August, 03 2005
Steel prices will bounce back - ASSOCHAM
Steel prices are expected to bounce back from the third quarter of this fiscal on the back of the recovery in the U.S. economy, large infrastructure build-up in the Middle East and strong growth prospects in the Indian economy, according to an ASSOCHAM Eco Pulse (AEP) study.
Globally, steel prices have declined by $150-200 per ton over the last quarter due to the lower economic activity in the European Union (EU), says the study. The E.U. and the U.S. have been piling up inventories since September 2004. Such an over supply in steel has resulted from a slack in demand for the metal in Europe, especially France, Germany and Italy, adds the study.
Of late, the E.U. as well as Iran have been dumping steel in India, according to the study. The U.S. and Germany have reported a drop of around 16% and 10% respectively in HR coil prices in Q2 2005 as compared to Q1 2005, it adds. The consequent effect is a fall in the domestic prices Global steel companies such as Mittal Steel, ThyssenKrupp and Arcelor have reduced their steel production owing to inventory build up, leading to a drop in international steel prices, says the study.
Besides, domestic imports are up sharply. Imports rose by over 20% in Q1 FY06 as compared to the corresponding period of the previous year, according to the study. Such an increase in steel imports can be attributed to the competitive pricing of the C.I.S. countries like Ukraine and Russia. HR coil prices in these countries have dropped by around 4% in Q2 2005 as against Q1, 2005. The C.I.S. countries consume less quantity of steel and have become net exporters.
"The slackening of demand and overstocking in certain countries, coupled with cheap domestic imports led to the erosion in steel prices," according to the ASSOCHAM President, Mahendra K. Sanghi. Consequently, domestic companies ended up building inventories and prices in the country declined, says Sanghi.
Steel prices in the country have dropped by around 16% between June-July 2005. Domestic steel producers, except Tata Steel reduced their prices in June by Rs500-2,000 per ton. Again in July, Tata Steel, Essar Steel and Ispat Industries slashed prices of steel products in the range of 5-8%.
In a recent move, China put an end to its decade-old peg to the U.S. dollar. The new yuan rate revalues the currency by 2.1%, the biggest gain against the dollar in two-and-a-half years. This is expected to be a boon to the domestic steel exporters whose net realizations are likely to expand following the yuan revaluation, says the study.
China imports around 30 MT of steel per annum. Of this, a significant portion is value added steel. Besides this, iron ore producers are also likely to benefit from the yuan revaluation, according to the study. The Chinese steel millers are likely to come to India in the first week of September for entering into long term contracts for an assured and stable supply of iron ore. Around 75% of the iron ore exports are likely to be shipped to China in FY06, feels the study.
In spite of the recent spate of price reductions, the future is still promising for the domestic steel industry, says the study. According to the International Iron and Steel Institute, world crude steel production of 62 countries increased by 5.2% to 89.7 MT in June from the year-ago period. The fact that the demand for steel is expected to remain buoyant has led a number of domestic companies to go ahead with their expansion plans. The production cuts announced by the European steel mills will also balance the demand-supply scenario. With the economies growing in Asia, especially South-East Asia and West Asia, the Indian steel industry is poised for a strong growth, according to the study.
"The rate of growth in infrastructure, housing and construction sectors in the country holds good promise for the steel sector," says Sanghi.
While China has a per capita consumption of 300 kg of steel, India has only 30 kg, which clearly points out the huge scope for further growth, says the study. Steel consumption growth is expected to reach 7% on the back of the ongoing boom infrastructure and construction sectors. This can be attributed to the planned infrastructure projects as well as the ongoing Golden Quadrilateral Highway project. The Governments decision to permit FDI in the construction sector will also be a major driver for steel demand in the country, concludes the study.
Confusion over Australian Coal price to Indian Mill
UBS points out that a sell-off in coal stocks triggered by an unusually low-priced tender put forward by Australia to an Indian steel mill was a matter of misunderstanding.
Australias US$115/t offer seemed to well undercut the Chinese offer of US$138 and the US offer of US$125, leading to fears of a price collapse amongst coal investors.
However, after speaking to Australian coal companies, UBS now believes the tender was for semi-soft rather than hard coking coal. As the current price for semi-soft is US$80-95, this is actually a good price, reflecting tightness in the market.
Thus, the opposite is true, says UBS. Coal companies are still experiencing very strong demand for their products, and UBS does not see any basic change in supply and demand for coking coal for at least two years. The analysts are, however, forecasting a hard coking price of US$110 in the next annual negotiation.
Tatas behind anti-Posco campaign, says Dama
The biggest private sector steel company of India, Tata Iron and Steel Company (Tisco) is spearheading the campaign against biggest Foreign Direct Investment (FDI) in the steel sector by South Korean Pohang Steel Company (Posco). Such is the refrain of a senior minister of the State Government that, paradoxically, entered agreement with both the Tisco and the Posco for setting up steel plants in Orissa. It is not clear if the statement, made in the Assembly, by Damodar Rout was intentional or guided by lack of wisdom, but it is sure to hurt the investment prospects in the State.
Over enthused and charged by the Opposition onslaught on Posco, minister Rout, who also is the spokesman of ruling BJD, observed that Tisco is behind the anti-Posco campaign. Tisco, he said, is not perhaps pleased that it has not been given the assurance of additional iron ore lease although the company has signed a MoU with the State Government to set up a Rs 15,000 crore plant in Jajpur. Instead, the Government has asked Tisco to ahead with the proposed plant, as it already possesses four iron ore leases.
Minister Rout, in his deliberation, said Tisco either envies or is scared of Poscos huge investment, which is why the company does not wish Posco to be in Orissa.
Mukand profit at Rs 15 cr for Q2
Mukand Ltd has posted an after-tax profit of Rs 15 crore in the April-June quarter this year against a loss of Rs 17.39 crore suffered in the same period last year.
Turnover of the company during the period grew to Rs 431 crore from Rs 340 crore. The company expects a turnover of Rs 2,100 crore for the year in progress, an increase of 25 per cent over the previous year.
Krivorozhstal Assessed at $1.16 billion
The State Property Fund of the Ukrainian government suggested that the tender committee set the starting price at $1.16 billion for sale of Krivorozhsal . The final price will depend on the current situation on the world steel market, the outcome of trials over Krivorozhsal and terms of investments in the plant. The tender commission can change the starting price, proposed by the state agency, up to August 4, though no drastic changes are expected.
Krivorozhstal is Ukraines largest steel maker. It produced 7 million tons of steel and brought in $1.9 billion revenues.
The plants state-owned 93.02 percent stake was bought out last year for $804 million by Investment & Metallurgical Union of Donbass (IMS) set up by Ukrainian businessmen Rinat Akhmetov and Viktor Pinchuk.
Overseas bidders, including Russian Severstal Group of Alexey Mordashe and Evrazholding of Alexander Abramov were denied the access to the tender.
The Kyiv Economic Court invalidated the transaction on April 22 and ruled to return Krivorozhstals stocks to the state property agency. The Ukrainian Government decided to hold a repeat sale of the plant, the bidding is on October 24.
The price at which the Ukrainian government sold Krivorozhstal last June became one of the main reasons for the disaffection with former Ukrainian president Leonid Kuchmas policy.
Severstal revealed last year the price it had been ready to pay for the plant. This is $1.2 billion, which is $400 million more than the sum offered by the buyers from IMS. Yulia Timoshenko is convinced Krivorozhstal was sold so cheaply because Mr. Pinchyuk had lobbied the terms of the tender that enabled him to do away with rivals. The current prime minister will surely seek the plant being sold at a maximum possible price. The question of the plants value became a political one for her even before the win of the Orange Revolution.
Russias Severstal and Evrazholding, British Mittal Steel, US Steel and Indian Tata Steel earlier declared their intentions to bid. The price for Krivorozhstal may soar to $2-2.5 billion due to the participation of these big players. However, the recession on the world market may bring the plants capitalization down to $1.5-1.9 billion.
Stronger RMB boosts China's steel sector
China's steel industry, the largest in the world, will benefit from a stronger renminbi (RMB), according to industry officials and analysts. However, the industry is now bidding farewell to its low-cost era.
The RMBs recent 2 per cent appreciation will cut the costs of imported materials by 3 billion yuan (US$369.9 million) this year, in particular iron ore accounting for 2.5 billion yuan (US$308.3 million) and import of steel scraps and coking coal for 500 million yuan (US$61.7 million) , according to Qi Xiangdong, deputy secretary-general of China Iron and Steel Association.
Zhou Xizeng, an analyst with CITIC Securities Co Ltd, told China Daily that the steel sector will gain an extra 4 per cent growth in profits this year due to stronger RMB as a result of imports of steel products and related materials remain much larger than exports.
The average cost of steel production in China will rise by around 15 per cent per ton this year compared with last year as China is accelerating its pace in turning into a strong steel producing nation from merely being a big one.
Mechel substantially raised net earnings for Q2 2005
JSC Mechel raised net earnings for the second quarter of 2005 up to 594.9 nillion rubles from 68.4 million rubles for the first quarter, Company said.
In the first half of 2004, Mechel had revenues of $1,63 billion and net profit (US GAAP) of $254,5 million, EBITDA - 420,8 million.
Mechel is the largest and most comprehensive producer of specialty steels and alloys in Russia, producing 52% of total Russian specialty steel output. Mechel is also the second largest producer of long products in Russia.
Company's steel business comprises production and sale of semi-finished steel products, carbon and specialty long products, carbon and stainless flat products, and value-added downstream metal products including hardware, stampings and forgings, as well as coke and coke products.
In 2004, Mechel produced approximately 6,196 thousand tonnes of steel, 4,937 thousand tonnes of rolled products, 3,880 thousand tonnes of pig iron, 2,942 thousand tonnes of coke, 592.7 thousand tonnes of hardware.
Company's mining segment comprises production and sale of coal (coking and steam), iron ore and nickel. Mechel is the second largest producer of coking coal in Russia in 2003, with a 12% market share. Company also controls 24% of the coking coal washing capacity in Russia.
Chinese Steel companies aim to target more countries
China's steel makers are being urged to diversify their overseas markets to prevent trade rows with other countries.
Luo Bingsheng, vice-chairman of the China Iron and Steel Association, said domestic steel producers should find more destinations to export to to try to avoid charges of dumping
China's steel exports have been growing rapidly since last year and focusing on regions such as South Korea, the United States and the European Union creating the risk of being accused of dumping.
China's exports of steel products rocketed by 154 per cent year-on-year to 11.6 million tons in the first half of this year with outh Korea, the US and the EU accounting for 46 per cent of the nation's exports.
The steel association has suggested domestic producers should be "self-disciplined to limit exports to a certain big destination" to avoid trade disputes, he added.
Luo predicted China's exports of steel products will reach 22 million tons this year, up from 14.2 million tons in 2004. The robust growth in China's steel exports since last year is largely due to the higher prices in the international steel market compared to the domestic market, according to industry officials and analysts. The average steel price in the international market was 9.5 per cent higher than China's domestic market at the end of June.
MMK accounts for 19% production in Russia in June
MMK produced 5,72 million tones of commercial steel products for the first seven months of 2005 as compared to 5,89 million tones for the same period a year ago.
In June MMK produced 145,100 tons of ready-to-use ore, 802,500 tons of sinter, 404,200 tons of coke, 729,100 tons of pig iron, 875,800 of steel and 853,500 tons of finished rolled steel. June's output of commercial steel products amounted to 790,800 tons.
In the first six months of 2005 MMK produced 720,900 tons of ready-to-use iron ore, 5,205,800 tons of sinter, 2,723,600 tons of coke, 4,606,400 of pig iron, 5,485,700 tons of steel and 5,247,200 tons of finished rolled products. In most products, with the exception of pig iron, the actual production was higher that the target figures but lower than last year's results. Year-on-year, in 2005 production of pig iron was 95%, and production of steel, 97.1%.
In June 50.1% of all the steel goods produced were shipped for export, while the average figure for the first six months was 51.8%.
MMK's share in the total Russian production of rolled steel in June stood at 19%.
Russian Metal Makers Call for Extension of Ukrainian Rod Duties
The Mining and Metal Trade Union of Russia has requested to extend import duties on Ukrainian wire rods which expire August 14. The Trade Union is sure abolishment of the duties will trigger take-off of Ukrainian rods, driving the national producers out of the $2-billion market.
Though the Economic Development Ministry canvasses the issue, the progress could hardly be seen, the metal companies say, pointing out once the formal decision is delayed till August 14, the duties revival will require another prolonged investigation.
Russias biggest manufacturers of steel rods for precast units are Mechel, Evrazholding, Severstal, VMZ Krasny Octyabr. In 2004, they accounted for 74 percent of domestic market, which overall turnover stands at around 5 million tons.
Key rod producers of Ukraine are Krivorozhstal, Enakievsky Metal Works, Makeevsky and Donetsky Metal Plants. The aggregate product capacity exceeds 5 million tons on year.
The 21-percent antidumping duty for Ukrainian rods was introduced July 8, 2002 to expire August 14, 2005. The rod import from Ukraine slid to 174,500 tons in 2004. Now Ukrainian rods are from 1 percent to 3 percent cheaper than the Russian ones.
Venezuelan steel specialist caution over steel price decline
Venezuela's steel industry suppliers association Aces is recommending caution in the sector over a drop in prices stemming from China's recent economic slowdown.
"It is not very clear whether there will be a change in [steel] prices in the medium-term. We can't tell the extent of their [Chinese] decline in growth or when will it pick up again," Aces president Igor Villegas told. Companies cannot predict whether prices will rebound in the near-term and therefore need to wait to see what happens before planning for the future, he said. "In a situation like this we recommend caution and that companies not go ahead will all projects, expansions or upgrades, but only execute the ones necessary for productivity and competitiveness," he added.
During the Latin American iron and steel institute's (Ilafa) November 2004 congress in Buenos Aires, participants took for granted the fact that for four or five years steel prices would remain high, Villegas said. "But it's been less than a year since the conference and we can already see a 30% fall in prices due to a slight downturn in China's economy, which is seriously impacting the steel sector. Supply is exceeding demand," he added.
As a result of excess supply, steelmakers have been renegotiating prices of delivery contracts with different countries, cutting initial prices by 30-40%, the official said. In the first six months of 2005, steel prices were above US$400/t, but currently prices are 30-40% below that level, Villegas said. According to Aces, strategic alliance with a series of associations grouping local steelmaker Sidor and its suppliers, figures, steel prices in eastern China have dropped by 70 yuan/t (US$8.26/t) since April.
10-year agreements between Elk Valley, Nippon and POSCO
Fording Canadian Coal Trust today announced that Elk Valley Coal has finalized 10 year sales agreements with Nippon Steel Corporation (NSC) and POSCO for an aggregate of 4.85 million tonnes per annum of metallurgical coal for 2005, increasing to 6.25 million tonnes per annum for the 2007 coal year onwards.
In addition, subsidiaries of NSC and POSCO have each contributed U.S.$25 million for a 2.5% limited partnership interest in a new entity, the Elkview Mine Limited Partnership ('EMLP').
Effective August 1, 2005, EMLP acquired the Elkview metallurgical coal mine in southeastern British Columbia from Elk Valley Coal Partnership, a general partnership between subsidiaries of Teck Cominco Limited and the Trust in consideration for a 94.99% general partnership interest. A wholly owned subsidiary of Elk Valley Coal will also be a general partner and will be responsible for management of the Elkview mine.
The proceeds of the NSC and POSCO investment in EMLP will be used to increase the annual production capacity of the Elkview mine to seven million tonnes of coal from its current level of six million tonnes.
Fording Canadian Coal Trust is an open-ended mutual fund trust. Through investments in metallurgical coal and industrial minerals mining and processing operations, the Trust makes quarterly cash distributions to unitholders. The Trust, through its wholly owned subsidiary, Fording Inc., holds a 60% interest in the Elk Valley Coal Partnership and is the world's largest producer of the industrial mineral wollastonite.
Elk Valley Coal Partnership, comprised of Canada's senior metallurgical coal mining properties, is the world's second largest exporter of metallurgical coal, and expects to supply approximately 27 million tonnes of high-quality coal products to the international steel industry in 2005.
5,000 Chinese coal mines to suspend production for safety reasons
More than 5,000 small township and individual run coal mines in China are ordered to suspend production to be rectified as they lack the required safety production license from concerned departments.
The production suspension has no great impact on the country's coal supply as the combined output of these coal mines is around 40 million tons in six month-period, said an official with the State Coal Mine Safety Inspection Bureau. By the end of July, 20,046 of the country's 25,927 coal mines have applied for safety production license, accounting for 77.3 percent of the total.
Last month, Chinese Vice Premier Zeng Peiyan vowed to reform the coal industry by establishing large coal groups with better safety equipment, instead of scattered small shafts with poor safety standards.
China's coal industry, which provides 70 percent of the country's energy needs is enjoying a high-speed production growth while being plagued by rampant accidents. Last year, more than 6, 000 miners lost their lives in explosions and other accidents.
In the first half of this year, China reportedly recorded some 2,700 mining fatalities, with the number of major accidents involving up to 29 fatalities more than doubling over the same period in 2004.
As the world largest coal producer and consumer, China's coal consumption is expected to increase by six percent this year to 2.1 billion tons, according to the China Coal Industry Association.
Price cuts take 27% bite in Dongkuk Steel net income
Dongkuk Steel Mill Co., Korea's third-largest steelmaker, said second-quarter net income fell 27 percent after it cut prices in June when a surge in world steel output caused Asian prices of the alloy to drop.
Profit fell to 82.5 nillion won ($81 million) in the three months ended June 30 from 113.2 billion won a year earlier, the company said in a regulatory filing yesterday. Sales rose 7 percent to 883.1 billion.
Dongkuk cut the price of steel sold to shipbuilders for the first time in three years on June 8, after a jump in China's output pushed down prices.
China, the biggest maker and consumer of the alloy, has doubled production in the past four years and may boost production 18 percent this year.
"Our second-half outlook is not too bright because the price cuts will take effect then," Dongkuk spokesman Kim Young-jin said. "Sales may fall because Chinese imports are increasing."
China scraps export rebate policy for manganese
China scrapped export rebate policy for manganese and related products starting Monday in a bid to help increase domestic supply and reduce prices, China Securities Journal reported.
Industry insiders believe that the move is part of the government's efforts to restrain exports of manganese and related products in order to crack down on rampant exploration of manganese to better protect the country's mineral resources, the paper said Monday.
Manganese is an essential material in steel-making, and 90 to 95 percent of manganese produced by the country are used in the iron and steel industry.
China used to impose a 17 percent value-added tax on manganese products and exporters enjoyed a 13 percent export tax rebate policy.
With the fast growth of China's iron and steel industry in recent years, the demand for manganese has increased rapidly, which leads to sharp price rises and surging exports. Meanwhile, China has to import huge amount of manganese and related products to meet domestic demand.
China imported 480,000 tons of manganese ore valued at US$71.54 million in March 2005. Its workable manganese ore reserves stand at 130 million tons, but most of them are of low quality.
It is predicted that the country will produce 3.5-4.5 million tons of finished manganese ores annually from 2005 to 2020 while the demand for crude manganese will stand at 7-9 million tons a year.
$1.7b steel projects in Vietnam await government approval
Two foreign-invested steel plant projects in Vietnam, worth a combined total of up to US$1.7 billion, are expected to be approved by the government soon, an investment official announced August 2.
The Prime Minister has agreed in principle to allow Tycoons World Wide, a Thai industrial group to invest $1 billion to build a steel plant in the central province of Quang Ngai, Phan Huu Thang, official from the Ministry of Planning and Investment said Work on the construction of the 200-hectare plant, which will be capable of producing five million tons of steel a year, is scheduled to begin by next year, Mr. Thang said.
Meanwhile, another group from Taiwan has been seeking permission from the Prime Minister to set up a $700 million stainless steel plant in the southern Ba Ria Vung Tau province. The second facility is designed to be capable of manufacturing 720,000 tons of steel a year, Mr. Thang said.
Brazilian Belgo Bekaert to build wire plant in Bahia
Brazilian steel wire maker Belgo Bekaert will build a manufacturing plant in northern Brazil's Bahia state, company chairman JosMio Malaguti told a business daily
The plant, which will be built at Feira de Santana where the company already has a factory, will cost US$50mn-60mn to build and will be Belgo Bekaert's fifth manufacturing complex in Brazil.
Works will supply steel wire for white-line domestic appliances and beadwire used in tire manufacturing. While the wire complex is not due to be fully completed until 2010, the plant to make beadwire for tiremakers in Bahia state will begin full production by February, according to Malaguti. Bahia will be home to three tire making plants when construction is completed on new factories for Continental and Bridgestone Firestone. Italian tire maker Pirelli renovated its plant in Feira de Santana two years ago. Previously beadwire was shipped from Belgo Bekaert's factories in S Paulo.
Belgo Bekaert is a joint venture between Brazilian long steelmaker Belgo-Mineira (55%) and Belgium's Bekaert (45%), the world's largest maker of steel wire. Belo Horizonte-based Belgo-Mineira is controlled by Luxembourg-based steel giant Arcelor, the world's second largest steelmaker.
Moody's raises CSN rating to Ba3
Moody's raised its foreign currency rating for Brazilian integrated steelmaker CSN to Ba3 from B1, the ratings agency said in a research report but maintained its subsidiary CSN Iron's corporate rating at B1. In addition, the agency increased CSN's local currency rating to Ba2 from Ba3, while CSN's rating on the Moody's national scale in Brazil was heightened to Aa3.br from A3.br. Moody's holds a positive outlook for CSN and its affiliated units.
The ratings decisions reflect CSN's position as a diversified steel supplier in the market and its control over two iron ore mines to supply steelmaking needs. But the ratings also incorporate the company's high dividend payments compared to profit, cash flow and investment needs, Moody's said.
S Paulo-based CSN operates steel mills in Volta Redonda and Curitiba. The company also owns the Casa de Pedra and Pedreira da Bocaina iron ore mines as well as a stake in railroad logistics firm MRS.
New contracts send Confab Q2 profit rocketing
Seamless steel pipe manufacturer Confab reported that its second quarter 2005 net profit surged 1,605% as the Brazilian company signed deals to provide tubes for several gas pipeline expansion projects.
S Paulo-based Confab, which has installed production capacity of 500,000t of steel tubes, is a subsidiary of Luxembourg-based steel tube giant Tenaris
Confab posted net earnings of 71.3mn reais (US$29mn) in 2Q05 compared to 4.18mn reais in 2Q04, Net revenue for the quarter rose 116% to 522mn reais compared to 242mn reais in 2Q04. Ebitda was 110mn reais.
Confab reported sales volume of 132,323t of steel tubes in 2Q05, a 62% increase compared to 81,469t in 2Q04. Some 37% of sales went to the export market, Confab said.
Confab produced 113,328t of steel tubes in the quarter, when utilized production stood at 91% of capacity, the company said. In 2Q04, the company produced 70,396t of steel tubes, utilizing 56% of production capacity.
In addition, the company invested 12.1mn reais in modernization projects at its factories during the 2005 quarter, aiming to improve quality and automate manufacturing, Confab said. But investments were down 28% from 16.7mn reais in 2Q04.
Confab signed a 281mn-real contract in the second quarter with China's Sinopec to supply 28cm-diameter steel tubes for a 303km stretch of the Gasene natural gas pipeline, the first of three links of the 1,100km pipeline.
In addition, the company signed supply contracts for a gas pipeline expansion in Argentina. Deliveries for the two contracts are due to be made throughout 2005.
US Manufacturers Applaud Trade, Transportation, Energy Bills
US Manufacturers are expecting to benefit from three bills passed by Congress in a pre-vacation flurry last week. The lawmakers approved a trade deal with Central America, major roadway-building legislation and a long-awaited energy bill. President Bush is expected to sign all three into law.
The Central American Free Trade Agreement (CAFTA) drops duties for 80% of consumer and industrial goods exported from the U.S. to the Dominican Republic, Guatemala, Honduras, El Salvador, Nicaragua and Costa Rica, which have a combined GDP of about $92 billion.
While commerce between the CAFTA block and the U.S. is small compared with NAFTA trading partners Canada and Mexico (combined GDP of more than US$1.4 trillion), manufacturers still cited the agreement as an avenue to new markets.
Australia's Portman Sees 2H Iron Ore Profit Lift
Perth-based Portman recently reported net income of A$41.1 million for the half year to June 30, up from A$17 million in the year-earlier period.
The company does not expect to pay any dividends in 2005 because of funding commitments for its Koolyanobbing mine expansion in Western Australia which aims to boost annual production at the mine to around 8 million metric tons by December 2005. Portman expects the expansion to cost "around the mid 60s in millions of dollars", compared with original estimates of A$55 million, he added.
Turning to the market, Mehan said that Portman has noticed a "slowdown in Chinese demand for iron ore in the last three months which is a critical market to us because around 75% of our product goes there". However, the company does not expect that "softness" to be sustained, with spot iron ore prices moving back up a little in recent days, combined with a revival of some scrap steel prices.
Portman is Australia's third-biggest iron ore producer, though much smaller than industry giants BHP Billiton (BHP) and Rio Tinto (RTP).
Singapore's Union Steel to expand operations
Singapore's Union Steel Holdings expects to raise about S$13.2 million in net proceeds from its initial public offering to expand operations in China and Indonesia.
The company recycles ferrous and non-ferrous scrap metals, trades steel products, manages waste collection and also conducts demolition works.
POSCO extends alliance with Nippon Steel Corp
POSCO has extended its research and procurement alliance, which ends this month, with Japan's Nippon Steel Corp. for another five years. The alliance also includes mutual equity holdings as POSCO owns about 2 percent of NSC and NSC holds almost 3 percent of the Korean steelmaker.
The two steelmakers' joint-R&D staff has been successful in low-cost raw materials utilization technology, commercial application of new heat-resistant fine ceramics and biotechnological treatment of waste water. The R&D developments have led led to commercial application and several joint patent applications, POSCO said.
Collaboration involving a total of 2,000 people from both companies and 150 meetings have focused on raw materials, iron-making, manufacturing and environmental technology to explore cost reduction, productivity enhancement, quality improvement and reduction of environmental i-burden reduction. Aiming to generate new demands for steel products, the two companies also have exchanged engineers to share technical know-how on steel houses and steel cans.
With the objective of procuring good-quality and low-cost iron ores and coking coals on a stable basis, POSCO and NSC have undertaken joint projects in Australia, Canada and India.
The two steelmakers have also increased their equity shares in Siam United Steel Co., Ltd., a joint venture in Thailand between the two and others, and through more active participation in management, SUS has been showing profits in recent years.
NLMK posts advance in net income
The net income of Novolipetsk Iron and Steel Works under Russian accounting standards stepped up 2.11 percent to RUR20.9736bn (approx. USD733.34m) in the first half of this year against the same period in 2004.
At the same time, the producer's net income totaled RUR9.9201bn (approx. USD346.86m) in the second quarter of 2005, which was 21.2 percent lower than in the same period last year.
The company explains this drop as coming from a decrease in production volumes and a worsening situation on the sales market.
Ellen Wants Bryant to Resign for Iron Ore Sales
A Prominent Liberian Politician, Ellen Johnson Sirleaf has called on the Chairman of the National Transitional Government, Charles G. Bryant to account for the sales of iron ore or resign his position.
The UP first partisan's call is based on Government's recent decision to suspend officials for alleged corrupt practices. Madam Sirleaf who expressed support for the government's action to eradicate corruption from its ranks files, said that although it is a positive initiative but noted that such action was too little and belated.
Fischer Tropsch process to convert coal into liquid fuel
Because the price of oil is at unheard of levels the United States needs alternative energy supplies.
The process is called Fischer-Tropsch, named for the German scientists who developed the process in the 1920s for converting coal to diesel fuel, which later ran the Nazi war machine.
In more recent decades, the process was used in South Africa to fuel its vehicles when the world would not trade with the apartheid nation. It still produces 150,000 barrels of fuel a day from coal.
Energy technology firms in the United States and elsewhere have fine-tuned F-T to make both its process and products pollution-free.
Montana has 120 billion tons of state and federal coal reserves under its surface, mostly in Eastern Montana. Schweitzer said 115 billion tons of that coal is recoverable. He said using the Fischer-Tropsch method, one ton of coal would produce 1.5 barrels of diesel fuel. A barrel is 42 gallons.
"It would cost less that a $1 per gallon to make that diesel," he said.
The F-T fuels are also clean - no sulfur, mercury or arsenic. Those ingredients are recovered from the process and are marketable byproducts on their own.
Schweitzer said a 150,000 barrel per day unit would cost about $7.5 billion to build. However, F-T units can be built in modules, so a 22,000 barrel per day unit could cost $1.2 billion, he said.
Serbian firm to build part of new coal complex in for SUEK
The Enterprise for waters Ivan Milutinovich-PIM (Serbia and Montenegro) has been chosen by the Siberian Coal and Energy Company (SUEK) as the contractor for the implementation of building-installation and start-adjustment works, which are part of the construction of the coal complex Vaninsky Bulk Terminal in the Khabarovsk region.
Eight Russian and foreign organizations participated to the competition, of which the Serbian company was the winner. The Turnkey Contract is expected to be signed within the next few days. SUEK's subsidiary, Daltransugol Ltd., will conclude the contract on behalf of the customer and its investor.
The Serbian company will build some of the complex's infrastructure including an access railway and the bridge over the river Muchka, hydraulic engineering constructions, objects of power maintainance, engineering communications and basic buildings. It will also mount the process equipment of the coal complex.
Construction will take up to three years at most. The new terminal will have the capacity to produce 12 million tons of coal a year. The arrangement of the complex in deep-water bay Muchka will allow serving large-capacity vessels of class Capesize there. SUEK will invest a total of over $100 million in this project.
Brazil's CVRD to study Australian hard coking coal project
Brazil's Companhia Vale do Rio Doce has agreed to study a proposed coal project in the Australian state of Queensland, Aquilla Resources Ltd, a stake holder in the project, said.
Aquilla said that it and its joint venture partner AMCI Holdings Australia Pty Ltd have entered into an agreement with CVRD which will see the Brazilian group undertake an exploration study on the Belvedere project, estimated to contain 2.7 bln metric tons of hard coking coal.
At the conclusion of the study, CVRD will have the option to acquire a 51 pct interest in the project.
Western Canadian Coal Announces Accelerated Wolverine
Western Canadian Coal Corp. (WCCC) announces that it has accelerated the estimated completion date for the construction of the Wolverine coal preparation plant and rail load-out by six months, from early 2007 to July 2006.
The accelerated construction schedule is primarily a result of a letter of intent entered into with the Sedgman group of companies, pursuant to which Sedgman will build a turnkey coal preparation plant for WCCC by July 2006.
Sedgman, an international company headquartered in Pittsburgh, Pennsylvania, specializes in the design, engineering, construction and operation of coal preparation plants and material handling systems worldwide.
The plant is designed and will be built to handle 3.0 million tonnes of hard coking coal per annum, however its initial throughput will be 2.4 million tonnes. Currently, the Company's mine permit allows for the production of 1.6 million tonnes of clean metallurgical coal per annum on the Perry Creek and EB open-pit properties over an 11-year period.
The Company however has applied to the BC government for an increase to the allowable production to 2.4 million tonnes per annum. A decision is expected on the application by the fourth quarter of 2005. The estimated marketable coal from the Perry Creek and EB open-pits is 15.6 million tonnes of metallurgical coal and 0.3 million tonnes of thermal coal.
Coal and Allied records $126.4m profit
Coal and Allied, which is 75 per cent owned by Rio Tinto, has made a half year profit of $126.4 million but says the strong Australian dollar and increasing costs of inputs will have a moderating influence on results in the second half.
Coal and Allied's sales revenue for the first half was $679.6 million, compared to $454.5 million in 2004. Coal production for the half year was 14 million tonnes, three per cent higher than in the first half of 2004.
The miner shipped 14.4 million tonnes of coal, up from the 13.9 million shipped the year before.
In the first half Coal and Allied shipped 10.508 million tonnes of export thermal coal, 1.955 of domestic thermal coal and 1.961 million tonnes of coking coal.
Coal and Allied's managing director Grant Thorne said the result reflected the strong global market for seaborne traded coal. "Coal and Allied is now realising the opportunities available, with the large majority of its contract business having been priced under the much stronger market conditions that now prevail," he said.
Too much inventory weighing on Australian Steel Outlook
Having completed a survey of industry participants, UBS believes the three-month outlook for the Australian steel industry remains difficult
The broker notes the number one conclusion of industry players is inventory levels remain too high, this at the same time as demand is expected to weaken.
This combination is expected to result in prices also falling in coming months, with both flat and long products to suffer.
Relating this feedback to listed stocks, the broker suggests those companies most likely to feel an impact in the next few months are BlueScope Steel (BSL), OneSteel (OST) and Smorgon Steel (SSX).
Labrador Iron Ore Royalty Income Fund Q2 Results
Labrador Iron Ore Royalty Income Fund announced its results for the second quarter ended June 30, 2005.
Royalty income for the second quarter of 2005 amounted to $20.91 million as compared to $13.23 million for the second quarter of 2004, an increase of 58% over the same period last year. The Net income was $21.34 million t compared to $8.30 million for the same period in 2004.
The price increases for pellets (86.1%) and concentrates (71.5%) negotiated for 2005 resulted in our share of IOC's earnings increasing to $10.7 million compared to $1.1 million in the 2004 second quarter.
AK Steel enters scrap agreement with Tube City, LLC
AK Steel said today it has entered into an agency agreement with Tube City, LLC for the purchase of ferrous scrap for all of AK Steel's steelmaking facilities.
As part of the agreement, Tube City will be responsible for negotiating the majority of carbon scrap and pig iron purchases for AK Steel plants in Ashland, Kentucky; Butler, Pennsylvania; and Mansfield and Middletown, Ohio. Additionally, Tube City will be responsible for scheduling, logistics and quality assurance related to ferrous scrap for the AK Steel plants.
"This agreement with Tube City continues AK Steel's efforts to develop long-term agreements with suppliers of key raw materials," said James L. Wainscott, president and CEO of AK Steel. "We look forward to working with Tube City as a strategic partner to help us improve costs, quality and reliability as related to our scrap requirements." Tube City is a long-time supplier of scrap and related services to AK Steel.
US Steel names general manager, Great Lakes Works
United States Steel Corporation today announced that Frederick G. Jauss has been named general manager of Great Lakes Works, effective August 1.
Great Lakes Works, in Ecorse and River Rouge, Mich., is one of five integrated steelmaking facilities the company operates domestically.
Jauss began working at U. S. Steel in 1968 and he served in a number of increasingly responsible supervisory and management positions in metallurgy and quality control at Fairless, Gary Works, and Fairfield Works before he was promoted to general manager of Research at Pittsburgh headquarters in 1996. In 1999, he was named general manager of sheet technology, and in 2002, managing director of technology. In 2003, he assumed his most recent position, plant manager of finishing operations at Gary Works.
At Great Lakes Works, Jauss replaces Frederick T. Harnack, who has been named general manager of Research at Pittsburgh headquarters
Stripco Inc. selects ERP solution from AXIS
AXIS Computer Systems, Inc. (AXIS), the leading provider of Enterprise Resource Planning (ERP) solutions for the metals, wire and cable industries, announced today that Stripco Inc. (Stripco), a leading steel coil and strip service center, has selected the AXIOM Enterprise Resource Management System as the company's new business management support system.
Stripco will use the AXIOM software solution to help further increase productivity, customer responsiveness, and profitability at the company's service center facility located near South Bend, Indiana.
AXIOM is a comprehensive enterprise management system built around the unique operational requirements of metals producers, processors, and service centers. AXIOM provides industry-specific support for all key aspects of the business; from sales, production, quality and financial management, to integrated web-based customer service, advanced planning and scheduling, and decision support.
Venezuelan Sivensa doubles Q2 net profit
Venezuelan steelmaker Sivensa, a subsidiary International Briquettes Holding (IBH), posted a second quarter net profit of US$54.3mn in fiscal year 2005, nearly doubling the US$27.3mn recorded in same-period last fiscal year
The company's operating profit in the period that ended June 30, 2005, was US$55.6mn, up 47.4% from US$37.7mn year-on-year. The net profit of US$53.2mn is up from US$12.9mn the same quarter last fiscal year. Operating profit was US$30.6mn from US$13.6mn in same period FY04.
Meanwhile consolidated sales in the period totaled US$243mn, up 69.9% from US$143mn in the same quarter of the previous fiscal year. Sales were US$115mn during the April-June 2005 period compared to US$34mn in the same period 2004.
Sivensa said the increase in sales was mainly a result of unit Orinoco Iron's consolidated results.
Sivensa also has commercial units such as Sidetur, which manufactures billets for the rolling industry and finished steel products for construction and infrastructure. The steelmaker also controls IBH, whose Venprecar plant produces iron briquettes, while Sivensa's Vicson unit makes wire and wire products for the manufacturing sectors.
