRM against Mexican steelmaker Sicartsa, a unit of Grupo Villacero.
"According to the decision workers have 24 hours to go back to work, according to the law," a Villacero official told BNamericas. The union confirmed the ruling, saying in a statement it condemned the decision.
Roughly 2,000 union workers started striking at Mexico's largest steel bar producer Sicartsa, a unit of Grupo Villacero, on August 1 over alleged contract violations and to push for new labor agreements. Sicartsa has lost 40,000t of production and US$24mn since the strike started
The strike will not impact domestic supply of steel bars as there is enough installed capacity but the labor conflict will help push up by 10-12% steel bar prices, which also are suffering from the high cost of input materials such as iron and scrap metal.
Mexico's five largest steel bar producers in descending order are Sicartsa, Hylsa, a unit of Hylsamex, DeAcero, Cosica and Sidertul.
SS imports account for 31% of US market share
Imports supplied nearly a third of the U.S. specialty steel market in the first four months of 2004, according to Commerce data analyzed by the Specialty Steel Industry of North America (SSINA) trade group.
Imports of specialty steel were more than 306,000 net tons through the first four months, equal to a 31% share of the total market of 974,000 tons. Total stainless steel imports were 234,000 tons, or 29% of the 800,512 tons consumed in the first four months of 2005.
The SSINA says the largest gainer was stainless bar, whose imports shot up 74% to 41,300 tons of a total market of 82,729 tons. Tool-steel imports were up 56% to 40,000 tons. Stainless sheet and strip imports were nearly 136,000 tons, representing 23% of the 586,000 tons consumed in the first four months. Flat-rolled imports inched up four percentage points from last years 19%. Stainless-plate imports were 25,600 tons, up 20% from last year, a market penetration rate of 28% of the 92,500 tons consumed.
Beijing sale of Baoshan stock 'illegal'
Beijing's plan to sell state-owned shares in Baoshan Iron & Steel, the nation's biggest steelmaker, is mistaken and illegal, according to Shan Weijian, an independent director of the company. Baoshan Steel's plan to compensate holders of the company's Shanghai-traded stock with 2.2 additional shares for every 10 they hold part of the government's plan to convert its non tradable shares is wrong and in violation of regulations, said Shan, who is also the Hong Kong-based managing director of Newbridge Capital. This is unconstitutional,'' said Shan. I am supportive of China making all of its shares tradable, but there is no legal basis for anybody to give shares away. These are state assets that belong to all Chinese taxpayers.''
The government plans to convert about US$250 billion (HK$1.9 trillion) of non-tradable, state-held shares at China's 1,379 listed companies - or two-thirds of the country's total market capitalization. China's securities regulator announced April 29 that it was resuming the sale of non-tradable shares of publicly listed companies. Forty-six listed companies, including Baoshan Steel, China Yangtze Power, owner of the world's biggest hydropower project, and CITIC Securities, the country's biggest publicly traded brokerage, are part of a pilot program.
Baoshan Iron & Steel will hold a shareholders' meeting tomorrow to approve its share compensation plan, which was first announced June 28.
US steel Mills are buying less pig iron as scrap prices fall
US imports of pig iron are showing signs of tapering off and could decline this year overall as a result of falling scrap prices. HBI (hot briquette iron) also is considered comparatively expensive, and imports into the US market are said to have declined significantly. Pig iron shipments into the US market hit a record 4.95 million metric tons in 2004, compared with 2003 imports of 2.53 million metric tons, as mills sought substitutes for high-priced scrap.
The largest proportion of these shipments was in the third and fourth quarters, when scrap prices exceeded pig iron tags by as much as 15%, or approximately $50 per metric ton.
In late 2004, pig iron prices reached as much as $350 metric ton, delivered to US mills. Prices for prime grades of scrap topped $400 at the time, and many mills turned to pig iron, typically from Brazil, in place of scrap.
US mini-mills in late 2004 and early 2005 were using as much as 15-20% pig iron in their furnace charges to lower their scrap acquisition costs. However, mills recently have reduced pig-iron rates in their charges to as little as 5% to take advantage of cheaper scrap.
IISI launches Living Steel for more use of construction steel
An international consortium of 11 steel producers and three research groups has launched Living Steel, a $15 million, five-year project to promote the use of steel in construction. The initial focus is to increase the use of steel in housing, says Steve Chubb, managing director. The initiative, led by International Iron and Steel Institute includes two competitions involving the design of sustainable steel housing in Poland and in India.
Funding, research and expertise is to be provided by Living Steels member companies. They will work with local contractors, developers and supply networks to develop the winning entries for construction. IISI has launched a new website, www.livingsteel.org, for the Living Steel project, whose goal is to increase the global consumption of steel in construction by 10% by 2010. Some 39% of all finished steel is used for construction, of which just over a third is used for residential housing, says the Indian project manager Pritish Sen of Tata Steel.
Living Steels producer members are Mittal Steel, Corus, Arcelor, Baosteel, Grupo Celsa of Spain, Irans Imidro, Posco, Ruukki of Finland, Tata Steel, Erdemir, and Bluescope Steel. The wide range of steel represented by the member companies means all types of steel and their applicationsfrom rebar to sheetwill be promoted during the project, Chubb says. The research groups are the European Convention for Constructional Steelwork, the Steel Construction Institute and the International Zinc Association.
Robust growth for world stainless in first quarter
A 14% increase in Asian production helped boost world output of stainless crude steel by 7.4% in the first quarter of this year. Three-month statistics from the International Stainless Steel Forum (ISSF) put global output at 6.52 million metric tons, as compared with 6.07 million metric tons produced in the first quarter of 2004.
Asias production was 3.3 million metric tons with most of the growth in China and India, where new production capacities are starting up. South Korea and Taiwan also reported increases, while production in Japan was flat.
Stainless-steel production in the Western Europe/Africa region was 2.4 million metric tons in the first quarter, 2.6% higher than for the same period of 2004.
With the end of stainless crude steel production in Canada as a result of Slater Steels bankruptcy, output in the Americas declined by 1.1% to 700,000 metric tons in the first quarter.
Production fell 21.1% in the Central and Eastern Europe region to 55,000 metric tons in the quarter.
ISSF, part of the International Iron & Steel Institute, still expects full-year global stainless-steel production to grow by 5% to 25.8 million metric tons in 2005 from 24.6 million in 2004.
China Ministry predicts lower growth in iron ore import this year
China will import some 240 million tons of iron ore throughout this year, about 30 million tons, or 15 percent higher than last year, with the growth rate dropping back 25.5 percentage points, the Ministry of Commerce predicted. Affected by demand-supply relations, the price of imported iron ore will also drop remarkably compared with last year.
The nation's macro regulation over iron ore import during the first half has turned out effective with market order rectified. During the six months a total of 130 million tons of iron ore was imported, 34.5 percent higher than the same period of the previous year and a growth rate 6 percentage points lower.
Due to dramatic decrease in spot price and shipping charge, the iron ore CIF was 68.2 US dollars per ton, only 3.2 percent higher, a growth rate 82 percentage points lower than last year and much smaller than expectations at year beginning.
In the second half, the effect of macro control over iron and steel demand is showing, and a lower production growth is expected. Therefore, the demand for iron ore will be controlled to a certain degree.
In terms of supply, production was active during the first half, with 174 million tons of iron ore turned out, a growth of 26.5 percent. The whole-year production is expected to stand at 370 million tons, a 19 percent growth. So it would be no sharp increase in iron ore import in coming months.
Mittal Steel Iasi gets API Certification
Iasi-based Mittal Steel will increase its production of high added value products by 20 percent, after having received the API 5L certification from the American Petroleum Institute (API), the company announced.
Mittal Steel Iasi obtained the API 5L certification, which is given for products that can be used in the oil and gas industries. API is the only institute in the world that issues certificates for products used in the oil industry.
Mittal Steel Iasi had been trying to obtain this API 5L certification for ten years. An audit team from the API came to Iasi to examine the quality norms at the production facility. The team forwarded its report to US-based API and Mittal Steel Iasi obtained the certificate in June.
"Now that we have obtained this certifiacate, we will be able to start exporting to new markets in the Middle East, Africa and Scandinavia. Furthermore, the certificate will allow us to participate in bids that oil companies organize for their top projects", Regie Paul, Mittal Steel Iasi General Manager said.
CSN Announces R$2.6 Billion EBITDA and a 48% Margin in 1H05
Cia. Siderurgica Nacional CSN, a Rio de Janeiro-based company and Brazil's third-largest steelmaker, posted an unexpected drop in second- quarter profit after domestic sales fell.
CSN net profit fell in Q2 1.2 percent to 419 million reais ($182 million) compared with 424 million reais in the second quarter of 2004.
Net revenue year-to-date is 22% higher than in 1H04. Net income accumulated in 2005 is 50% higher than in 1H04. EBITDA was R$1.2 billion in the quarter and R$2.6 billion in the first half of the year, with a 48% margin in both.
Sales in the quarter totaled 1,137 thousand tonnes, 60 thousand down the previous quarter. Exports share in total sales grew from 25% to 33%. Prices in the domestic market fell only by 4% in Reais and export prices fell by 10% in dollars.
CSN is among Brazilian steelmakers such as Gerdau SA, Latin America's biggest steelmaker, whose earning have declined as a cooling economy cut local sales, forcing increased reliance on less-profitable exports. Gerdau last week reported earnings little changed in the second quarter after six periods of rising profit.
Sales also were hurt because Brazilian customers built inventories ahead of expected price increases in the last quarter of 2004 and the first quarter of this year. The price of cold- rolled steel, a CSN product used by the auto and appliance industries, rose in October, November, and January to an all-time high of $705 a metric ton February. Since Then the price has fallen to $510 a ton, the lowest since Feb. 2004.
The Company does not expect significant adjustments in prices: the downward trend in steel prices should be interrupted in the end of 3Q05.
Formosa to abandon steel mill project if EIA report negative
Formosa Plastics Group said this week that if the environmental impact report for its steel plant in Taiwan fails to come through, the group will abandon the NT$130 billion (US$ 4 Billion) worth of investment all together.
Formosa just submitted in its environmental impact report this week. According to a Commercial Times story, the report detailed the company's plans to reduce emissions of Carbon Dioxide (C02) to 1.9 ton per production unit, to obtain a water supply and to contribute to the development in the community. Minister of Economic Affairs Ho Mei-Yueh pointed out that since Formosa has voluntarily committed itself to reducing CO2 emissions and preserving the environment, the EPA should support the investment. Ho, however, urged Formosa to gain recognition from the community as well.
If everything goes expected, Formosa will obtain approval to start building by December, the spokesperson said. If not, he added, the group will terminate any future pursuit of the project.
Marafe declares H1 results
Merafe has announced consolidated financial statements in accordance with IFRS for the six months ended 30 June 2005. Merafe"s current source of income is generated from its chrome venture with Xstrata SA (Pty) Limited Xstrata-Merafe Chrome Venture which became effective on 1 July 2004 and reinforced the merged entity as the market leader with a total managed capacity of 1.4 million tonnes of ferrochrome per annum.
Merafe shared in 11% of the EBITDA from the Xstrata-Merafe Chrome Venture until 30 June 2005. Merafe"s share of the EBITDA from the Xstrata-Merafe Chrome Venture increased to 14% from 1 July 2005 and will increase to 17.5% from 1 July 2006 onwards.
EBITDA for the six-month period ended 30 June 2005 was R67.3 million. After accounting R4.2 million for depreciation; R19,9 million for net interest paid and R9,7 million for preference dividends, the net profit after tax was R32.4 million.
Demand for ferrochrome remained strong during the first half of 2005 and quoted European base prices increased by 6.8% from $73 per pound to $78 per pound. The market for ferrochrome was supported by strong stainless steel growth in the first half of 2005, estimated at around 13.0 million tonnes, up by around 7.4% from 12.1 million tonnes for the same period in 2004 which was driven by China.
Some correction in stainless steel melt is inevitable in the second half, as
stocks build up in China. This, together with the recent depreciation of the
South African rand against the US dollar, which declined by 6.5% from the first to the second quarter, will result in some downward pressure on ferrochrome prices. The third quarter base price declined by 5 US per pound.
Xstrata's 1st-Half Profit Rises 80% on Coal
Xstrata Plc, the world's largest exporter of coal used by power plants has announced 80% increase in profits in H1 as it benefited from stronger coal, copper and zinc prices. Net income rose to $764 million from $425 million. Sales rose 28 percent to $3.8 billion.
The company got an average of $49.10 a metric ton for thermal coal shipped from Australia during the first half, 42 percent higher than in the year-ago period. Xstrata sold copper at an average of $3,333 a ton, up 21 percent, while zinc prices were 23 percent higher at $1,295 a ton. Xstrata is also the world's second-largest producer of ferrochrome which gained 20 percent during H1.
Xstrata, led by Chief Executive Mick Davis, 47, has benefited from rising global demand for raw materials and metals from China, the world's fasted-growing industrialized economy. Utilities are turning to coal to generate power after oil prices rose to a record high. The company also predicted higher second-half profit.
Xstrata is 40 percent owned by commodity trader Glencore International AG, Switzerland's largest company by sales, operates more than 30 coal mines, produces copper in Australia and Argentina and refines zinc in the UK. It paid $2.2 billion in June 2003 for Australian zinc and copper producer MIM Holdings Ltd.
Grande Cache Coal stock sinks as Q2 loss widens to $12.2 million
Grande Cache Coal shares plunged Wednesday after the company announced a $12.2-million quarterly loss and revised its full-year guidance, saying production costs will be higher and volumes will be lower because of transportation problems.
The Calgary-based company said Wednesday that revenue in its first quarter ended June 30 was $9.4 million from the sale of 100,000 tonnes of coal. It said the low volume was primarily due to transport problems. At June 30, Grande Cache had 200,000 tonnes of coal awaiting customer vessels. It shipped that amount in July and expects to ship 400,000 tonnes in the second quarter - four times as much as in the first quarter.
Grande Cache said it is lowering its fiscal 2006 guidance for metallurgical coal sales to 1.6 million tonnes, down from 1.7 million, and its oxidized coal sales guidance to 200,000 tonnes, down from 300,000.
The company also said its estimated average cost of sales will be $80 per tonne, up from $70 a tonne, due to first-quarter costs exceeding estimates and production delays encountered in the first quarter. Grande Cache said it expects to return to an average cost of sales of $70 per tonne for the fourth quarter of the current fiscal year.
Anglo Coal hoping to take bigger slice of Chinese Cake
ANGLO American subsidiary Anglo Coal hoped to expand its presence in China and had also looked at opportunities in Russia, CEO John Wallington said on Friday. The group announced in early June that it had taken a $150m strategic stake in Shenhua, China's biggest coal producer and the fifth-biggest coal producer in the world.
Wallington said Shenhua was a modern, high-quality coal company and the initial stake taken by Anglo Coal was a "foot in the door".China is a country that cannot be ignored, especially for the natural resources industries, and all three of the London-listed resources giants have a presence there -- Anglo, Rio Tinto and BHP Billiton.
While Anglo Coal had considered Russia, there were a number of questions over its ability to operate there on sustainable development principles and the group would take great care in making investments, Wallington said.
Anglo Coal, which reported its results last week as part of Anglo American, contributed 13% of Anglo's headline earnings for the six months to June, compared with 9% in the year-ago period.
Wallington said the coal industry had never been in such a favourable position. Until recently, the coal price had been declining in real terms for 20 years. But predicting the coal price was difficult.
The biggest uncertainty was China. If the Chinese economy continued to grow at 8%-9%, or even 5%-6%, prices would not bottom, but if the Chinese economy slowed, there would be "carnage" in the industry, he said.
Anglo's head of energy, Roger Wicks, said this meant coal companies were looking at wider bands of sensitivity for projects and at how they could improve efficiencies.
Wallington said Anglo Coal's strategy since its delisting had been to diversify its coal resources and its geographical presence, and to acquire world-class assets. It had targeted operational excellence as the coal industry was competitive, with only six or seven major producers.
The mining industry generally tends to over invest in good times and helps to create its next crisis phase. In the current upturn, that has not been the case for coal companies because of infrastructural constraints in various areas -- for example, Australia has had to deal with rail and port issues. The big groups, headed by executives who recall previous down cycles, are being conservative in their project planning but the threat of oversupply will come from the newer entrants bringing new projects on stream.
Charred coal factory to be built at AFP in Kazakhstan
The project of charred coal production enterprise was developed at Aksu Ferroalloy Plant AFP of Kazkhrom transnational company JSC.
The testing of coal applicability, being extracted at Ekibastuz Vostochniy mine, for charred coal production was conducted by experts of East Kazakhstan oblast and Novokuznetsk (Russia) research institutes . The obtained results were positive. The project of the new enterprise was worked out on the basis of world experience and up-to-date technical achievements in the sphere of coal processing.
The plant construction will cost $ 11.5 million. The investments will pay off during 11 months. The Aksu ferroalloy plant, purchasing Russian and Chinese charred coal, will have its own cheaper component for ferroalloy smelting. Due to this component the production cost is to decrease.
AFP deputy director on production and ecology Alexander Suslov pointed out, the usage of charred coal instead of coal in the melting furnaces is to improve regions ecology. According to experts calculations, noxious emission to the atmosphere will decrease 700 tons annually.
Trout Coal to launch initial public offering
Trout Coal Holdings and Trout Coal Holdings II on Tuesday said a newly formed company that would own the mining operations of Trout Coal and its affiliated companies plans to conduct an initial public offering of its common stock.
The company also said it named Paul Vining as president and chief executive, replacing CEO H. Doug Dahl, who is retiring for health reasons.
Aztec reveals Koolan iron ore project
Perth-based Aztec Resources has unveiled its $100 million plan to re-develop an iron ore project at Koolan Island in the Kimberley. The announcement was made at the annual Diggers and Dealers mining forum in Kalgoorlie Boulder.
The project was previously mined by BHP until 1993, producing 68 million tonnes of iron ore. Aztec says a feasibility study has shown there is at least another nine years of life in the project. The company will spend $108 million on mine development costs.
