October, 07 2005
Indian steel prices likely to firm up again
Though the domestic steel industry has spared consumers a major hike in prices this month, the steel ministry expects that prices would firm up again in coming months. According to monthly summary reports of the steel ministry, steel prices have remained stable during the months of August and September, but there is expectation that prices may firm up again in coming months as inventory levels built up by most companies have been liquidated, and Chinese industry is showing renewed signs of growth.
The declining trend of steel prices that started in March this year now has been reversed. Hot rolled coil prices have seen a marginal increase of $50 per tonne in recent months, and there were chances that steel prices may firm up again, the steel ministry report has said.
Domestic steel makers reduced steel prices by almost 18% this year. Prices cuts were affected in three consecutive months of June, July and August.
Steel prices have started firming up from August, resulting in about Rs 500-750 per tonne increase in prices during the month of September. In October, though there was not much change in prices and only a few companies adjusted the price of long products
JSPL to sign a new MoU in Orissa
Jindal Steel and Power Ltd JSPL will sign a new MoU with the Orissa Government for increasing the size of its proposed steel plant in the State from two million tonnes to six million tonnes in two phases of 3 mt each.
Earlier, the company had signed a MoU with the State for a two million steel plant at Deojhar in Keonjhar district at an estimated cost of around Rs 4,000 crore. Now it has been decided that parts of it may be set up in the Angul district also for operational convenience.
The company's Finance Director Mr Sushil Maroo, said that the new MoU would replace the earlier MoU and the revised project cost would now be around Rs 13,000 crore. The whole project would take five years to be completed, he said
Dempo signs MoU with Jharkhand
The V S Dempo and company, a flagship of the Dempo group operating in Goa, on Thursday committed to set up in Jharkhand an iron ore beneficiation plant and half a million integrated steel plant at a cost of Rs 1,016 crore.
''We will set up an integrated steel plant of capacity about 0.5 mt/yr of cast billets along with iron ore fines and lumps beneficiation facilities with an estimated cost of Rs 1,016 crore,'' Mr Srinivas Dempo, the CMD of the company, told press after signing an MOU with the government.
Chief Minister Mr Arjun Munda said he gave priority to Dempo as the company would help upgrade waste and rejected iron ore.
Anti dumping duty on CR SS from US & Japan to stay
It is reported that Commerce Ministry has recommended continuation of the anti dumping duty on imported cold rolled flat stainless steel products of width of 600 mm or more or whether further processed or not, from the US and Japan while withdrawing the levy on such products from the EU and Canada, after undertaking a mid-term review. The anti-dumping duty is $445.69 PMT for US origin and $305 PMT for Japanese origin
The Authority held that the subject goods have been found to be exported from the US and Japan below their normal value, resulting in dumping. The domestic industry continues to suffer material injury and due to the likelihood of injury to the indigenous industry as a sequel to the persistent dumping, the anti-dumping duty might continue to remain imposed.
However, due to the negative injury margin in respect of imports from the EU and Canada, the anti-dumping duty on EU and Canada might be withdrawn, the Authority said.
Auto companies to pass on steel price cuts
Softening steel prices have turned into margin manna for a section of the automobile industry though not everyone is cheering just yet. For some companies, particularly in the 2-wheeler segment, the current let up in steel input costs has given enough elbow room to roll out some aggressive discounts and subventions during the festival season.
Pawan Kant Munjal, MD, Hero Honda, says: With the softening of steel prices things are looking better than what they were at the beginning of the year. So we can end the year more happily than we would have expected. Hence we have managed to give an Rs 1,001 benefit on our models. Its necessary to get to our 3m unit annual target.
Not everyone has actually reaped that steel benefit though. For some companies the current price downturn has been neutralized by longer-term contracts. Thats true of most car companies too where annual contracts that neutralized some of the spurts last year and early this calendar will now even out the spikes as well. Indeed, car makers have been raising prices in an attempt to cut down current discounts in the market and balance some pressure from steel inputs costs.
Hot rolled coil prices, which had been steadily rising and ruling at about Rs 28,000 a tonne by April 05, started softening since May this year. HR prices had come down to about Rs 24,000-25,000 per tonne in August. September saw a trend reversal with HRC makers hiking rates by about Rs 1,000 a tonne. Since then, prices have been stable. Makers say prices are expected to stabilize at this level for some time.
Ispat pulled up over emission standards
Ispat Industries will have to give the Maharashtra Pollution Control Board (MPCB) a time bound action plan to improve the emission standards of its 3m tonne integrated steel plant situated in Raigad District of Maharashtra. MPCB had on Wednesday served a notice to Ispat Industries demanding an explanation as to why the environmental norms have not been met.
While Ispat Industries has claimed that it is adhering to standards set by the World Bank, MPCB has claimed that the emission levels were much higher than permissible limits.
MPCB member secretary Mr DB Boralkar said that the permissible limit for emission is 150 mg/Nm3 from the chimney where as the actual emissions were as high as 370 mg/Nm3. Mr Boralkar said that the pollution control systems installed at the plant were inefficient and were able to collect only 60 to 70 % of the emission. Ispat Industries may not have to shutdown its plant, Mr Boralkar said
The board also has a mechanism to enforce the action plan. The board is likely to ask the company to furnish a bank guarantee which will be equivalent to 10% of the investments to be made in installing the pollution control systems. This bank guarantee can be invoked by MPCB if the company fails to honor its commitments.
Ispat Industries has denied all the charges levied by MPCB in its closure notice issued on Wednesday. The company in a press release issued on Thursday said that its plants are fully compliant with all the provisions of the pollution control norms. The company said, Ispat is fully complying with all the provisions of the Pollution Control Act as well the directions issued from time to time by MPCB.
Jindal Stainless reported to be looking at a CR mill in Taiwan
Jindal Stainless, the largest stainless steel manufacturer in India intends to purchase a cold rolling mill in Taiwan. Accordingly, Chung Ming stainless was once assumed as the best target for Jindal.
Chung Ming was bankrupt several years ago and sold to Far Eastern Group recently. According to some market analysts, Far Eastern Group has no previous experience in steel business
INI Steel CEO says steel prices may recover in 2006
South Korean prices of construction steel may recover in the second half of next year as a surge in Chinese imports subsides, said Mr Kim Moo Il, CEO of INI Steel Co the country's second-largest steelmaker. The sudden increase in imports from China in the first half was probably temporary and Korean imports of Chinese steel will probably grow more slowly over the rest of this year and the first half of next year '' said Mr Kim
INI Steel, based in Incheon, South Korea, joined rivals such as Posco, the country's biggest steelmaker, in cutting prices after imports from China more than doubled in the first half to 4.1 million metric tons
The company, which uses scrap as a raw material, mainly produces reinforcement bars used in construction and has about 42 percent of the domestic market. It uses electric arc furnaces, and plans to build its first blast furnace by 2010 to provide more of the alloy for its parent companies, Hyundai Motor Co. and Kia Motors Corp. INI Steel has no overseas investment plans.
For second time Krivorozhstal might avoid Russian hands
On Monday, the French company Arcelor announced its intention to participate in an auction, which will put on the lot 93 percent of the shares of largest Ukrainian metallurgical plant Krivorozhstal. The French bidder will be trying to acquire the metallurgical plant in alliance with consortium Industrial Union of Donbass (IUD). This alliance, formed by political and economic reasons, brings the chances to other seven contenders, including Russian Evraz Group and Severstal, practically down to zero.
Yesterday, the Antimonopoly Committee of Ukraine announced the issue of the permission for Arcelor to buy 60 percent of Industrial Group, which manages the assets of Industrial Union of Donbass of entrepreneurs Mr Sergey Taruta and Mr Vitaly Gaiduk. Because the industrial group does not have any industrial assets, through this purchase Arcelor is buying its participation in the auction for Krivorozhstal.
Arcelor does not hide its plans. We would like to put up our bid together with IUD, Mr Jean Lazar, Press Secretary of the company told press.
Other contenders for Krivorozhstal yesterday refused to comment the creation of the alliance, quoting the confidentiality agreement, signed by the Fund of the State Property of Ukraine with every participant of the auction. However, people in the companies are saying unofficially that Industrial Group is likely winner of the auction in financial and political terms.
The co owners of IUD Mr Sergey Taratuta and Mr Vitaly Gaiduk can provide political support to Arcelor. The Ukrainian media say that the entrepreneurs are famous because their financial support of Mr Viktor Yushenko presidential campaign. In March Mr Yushenko personally asked Polands President Mr Alexander Kwasniewski to assist IUD to purchase metallurgical plant Huta Czestochowa
Arcelor & POSCO still interested in Erdemir
The world's number two steelmaker Arcelor and South Korean giant POSCO are interested in a partnership with Turkey's OYAK in the country's biggest steel company, Erdemir, as per a press report
The two firms contacted OYAK with the suggestion after the Turkish conglomerate won a tender for Erdemir's publicly held 46.12 percent share on Tuesday and signaled that it would be open to new partners in the company
POSCO had pre qualified for the tender but pulled out before Tuesday's final bidding stage. Arcelor participated in the tender but withdrew in the first round of the auction when the price went up to $2.67 billion
OYAK, a large business group representing the army's pension fund, won with a bid of $2.77 billion. Arcelor would have priority in possible partnership talks with OYAK, as the two companies already have business ties, with Arcelor supplying steel to a Turkey-based joint venture between OYAK and French group Renault.
Russky Ugol buying majority stake in ZMZ
Rusky Ugol (Russian Coal) is finalizing the deal to buy out the majority stake in Zlatoustovsk Metallurgical Works. Once the deal is completed, Russias fifth producer of coal will enter the league of the top ten steelmakers of the country. Russky Ugol CEO Mr Vadim Varshavsky announced that his companys stake in Zlatoustovsk Metallurgical Works widened from 25 percent to 60 percent. Although Varshavsky refused to disclose the deal budget but it is rumored to be around $40 million.
Mr Mark Leivikov, who is selling the shares, controlled the 100 percent of the works till August 2005.
Zlatoustovsk Metallurgical Works made 330,400 tons of steel from January to July of this year and posted rolled metal output of 234,300 tons. The revenues stood at around 4 billion rubles.
Russias fifth coal producer, Russky Ugol has five metallurgical plants already with the aggregate output of more than 1.4 million tons of rolled metal on year.
It appears Zlatoustovsk Metal Works wont be the last metal acquisition of Russky Ugol. The next candidate for takeover is Gurievsk Metallurgical Works.
Ferro Chrome prices seen down
Ferrochrome firms in South Africa, the world's biggest producer of the alloy, expect to reduce fourth quarter contract prices by 4% to 7% percent due to oversupply, industry sources said yesterday.
A decline would mark the second consecutive fall in quarterly prices after they slipped by five cents in the third quarter. Prices rose by five cents in the second quarter.
Ferrochrome prices nearly doubled last year on supply difficulties but have come under pressure as the market grapples with a surplus and production cutbacks by stainless steel producers, which use ferrochrome as an anti-corrosive element.
Ferrochrome producers responded in kind, with market leader Xstrata closing seven furnaces in the third quarter to perform maintenance and leaving two others idle due to soft demand. Samancor Chrome, another big producer, had said it would cut production by 60 000 t in the third quarter.
The sources said stainless producers were seeking to keep ferrochrome prices low by using up their inventories instead of buying new material.
Besides lower demand from the stainless steel sector, prices were pressured due to large amounts of scrap material coming onto the market, one source said.
Venezuelan Govt studying investment bids for steel sector
Venezuela's basic industries and mining ministry (Mibam) is mulling investment proposals in the steel sector submitted by Indian and Chinese companies, a government news service has reported. India's Essar and China's MMC have expressed interest in forming strategic alliances for the installation of a steelmaker announced by President Hugo Chez in which the Venezuelan state would hold a majority stake.
The Indian company also could install a plant to produce rails and other structures, the statement said, without detailing investment figures.
"We are studying the proposal and will wait for the company's presentation," investment promotion deputy minister Mr Valmore Vquez said.
The state steel company in the southeastern Guayana region announced by Chez requires US$1bn in investments and will supply specialty steel need for the construction of bridges, ports and airports.
To build the project the government foresees strategic associations with
foreign investors to ensure technology transfers and technical assistance.
US trade body urges Bush to eliminate import duties on steel
An American trade body has urged President George W Bush to consider elimination of all import duties on steel to reduce the burden of post-hurricane reconstruction costs to taxpayers. The American Institute for International Steel (AIIS) cautioned that the cost of reconstruction in the hurricane-affected areas will increase manifold since both the government and the private sector will have to pay anti-dumping or countervailing duties on steel products.
Many steel products currently have anti-dumping duties in place, including hot rolled sheet, plate, structural, re-bar, pipe, and tube all critical building materials in the reconstruction effort, the AIIS said. Paying such duties would also be essentially a corporate welfare subsidy, and a colossal injustice and waste of taxpayers money, it said.
Chinese mills announces price adjustments
Chinese steel makers Angang and Shagang have announced price reduction with effect October 1st on commercial quality round bars, ReBars, wire rods and plates. The price of sections and HRC were kept at the same levels.
It is reported that new tax paid price for round bars are RMB3020 PMT, Rebars RMB2941 PMT and RMB3772 - 3232 PMT for plate.
Audi in discussion with Russian and Chinese steel suppliers
Audi is looking for new sources of steel, according to Automobilwoche, quoting Audi purchasing chief, Erich Schmitt.
Audi has traditionally only sourced steel from European suppliers, but it is now in discussion with Russian and Chinese steel suppliers.
This situation is particularly unsustainable when you consider that Audi produced and sold 51,000 cars in China last year
Investors withdraw from Erdemir for OYAK inexperience
Despite comments that the giant of the industry remained in the hands of a domestic investor heard following a privatization tender for Erdemir, the biggest iron and steel establishment in Turkey, the stock exchange reacted nervously Wednesday to the news that the Armed Forces Pension Fund (OYAK) had won the tender by offering $2.77 billion.
Rumors that the world steel giant Mittal and Arcelor had sold off Erdemir shares, which they had collected prior to bidding anticipating acquiring the mill, increased the panic among small investors. Mittal Steel, which owned 23 million shares in Erdemir, which corresponds to 8.61 percent, has reportedly sold half of its shares.
Two strategic investors that participated in the tender for had shares in Erdemir. The shares are falling either because they are selling their shares or others are selling theirs for they assume these two investors are selling their shares, Ekspres Yatirim Arastirma (Investment and Research) Manager Haldun Alperat said.
There are doubts whether how much value OYAK will add to Erdemir. The new owner does not have much experience in the steel sector which has global competition. It purchases commodities from the sector through to its connections with the automotive sector, but there are questions if it would be able to produce a synergy that would provide Erdemir raw materials at cheaper prices.
If it forms a partnership with a foreign investor, expectations might change. Asked whether or not they would go for partnership during his statement after the tender for Erdemir, OYAK Director General Coskun Ulusoy left the door open, We have to consider all kinds of issues.
Tokyo Steel lowers scrap price
With the international steel scrap price dropping, the price of Taiwanese H2 scrap to Japan has also dropped. The current price for H2 scrap is US$238 PMT C&F, about NT$8,250 PMT.
Tokyo Steel had dropped scrap purchase price by around 1,000 yen/mt. Russian A3 scrap had dropped to US$260 PMT C&F. Japan H2 scrap quotation is US$236 PMT C&F. The highest quotation is US$252 to US$255 PMT C&F.
Workers back to work at PSC Metals
Unionized employees of scrap metal supplier PSC Metals agreed to a three year contract with the company, ending a nearly month long strike. International Brotherhood of Teamsters Local 142 members employed by Phillips Service Corp. Metals favored the contract by a 4 to 1 ratio in a vote taken Sunday, business agent Mr Jim Skinner said. They went back to work Monday, processing scrap metal inside the Mittal Steel Burns Harbor plant, Skinner said.
About 100 Local 142 members walked off the job Sept. 9 after rejecting initial contract offers from PSC in a dispute over wage and pension issues.
PSC Metals spokesman Mr George Baker said a federal mediator proposed the contract late last week. PSC Metals all along was offering "a wage and benefits package that is significantly above and beyond what these employees already have," Baker's statement said. Mr Baker's statement said the company thanked Mittal Steel USA for its support during the strike.
Schnitzer Steel reports record annual earnings
Schnitzer Steel Industries Inc has reported for the fiscal year ended August 31, 2005, record net income of $146.9 million on revenues of $853.1 million. In comparison, net income was $111.2 million on revenues of $688.2 million for the 2004 fiscal year.
"Schnitzer Steel completed another strong quarter that resulted in a record
year for earnings and revenues not only for the Company as a whole, but also for each of our three business segments," said Mr John D. Carter, President and CEO. "We continue to see good demand for all our products and remain optimistic regarding the fundamentals underpinning our businesses."
"We feel that our recent transactions to grow Schnitzer will position it well for the positive market conditions we anticipate in 2006. We are pleased with the initial progress in integrating the businesses that we acquired through the separation of our joint ventures with Hugo Neu. We will further strengthen the recently acquired New England metals recycling operation when we acquire the minority interests in the Rhode Island business. Finally, we believe our Greenleaf acquisition will enable a significant expansion of our Pick-N-Pull Auto Parts Business in a region where supplies are growing," added Mr. Carter.
BHP Billiton & Mitsubishi team up to set up smelter in Sarawak
BHP Billiton and Mitsubishi Corporation have teamed up to set up an aluminium smelter in Sarawak. In a joint statement on Oct 6, the two companies said they had concluded a memorandum of understanding to work together to develop the smelter. They did not say where exactly they would site the smelter. They also did not provide any other details.
They join a group of other companies that are planning to set up smelters in the east Malaysian state. It is reported that Smelter Asia Sdn Bhd, a company controlled by Tan Sri Syed Mokhtar Al-Bukhary, will resubmit a bid to build an aluminium smelter in Semilanjau, Sarawak. It said the proposal was among three that the government had in hand. One was from a joint venture between Cahya Mata Sarawak Bhd (CMS) and two Chinese companies - Luneng Group Co Ltd and Sinohydro Corp. The other came from Australia's Rio Tinto Group, the world's second largest mining group.
"BHP Billiton and Mitsubishi have a successful history of developing projects together, most notably the award winning Mozal smelter in Mozambique," the companies said. "BHP Billiton's expertise in aluminium smelter development and Mitsubishi expertise in infrastructure development will help deliver a world-class smelter industry to Sarawak.
BHP Billiton is the world's largest diversified mining company with a market capitalisation of US$98 billion. It produces 1.3 million tonnes per annum of aluminium and four million tonnes per annum of alumina.
Mitsubishi is one of the largest diversified trading and investment companies in the world with over 200 bases of operations in about 80 countries. Its market capitalization amounts to US$31 billion.
Income of Polish coal mines falls
In the first eight months of this year, the Polish mining industry had PLN 793.5m (Euro 201.5m) of net income, down from PLN 1.4 billion in the same period of last year. Sales were at the same level and amounted to PLN 13.4 billion. Coal exploration decreased nearly 1.3m tonnes and amounted to 64.1m tonnes in the January-August period. Inventories rose drastically from 2m tonnes to 5.8m tonnes. On the other hand, mines debts fell from PLN 6.1 billion to PLN 3.9 billion.
Every year, the industry notes price and sales decreases but this year, another important element appeared: Zdzieszowice coke plant owned by Mittal Steel Poland withheld acquisition of coal from JSW coal company. It was due to the PHS privatisation, which was not well thought through, Wieslaw Blaschke, the head of Energy Fuel Market Research and Economics in PAN institute commented.
Since January, coke coal exploration has fallen by 13.8 percent, so have its prices (from 20-50 percent). At the end of August, mines have sold 59.3m tonnes of this coal, or 3.7m tonnes fewer than last year. Exports fell by over 8 percent. Indonesian coal is competing with the Polish product
Gladstone Pacific gets government backing for nickel refinery
Gladstone Pacific Nickel Ltd's proposed $983 million nickel and cobalt refinery in northeastern Australia won the backing of the Queensland state government. The government declared the proposed refinery a significant project and wants the company to submit an environment study by October 2006, Queensland Premier Mr Peter Beattie said yesterday in Parliament
Nickel prices have more than doubled in the past three years as China, the world's fastest-growing major economy, bought more of the metal to make stainless steel used in kitchen utensils and construction. Higher prices have prompted miners to propose new mines and refineries to meet demand.
"The refinery will have the ability to produce 30,000 tons of nickel and 1,400 tons of cobalt a year," Beattie said in the statement.
Construction of the first phase of the plant could start in 2007, and production could begin in 2009, the statement said.
Workers walk off job at Gary Works blast furnace
An unknown number of workers walked off the job early Wednesday rebuilding the largest blast furnace at US Steel Corp.'s Gary Works.
There were varying reports of how widespread the work-stoppage was early in the day, but by late afternoon US Steel spokesman Mr John Armstrong said everyone would be going back to work. "The issues with the unions have been resolved," Mr Armstrong said. "All misunderstandings have been cleared up, and everyone will be returning to work on the next shift."
The problems started when paychecks bounced for some workers employed by the Pirson Group, a Belgian firm.
Armstrong said the bounced checks were not the fault of U.S. Steel or Pirson. It was apparently due to a bank error. The bank has corrected the situation and taken steps to make sure it does not occur in the future, Armstrong said.
The No 14 blast furnace is being rebuilt to replace the decades-old No. 13, which had outlived its usefulness. When complete, the No. 14 will be capable of producing 9,200 tons of hot metal per day 2,155 tons more than No. 13 -- at 97.5 percent availability for the next 20 years
Construction drives steel demand in UAE
A local news paper has reported that the demand as well as the price of steel has increased due to surge in infrastructure and property development in the UAE
The increased demand for steel has also created a major market sector of steel stockiest and suppliers who compete to provide the most comprehensive variety of steel on demand."
There are about 15 players in the local UAE market with three to four top level ones. At present, seven iron and steel factories in the UAE are manufacturing various steel products, which are consumed by local construction industry
Ann Joo offer for Malayawata Steel unattractive
THE voluntary general offer VGO by Ann Joo Resources Bhd to buy the remaining shares it does not own in an associate steelmaker is not attractive, the minority shareholders watchdog association MSWG said. Ann Joo, which holds 32.06 per cent of Malayawata Steel Bhd, made an offer to buy the rest of Malayawatas shares for RM1.50 apiece.
MSWG is of the view that after considering the track record of Malayawata Steel, including its profitability, past earnings and net tangible assets, the offer price is not attractive to minority shareholders, it said.
The VGO would only happen if Ann Joo manages to get more than 50 per cent or a controlling stake in Malayawata, two months after it sent out the offer documents. However, Ann Joo is only an inch away from a mandatory general offer, which would be triggered if it has 33 per cent of Malayawata.
Malayawatas almost 40 year history in operations will provide Ann Joo a competitive edge and a stronger base for expansion of its marketing and distribution of steel-related products and services
Bollore cuts Vallourec stake amid Aegis bid talk
French financier Vincent Bollore has cut his stake in steel tube maker Vallourec, amid market speculation that the corporate raider might use the cash to increase his stake in British media firm Aegis
In a statement on Thursday, Group Bollore the investor's holding company -- said it now held 17.69 percent of Vallourec, down from a previous stake of 21.89 percent.
Group Bollore added it had sold around 274 million euros ($330 million) worth of Vallourec shares in 2005, representing a capital gain of 229 million euros.
