October, 28 2005
SAIL reports Rs. 1,127 crore Q2 after tax profit
Steel Authority of India Limited SAIL achieved highest ever H1 profit before tax of Rs. 3,408 crore for 2005-06, a growth of 12.5% over the corresponding period last year backed by best-ever physical performance in hot metal, crude steel and saleable production. SAILs unaudited financial results for April-September 2005 were taken on record by the companys board of directors this morning. The profit before tax for the second quarter at around Rs. 1,707 crore, however, declined by 6.4 % over CPLY mainly because of increase in price of indigenous and imported coal and reduction in net sales realizations..
The steel major recorded higher sales turnover at Rs. 7,889 crore with a growth of 6.7 % over CPLY. However, a net profit (after tax) of Rs. 1,127 crore in Q2 of the current fiscal is lower by Rs. 386 crore over CPLY mainly due to higher tax provision. In the previous year, in view of brought forward losses, unabsorbed depreciation and other relief available under the Income Tax Act, the company did not have taxable income and only minimum tax on book profits was provided under the Income Tax Act. SAIL is now providing regular tax liability. There was higher tax provision of Rs. 270 crore during Q2. SAILs net profit after tax amounted to Rs. 2,251 crore during H1 against Rs. 2,625 crore recorded during CPLY.
Production of saleable steel increased by 11% during April-September 2005 and the average capacity utilization of plants was about 105 % during the period. Production through the energy efficient continuous cast route went up by 4% during the first six months of 2005-06 over CPLY. Energy consumption came down by 3% to 7.23 giga calories per tonne of crude steel during the period. The coke rate has also come down by 5 kilogram per tonne of hot metal and the blast furnace productivity has gone up from 1.43 to 1.51 tonnes per cubic meters per day during the period.
While recording highest ever production of saleable steel, SAIL reduced its manpower by over 2,000 with an improvement of 6% in the labor productivity during the year.
Commenting on the companys performance during the first half of 2005-06, Mr. VS Jain, Chairman, SAIL said, "SAIL today is on a strong footing and is going ahead with a steady expansion plan to compete with the best in the steel market."
SAIL Chairman says that prices to be stable in remaining 2005-06
State owned Steel Authority of India Ltd on Thursday said the steel prices would remain stable in the rest of the current fiscal and the company would liquidate its inventory pile up within a month. "Water takes to its level. I think the prices have more or less stabilized though a fluctuation of $ 20-30 cannot be ruled out," SAIL Chairman Mr VS Jain told press
On the China factor affecting steel prices, he said the Communist state had from being a major importer of steel had become a net exporter of the commodity. "With the demand hovering around four per cent, there would not be much impact," Mr Jain added.
RINL expansion project get CCEA nod
The Cabinet Committee on Economic Affairs CCEA on Thursday cleared the expansion of liquid steel capacity from 3 million tonnes to 6.3 million tonnes in Rashtriya Ispat Nigam Ltd, better known as Vizag Steel. The project that was estimated to cost Rs 8,277 crore originally, will now cost Rs 8,692 crore as per June 2005 revised prices.
Debt equity ratio for the Vizag Steel expansion project will be 1:1. The equity component will be funded internally for the project, which is expected to be complete by 2007-08.
SAIL to expand to 22.5 million tonnes by 2011-12
Following impending merger of IISCO, the capacity of SAIL will expand to 22.5 million tonne of hot metal production by 2011-12. In pursuit of its Corporate Plan-2012, SAIL already has initiated capital schemes worth over Rs. 3,500 crore which are at various stages of implementation.
This is a part of the overall capital outlay plan of Rs. 35,000 crore by 2011-12. Some of the recently completed schemes are up gradation of BF4 and ERW Pipe Plant at Rourkela, cast house slag granulation plant at Rourkela, Coal Dust Injection at Bokaro and Bhilai and Coal Tar Injection at Durgapur.
Other major schemes in the pipeline include installation of bloom caster and associated facilities at DSP, installation of new slab caster at BSP, revamping Mae-West block system of Hot Strip Mill at BSL and rebuilding coke oven batteries at Bhilai, Bokaro and Rourkela Steel Plants. A systematic plan for up gradation of blast furnaces in all the plants is being taken up to improve blast furnace productivity.
ISMT aiming for Rs 1000 crore turnover in 2005-06
ISMT Ltd the merged entity of the Pune-based Indian Seamless Metal Tubes and Indian Seamless Steels & Alloys is likely to be an Rs 1,000 crore entity in 2005-06. MD Mr OP Kakkar said that the turnover of the merged entity would be about Rs 1,200 crore and if all goes well in the second half, net profit would be over Rs 100 crore in 2005-06.
In the first half of the current fiscal, the two companies aggregated net sales of Rs 747.84 crore, with Indian Seamless Metal Tubes having contributed Rs 346.38 crore and Indian Seamless Steels & Alloys Rs 401.46 crore. The half-yearly net profit of the combined entity stood at Rs 61.03 crore, with the former having contributed Rs 8.01 crore and the latter Rs 53.02 crore.
Mr Kakkar said the new entity is poised for interesting times. The merger consolidates our engineering knowledge and skills, and tightens supply chain so that we can service our customers better, he said.
The merged entity is using the de-bottlenecking and technology-upgrade approach to enhance capacity in the immediate future. While the 1,55,000-tonne per annum tube capacity of the company will be increased to 2,00,000 tpa, its steel capacity of 1,90,000 tpa, already manufacturing 2,40,000 tpa, will be enhanced to 3,50,000 tpa.
The merged entity will offer a range of precision seamless tubes to tier-I suppliers of auto, bearing and other engineering original equipment manufacturers
Posco move to reduce project ousters
In a move aimed at keeping the number of ousters on account of its mega steel plant at Paradip to the minimum, POSCO India has decided to redraw the project site map by keeping certain thickly populated villages out of the plant boundary. Our target is to keep the human displacement within 1000 to 1200 people ie 200 to 300 families, said Mr Ryu Ho Chan, team leader, Posco India project. This is considerably lower than the original calculation that about 4000 families or 20,000 people will be displaced by the project.
Posco proposes to set up its plant in an area of over 4000 acres of land near Paradip. It also needs another 1500 acres to construct the township. The area originally demarcated for the project encompassed a number of thickly populated villages.
Villages threatened by the project including Gobindpur, Dhinkia and Nuagaon had maximum population and in the reworked site map some of these villages will not be affected. Displacement has emerged as a major cause of concern for the company, as it is aware of precedents where several mega projects in the state have been stalled due to Protests against displacement.
BHEL inks technology transfer pact with Alstom
Bharat Heavy Electricals Limited BHEL on Thursday announced entering into a technology transfer agreement with French power major Alstom for manufacturing large-size supercritical boilers. The tie-up will enable the domestic equipment major to undertake 800 mw power projects. BHEL CMD Mr AK Puri and Alstom CEO Mr Patrick Kron inked the agreement
The agreement includes transfer of state of the art technology to BHEL for any size of once-through boilers and associated coal pulverizes. With this, BHEL has also become the first Indian company capable of manufacturing large size super-critical boilers for power projects.
Core sectors growth dips to 1.8% in Sept
THE six core infrastructure sectors registered a 1.8% YOY growth in output in September 2005, falling from the 5.7% growth registered in August
The infrastructure output had gone up 0.2% in September last year. During April-September this year, infrastructure output grew 4.4%, lower than the 5.3 per cent growth registered during the same period a year ago, mainly due to a fall in production in the crude, electricity and cement sectors.
Coal production grew by 4.6% in September 2005 compared to 9.3% in September 2004. Coal production grew by 5.3% during April to September compared to an increase of 6.3% in the same period of last fiscal.
Finished carbon steel production, however, grew by 5.9% in September 2005 compared to the negative growth of 14.1% in September 2004. On a cumulative basis finished carbon steel production grew by 7.2% during April to September 2005-06 compared to 1.3% in the same period of 2004-05, the release added.
BEML bags Rs 368 worth orders in October
Public sector Bharat Earth Movers Limited today announced that it had bagged orders to the tune of Rs 368 crore this month from coal companies and NMDC, Hyderabad, for supply of dozers, dump trucks, motor graders, high capacity excavators and rope shovels.
The order book stood at Rs 2,457 crore as of today, according to a company release here.
BEML had posted a turnover of Rs 1,856 crore and earned a record profit of Rs 272 crore during the last fiscal as against Rs 50 crore in the previous year. BEML had set an ambitious MoU target of Rs 2,200 crore of sales for the current year
Kanishk plans to invest Rs 90 cr in Q3
Chennai based Kanishk Steel Industries Ltd KSIL plans to set up a waste recovery plant at an investment of Rs 40 crore and re-rolling mill of 150,000 MT capacity at a cost of Rs 50 crores
The company reported 329 per cent increase in profit in second quarter ended September 30, which translated into Rs 5.24 crore as compared to Rs 1.22 crore in the corresponding period last year. KSIL's turnover grew by 21.38 per cent to Rs 62.36 crore while net sales registered growth of 21.38 per cent to Rs 62.09 crore from Rs 51.15 crore in the corresponding quarter last year, a company release said here.
Arcelor posts $792 million Q3 net profit
Arcelor SA posted a 4.5 percent increase in Q3 net profit as its move into Latin America boosted results amid difficult market conditions worldwide. The world's second-largest steelmaker said it earned euro 657 million (US$792 million), up from euro 629 million (US$758 million) for the same period last year.
Sales rose to euro 7.48 million (US$9 million) in the third quarter from euro 7.15 billion for the third quarter of 2004.
Arcelor said it had to deal with higher prices for raw materials and weak demand in the third quarter as flat carbon steel prices reached a low point in September.
The fourth quarter, at least the market, will be better than the third and second,'' Arcelor CEO Mr Guy Dolle said in an interview. With the beginning of inventory rebuild in the first quarter of next year there is room for new price increases.''
Arcelor, created in 2002 through the merger of Usinor SA of France, Arbed SA of Luxembourg and Aceralia Corp. Siderurgica SA of Spain, is the world's largest steelmaker by sales after Mittal Steel.
9 killed in gas leakage of Shougang's steel plant
A gas leakage through cracks on the drain pipe of a water-seal gas holder in Shoudu Iron and Steel Group (Shougang) steel plant in Beijing killed nine, including some bystanders, on Wednesday afternoon, according to an official source. The State General Administration of Work Safety on Thursday made the accident report. The nine victims, including three cleaners with the steel plant and six passers by, were poisoned to death by the carbon monoxide.
Secretary of the Beijing Municipal Committee of the Communist Party of China Mr Liu Qi and Mayor Mr Wang Qishan have asked the Capital Iron and Steel Corp. to take repairing and precaution measures to prevent similar accidents from happening.
Arcelor acquires controlling stake in Brazilian SS maker Acesita
Arcelor agreed with the Brazilian pension fund Fundao Sistel de Seguridade Social ("Sistel") to acquire the 12% of the voting capital of Acesita held by Sistel for R$45 per share. As a result, Arcelor will become the controlling shareholder of Acesita, holding 76% of the common (voting) shares of Acesita and 40 percent of the total capital of that company.
The move follows the agreement, on October 6, 2005, with Previ and Petros, two other Brazilian pension funds to acquire common shares representing 25% of the Brazilian stainless steel producer's voting capital and 8% of its total capital for R$ 45 per share.
In accordance with Brazilian law, Arcelor will launch a "tag along" tender offer for the acquisition of the remaining common shares issued by Acesita for 80% of the average price paid to Previ, Petros and Sistel.
Acesita is one of the most competitive and profitable stainless steel producers in the world. The move is a reflection of Arcelor's longstanding commitment to Brazil, a high quality and low cost production base for steel products with attractive domestic and export markets.
Arcelor has been constantly strengthening its positions in Brazil and Argentina since its inception in 2002, becoming Latin America's leading steel producer. The company is one of the largest global producers of flat stainless steel products with major operations in Europe and in Brazil and a global market presence.
The closing of the Acquisition is subject to the approval of the Brazilian Secretaria de Previdcia Complementar (SPC) and from certain non-Brazilian anti-trust authorities.
Brazil export tax cuts to attract new plants
Brazil's congress approved a package of tax cuts for exporters, paving the way for more than $10 billion in steel and pulp and paper investments and encouraging investment in the computer industry. The lower house approved the legislation today after the Senate approved it yesterday, making permanent an executive order by President Mr Luiz Inacio Lula da Silva.
The measures cut about 3.3 billion reais ($1.4 billion) of social security taxes on the purchase of equipment by companies that export at least 80 percent of output and provide incentives to computer companies. Unlike companies selling locally, exporters don't get rebates on the taxes. The breaks are valid for three years.
Failure to approve a similar order on October 13 had put at risk more than $10 billion in steel and pulp mill investments by companies such as CVRD and Baosteel
One project that becomes more likely with the passage of the tax breaks is Cia. Siderurgica do Ceara, a joint venture between CVRD, Dongkuk, Danieli and Brazil's state development bank, BNDES. The $750 million mill would produce 1.5 million metric tons of steel slabs a year, mostly for sale to Korea, where Dongkuk is the world's largest buyer of steel slabs.
Work is slated to start on the Ceara plant in November. In April, Baosteel, which is planning a $1.5 billion mill with CVRD and Arcelor in Brazil's Northern state of Maranhao, said it has delayed plans because of high Brazilian costs, primarily taxes.
Other projects expected to take advantage of the tax breaks are Cia. Siderurgica do Atlantico, a joint venture between CVRD and ThyssenKrupp AG and a CVRD mill in Maranhao with Posco
ThyssenKrupp MinEnergy acquires interest in the Chinese coke plant
Long-term access to important source of raw materials in Tangshan
ThyssenKrupp MinEnergy GmbH (Essen/Germany), a Company of ThyssenKrupp Services, has acquired a 25% interest in the BCCW Jiahua Coking & Chemical Co Ltd. in Tangshan China coking plant, securing long term access to an important raw material source.
The coking plant was already fired up in September 2005 and will begin production at an official inauguration ceremony on November 28, 2005. With the start of production, ThyssenKrupp MinEnergy will take over exclusive marketing of BCCW coke and ancillary products including by products like benzene and coal tar outside China.
Other joint venture partners are: Beijing Coking and Chemical Works, Shougang Corporation and Tangshan BeiJiang Trade Co., Ltd.
ThyssenKrupp MinEnergy's activities include trading in all types of solid fuels and refractory minerals. The company is among the world's largest suppliers in this trading sector. China is the principal procurement source. Customers of ThyssenKrupp MinEnergy include steel mills, foundries, rockwool producers, ferroalloying plants, the sugar industry, nonferrous metal works, power stations, cement and lime plants and the refractory, chemical and glass industries.
Arcelor's CEO says Ukraine steel exports could affect European prices
Arcelor CEO Mr Guy Dolle said Ukrainian steel exports, which will begin entering Europe when the country joins the World Trade Organization next year, could result in a large increase in supply that could in turn weigh on prices. He added Ukraine "is both an opportunity and a threat."
"It's an opportunity because there is iron ore, and because there is a steel sector that is certainly outdated," Dolle said, just a few days after the group lost out on the bidding to acquire Ukraine's Kryvorizhstal steel group to rival Mittal Steel
"It's a threat because Ukraine is going to join the WTO sometime in the next 12 months. So there is a risk of very high exports of its products to Europe," he added.
"Today, Ukraine produces 40 mln tonnes of steel, and consumes less than 10 mln," Dolle said.
CST Q3 profit down 52% on lower prices
Brazilian steelmaker CST reported a 173mn-real ($76 million) net profit for the third quarter of 2005, down 52% from 358mn reais ($157million) in same-period 2004. Net revenue declined 21% to 1.05bn reais from 1.33bn reais year-over-year.
Results reflect the appreciation of Brazil's currency, reduced steel prices and lower sales volume, CST said. Steel plate production dropped 12% to 1.15 million tonnes while its sales fell 40% to 451,000 MT in the quarter.
EBITDA dropped 38% to 406mn reais compared to 651mn reais 3Q 04 with the EBIDTA margin decreasing from 49% to 39% during the same period.
Net profit for the first nine months of 2005 totaled 1.19bn reais, a 6% increase from 1.12bn reais in same-period 2004. During the nine-month period CST spent US$568mn in expansion projects due to wrap up by 3Q 06 to boost steel output capacity from 5 million tonnes to 7.5 million tonnes.
Russia & EU to sign steel deal in early November
Russia and the European Union will sign a new agreement on trade in selected steel products at the beginning of November as per a statement from Mr Maxim Medvedkov, head of the Russian Economic Development and Trade Ministry's Trade Negotiations department. "We intend to sign the deal next week," Medvedkov said, without saying precisely when.
"The Economy Ministry is certain that the agreement will open up additional opportunities to develop Russian exports to the EU and will make the switch from the existing autonomous system to trading under the agreement as painless as possible for Russian exporters," Mr Medvedkov said.
Russia and the EU initialed the agreement back in December 2004. Russian PM Mr Mikhail Fradkov gave the go-ahead to sign the deal in June. The new deal, when signed, would enable Russia to increase exports of sheet, sections and bars to the EU to 2.217 million tonnes in 2005 and 2.273 million tonnes in 2006 from 1.8 million tonnes in 2004.
LME nears a decision on steel futures
London Metal Exchange executives are expected to tell the exchanges directors on Friday at a board meeting that the LME should go ahead with a steel futures contract but in a different form than previously proposed. If the board decides against steel futures it might bury the idea indefinitely, but if it does go ahead the contracts would be radically different to the proposal the LME devised two years ago, when it suspended a year-long investigation into the issue. The directors are expected to make a final decision by Tuesday when the LME hosts its annual dinner in London.
The LME management is understood to favor a contract based on a steel price index without physical delivery, in sharp contrast to the LMEs traditional physical delivery contract for other metals. It is a massive change for the LME. They have used the same business model successfully for the last 128 years and they are looking at changing it for steel, said Mr Mike Walsh, management consultant to the steel industry with Hatch Beddows.
When the LME last looked into launching a steel contract, it proposed a contract for North America, Europe and Eurasia covering Asia and southern Europe. It is unclear which steel index LME management is keen to work with, or if it would devise its own. CRU, Metal Bulletin and Dow Jones each publish a steel index.
Steel is by far the biggest metal market in the world and the second biggest commodity behind oil. Steel production of more than 1bn tonnes a year exceeds that of all other metals put together. However, the lack of a futures contract leaves producers and consumers unable to hedge against volatile steel prices as they can with other commodities.
Arcelor cuts costs on Brazilian expansion
Arcelor is cutting production at some plants in Europe and spending $4.8 billion on expansions in Brazil and Argentina, where production costs are lower. The company wants to reduce Europe's share of its total production to 50 percent by 2015 from about 80 percent today. Arcelor is relying on its South American plants to maintain profit as weakening European demand forced it to trim regional output to shore up prices.
Arcelor spends an average of $142 a ton to make steel in Brazil, compared with $200 at its European coastal plants and $225 at its inland mills, according to Mr Andrew Snowdowne, a London-based analyst at UBS AG.
Arcelor is combining its three Brazilian steel mills worth $8 billion into a single company called Arcelor Brasil that will trade on the Sao Paulo stock exchange in November. Arcelor Brasil will combine Arcelor's majority stakes in Serra, Brazil-based Cia. Siderurgica de Tubarao, Brazil's third-largest steelmaker by volume, Vega do Sul and Cia. Siderurgica Belgo-Mineira. CST was fully consolidated into Arcelor's accounts in October last year.
Coal mine explosion traps 16 in Xinjiang
An alleged explosion in a coal mine in northwest China on Thursday has left at least 16 people trapped underground, the local mine safety watchdog said.
The explosion occurred at about 7:25 p.m. in the Zhongxing Coal Mine in Wusu City, Xinjiang Uygur Autonomous Region, the region's supervision bureau on mine safety said. Senior officials with the bureau are heading toward the site of the alleged explosion to investigate.
SSAB Q3 profit beats expectations underpinned by 12% sales growth
Steel producer SSAB AB said its third-quarter profit after financials rose 10 million skr from a year earlier to 933 million as strong demand from China helped boost sales by 12%. For the nine-month period, operating profit increased 74% to 4.517 billion skr, and profit after financials by 43% to 4.473 billion skr
'Thus far this year, steel prices in Swedish kronor have been 36% higher than last year and 20% higher than during the third quarter last year,' the company said.
The company said based on contracts pending for the fourth quarter, it expects steel prices in local currencies to be on average, marginally higher than during the third quarter. The company said it expects growth within its steel operations to continue among core niche products, extra and ultra high-strength as well as quenched steels. SSAB said its steel prices over the last year have increased sharply.
SSAB said its robust sales growth is underpinned by continued growing global demand for steel, which is set to reach a new record high this year driven by Asia, and in particular China. 'Growth is.., concentrated on Asia - foremost China, where steel consumption continues to grow rapidly,' said SSAB. In Europe, it said underlying demand for steel remains little changed from last year, while it has decreased 'somewhat' in the US.
Ryerson Tull reports Q3 2005 earnings
Ryerson Tull, Inc today reported net income of $33.9 million for the third quarter ended September 30, 2005, compared with $17.4 million for the Q3 of 2004. The Q3 of 2005 reflected the contribution from Integris Metals, Inc., which was acquired on January 4, 2005.
Q3 sales of $1.4 billion increased 57.6% from the Q3 of 2004, due to the acquisition of Integris, and declined 6.8%, sequentially, from the second quarter of 2005. For the Q3 of 2005, tons shipped increased 24.4% and the average selling price increased 26.6% YOY. Sequentially, tons shipped declined 2.3%, and the average selling price per ton declined 4.7% from the Q2 of 2005.
"We posted a solid third quarter, even when compared with the year-ago quarter's peak historic pricing for carbon flat rolled. Pricing and demand trends across our product lines were mixed. And the third quarter is seasonally slower than the first half of the year," said Mr Neil S. Novice, Chairman, President, and CEO of Ryerson Toll. "The acquisition of Integris continues to provide benefits as we capture cost savings and adopt best practices from both organizations. We made excellent progress reducing inventory and debt levels. And, as demonstrated by the gains described above, we are capitalizing on opportunities to sell excess assets and reduce our expense structure."
"The fourth quarter is our seasonally slowest of the year, driven by customers' year-end shutdowns and fewer ship days-60 compared to 64 in the third quarter of 2005," concluded Mr Novich. "However, we expect the economy and the overall metals market to remain healthy through the fourth quarter and into 2006. And beyond the consolidation of the two companies, we remain committed to continuously improving our cost structure and customer service, and driving growth from our national marketing program. These serve to enhance our competitive position and long-term prospects."
Chinese steelmaker Angang Q3 net profit slips
China's Angang New Steel Co., a unit of one of the country's five biggest steelmakers, reported Thursday that its third-quarter net profit fell 1.5% from a year earlier, amid shrinking sales volume and a decline in prices. Angang's net profit for the quarter through September totaled 491 million yuan ($61 million), down from 499 million yuan (US$62 million) for the same period a year earlier.
Revenue in the third quarter dipped to 6.92 billion yuan (US$854 million) from 6 billion yuan (US$741 million) in the same period of 2004, said the company. Angang produced 4.5 million tonnes of steel products in the first nine months of this year, up 10% from the same period a year earlier
Angang did not provide further details on its results. But analysts said the lackluster results were in line with market expectations and likely resulted from the impact of falling prices, as well as mediocre sales.
Angang's quarterly result paralleled that of its smaller rival Maanshan Iron & Steel Co., which posted a net profit of 577 million yuan (US$71million) in the third quarter.
Angang's state-owned parent company, Anshan Iron and Steel Group, recently announced its merger with smaller competitor Benxi Iron and Steel Group, a union that created a rival for China's largest steelmaker, Baosteel. Anshan and Benxi are both based in the rust-belt northeastern province of Liaoning. Their newly merged company is called Anben Iron & Steel.
Ukraine is warned about Mittal Steel
In interview to Glavred the Chief of Trade and Economic Department of polish Embassy to Ukraine Anna Skovronska-Luchinska commented on the results of Kryvorizhstal auction which was bid by Mittal Steel GmbH. She stressed that money should not be the key point of this bid and determine the winner.
Skovronska-Luchinska marks the fact that Mittal Steel is the European monopolist of this field and posses enterprises in France, Germany, Poland, Czechia, Romania, Bosnia and Macedonia. You should beware of monopolists, warns Polish diplomat.
She also mentioned negative experience of Mittals management in Polish plants which belonged to the corporation and time after time the workers of which protest against conditions of work there.
Skovronska-Luchinska supposed that as Ukraine possesses cheap manpower and row material so Mittal Steel may use Kryvorizhstal for providing its enterprises situated in other countries with stuff and feed for final product.
Russel Metals announces Q3 2005 earnings
Russel Metals reported 2005 Q3 net earnings of $25.9 million, stronger than the Q2 of 2005, and were the second best Q3 in our history. The gross margins and operating profits as a percentage of revenue improved in all business segments in the third quarter of 2005 versus the second quarter of 2005.
The net earnings for the nine months ended September 30, 2005 were $82.9 million versus $134.3 million or $2.77 per share in 2004.
Declining steel prices have reduced our profit margins in 2005 for all business segments, compared to the exceptionally high profit margins experienced in the same period of 2004, due to increasing steel prices. In the third quarter of 2004, our metals service centers realized large inventory holding gains of approximately $16 million, as steel prices and surcharges jumped, compared to inventory holding losses of approximately $8 million realized in the third quarter of 2005.
Mr Bud Siegel, President and Chief Executive Officer, commented: "If the summer months prove to have been the bottom of the current pricing cycle, then the industry will have demonstrated the pricing discipline needed to prevent the free fall in pricing created by the producers. The third quarter's strong earnings in a tough price environment is very encouraging and reflects the changes we made to the Company through our successful acquisitions since 2001 and the recapitalization of the balance sheet in 2004.
Russel Metals is one of the largest metals distribution companies in North America. It carries on business in three distribution segments: metals service centers, energy tubular products and steel distributors, under various names including Russel Metals, A.J. Forsyth, Acier Leroux, Acier Loubier, Acier Richler, Arrow Steel Processors, B&T Steel, Baldwin International, Comco Pipe and Supply, Fedmet Tubulars, Leroux Steel, McCabe Steel, Megantic Metal, Metaux Russel, Milspec Industries, Pioneer Pipe, Russel Leroux, Russel Metals Williams Bahcall, Spartan Steel Products, Sunbelt Group, Triumph Tubular & Supply, Wirth Steel and York-Ennis.
Grupo Imsa Announces Q3 results
Grupo Imsa today announced results for the Q3 of 2005. EBITDA grew considerably for the second consecutive quarter by 26.8% QOQ to US$103 million
IMSA ACERO's sales volume rose significantly during third quarter 2005 to 654,000 tonnes, an increase of 10.6% over third quarter 2004 and 13.7% above the previous quarter. During third quarter 2005, revenues totaled US$941, an increase of 6.6% compared to the same period of 2004.
IMSATEC posted a historic maximum EBITDA of Ps 312 for third quarter 2005, an increase of 61.7% over third quarter 2004 and of 57.6% compared to the previous quarter.
Grupo Imsa continues its efforts to enhance operating efficiency. During the first nine months of the year, operating expenses as a percent of sales declined to 7.6%, down from 8.1% for the same period of 2004.
During the quarter Grupo Imsa announced changes in its organizational structure in order to optimize its value chain by increasing the leverage of existing synergies between steel-related businesses enhance the efficiency of its operations and reduce administrative expenses. As of the fourth quarter of the year, Grupo Imsa will post its results according to the new organizational structure of two business segments: IMSA ACERO and IMSATEC.
Olympic Steel reports Q3 results
Olympic Steel Inc, a US steel service center, today announced its financial results for the third quarter and nine months ended September 30, 2005. Net sales for the third quarter of 2005 totaled $208.4 million, a 14.7% decrease from the $244.1 million for the third quarter a year ago. Third quarter 2005 net income totaled $2.2 million compared to net income of $18.6 million for last year's third quarter. Tons sold decreased 5.5% to 306,000 MT from 323,000 MT in the third quarter of 2004.
For the first nine months of 2005, net sales increased 12.3% to $734.4 million from $653.9 million. Net income for the first nine months of 2005 was $14.8 million, or $1.42 per diluted share, compared to net income of $47.9 million, or $4.70 per diluted share in the first nine months of 2004. Tons sold decreased 6.5% to 984,000 MT from 1.05 million tonnes in the first nine months of 2004.
"Our acceleration of inventory and receivables turnover, coupled with consistent profitability and expense control, resulted in a significant reduction in our debt. During the third quarter, we reduced our Total Debt by $70 million to $13 million. Olympic Steel now has its strongest balance sheet and capital position since our initial public offering in 1994, with over $193 million, or $19.01 per share, of shareholders' equity at September 30, 2005," stated Mr Michael D. Siegal, Chairman and CEO.
"During the third quarter, carbon flat rolled pricing and margin compression reached its low point so far this year. We at Olympic are encouraged by the recent reductions in the steel service center industry's inventory levels as reported by the Metals Service Center Institute, coupled with announced producer price increases for carbon steel throughout the third quarter. Currently, demand appears solid entering the fourth quarter, leading us to believe in strong economic fundamentals for the marketplace. Our repositioned balance sheet is appropriate for these improving market conditions. We also anticipate using our financial position to take advantage of a consolidating service center industry," concluded Mr. Siegal.
Founded in 1954, Olympic Steel is a leading U.S. steel service center focused on the direct sale and distribution of large volumes of processed carbon, coated and stainless flat-rolled sheet, coil and plate steel products. Headquartered in Cleveland, Ohio, the Company operates 12 facilities and
participates in two joint ventures.
Mexican steelmaker Ahmsa reported $81.6 million net
Ahmsa has reported consolidated net profit for the third quarter this year, down 30% from 1.27bn pesos in same-quarter 2004. During the period, sales decreased 11% to 5.238bn pesos, although shipments grew 10% to 729,000 MT from 660,000 MT. EBITDA slumped 50% to 1.028bn pesos.
The success of strategies to take advantage of renewed demand allowed the company to maintain margins despite a 20% drop in average steel prices, the statement said. Especially important was the fact that Ahmsa relied on its own raw materials.
Due to the price drop, Ahmsa plans to increase efficiency at its existing plants, thus raising liquid steel production capacity by 600,000 tonnes per year to 4.6 million tonnes per year. The 20% rise in production will result in a 20% fall in fixed costs, Ahmsa said.
The plan will be in place in one year and requires a total investment of US$250mn to modernize Colada Continua and the Molino de Placa, the latter of which will have doubled capacity of 1 million tonnes per year. In addition Ahmsa will invest a total of US$20mn in a new exploration project at its Santa Mar Zaniza iron property and other projects with the aim of doubling proven reserves to 500 million tonnes. The Santa Mar Zaniza project will show results in the first four months of 2006, according to the statement.
Consolidated Mineral sees strong H1
Consolidated Minerals yesterday updated its business outlook for the first half of the 2005-6 financial year and announced the start of a feasibility study on a significant new underground nickel exploration and development program in the Kambalda region.
Consolidated said that all its business divisions continued to perform strongly with demand for steel and stainless steel-related materials in China remaining very strong, however commodity prices had weakened across the board during the first quarter of the financial year, retreating from their previous very high levels. While prices are currently still at high levels, we have seen a similar pattern to last year with prices falling from their peaks during the first quarter, said MD Mr Michael Kiernan. Clearly, this will be reflected in our financial result for the first half.
However, we expect prices in the second half of the financial year to strengthen with the traditional pick-up in trading conditions and we are looking forward to a stronger second half financial performance which we project will surpass last year, he added.
Demand for our core manganese and chromite products remains strong and we see continuing strong underlying demand fundamentals for all the commodities we are involved in, including the expanding nickel division and our recent entry to the zinc and copper businesses through Jabiru Metals Ltd. Our outlook for commodities and the robustness of demand for raw materials in China remains unchanged, he said.
Massey Energy reports Q3 2005 results
Massey Energy Company today reported that produced coal revenues for its Q3 ended September 30, 2005 increased by 14% to $418.3 million from $366.6 million in the third quarter of 2004, while net income of $22.5 million was significantly higher than net income of $2.0 million in 2004. EBITDA increased by 49% to $99.4 million in the third quarter of 2005 from $66.6 million in the third quarter of 2004.
The Company stated that low production volume from underground operations negatively impacted third quarter financial results. Massey produced approximately 4.7 million tons of coal from its underground operations in the third quarter, compared to 6 million tons in the second quarter.
"Favorable marketplace conditions continue to support our 2006 and 2007 projections," said Mr Don L. Blankenship, Massey's Chairman and CEO. "Coal pricing remains strong in all markets and the outlook for Central Appalachia's high quality coal is exceptional," concluded Mr Blankenship.
The Company observed that while coal demand in the U.S. remains high, production struggles to keep pace. The Company is not aware of any significant expected changes in domestic or worldwide conditions that would threaten current pricing levels for coal. Some supply response is being seen from U.S. and foreign producers importing coal, but supply continues to be hindered by infrastructure and shipping constraints, a shortage of labor and higher costs. "We continue to commit tonnage for 2007 and 2008 at the recent strong pricing levels for steam, industrial and metallurgical coal," Blankenship stated.
Ahmsa to finalize Micare debt restructuring deal
Mexican steelmaker Ahmsa will finalize a restructuring deal of some US$200mn in debt for its subsidiary Micare in coming months, effectively ending the coal mining unit's suspension of payment status. Ahmsa presented its agreement with creditors to the primary civil court in Monclova, Coahuila state in an effort to suspend Micare's suspension of payments status.
"Micare's creditors will receive payment in the amount and timeframes we agreed upon in keeping with the agreement and as soon as the ruling is made to end the suspension of payments," according to the company.
The agreement with creditors, which include Banamex-Citibank and Caterpillar, entails paying off liabilities in three years.
In addition negotiations have advanced and could wrap up in coming months to restructure payment agreements for the rest of the group, the company said.
In 1999 Ahmsa received legal protection in Mexico and permission to continue operating under a form of bankruptcy protection for failing to pay US$1.8bn in debt. Micare operates in Monclova, Coahuila in the country's northeast.
Grupo Simec announces results for the first Nine Months Of 2005
Grupo Simec SA de CV announced today its results of operations for the nine-month period ended September 30, 2005. Net sales increased 99% to Ps. 7,988 million in the first nine months of 2005 compared to Ps. 4,017 million in the same period of 2004, primarily due to the inclusion of net sales generated by the newly acquired plants in Apizaco and Cholula of Ps. 2,119 million and Ps. 2,827 million generated by the newly acquired plants of PAV Republic, Inc.
Simec recorded net income of Ps. 976 million in the first nine months of 2005 versus net income of Ps. 1,079 million for the first nine months of 2004.
On July 22, 2005 Simec and its parent company Industrias CH SA de CV acquired 100% of the stock of Republic. Simec, ICH's largest subsidiary, acquired 50.2% of Republic's stock, and ICH purchased the remaining 49.8%. With the acquisition of Republic, Simec has become the largest producer of special bar quality (SBQ) steel in North America.
Simec sold 1,115,054 metric tons of basic steel products during the nine-month period ended September 30, 2005 including 324,026 metric tons produced by the newly acquired plants in Apizaco and Cholula and 308,719 metric tons produced by the newly acquired plants of Republic, an increase of 105% as compared to 542,705 metric tons in the same period of 2004.
Simec is a mini-mill steel producer in Mexico and manufactures a broad range of non-flat structural steel products.
Ground broken for SeverCorr steel mill
State and local dignitaries were on hand today for the official groundbreaking for an $880 million mill in north Mississippi that plans to produce high-grade steel for the automotive industry.
The mill, scheduled to open in 2007, is being built by SeverCorr, a startup company led by a longtime steel industry executive. The mill site near Columbus is within a day's drive of a dozen auto manufacturing sites in the South, including a Nissan plant in Mississippi and Hyundai and Mercedes-Benz plants in Alabama.
SeverCorr President Mr John Correnti said that construction of the SeverCorr mill is expected to take about 21 months and will eventually make 1.5 million tons of steel a year.
BHP toys with $105m molybdenum plant for Escondida
BHP Billiton is studying the possibility of building a plant, linked to the Escondida copper mine that it controls, to produce the steel additive molybdenum. BHP's VP Processes Mr Marcelo Villouta, told a seminar in Santiago this week that a scoping study on building a plant that could cost $80 million, with a capacity to produce up to 4000 tonnes a year of molybdenum in concentrate form, would be finished in the first half of next year.
"This is absolutely preliminary, Molybdenum is not part of our next five-year development plan." a BHP Billiton spokesman told press
There are hurdles for Escondida in producing molybdenum as its ore has a content of some 70 parts per million of molybdenum compared with the 100-400ppm range of other Chilean producers. However, as it is the largest copper mine in Chile and produces about 1.2 million tonnes of copper a year, the volume could make the project viable.
Molybdenum is mainly produced as a byproduct of copper production, with about a third of global supply coming from copper hot spot Chile. The mineral has become a rising star for the companies that produce it, because its rising price is having a dramatic impact on their bottom lines. Global supply shortages and demand from steel manufacturers have sent prices from $4 a pound to $30 plus in the past two years.
Escondida is owned by BHP Billiton (57.5%), Rio Tinto (30%), Jeco (10%) and World Bank (2.5%).
Argentina Acindar 9 month net rises 6.6%
Argentinas no. 3 steelmaker Acindar has announced that its net profit in the first nine months of 2005 rose by 6.6% to 418 million pesos ($139 million) from 392 million pesos in the same period a year earlier. Net sales were up 23% to 1.85 million pesos in the nine month period. Domestic sales increased 22% to 1.49 billion pesos, while exports were up 28% to 402 million pesos. Selling prices rose 20%, while costs increased 32% mostly due to higher raw material prices like the 91 percent increase in iron ore.
Acindar, controlled by Brazil's Belgo Mineira, sells to the construction and farming sectors, both booming areas of Argentina's economy after the 2001-02 crises.
BNSF makes record profit off demand
Paced by strong demand for coal, agricultural and consumer-goods shipments, Burlington Northern Santa Fe Corp. of Fort Worth reported a record quarterly profit of $414 million for the third quarter, which ended Sept. 30. Earnings increased despite a 50 percent rise in BNSF's diesel-fuel costs, up to $499 million for the quarter. The company dealt with that problem with rate increases and fuel surcharges that added about 6 percent to its charges to customers.
Third-quarter freight revenue rose 18% to $3.22 billion. International shipments, mostly Asian imports picked up at Southern California ports and carried inland, were up 30%.
"We continue to realize more value for our services," BNSF Chairman Mr Matt Rose said. The high demand for rail services, spurred by high diesel prices, which make truck rates less competitive, have enabled BNSF and rival Union Pacific Railroad to increase freight rates for the first time in decades he added
Mr Rose said BNSF hasn't decided on capital expenditures for 2005. It will spend $2.1 billion this year on track repair and maintenance, he said. "We really need to know what our growth will be before we set the cap ex figure," Rose said.
The biggest maintenance problem on the 33,000-mile BNSF system is in the coal-rich Powder River Basin of Wyoming, where extensive track upgrading has been required because of a boom in coal shipments to utilities.
Alliance Coal to Open Ohio County Mine
After years of speculation, Ohio County officials discovered the old Valley Camp coal mine, which has been idle for 30 years, is being brought back to life. Alliance Resource Partners, which owns a portion of the Pittsburgh No. 8 coal seam, has started its formal paperwork and permitting process to reopen the former Valley Camp mine, now called Tunnel Ridge LLC.
The Tunnel Ridge reserve area encompasses more than 50,000 acres in Ohio County and Washington County, Pa. It controls about 900 acres of surface land.
The longwall mine operations will be in Ohio County, and Alliance has said the mine could produce up to 6 million tons of coal each year. The operation will stretch from the mine, which is near the Pennsylvania state line, across Ohio County to a coal-loading facility along the Ohio River.
Alliance also operates the Mettiki and Mountain View coal operations in North-Central West Virginia.
Fushun Special Steel Co appoints new GM
Fushun Special Steel Co., Ltd. announced that its Board of Directors has approved the resignation of Mr Liu Qiliang from the position of General Manager and Director and has appointed Mr Chen Hongbo as General Manager.
The Company's Board of Directors has proposed Mr Chen Hongbo to join in the Board of Directors.
