December, 14 2005
Steel prices to settle at $350-$400 levels Dr Irani
It is reported that a senior official has predicted that the global steel prices could settle at around current levels of $400 a tonne, and companies with access to own raw materials will be comfortable with that. "We are at the peak of the previous price cycle. I think the prices will hold in the range of $350-$400 a tonne" Dr Irani is reported to have told media
The global prices have fallen by 35 to 40% since January due to glut in the market, which is primarily caused by oversupply situation from Chinese mills and could not be controlled in spite of production cuts by steel makers in Europe and USA. Chinese authorities are taking measures to control the situation and results are yet to be seen
The situation in Indian steel makers is similar or slightly worse as major steel makers are saddled with very high inventories and are forced to reduce price every month. It is reported that Dr Irani declined to comment when asked whether domestic prices would drop further.
JSW Steel orders CR skin pass mill from SMS Demag
Jindal South West Steel Ltd JSW Toranagallu in Karnataka have awarded a contract for the supply of a CCM (Compact Cold Mill) and skin pass mill to SMS Demag AG, Germany. JSW Steel will thus become the first to operate a CCM on the Indian subcontinent.
The two-stand, high-capacity reversing-type cold rolling mill is rated for an annual output of 850,000 tons, rolling coils with a maximum weight of 62 tons and a maximum strip width of 1,650mm. In addition to standard products for building fronts and white and brown goods, the CCM is to produce body plates for the automotive industry. The requirements in terms of the quality of the strip produced and the flexibility of the CCM are accordingly high. To attain these objectives, the CCM is designed as a 6-high mill stand and equipped, among others, with the patented CVCPLUS technology. Apart from cold rolled strip, the skin pass mill will also process hot rolled strip coming directly from the pickling line.
SMS GmbH is the holding for a group of companies internationally active in plant construction and mechanical engineering relating to the processing of steel, non-ferrous metals and plastics.
SAIL inaugurates upgrades at ERW pipe plant in RSP
The 308th board meeting of the Board of Directors of SAIL was held recently at Rourkela Steel Plant and during this period the upgraded ERW Pipe Plant was formally inaugurated by Mr VS Jain Chairman of SAIL
The upgrades are likely to give an edge to RSP in the potential pipe market.
Bajrangbali Alloys to setup mini BF with CIIM at Cuttack
Bajrangbali Alloys has signed a MoU with Chinese company CIIM for establishing a steel plant at Bali Cuttack in Orissa. The MoU was signed by ED of Bajrangbali Alloys Mr D Agarwal and Chairman of CIMM Mr Mark Shujun Ma. The Rs 35 crore projects includes installation of a 65 cubic meter mini blast furnace having a capacity of 150 tonne molten iron per day and a 3.5 MW captive power plant. The project undertaken with technical collaboration with CIMM would be complete and production would commence by the end of 2006. The technology of producing steel from iron ore in a mini compact establishment developed by the Chinese company would be introduced for the first time in the country.
Bajrangbali Alloys MD Mr R Agarwal said that under the MoU, 50% of the steel manufactured in the Plant would be used by the existing steel unit at Manguli while the rest would be exported to China for use by CIMM.
Bajrangbali Alloys presently produces ingots, bars and rods and other structural steel products under the Icon Steel brand having capacity of almost 30,000MT per month
Indian government to survey for coal deposits in North Bengal
Indian government is expected to send a team to North Bengal region to examine possibilities of presence of coal deposits in the India-Bangladesh border region and submit the report to the Coal Ministry.
Information and Broadcasting Minister Mr Priya Ranjan Dasmunshi said that during his visit to Bangladesh he found coal mines in the Dinazpur and Thakurgaon area of Bangladesh, which are very close to the Indo-Bangladesh border in the north and south Dinajpur and Malda districts of West Bengal and there is a good chance of discovering coal deposits in the region
Powerscreen to supply screening and conveyor systems to VSL
UK-based Terex group company Powerscreen, which manufactures screening and conveyor systems, has bagged a $500,000 order from VSL of Hospet, Bellary for deploying the screening and conveyor systems at its iron ore mining areas in Bellary, Karnataka.
Mr Malachy Gribben sales director of Powerscreen said that the company along with Terex Pegson, which offers stationary and tracked crushing equipment, has bagged orders worth $25 million within one year of its operations in India. Terex is targeting fast track infrastructure projects. The company is also eyeing Indias future requirements like the demolishing-recycling and domestic waste-recycling sectors and will firm up plans once the countrys environment policy is ready, said Mr Terry Hughes, sales manager, Terex-Pegson.
UNCTAD Iron Ore Trust reports 1.25 billion tonnes production in 2005
According to the UNCTAD Iron Ore Trust Fund's summary of the global iron ore market in the first half of 2005, the pace of iron ore production increase has slowed down. During the first half of 2005, global production reached over 616 million tons, an increase of 6.8% compared to the first half of 2004 with exports accounting for 338 million tons. The strong growth rate that has prevailed since 2002 is maintained, albeit at a slightly lower level than in 2004. China continues to drive the increase in iron ore demand. Imports in the first half of 2005 were 131.3 million tons, a 34% increase. Chinese growth continues at the same rate as in the first half of 2004.
Based on statistics for the first six months and available country figures for more recent developments, total world production for all of 2005 is projected to reach above 1.250 billion tons. Exports are also likely to reach a new record figure approaching 700 million tons
Based on expectations that global steel consumption will remain relatively strong, iron ore prices are likely to rise again in 2006, although not by as much as in 2005. The price increase is more likely to be on the same order as in 2004, or 15% to 20%.
Australian production in the first six months of 2005 was 129 million tons compared to less than 115 million tons in the same period in 2004. Iron ore output of Brazil was 124 million tons. Among the second tier producers, Ukraine, Venezuela, South Africa and Sweden there was also increased production. Exact Indian figures were not available but it is estimated that Indian production for all of 2005 will increase by more than 10%.
Several iron ore projects have been speeded up and logistics bottlenecks have been eliminated. New projects, both Greenfield and Brownfield, are continuously being announced. While some of the new projects are planned to enter into operation over the next year or two, it is probable that supplies will remain relatively tight over the next year at least.
For the longer term, a large number of new projects have been announced, and if all of them are realized, an oversupply situation could develop towards the end of the decade. This would be the case in particular if Chinese demand fails to grow at the same rates as in recent years.
Growth in China's steel production in November reduces by 4%
China's industrial production rose in November at the fastest pace in last five months and may result in swelling of inventories of goods and cause price declines for manufacturers. The 16.6% increase in was higher than the 16.1% recorded in October
This is clearly a result of the buildup of excess capacity and the massive investment over the past three years,'' said a China strategist at Royal Bank of Scotland in Hong Kong. Strong production means China will continue to buy a lot more resources from abroad,'' said Chief China economist at Citigroup Inc in Hong Kong. Prices are falling by a large degree, company profits are sliding and losses are rising,'' Ms Ma Kai, head of the National Development and Reform Commission, said on Dec. 3. If we don't address the problem, companies could go bankrupt and job losses could increase remarkably. Banks' bad debts could rise.''
Coal output rose by 11.4% in November from a year earlier after advancing 10.8% in October. Production of steel products reduced to 19.6% from 23.6 % in October, as some major steel makers have undertaken production curs to ease gluts. Baoshan Iron & Steel Co., China's largest steelmaker, said in October it would carry out maintenance work this quarter, effectively cutting production, after China Iron and Steel Association CISA asked 50 of the biggest mills to cut output by 5% to help ease a domestic glut.
Ukrainian pipe production up by 12.4% in nine months
Ukrainian steel pipe makers increased production by 12.4% YOY to 2.115 million tonnes during January-November, according to preliminary data. The production of pipes in November 2005 amounted to 186,900 tons were produced.
The GD of the pipe producer association Ukrtruboprom Mr Leonid Ksaverchuk is reported to have expressed that Ukrainian pipe makers are operating stably and forecast 10% in crease over 2004.
"The main problem is how to work with Russia next year. And another issue is the gas price for pipe producers, as it may raise the costs of production," he said. He also added that if Russia raises the gas price to the level it proposes, there would be no need to sign agreements on pipe supplies to Russia. "With such gas prices, we just won't be able to squeeze into the Russia market due to the high pipe price" Mr Ksaverchuk said.
Fitch predicts 2006 as strong year for US coal industry
US coal producers continue to benefit from strong pricing dynamics following the rebound beginning in the third quarter of 2003, according to Fitch Ratings. Spot prices for some coals have leveled off but more contract prices should be reflecting current conditions resulting in higher realized prices. Earnings growth is somewhat constrained by rising costs given tight labor markets, high energy-related prices explosives and diesel fuel, high steel prices, and tight markets for equipment and parts. Fitch views the overall fundamentals for the industry positively.
Spot prices for Central Appalachian coal CAP and Northern Appalachian coal NAP have moderated over the last 12 months given greater burning of Powder River Basin coal PRB. The spot price per ton for CAP was $62.00 for the week of December 3, 2005, down from $66.50 at the end of 2004 but strongly ahead of the year end 2003 spot price per ton of $39.00. NAP spot prices per ton have moderated as well to $44.00 recently, down from $57.00 at year-end 2004 but up from $32.00 at year-end 2003.
Demand for coal continues to be strong given coal's increasing cost advantage over natural gas and fuel oil as fuel for electricity generation. Thermal coal currently has a substantial delivered price advantage over natural gas for electrical generation purposes approximately $1.50 per MMBtu versus natural gas's approximately $7.00 per MMBtu as of July, the most recent data.
While coal is often the fuel of choice for base load electrical generation when natural gas prices exceed $6.00 per MMBtu, natural gas 12-month futures prices have risen further to approximately $10.64 per MMBtu from $5.40 per MMBtu since the beginning of 2004. This implied outlook for continued high gas prices supports a robust coal price market, which continues to be reflected when contracts come up for pricing. Coal demand is generally weighted toward the summer months given that air-conditioning is 100% electricity fueled, where as only about 30% of heating is electricity fueled.
Chinese coalmine accidents kill more in 2005
At least 206 more workers were killed in Chinese mines by December 11 in 2005 year than in the same period during 2004 as per a report form state media, despite repeated promises by the government to crackdown on rampant safety violations in the industry. The China Daily newspaper reported that 5,491 coal miners were killed in 2,939 accidents by December
Mr Li Yizhong, the head of China's State Administration of Work Safety, on Monday vowed to carry out an "iron-handed" safety overhaul of the mining industry by curbing overproduction and shutting down 4,000 mines by December 31, the China Daily said.
Xstrata chosen by Nova Scotia for reopening Donkin coalmines
Coal mining in Cape Breton is going to be revived by the Australian unit of Swiss mining multinational Xstrata as per some reports in Canadian press. Xstrata Coal Plc is reported to be chosen by Nova Scotia's cabinet from three companies bidding to revive the Donkin coal mine. Donkin Resources and Cape Breton Coal Energy were also in the running.
At the Donkin site near Glace Bay, tunnels were dug more than 20 years ago when the mine was owned by the Cape Breton Development Corp., a federal Crown corporation. But the tunnels were allowed to flood after the price of coal slumped, and the estimated 300 million tonnes of coal was never extracted. When it closed, Devco was taking about one million tonnes of coal annually from its Prince colliery, its single producing mine in Point Aconi, N.S., and selling it to the provincial electric utility, Nova Scotia Power.
The Nova Scotia government had called in December 2004 for proposals to develop the Donkin coal block, and tenders closed earlier this year. Full details of the project will be revealed Wednesday but the project could extract up to three million tonnes a year of coal
Xstrata Coal is one of Australia's biggest coal exporters and is part of the Swiss-based Xstrata group, a major player in the Canadian mining sector with a nearly 20% stake in Toronto-based nickel miner Falconbridge.
Bangladesh draft Coal Policy finalized
An expert group has drafted a Coal Policy that focuses on national energy security through the best use of coal in the country and introduction of incremental rate of royalty for the companies which would be engaged in coal mining.
The expert group, headed by the chief executive officer of the Infrastructure Investment Facilitation Centre, Nazrul Islam, said that any company, engaged in coal mining, will have to use or sell 50 per cent of the total coal it will extract in the country. The company will be allowed to export the rest 50 per cent coal.
The government is preparing the coal policy for its optimum use as the countrys current limited gas reserve of 14 trillion cubic feet according to current estimate will be depleted by 2015. The country has a reserve of over 2 billion high-quality coal that is equivalent to 53 tcf of gas.
The draft suggested that all the power plants of the country be coal-based from 2012-2013.
Consol Energy restarts Buchanan Mine
Consol Energy Inc restarted production Tuesday at its Buchanan Mine in Virginia, three months after it was shut down because of mechanical problems. The mine was idled on September 16 when a braking mechanism on the mine's skip hoist, which is used to lift coal from the bottom of the mine shaft to the surface, failed.
Buchanan mine, near Keen Mountain was opened in 1983 and produced 4.4 million tons of coal last year, primarily metallurgical grade. Consol Energy owns 17 bituminous coal mining operations in seven states. The company has annual revenues of $2.8 billion.
Liberal import policy threat to steel industry in Pakistan
The Steel Industry of the Pakistan is in crisis and fast heading towards collapse due to excess import of finished and semi-finished steel products as a result of government's recently announced liberal import policy as per domestic steel manufacturers. Pakistan Steel Melters Association and Pakistan Re-rolling Mills Association office-bearers briefed Lahore Chamber of Commerce and Industry LCCI President Mr Mian Shafqat Ali about problems faced by the industry.
The association members have urged the government to give a second thought to its import policy, which by all means was detrimental to this huge revenue-generating sector of the country. Continuation of the present policy will severely dampen investment and industrial growth, and is likely to result in disinvestments and collapse of the industry with negative socio-economic consequences.
The association said that the re-rolling industry is fully capable of producing all types of structural mild steel products in any quantity and quality that could be needed for earthquake-hit regions. The association members estimated that the installed capacity of the steel re-rolling industry was 4 million tons annually and only 40% of the capacity was being used for production of structural steel.
Iran to export over 2 million tons of steel this year
Irans annual steel export is expected to exceed two million tons by the end of the current Iranian year which started on March 21, stated an official from the Ministry of Industries and Mines. Iran produces about 9.5 million tons of steel this year, Mr Ahmad Harati added, noting that the volume is estimated to reach 10.5 million tons in the next Iranian year.
He pointed to the financial problems that have already severely affected of state-owned steel companies like Isfahan Steel Complex, Mobarakeh Steel Complex, and Khuzestan Steel Complex. Mr Harati stated that the Central Bank of Iran has clarified that state-owned companies and industries are no longer allowed to receive short-term loans from overseas banks and financial institutions. However, the parliament is expected to revise the law in order to ease the process so that these companies can get up to 200 million dollars of foreign loans to fund their projects through project finance
WRF Securities considers options for Mr Constance iron ore project
WRF Securities yesterday announced that it had resolved to pursue options including either a trade sale or possible IPO for its 100%-owned Mt Constance iron-ore project, in northwest Queensland, after negotiations with an associated listed mining company, AXG Mining, for the sale of the project were discontinued by mutual agreement.
The Mt Constance project is regarded as a non-core asset for WRF, which is focused on the continued growth of its $300-million diversified property syndication and funds management business. However, WRF believes that the project has significant strategic value as an iron-ore asset, particularly in the current strong market environment.
The Mt Constance project is located approximately 40 km from the Century Zinc mine in northwest Queensland. The project area was extensively explored by BHP between 1956 and 1963, with work completed including over 200 diamond drill holes, the sinking of two exploration shafts, underground mining trials and bulk sample extraction for beneficiation test work.
BHP identified a significant sedimentary hematite target at Mt Constance and reported a substantial pre-JORC resource, but subsequently changed its focus to the Pilbara region of Western Australia following the discovery of high-grade direct shipping ore in that region. Beneficiation and processing test work carried out by BHP indicated that the iron ore at Mt Constance was economic to mine and that commercially acceptable iron grades could be achieved after beneficiation.
WRF is continuing to build its knowledge base and evaluate various issues such as the provision of power for beneficiation and possible palletizing of the ore.
NLMK 9 month revenue up by 5.4% but net down by 19.2%
The NLMK Group's consolidated sales revenue for the first nine months of 2005 was US$ 3.387 billion, an increase of 5.4% compared to the first nine months of 2004.
Gross profit decreased by 3.1% to US$1.629 billion. Net income was US$1.045 billion, a decrease of 19.2% compared to the first nine months of 2004.
NLMK is a vertically-integrated steel producer. NLMK has a 97% ownership of Stoilensky GOK, Russia's third-largest iron ore producer, and a 33% stake in KMA-Ruda and 12% in Lebedinsky GOK.
Steelworkers campaign to unionize Dofasco
It is reported that the United Steelworkers union is once again trying to unionize Dofasco Inc. Dofasco has remained mostly non-union over the decades by matching wage increases won by the Steelworkers at Stelco.
"We've had a campaign on for about ten weeks now," said Mr Wayne Fraser, director of the Steelworkers Ontario and Atlantic division. "Workers are very concerned about the recent developments at Dofasco," he claimed. Mr Fraser said that Dofasco stands to be restructured with a new buyer. He said the Steelworkers have received calls from concerned Dofasco employees, who were also impressed with how the Steelworkers resisted concessions when Stelco restructured.
Dofasco CEO Mr Don Pether has said that, with Thyssen, "Dofasco Hamilton will be the steel-producing hub of the combined North American business, and the opportunity to continue to reinvest and grow our facilities is very good news for Hamilton and Ontario." Thyssen CEO Mr Karl Kohler said part of the reason Dofasco and Thyssen complement each other is the lack of overlap in their operations meaning there will be no need for restructuring or job cuts.
Malaysian pipe maker CSP floats for funds for expansion
CSP Steel Centre plans to float 100 million new shares at three baht each in an initial public offering.
CSP MD Mr Weerasak Chaisupat said the company would spend 100 million baht raised from the offering on new machinery to boost production capacity. He said the upgraded facilities would help expand the company's pipe product range. It currently supplies pipes to the auto, furniture and electrical appliance sectors. Production capacity is expected to triple to 30,000 tonnes of cold-rolled steel pipe per year by the end of 2006.
Severstal to pay dividends for nine months
The decision to pay interim dividends in the amount of 3 rubles per share was approved by the Shareholders of Severstal on the Extraordinary General Meeting, which was held on December 6th, 2005. The starting date for payments determined as December 10th, 2005. Over the nine months the summary dividend payments of the Company will total 6 billion rubles, representing a decrease of 26.7% from the same period a year earlier.
Severstal is the principal operating company within a major Russian industrial holding group, under common control, directly or indirectly, of a single shareholder, which has assets in metallurgy, mining, automobile making, machinery, transportation, banking, insurance, woodworking and other business.
The principal activity of Severstal is the production and sale of steel products. The Company unites assets of the Cherepovets steel mill and Severstal North America Inc
Tarpon Industries announces new CFO
Tarpon Industries Inc, a manufacturer and distributor of structural and mechanical steel tubing and engineered steel storage rack systems, today announced that Mr John A Mayfield has joined the company as its new CFO. Mr Mayfield will report directly to Tarpon President and COO Mr Patrick Hook, and will be responsible for finance and accounting. Mr Mayfield succeeds Mr James T House
"It is a pleasure to announce the appointment of Mr John Mayfield as Tarpon's new CFO," said Tarpon Chairman and CEO Mr J Peter Farquhar. "John's proven leadership skills, expertise in acquisition integration, public company experience, and business acumen, coupled with his background as finance and accounting executive for billion dollar corporations makes him a tremendous asset to the Tarpon team as we drive to substantially scale our business."
Tarpon Industries Inc, through its wholly owned subsidiaries within the United States and Canada, manufactures and sells structural and mechanical steel tubing and engineered steel storage rack systems.
Grande Cache Coal announces appointment of Director Engineering
Mr Robert Stan, President and CEO of Grande Cache Coal Corporation have announced the appointment of Mr Lloyd E Metz to the position of Director, Engineering and Planning. Mr. Metz will be responsible for the long term development plans of Grande Cache Coal and for providing senior engineering guidance to current operations. He will be based in Grande Cache Coal's Calgary office and will report to the President and CEO.
Mr Lloyd is a mining engineer with 27 years coal mining experience including extensive mountain mining experience in west central Alberta and south east British Columbia. He joined the Corporation in August 2005 as Grande Cache Coal's Chief Mining Engineer. Prior to joining Grande Cache Coal, Mr. Metz held various senior operating positions with both Luscar Ltd. and Elk Valley Coal Corporation.
"I'm extremely pleased that Mr Lloyd is joining our senior management team" said Robert Stan. "His extensive operations experience combined with his leadership and management skills make him an important member of our team. Lloyd will play a key role in helping Grande Cache Coal develop our future mining plans as we continue to build a sustainable, long term mining operation."
Grande Cache Coal is an Alberta based metallurgical coal mining company whose experienced team of coal professionals are developing a long-term mining operation to produce metallurgical coal for the export market from Grande Cache Coal's coal leases covering over 15,000 hectares in the Smoky River Coalfield located in west-central Alberta.
