January, 19 2006
Jharkhand not to welcome small investors
Jharkhand government has decided not to entertain any investment proposal of less than Rs.15 billion as it is already finding it difficult to provide land to investors amid growing protests over land acquisition and displacement by tribal. Till now, the state government has signed 42 MoUs with companies in mining, steel and power sector. These companies are expected to invest Rs.1,750 billion to set up their industries in the state.
An official in the industry department told press "We still have 150 proposals from companies which are interested in signing MoUs with the government. The amount varies from Rs.1 billion to Rs.12 billion. But in principal we have decided not to entertain any investment proposal less than Rs.15 billion." He added: "We have already signed MoUs with 28 companies who will spend less than Rs.15 billion in the state."
Essar Steel targets 17-18% share of auto business
Essar Steel has said that the company will be targeting the auto steel market with a view to become a leading auto steel supplier in the domestic and international market. It has set up its cold rolling facility with the auto steel segment in mind.
The total steel requirement for auto segment is classified into 0.36 million tonnes of HR sheets, 0.32 million tonnes of HR plates and 1.46 million tonnes of CR. Essar is targeting a market share of around 18% and 17% in HR and CR auto grade steel, respectively.
The CR complex is being set up at a cost of Rs 1,000 crore at the companys Hazira plant. The complex will have a capacity of 1.2 million tonne per annum and include 0.5 million tonnes each of galvanized and annealed products.
POSCO submits participation proposal in Haridaspur-Paradip rail line
POSCO is reported to be keen on acquiring stake in the 82 kilometers Haridaspur to Paradeep rail line project and has submitted a proposal for participation in the project which is being developed by a special purpose vehicle led by the Rail Vikas Nigam Ltd of Indian Railways.
The Indian Railway has sanctioned the Haridaspur-Paradip rail line project in 1996-97. The railway project will be first of its kind in the country which will be developed by the public companies jointly with the rail users.
The Rail Vikas Nigam, last week, has invited expression of interest (EoI) for equity participation form strategic investors in the project specific SPV.
According the Nigam, the equity component of the project , whose cost with diesel traction is Rs 456 crore and with electrification is anticipated to be Rs 500 crores, will be Rs 200 crore.
The railway line which will be an alternative to the existing Cuttak-Paradip railway line will be strategically important for Posco. As the Cuttack-Paradip line has become congested, the new line will serve as the alternative route for transportation of raw materials like iron ore and coal from Keonjhar and Angul districts of the state to the plant site.
CIL board clears proposal for CVL
Coal India Limited proposal for is setting up a subsidiary Coal India Videsh Limited CVL for foreign ventures has been cleared by the CIL Board and sent for necessary approval of the Coal Ministry, an official statement said today.
A dedicated Coal Videsh Department has been set up by CIL at Kolkata for perusing coal equities abroad. A resource pool consisting of consultants of international repute has been created to assist this department.
CIL has identified Australia, South Africa, Indonesia, Mozambique, Zimbabwe and Russia as prospective destinations for initiating ventures of CVL.
China's iron ore imports to rise by 35 million tonnes in 2006
China's iron ore imports are expected to rise to 295 million tonnes this year, up from 260 million tonnes during 2005, the China Business News reported, without citing sources.
Domestic iron ore output is expected to total 517 million tonnes, the newspaper added.
The newspaper said China will oppose higher iron ore prices this year, despite rising imports.
Brazils steel output reduced by 3.9% in 2005
Brazilian crude steel production tumbled in 2005 as high interest rates and elevated stocks at distributors and manufacturers crimped domestic demand, the Brazilian Steel Institute IBS said. Brazilian steelmakers produced 31.6 million tonnes of crude steel in 2005, down 3.9% from 32.9 million tonnes in 2004, IBS said. Brazil slipped one spot to the ninth largest steel producing country in the world in 2005, according to IBS.
The data came in slightly above IBS' preliminary year end forecast made in December, which pegged 2005 production down 4.1% at 31.6 million tonnes.
"High interest rates, low level of government investments and the consequences of elevated stock levels at steel consumers contributed to this result," IBS said in a statement.
Minmetals announces record revenue of $17.8 billion in 2005
China Minmetals Corporation, the country's State-owned metals trading giant, has reported record revenue of US$17.8 billion for 2005, according to its senior official. Its revenue increased by more than 18% YOY Mr Zhou Zhongshu, president said. He declined to disclose the company's profit, but said it also recorded a new high last year.
The outstanding performance was largely due to the growth of its major businesses, in the trade, steel and raw materials sectors. Major businesses now account for 94.6% of the company's total revenue.
Minmetals is adjusting its strategy to move from a simple trading company to one also involved in the manufacturing sector. The company has strived to establish a sales network across China, Zhou said. He explained that contact with end-users helped to enhance the utilization of resources and add more value to the firm's products. This strategy also helped the company counteract the negative affects in the steel sector resulting from China's attempts to control the industry.
The group has diversified its business into a number of industries, including shipping, transportation and finance. "After a rapid growth in the past few years, we are standing at a high level," said Mr Zhou. He expected Minmetals would develop into a leading metal and mine producer and trader across the world.
Japan 2005 crude steel output down
Japan's crude steel production inched down 0.2% in 2005 from the previous year to 112.47 million tonnes Japan Iron and Steel Federation said. Raw steel production in Japan peaked in 1973 with 119.32 million tons.
In 2005, the output of special steel products for use in automobile and machineries rose 4.1% to 24.55 million tons, reaching a record high for the fourth straight year. That of ordinary steel products declined 1.4% to 87.92 million tons.
Japan Iron and Steel Federation said. Japanese carmakers and shipbuilders purchased crude steel aggressively, while steel exports to Asia were brisk in the first half of last year, it said. But after the prices of multipurpose steel products dropped due to increased outputs in China and other countries, major Japanese steelmakers cut their production volumes during the second half of 2005 in order to support their product prices. Analysts expect them to continue to adjust their production levels.
China steel exports surge due to domestic overcapacity
The sharp rise in China's steel exports last year and the fall in imports were the result of excess capacity and redundant production in the country, analysts said. The General Administration of Customs announced that China's 2005 steel and steel product exports rose 44.2% to 20.52 million tonnes while steel imports were down 11.9% at 25.82 million tonnes.
"There continues to be tremendous overcapacity and irrational production in China with domestic supply greatly outpacing demand, so the rapid rise in exports and falling imports would be the logical result," said Mr Wu Xianfeng, steel analyst at Guotai Junan Securities. But he added that China is unlikely to stop importing certain kinds of steel soon. "Although imports were down somewhat, China will continue to have a need for crucial high-end value-added steel and steel products going forward and imports are best suited to meet this demand," he told. He said there was no relief in sight, at least in the short term, for the ailing sector which has seen prices plummets in China by over 3,500 yuan per ton since the peak in April. "For crude steel, not only will overcapacity in China continue to boost exports and limit import demand, but will also prove a drag on selling prices for much of this year if not longer," he said.
Mr Tian Shuhua, senior analyst at China Galaxy Securities, said the rapid increase in exports was symptomatic of structural ills within the sector. "China's steel sector is experiencing many systemic problems. As recently as a few years ago, China was the world's largest steel importer and only exported token quantities. But the sharp rise in steel exports seen last year is an unhealthy development for the industry," he said. He said exports were further spurred by reductions in export tariffs, and helped pull down prices on world markets for a sector already suffering from shrinking margins. It is an unhealthy path for the sector to take and shows that massive restructuring is still needed to keep the industry afloat. The rapid rise in exports also suggests that many smaller, less efficient producers are desperately trying to offload steel on world markets due to overcapacity at home," Mr Tian said.
China has been encouraging consolidation in the sector to rein in redundant overcapacity. Some major producers have also shown restraint by pledging to cut production voluntarily. The country is expected to have overcapacity of at least 100 million tonnes of steel for 2005 amid expected demand of 300 million tonnes tons. The country's steel production capacity is expected to hit 490 million tonnes in 2006 and 538 million tonnes in 2008, up from 419 million tonnes in 2004, earlier media reports said.
Kazakhstan to supply pellets to China stainless steel smelter
Kazakhstan's iron ore mining and concentrate group, the Sokolovsko-Sorbai Mining Production AS, will supply iron ore pellets to the new stainless steel smelter, which is being constructed by the Chinese Jiuquan Steel in the North-West of China, according to the press office of the Kazakhstan government.
The new smelter, whose construction has been recently approved by the Chinese development and reform state committee, will have the annual capacity of 600,000 metric tons of stainless steel and will be commissioned in 2007. The nickel for the stainless steel production will be supplied by the Chinese Jinchuan Group.
In 2006 Sokolovsko-Sorbai will increase its iron ore pellets output by 17.6% on the year to 8.7 million tons. The export of pellets and ore concentrate in 2006 is seen at about 10 million tons, 84% of total sales. In January-October 2005 Sokolovsko-Sorbai exported 4.75 million tons of iron ore pellets. The export of iron ore pellets to Russia during the period fell by 39.5% to 3.34 million tons, while exports to China increased by 76.2% to 1.41 million tons.
AK Steel announces February surcharges
AK Steel Corp. adjusted some surcharges for February, lowering one and boosting another.
Flat-rolled carbon steel has a $205 per ton surcharge for products shipped in February, down from the $215 surcharge added to products shipped in January.
The company increased its electrical steel surcharge to $280 per ton in February, up from the $255 surcharge tacked on in January.
The surcharges are based on reported prices for raw materials and energy used to manufacture the products, with the December 2005 purchase cost used to determine the February 2006 surcharges.
Middletown based AK Steel produces flat-rolled carbon, stainless and electrical steel products as well as carbon and stainless tubular steel products for the automotive, appliance, construction and manufacturing markets.
Vietnam Steel makers had a bad 2005
The Viet Nam Steel Association VSA said local steel-makers could expect another languid year unless the real estate market starts to pick up. The association said that although local producers sold a total of 3.1 million tonnes of steel last year up 10.5% over 2004, Viet Nam's steel industry suffered its worst year since 2000, with 44 of the association's 50 members reporting financial losses. While a few domestic steel makers including Thai Nguyen Steel (Tisco) and Southern Steel reported modest profits, most foreign-invested steelworks reported losses. The VSA cited Japanese invested VinaKyoei, Korean invested Viet Han and Australian invested Viet Uc as examples, although it did not reveal financial details.
The association said the poor performance was due to unstable prices of pig iron, the main input material of steel production, and fixed retail prices on finished steel, which were set at VND8 million (US$500) per tonne last year. Steel-makers faced pig iron prices of $400 per tonne early last year, and stockpiled large supplies to shelter themselves from further anticipated price hikes. However, prices on the input material fell to $350, dragging down retail prices in the local market and forcing steel-makers to slash their prices.
Meanwhile, the sluggish real estate market led to lower demand for construction-grade steel, further exasperating the situation, said VSA chairman Mr Pham Chi Cuong. According to the Ministry of Construction, real estate transactions in Ha Noi and HCM City slumped by as much as 60-65 per cent in 2005. Natural disasters, including several typhoons and floods that ravaged coastal provinces last year, contributed to lower demand for steel, Mr Cuong said.
In a bid to mitigate further losses, the association is calling for its members to increase exports and enter new markets, and to not sell steel at below production costs, estimated to be around VND7.3 million ($458) per tonne.
S. Korea's steel plate inventories fall in December
The steel plate inventories of South Korean steel manufacturers fell in December for the third consecutive month amid reduced prices and declining imports, Korean Iron & Steel Association KISA said. To counter surging imports from China, the nation's steel industry has recently lowered prices of products, which encouraged distributors to sell off steel plates. In addition, imports dropped due to a slowdown in the economy, KISA said.
Steel plate inventories of South Korean companies went down to 997,000 tons in December, down by 65,000 tons from a month earlier, the association said. The inventory index for steel plates fell by 10.9 points to 167.2 in December. Since its lowest point of 80.9 in April 2004, the index climbed steadily until it hit a record high of 190.8 in September 2005. The index sets 100 as the base month of January 2004.
Imports of steel plates dropped to 692,000 tons in December, 14,000 tons less in comparison to November. Heavy steel plate imports also decreased by 31,000 tons to 245,000 tons in December.
BlueScope Vietnams Ba Ria Vung plant starts sales
BlueScope Steel Viet Nam, made its first sale yesterday with the delivery of steel coils to the Ho Chi Min based Van Thanh Company. Speaking at a ceremony to hand over the products, Mr Peter Wilson, its president, said it was an important achievement for the company in Viet Nam.
BlueScopes $105 million plant in Ba Ria Vung Tau Province has an annual capacity of 125,000 tonnes of metallic coated flat steel and 50,000 tonnes of painted flat steel products.
BlueScope first came to Viet Nam in 1993 when it built a steel plant in Bien Hoa city in Dong Nai Province. In 1996 it established a second plant in Ha Tay province. The company is now a leading supplier of metallic coated steel products in the country.
Rautaruukki has completed the acquisition of PPTH
Rautaruukki Corporation has today completed the acquisition of PPTH Steelmanagement Oy from funds managed by private equity investor CapMan and from the company's management. PPTH will be consolidated in Rautaruukki's reporting from January 1, 2006. PPTH will use the Ruukki marketing name and logo.
PPTH is the leading Nordic constructor with steel. The acquisition will significantly increase Ruukki's know how in construction design and project management, creating a knowledge-based platform for Ruukki's growth in construction solution business also in the CEE countries.
Kuzbassrazrezugol increased coal output in 2005.
Kuzbassrazrezugol Coal Company in Kemerovo region of Russia has increased its coal output by 2.4% in 2005 up to 40.3 million tones from 39.4 million tones in 2004. The coal deliveries to consumers increased by 1.3% to 39.45 million tones from 38.9 million tones in 2004.
The KRU affiliates in 2005 decreased the production of coal for coke by 28 % to 3.8 million tones from 5.26 million tones in 2004.The delivery of coking coal cut 29.5 percent to3.7 million tones from 5.24 million tones
Export of coal raised 4.5% to 17.6 million tones versus 16.9 million tones in 2004. The export of coal taking into account the open-pit mine Taezhny amounted to 19.08 million tones.
According to the Ministry of Industry, Viet Nam's steel-sector projects need VND15 trillion ($949.3 million) of investment this year. The projects include a smelter at the Thai Nguyen steel mill in the northern province of Thai Nguyen, and the Quy Xa iron ore joint venture in Lao Cai, both of which are expected to have an annual production capacity of 500,000 tonnes of steel ingots.
Other projects requiring investment are the Cuu Long Steel Ingot Mill, a steel and cast iron mill in the northern port city of Hai Phong, and the Samoa-Qing Dinh Stainless Steel Mill in the southern province of Ba Ria -Vung Tau.
Foreign-invested projects slated for next year include the $1 billion Tycoon Group metallurgical complex in the central province of Quang Ngai and the Sunteel Company Steel Mill in Ba Ria Vung Tau.
The construction ministry predicts prices in the domestic market this year will range between VND7.2 million and VND8 million ($450-$500) per tonne.
Viet Nam's current demand for steel stands at 2.8 million tons per year, 75-80 per cent of which is imported.
Slovak Kovostroj launches new operation in Romania
Kovostroj SRL, a daughter company of Kovostroj Dobina, Slovakia's biggest producer of galvanized strips and thin-steel profiles used in plastic-frame windows, has begun manufacturing operating in Romania. "Until now, we've been exporting profiles to Romania. Now we are going to produce them there," chairman of the Kovostroj Board Mr Darko Karlovsky told press.
The company's exports to Romania have until now represented 18% of its total exports, the second largest after the Czech Republic, which accounts for one quarter of Kovostroj's exports.
According to Mr Karlovsky, the company wants to become the leader on the central-European market in this field, which is why it is continually investing in new engineering facilities.
Kovostroj, with its plant in Dobsina Koice region, originally belonged to the group of firms linked to VSZ Koice but another Koice based company Strip became its new owner in 2003.
Reliance Steel to buy EMJ for nearly $650 million
Reliance Steel & Aluminum Co will buy Earle M Jorgensen Co for nearly $650 million in cash and stock, a deal which will add 39 metal processing facilities in the United States and Canada to its business and sharply increases its annual revenue. The deal is expected to be finalized in the second quarter of 2006.
EMJ, a distributor of metal products, stocks more than 25,000 different bar, tubing, plate, and various other metal products.
Once the deal is completed, Reliance, based in Los Angeles, will have total assets of approximately $3 billion and annual revenues of more than $5 billion. Reliance said there would be no changes to its senior management or board. EMJ CEO Mr Sandy Nelson will retire as of the closing date and will be replaced by Mr R Neil McCaffery, who recently became president and COO.
Baku Steel shutdown temporary
Baku Steels President Mr Paolo Perviz said that every big enterprise can encounter problems and temporary breaks in its work and added that it is not right to exaggerate and politicize this issue: "The Company has stopped its production for 2 weeks because of decrease of ferrous metal cuttings supply, but not because of political processes. The Company was faced such problems in former times, too. But the government intervened in the problem and addressed it. Today the government helps us with this problem as well, because the main reserve of waste metal is at governments command".
Mr Paolo Perviz said After the 2week pause ends, production will be resumed starting from February 1. Repairs will be conducted in the plant during this period. The pause will not affect wages of the employees in any form".
Wyoming coal production surges to 400 million in 2005
Wyoming coal producers reached a new milestone in 2005, with production surpassing 400 million tons. Although unofficial, the 405.4 million tons figure from the Casper Star-Tribune's annual survey represents a conservative estimate. Coal industry analysts at the U.S. Department of Energy's Energy Information Administration estimate the actual figure for 2005 is about 407.2 million tons, with the additional tonnage coming from Powder River Basin operations.
The 2.4% increase in coal production from 2004 translates into good economic news for a state that receives most of its revenues from minerals. Severance taxes, federal mineral royalties and coal lease bonus bid payments from the coal industry in 2005 well exceeded $600 million, according to the state's economic analysis division.
Armtec to acquire a leading Alberta culvert pipe manufacturer
Armtec Infrastructure Income Fund announced an agreement to acquire the Construction Products Division of Twister Pipe Ltd of Calgary, Alberta for approximately C$8 million. With the acquisition of Twister, Armtec will be in a strong position to capitalize on this market opportunity, particularly with corrugated steel pipe in Southern Alberta. The acquisition is expected to close on February 1, 2006.
"This acquisition supports Armtec's growth strategy by strengthening its position in the thriving Alberta market," said Mr Charles Phillips, President and CEO of Armtec Limited Partnership. "The business is an excellent strategic fit, with complementary products that should generate synergies in purchasing and distribution. Twister has a reputation for providing quality products and excellent customer service. We intend to continue that tradition and look forward to introducing our broad line of products and services to our new customers."
Twister Pipe Ltd is a manufacturer and supplier of a wide range of highway construction products since 1976. Twister highway construction products include corrugated steel pipe, structural plate CSP, flared end sections, guardrail, water control gates, agricultural ventilating pipe, specialty CSP fittings and custom fabrications. Twister's Grain Storage Division is not affected by this purchase and will continue normal operations.
Armtec is a leading manufacturer and marketer of drainage products and engineered solutions for infrastructure applications in a diverse cross- section of industries, including the public infrastructure market and private sector markets such as natural resources, residential drainage and agricultural drainage in Canada.
Steel Firm Romtech's 2m All-Ireland Base
UK based Romtech, a manufacturer of prefabricated steel reinforcement cages for the construction industry, is to establish an all Ireland operation in Craigavon in a 2 million investment. The expansion will allow the company to take advantage of growing market opportunities in the Republic for prefabricated piling cages, piling cage accessories and geotechnical products.
Announcing details of the investment, which has been backed by Invest Northern Ireland to the tune of 140,000, Invest NI chief executive Mr Leslie Morrison said Romtech had embraced the approach to quality construction recommended in the Government's Egan report on the future of the construction industry. The report details the scope for improving the quality and efficiency of UK construction. He added "The Craigavon facility will complement and enhance the capability of the Northern Ireland construction sector.
SKF launches new divisional structure
SKF has decided to rationalize its divisional structure and reduce the number of divisions within the SKF Group. As of January 1, 2006 the Aero and Steel Division as well as the Electrical Division have been integrated into other divisions. The SKF Group's operations will as from January 2006 consist of three divisions
The Industrial Division, headed by Henrik Lange, comprising sales to the industrial OEM customers and the development and manufacturing of a wide range of bearings, mainly spherical and cylindrical roller bearings, angular contact bearings, medium size ball bearings, bearings designed for aircrafts and railways, linear motion and mechatronics products, couplings, and related products and lubrication systems. The Division's sales will represent some 31% of the Group's sales.
The Automotive Division, headed by Tryggve Sthen, comprising sales to the car, light truck, heavy truck, bus, vehicle component industries, vehicle service market, two-wheelers, household appliances, power tools and manufacturers of electrical motors and the development and manufacturing of mainly taper roller bearings, wheel hub bearing units, small ball bearings, seals, special automotive components, complete repair kits for the vehicle service market and forged products. The Division's sales will represent some 36% of the Group's sales.
The Service Division, headed by Phil Knights, comprising sales to the industrial aftermarket, mainly through a network of some 7,000 distributors and knowledge-based solutions to optimize asset efficiency. The Division also includes logistics services. The Division's sales will represent some 33% of the Group's sales.
Darlington's Nucor Steel gets top honor
A national manufacturing trade magazine has named Nucor Steels Darlington plant as its choice for 2005s Plant of the Year Award. Plant Services Magazine, a monthly magazine dedicated to best practices in plant maintenance and operations for manufacturers, cited the Darlington Nucor plants maintenance, reliability and asset management as reasons for its selection.
Its really tremendous teamwork that goes on here that makes the difference at this plant, Mr Andy Munson, maintenance manager at Nucor-Darlington, said. Its really very nice for everyone here to get some recognition for their efforts, Mr Munson said.
