January, 04 2006
Chhattisgarh sponge iron units resume production
Chhattisgarh 70 closed sponge iron units resumed production on Tuesday, a day after Prime Minister Dr Manmohan Singh assured them of regular iron ore and coal supply.
Mr Suresh Agrawal, president of Chhattisgarh Sponge Iron Manufacturers Association, said Tuesday: The prime minister assured Chief Minister Dr Raman Singh in Delhi Monday that the central government would help the closed units to overcome the recurring iron ore crisis and coal linkage problems."
Mr Agarwal added: "We have resumed production from Tuesday and we are sure that the sponge iron units that make steel will start getting coal linkage by January end." He added that it would take at least three-four days for complete resumption of production.
BCCL set for turnaround
Bharat Coking Coal Ltd BCCL a loss making subsidiaries of CIL is all set for a turnaround this fiscal, with expectation of profit-earning of Rs 70-80 crore by the end of 2005-06. Giving this information to the coal ministry, BCCL also said that the turnaround from a near-bankruptcy situation has been made possible by putting in place a dedicated strategy focusing on creating and internalising product values, and arresting and reversing the trend of persistent decline in coal production since 1999-2000.
BCCL had incurred a loss of Rs 569.85 crore and cash loss in excess of Rs 300 crore in 2003-04. This improved to a loss of Rs 199 crore in 2004-05.
However, as per estimates of the first nine month period of the current fiscal, the company has achieved break even, earning a profit of Rs 1.66 crore as against losses of Rs 259.35 crore in the corresponding period in 2004-05.
Uttam Galva Steels inks $40 million deal
Uttam Galva Steels Limited UGSL, the countrys second largest galvanized steel manufacturer has inked a 3-year unsecured deal worth US $ 40 million with Deutche Bank AG.
Mr Ankit Miglani, Director, Uttam Galva Steels, said, We constantly explore avenues to reduce our cost of production. The current deal is structured at Libor plus 300 basis points, which is probably the lowest for any steel company in India. Earlier this year, BNP Paribas and Societe Generale Corporate & Investment Banking had taken exposure to the tune of $15mn. Thus we are trying to increase our exposure to international banks and reduce cost of funds.
Uttam Galva announced the successful commissioning of its 6-HI Reversible Cold Rolling Mill recently as a part of the Rs3.5bn expansion plan to manufacture cold rolled sheets to cater to the exacting standards of Automobile and White Goods industry. The new Cold Rolling Mill will increase UGSLs cold rolling capacity to 750,000 MT per annum. Plans are afoot to introduce one more stand this year, whereby UGSL is expected to reach a rolling capacity of 1mn tons in 2006.
Monnet Ispat to set up a sponge iron unit in MP
Monnet Ispat Ltd has proposed to set up an Rs 200-crore sponge iron unit in Madhya Pradesh and it is reported that the company is in talks with the Madhya Pradesh government to give shape to its plan, which is almost finalized.
As per a report in a business daily The company has decided to set up a sponge iron unit at the proposed special economic zone in Gwalior. The company has also found a local partner in the venture. The investment may go up further by other Rs 30-50 crore.
Monnet Ispat already has a plant in Raipur with a 300,000 tonne capacity.
Tribal agitating against construction of steel mills in Orissa
Angry villagers have stopped work at the Jindal and Mesco steel plants in Kalinga Nagar in Orissa. The villagers are protesting the death of 13 people, most of them tribal who were killed in mob violence and police firing on Monday. The situation in the town remains tense with the tribal defying curfew orders and refusing to lift road blockades. Curfew, which had been imposed in several parts of the industrial town, had been lifted on Tuesday morning
The tribal, while asserting that no one would be willing to part with homestead or agricultural land for industrialization of the area, demanded that Chief Minister Mr Naveen Patnaik should come to the spot and discuss the issue with them.
People displaced by one such project turned violent when TATA Steel tried building a boundary wall in the proposed area. Police then used teargas to disperse the crowd and later fired on the mob
Ruia group to buy two sick Orissa units
The Ruia group will complete the acquisition of two sick Orissa state owned units Hirakund Cables and IDCOL Rolling Mills Ltd IRML by end of January or early February at a total consideration of roughly Rs 20 crore. "There are no further hurdles before acquisition of these two companies and we are hopeful to takeover both the facilities in January or February," the Ruia group Chairman, PK Ruia, said.
Both the companies located at Hirakund are expected to provide backward and forward integration to fabrication and crane manufacturing business of Jessop & Co.
Hirakud Cables is an aluminium conductor wire manufacturer and also started a transmission tower manufacturing facility in April 2005.
IRML has a capacity to manufacture 25,000 tonnes of rolled products, including torque steel, angle, flat and rounds. The company was closed since August 1998 and put on the block in 2003.
Dofasco Duel - ThyssenKrupp increases its offer
ThyssenKrupp AG announced that it will increase its offer to purchase all of the common shares of Dofasco Inc to C$ 63.00 per share. ThyssenKrupp also announced today that, in order to allow sufficient time for the receipt of all necessary regulatory clearances, it will extend the date of acceptance of its increased offer to January 25, 2006. ThyssenKrupp will mail a notice of variation and extension to Dofasco shareholders in the coming days.
"ThyssenKrupp's decision to increase its offer reflects the quality and strategic value of Dofasco" said Dr. Ekkehard Schulz, Chairman of the Executive Board of ThyssenKrupp. "We will continue to pursue the acquisition of Dofasco, recognizing the significant growth opportunities for our combined North American steel operations."
ThyssenKrupp's offer was mailed to Dofasco shareholders on December 5, 2005, with an original expiry date of January 10, 2006.
China to adjust capacity of steel sector
China's National Development and Reform Commission NDRC have recently submitted a report on the measures for overall adjustments of industrial capacity of the steel sector. NDRC has listed 11 sectors facing overcapacity or potential over capacities for overall adjustments with the steel sector on top of the list.
Mr Liu Zhi, director of the NDRC's industrial policy department told a press briefing held in Beijing recently that as of 2003, steel sector has made blind investment and its industrial capacity surpassed the market demand. By the end of 2005, the production capacity of the steel sector exceeded 470 million tons. In addition to the rebuilding capacity of 70 million tons, there still exists a future capacity of 80 million tons in the sector.
Industrial overcapacity results in increased production and low prices as well as lower profits. Statistics released by the National Statistical Bureau show that during the Jan-Nov period of 2005, the profit growth of the steel sector declined to 3.9% at present as against 36.1% in the first half of the year, down some 90%.
ICGs Sago mine has history of roof falls
An Upshur County coal mine where 13 workers were trapped Monday has a recent history of roof falls and serious safety violations, according to a review of government records. In 2004, the Sago Mine reported an injury rate that was three times that of similar-size underground mines across the country.
And last year, the Anker West Virginia Mining Co operation was fined more than $24,000 for about 200 alleged violations, according to U.S. Mine Safety and Health Administration data.
During the last six months of 2005, the Sago Mine reported a dozen accidental roof falls, according to MSHA records. Only one of those roof falls caused an injury, the MSHA records show.
In that October to December inspection, MSHA cited the Sago Mine for violating its approved roof control and mine ventilation plans. The company was also cited for violations concerning emergency escape ways and required pre-shift safety examinations.
US steel imports in November deceased
Newly released preliminary US government figures covering steel imports for the month of November 2005 show that steel imports decreased 15% from October 2005 levels. The change in November's total amount of steel imports was due primarily to decreases in blooms, billets, and slabs; hot rolled sheets; and wire rods. November 2005 imports of finished steel products decreased 8% compared to October 2005, while imports of semi-finished steel decreased 36%.
November 2005 imports of steel mill products were down 31% compared to November 2004. November 2005 imports of finished steel were down 29% compared to November 2004, while semi-finished steel products decreased 38% compared to November 2004.
November 2005 imports of hot-rolled steel decreased 24% from their October 2005 levels and were down 52% compared to November 2004 levels.
November 2005 imports of cold-rolled steel increased 14% from October 2005 levels and were down 47% compared to November 2004 levels.
November 2005 imports of cut-to-length plate decreased 20% compared to October 2005. November 2005 imports were up 4% compared to November 2004.
November 2005 imports of corrosion-resistant steel increased 7% compared to October 2005. November 2005 imports of these products were down 43% compared to November 2004.
November 2005 imports of wire rod decreased 36% compared to October 2005 levels and were down 46% compared to November 2004 levels.
November 2005 imports of heavy structurals increased 48% from their October 2005 level and were up 23% compared to November 2004 levels.
Rebar
November 2005 imports of rebar increased 65% compared to October 2005. November 2005 imports of these products were up 4% compared to November 2004.
November 2005 imports of hot-rolled bar decreased 8% compared to October 2005 and were down 13% from November 2004 levels.
November 2005 imports of standard pipe decreased 3% compared to October 2005. November 2005 imports of these products were up 3% compared to November 2004.
November 2005 imports of OCTG decreased 25% compared to October 2005. November 2005 imports of these products were down 7% compared to November 2004.
November 2005 imports of semi-finished steel decreased 36% compared to October 2005 and were down 38%t compared to November 2004 levels. Imports of these products are used by US. steel companies to produce finished products.
Since November 2001 the U.S. Census Bureau (Census) expanded its early release of steel import data to include separate breakouts for carbon, alloy and stainless steel in each of the product categories. The following lists some of the highlights from these new breakouts.
Dofasco Duel - Dofasco supports ThyssenKrupp's sweetened offer
Dofasco said on Tuesday it continues to support a takeover offer from Germany's ThyssenKrupp, which has sweetened its takeover bid for the Canadian steelmaker.
Earlier on Tuesday, ThyssenKrupp raised its bid for Dofasco to C$63 per share, matching a hostile offer from Arcelor shortly before Christmas.
Chinese power producers ask for fixed coal prices
A group that represents power producers has called for the government to keep coal prices at below market prices, at least for this year. China Electricity Council CEC said government controls should remain in place to ensure the profitability of power generators. "The government should keep its controls over the supply and price of coal used for power producers, especially in areas where there is a supply shortage." Mr Wang Yonggan, secretary-general of the CEC, said. This follows a government announcement on Sunday that it will get rid of price controls for coal used for power generation.
At the annual coal ordering conference that kicked off on Sunday, Mr Ou Xinqian, vice minister of the country's top economic planning agency, the National Development Reform Commission NDRC said that in future coal prices would have to be decided through independent negotiations between buyers and sellers. The government will still adjust coal prices if they rise by an "obvious margin," the NDRC said in a circular. But it did not elaborate on the exact figure at which it would intervene.
For a long time thermal coal, coal used at power stations, has been traded in China at two prices: the market price and the set price. The set price, arranged by the government, is much lower than the market price, and the gap has widened over the past few years. The gap between the two prices was as much as 150 yuan (US$18.5) per ton in East China last year, said Mr Zheng Yong, secretary-general of the East China Coal Sales Association.
The 10-day annual coal conference will see major contracts signed between suppliers, big power producers, such as Huaneng and Datang, as well as the transport units.
The recent liberalization of thermal coal prices marks a move towards making energy prices more market orientated, according to industry analysts. But the electricity association's Mr Wang said the current situation is not mature enough for the government to completely free up controls over coal prices.
"Coal prices on the market have been high, while electricity tariffs are fixed by the government, which has put great pressure on the country's power generators," Mr Wang said. Also, coal supplied to power producers is now of a lower quality, so power firms have had to buy more coal for each unit of electricity generated in comparison with previous years, Wang added.
Dofasco Duel - Arcelor reviewing options
Arcelor is 'reviewing its options' following news that ThyssenKrupp AG has matched its C$63 per share bid for Canadian steel maker Dofasco, a company spokesman said. 'Arcelor has taken note of ThyssenKrupps decisions to match its bid and extend the offer to January 25 and Arcelor is reviewing its options,' the spokesman told press
Last month Arcelor raised its bid for Dofasco to C$63 from an original offer of C$56 after ThyssenKrupp put forward a bid of C$61.50, which received the endorsement of the Dofasco board.
Mr Putin does not want to subsidize Indian business in Ukraine
Mittal Steel has been caught in the crossfire of the bitter fight between Russia and Ukraine over natural gas supplies as it found itself directly in the firing line from Russian President Mr Vladimir Putin as the row escalated last week.
It's one thing to subsidies friends and neighbors who like us are emerging from the complicated situation of a planned economy, and another thing, for example, to subsidies Indian business in Ukraine, said Mr Putin during a meeting with a Ukrainian delegation in Moscow
Kryvorizhstal is an extremely profitable mill that makes about 7 million tonnes of steel annually with over one billion tonnes of iron ore reserves.
ThyssenKrupp buys Canadian Hearn Group
ThyssenKrupp AG is expanding its business reach in Canada through the purchase of the Hearn Group of Companies. Terms of the deal were not disclosed. The purchase was made by ThyssenKrupp Materials NA Inc, a unit of ThyssenKrupp Services AG, a member of the ThyssenKrupp AG group of companies of Dsseldorf, Germany.
Seeking to add logistics, quality control, industrial facility maintenance and supply chain engineering to its array of services, ThyssenKrupp targeted Hearn for acquisition about 11 months ago, said Mr Don Hearn Jr., who will stay on as COO. Mr Hearn said the acquisition will provide "exciting growth potential for our division and its good news for all of our employees."
Mr Richard J. Greaves, chief operating officer of ThyssenKrupp Materials, said the acquisition "will provide us with a strategic opportunity to further expand our services in the NAFTA region."
M Don Hearn Sr. started the company 40 years ago as a small construction company and now has operations in US and Canada
Millennium CHP delay effects Excel full year guidance
Australian miner Excel Coal Ltd cut its profit guidance for the second time in three months after delays to a plant at its Millennium coal mine in Queensland State. The Millennium coal preparation and handling plant is running three to four months behind schedule, which may reduce profit to between A$110 million and A$120 million, MD Mr Tony Haggarty told
Excel had forecast profit of A$150 million in the year ending June 30, but said on November 3 that it would lose A$10 million for every month the Millennium coal plant was delayed beyond its planned January start. The delay then was expected to be only eight weeks.
"Basically we'll lose about A$10 million a month from delays, and it looks now like it will be a three to four month delay instead of the two months we had before," Haggarty said. "The only way to ensure we get the results that we want from here is to take control of the project directly."
The Millennium plant is now expected to be finished in late April or early May. Mr Haggarty said "lack of performance by the contractor" was the main reason the project is running late.
Wuhan and Liuzhou plan a 10 million tonne JV
Wuhan Iron & Steel (Group) Corp. WISCO has signed a steel production JV deal with Liuzhou Iron & Steel (Group) Co. in Nanning. The two sides will jointly invest CNY 12.7 billion for Wusteel Liusteel (Group) Corporation Ltd according to the agreement.
Liuzhou Iron and Steel, the largest industrial enterprise in Guangxi, will join the venture with CNY 6.25 billion of all its net assets, while WISCO, China's third-biggest steelmaker, will invest CNY 6.50 billion in the venture. The planned investment for the project will reach CNY 60-70 billion in order to build a 10-milion-ton world-class modern iron and steel complex.
At present, the project has been sent to the related state departments for approval, entering into the stage of comparability assessment.
CVRD awards GRD $1.2 billion Vermelho nickel project
GRD Minproc, the construction subsidiary of Australia's GRD, has won the engineering, procurement and construction management contract for Brazilian iron ore miner CVRD's $1.2 billion Vermelho nickel project, GRD said in a statement. "The project is significant for GRD as it is most likely the largest international project undertaken by an Australian contractor," GRD executive chairman Mr Brettney Fogarty said.
Vermelho is located in the Caraj region of northeast Brazil's Parstate, and is expected to produce 46,000t/y of nickel, 2,800t/y of nickel cathode and 500t/y of copper, GRD said. Mobilization is set to start immediately and production by 2008 year-end, it added.
GRD Minproc has appointed two Brazilian engineering companies, Minerconsult Engenharia and Setal Engenharia Construes e Perfuraes, to provide support to the project.
PSMC privatization 4457 acre land to go with mill
The area spread over 4,457 acres out of under use 19,120-acre area would be given to purchaser in case of the privatization of the Pakistan Steel Mill as per a briefing by the Privatization Commission to Prime Minister Mr Shaukat Aziz
During December 2005 it was revealed that the area in which PSMs plant is currently working is still not owned by the PSM and that the Sindh government had some reservations over transferring the piece of land to the PSM. The prime minister, however, directed the chief secretary to carry out immediate transfer and to clear all the snagging issues related to the transfer of area.
Corus sells Corus Perfo activities
Anglo-Dutch steel and aluminium company Corus Group said on Tuesday it had agreed to sell Corus Perfo, part of its distribution and buildings systems division to German firm Dillinger Fabrik.
Corus said the divestment was part of its strategy to concentrate on activities with high added value.
Corus, Europe's third-largest steel maker, was created through the merger in October 1999 of Dutch Hoogovens and British Steel.
UMW China unit in joint-venture pact
Malaysian UMW Holdings Bhd said its 51%owned subsidiary, Wuxi Seamless Oil Pipe Co Ltd (WSP), has entered into JV arrangements with Panjin Weihua High Technology Energy Saving Machinery Co Ltd in China. The joint venture is called WSP Heat Insulation Tubing Co Ltd. The total investment by WSP will be 5.1 million yuan (about RM 2.39 million) in cash, representing 51% of the total registered capital of 10 million yuan (RM4.68 million) in WSP HITCL.
UMW Holdings said the purpose of setting up the joint-venture company is to offer a wider range of oil and gas-related products and services to its customers.
The principal activities of WSP HITCL are the production, sales and servicing of energy saving heat extraction equipment, heat insulation tubing and casing, oil well electric heating devices and other related accessories.
The principal activities of WSP are manufacturing and trading of hot rolling seamless steel, including tubing and casing, drill pipe, line pipe, boiler tube, tube for structure, conveyance of fluid, automotive, platform rigs and petrochemical plants.
The shareholders of Panjin Weihua are Zhu Changlin 65%, Sun Chengdong 15% and Liu Lanlan 20%.
Higher Nickel costs not tempting SS users to buy early MEPS
MEPS in a recent article said that alloy surcharges on austenitic grades of stainless steel flat products will fall again in January. Type 304 alloy surcharges will be at a 16-month low in Europe and at a two-year low in the USA this is in spite of some US mills having added an energy component onto the figure from November.
MEPS adds that the falls follow declines in raw materials costs. Chromium, unalloyed scrap and nickel are all well down from the peaks they reached earlier this year. It is nickel that has the biggest influence on surcharges, and the LMEs monthly average settlement price fell to just over $12,100 per tonne in November from nearly $14,900 per tonne in August. The drop in surcharges in the last few months has prompted many stainless buyers to stay away from the market as much as possible. They may have to change their strategy if surcharges rebound and there are signs this is about to happen.
Nickel prices have staged a surprising resurgence in the last few weeks. Since mid-November, the LME settlement price has changed from below $12,000 to over $14,000 per tonne. In the first week of December alone, the cash nickel price jumped 9.5%. This rise appears to fly in the face of market fundamentals. Nickel users have been running down their stocks. Cuts in stainless production have reduced demand and inventories of the metal in LME warehouses stand at a two-year peak. Nevertheless, the nickel price is being driven upwards partly through buying by commodity fund managers, and partly on the back of copper which has been trading at record highs.
MEPS conclude that January could be the month that alloy surcharges bottom out. Under normal circumstances, buyers would be taking advantage of this window of opportunity to replenish stocks before the surcharge starts increasing again. But we have detected no rush to place orders. Maybe the China effect has spooked the market with talk of large-scale stainless exports. Or, just maybe, buyers have their eyes on the fundamentals of nickel. These indicate that the metals price should go down as new production capacities come onto the market, and suggest alloy surcharges may not continue going up for very long.
Arc Coals Colorado mine prepares to reopen
Arch Coal Inc. said it hopes to reopen its West Elk coal mine in Gunnison County within the next 10 days after being shut down from a smoldering coal fire. The mine near Somerset has been closed for more than two months since smoldering coal caused a buildup of dangerous combustion gases.
Arch Coal said gas readings inside the mine have been stable for several weeks, allowing the firm to restart ventilation equipment and resume electrical power. Company officials and personnel from the US Mine Safety and Health Administration entered the mine last Wednesday for the first time since its shutdown. Crews have made several more trips into the mine since then to assess gas levels and the condition of mining equipment.
The mine ships coal to about a dozen electrical power producers. Its largest customer is the Tennessee Valley Authority.
New slitting line at Island Steel UK
Island Steel is planning to invest 3 million in new facilities and equipment in new premises adjacent to its existing premises at Alexandra Docks to become a market leader in its field. Company claims that it "will create the highest specification slitting line in the UK".
The new facility will have a 1.5 million slitting machine to more than double the firm's existing capacity. The new equipment will enable 30-tonne steel rolls to be uncoiled and precision cut from anything between 0.3mm to 6mm.
Island Steel was set up in 1994 by father and son team Mr Alan Roberts and Mr Alex Roberts.
CVRD to buy back debt due in 2013 and sell 10 ear bonds
Cia Vale do Rio Doce CVRD plans to sell 10-year foreign currency bonds to fund operations and pay for the repurchase of as much as $300 million of outstanding debt to cut borrowing costs.
CVRD plans to buy back any or all of its 9% guaranteed notes due 2013 issued through its Vale Overseas unit. The repurchase offer expires Jan. 10.
Vale, which won an investment grade rating on its debt in July, is trying to cut its cost of capital to compete with rivals such as BHP Billiton Ltd doing business in Brazil, where the benchmark overnight rate is 18% has forced Vale to pay more to borrow than rivals.
Arch Coal sells select assets in Central Appalachia to Magnum Coal
Arch Coal Inc ACI announced that it had completed the sale of its Hobet Mining, Apogee Coal Co., and Catenary Coal Co. subsidiaries to Magnum Coal Co. effective 12/31/2005.
As a result of the sale, ACI expects to record a small net gain during 4Q05, which includes the write-off of an estimated $50-60m of below-market legacy sales contracts retained by the Co.'s sales in the transaction.
Baffinland announces appointment of CFO
Baffinland Iron Mines Corporation announced that Mr. Robert J Chausse has agreed to join Baffinland as VP and CFO effective March 1, 2006.
Mr Gordon A McCreary, President and CEO of Baffinland stated, "We are thrilled that Rob has agreed to join the Baffinland team where he will be key member to assist in the advancement of what we believe is a world class iron ore project at Mary River, Nunavut, Canada. Rob's diverse financial background in the resource sector over the last dozen years will be instrumental as we advance the project beyond the Aker Kvaerner Scoping Study expected later this quarter, to a Bankable Feasibility Study and ultimately, hopefully, a producing iron ore mine focused on the direct-shipping of lump and fines to European and other markets." Baffinland would also like to take this opportunity to publicly thank Mr. A. George Matthew for his excellent service to Baffinland as CFO during our first two years as a public company. Mr. McCreary went on to say, "George's intent to throttle back his involvement in the first half of 2006 will allow a seamless transition as Rob takes up his duties at Baffinland."
Worst is over for Ornasteel, says MD
The offshoot of a China Steel Corp of Taiwan, Malaysian Ornasteel Holdings Bhd went through a trying time when steel prices abruptly fell in the third quarter of last year. Ornasteel MD Mr Paul Huang believes the company had seen the worst in the third quarter last year. We wrote off a lot of our higher priced inventories of HRC in that quarter, he told press. As a result, the company suffered a loss in Q3.
Ornasteel buys about 40% of its required HRC locally while 60% is bought from China Steel as higher quality products are not produced locally.
Mr Huang said that the HRC sourced locally were relatively costly compared with raw materials he could import and the higher cost affects the competitiveness of Ornasteel's exports resulting in lower volumes
