Coal India Limited announced that it is considering a revision in coal prices to sustain profitability in the long run after inflationary pressures impacted its bottom line in 2006-07.

Mr PS Bhattacharyya chairman of CIL told reporters that We are contemplating a price hike. 33 months is a long period to stay without a hike, but we have not yet taken a decision.

Inflationary impact on costs and a stay by Supreme Court on e-auctioning, affected the pre tax profit of CIL during 2006-07, which declined by over 5% YoY. CIL reported a pre tax profit of INR 8,212.69 crore during 2006-07 as compared to INR 8,676.72 crore in 2005-06.

Paradip Port has handled record cargo traffic of 38.52 million tonnes in 2006-07, surpassing the previous record of 33.11 million tonnes handled during 2005-06, thereby registering a growth of 16.34%. This includes the import cargo of 13.66 million tonnes and export traffic of 24.86 million tonnes. The port earned a net surplus of INR 198.55 crore in 2006-07 while operating income stood at INR 572.40 crore.

Breakup of traffic handled is as under

In million tonnes

Pardip Port handled as many as 1,452 vessels during 2006-07 as against 1,330 vessels during 2005-06. The average pre berthing waiting time of vessels came down from 1.48 hours in 2005-06 to 1.41 hours during 2006-07. The average turnaround time of vessels was also reduced from 2.57 days in 2005-06 to 2.54 days during 2006-07. The average output per ship berth day increased from the previous record of 11,316 tonnes achieved during 2005-06 to 11,795 tonnes during 2006-07. The port railway handled an all time record quantity of 26.54 million tonnes of rail borne traffic surpassing the 22.68 million tonnes handled during 2005-06.

Mr K Raghuramiah chairman of PPT told media that "In 2006-07, Paradip port achieved highest ever growth in traffic throughput despite no addition to port capacity. The growth should be largely attributed to improvement in operational efficiency for which I must congratulate all sections of the port employees.

Mr Raghuramiah added that "Though we have set a target of handling 45.10 million tonne during 2007-08, we are confident of surpassing that and reaching the 50 million tonne milestone."

It is reported that iron & steel industry in the state of Chattisgarh, some of whom are reliant on iron ore from Orissa so far, would benefit by way of sourcing of iron ore from the National Mineral Development Corporation and Chhattisgarh Mineral Development Corporations iron ore JV in the state.

Mr Shivraj Singh chief secretary of Chattisgarh said that "The state government has asked the corporations to constitute the joint venture company by June this year. The MoU for JV was inked in July 2006.

Chattisgarh state government will recommend mining lease of deposit 13 of Bailadila iron ore mine for the JV and as per the iron ore supply clauses mentioned in the agreement, JV will supply the iron ore in following order of priority.
1. If either of the corporations or both jointly set up a steel plant in Bastar region.
2. Steel plants across the state
3. Remaining iron ore, if any, will be transported to other states.

It is reported that Coal India Limited has invited expression of interest for the appointment of consultant to evolve standardized commercial clauses for the introduction of mass production technology and other activities.

CIL would expect consultants to evolve standardized commercial clauses for introduction of mass production technologies and other activities such as continuous miners, powered support longwall. The consultants would also help frame contracts with equipment suppliers.

CIL has embarked upon a plan to invest INR 15,600 crore in the 11th Five-Year Plan to raise output by 170 million tonne to 520 million tonnes from 363 million tonnes as projected for 2006-07.

It is reported that Power Finance Corporation has decided to appoint a consultant with expertise in vetting contracts and commercial transactions for its ultra mega power projects and has invited applications from prospective candidates.

PFC said that in order to develop the ultra mega power projects on a fast track basis, the company requires a consultant, who is an expert in the areas of contracts and commercial. It plans to appoint the consultant on a full-time basis for one year, by which time it expects the bidding process for most of the projects to go through.

The consultant would be mandated to assist PFC in evaluation of bids for technical consultancy firm, assist in finalization of the request for quotation and request for proposal documents. Besides, the consultant would be required to assist in finalization of draft power purchase agreement to be attached with the request for proposal document in consultation with procurers and in finalization of the contract documents to be entered with the selected developers.

However, insider point that the move, on the back drop of Sasan ultra mega poer plant award to Globecq led consortium, could be a little late in coming as bidding for 2 projects has already gone through while the process has been kick started for two more projects.

Bharat Heavy Electricals Limiteds Hyderabad unit is planning to expand its gas turbine manufacturing capacity to 15 turbines a year. It is also reported that BHEL Hyderabad will soon enter into technical tie ups with Mitsubishi and Alstom for manufacturing the new generation super critical thermal power units of 800 MW and above.

Mr GV Rami Reddy group GM of BHEL Hyderabad told media that about INR 45 crore was being invested in the new workshop being set up exclusively for manufacturing and testing the gas turbines that would take the capacity to around 15 turbines a year from the present 7 units to 8 units.

It is reported that BHEL would also start building 230 MW turbines in the new shopfloor as against 100 MW turbines which are being produced so far by the unit. BHEL Hyderabad has already extended the agreement with GE for heavy duty gas turbines of 230 MW it has newly entered into a collaboration with Alstom of US for designing and manufacturing pulverizes up to 1,000 MW for super critical thermal units. An agreement with Mitsubishi is under finalization for pumps meant for super critical thermal power stations.

BHEL Hyderabad achieved recorded a turnover of INR 2,860 crore for the year 2006-07 up by INR 200 crores as compared to 2005-06. But its profit before tax increased by just INR 15 crore to INR 630 crore due to pressure on margins on account of global competition while the turnover.

Local media reported that Jharkhand government has last week reviewed the draft of rehabilitation and resettlement policy and is likely to announce the same any time now.

Mr Madhu Koda chief minister of Jharkhand and other ministers during a meeting with states industry department officials asked for clarifications on the exact definition of a family that would reap the benefits of the policy and that who all would be entitled for a job in lieu of parting away with their land or property for an industrial project.

SK Satapathy secretary of industries department said the meeting was more of a confidence building exercise for the top politicians of the state. He said "We tried to clear the queries of the CM as well as his asides regarding the exact content of the much touted R &R policy. On our part we would try to incorporate the few suggestions that came in from them.

Port of Rotterdam, which is advising Indian Ports on future strategy, said that although major Indian ports are witnessing high growth rates, they have a lot of catching up to do as far as their counterparts in North West Europe are concerned. While the 11 major ports between Hamburg and Le Havre handle 1,020 million tonnes of cargo, the 12 major ports in India between Kolkata and Kandla handle about only 420 million tonnes of cargo annually.

Mr Marc Evertse area manager of Port of Rotterdam while speaking at an interactive meeting held between the shipping ministry and port officials pointed out that The North West European ports serve a population of about 200 million, where as the Indian ports serve a population of 1,100 million. In addition while the North West European ports are matured markets, India is emerging.

Port of Rotterdam, one of the busiest container ports in the world, was commissioned by the Indian Ports Association about a year ago, to advice on business plans of the major ports in India. The key recommendations of the Port Authority of Rotterdam include the following
1. More delegation of powers from shipping ministry to the major port authorities and from higher ups to places of action within ports so that several decisions can be taken and acted upon in a relatively faster manner.
2. Port authorities should make master plans and not do the jobs rather outsource them
3. Major ports should invest more in mechanized cargo handling as ports appear to be berth minded. Whereas it is cheaper to improve efficiency of present berths than create more berths
4. Ports should invest in hinterland connectivity to be able to offer total transportation solutions to the clients.

It is reported that CVR Navayuga Group has shown interest to develop a Greenfield minor port of 15 million tonne capacity on (built, own, operate, share and transfer basis at Astarang in Puri in Orissa at a investment of INR 6,000 crore. Mr CBS Rao CMD of Navayuga Group met Mr Naveen Patnaik chief minister of Orissa last week in this regard.

Navayuga has proposed to develop the port in three phases. In the first phase, it will have two berths for handling bulk cargoes like coal and iron ore. First phase envisages investment of INR 1,500 crore. Navayuga has asked for 5000 acres for the project. It has also asked for exemption of local taxes and stamp duties. Navayuga is proposing to lay 50 kilometer railway line and a four lane highway from Sakshigopal to Astaranga on the PPP basis.

Mr Jayanarayana Mishra state transport minister said that the government would examine the proposal after receiving the final techno economic report from the company.

Navayuga has also proposed to set up a 1320 MW plant with an investment of INR 5000 crore with facilities for making brick from fly ash and a water treatment plant to convert saline water into sweet water.

Orissa government has already lined up private developers for four ports. Orissa Stevedores Ltd is developing the Gopalpur Port, Dhamra Port Company Ltd is constructing a port at Dhamra., Creative Infrastructure Company Ltd has signed an MoU to set up a port at Kirtania on the river mouth of the Subernarekha and POSCO has proposed to set up a captive port at Jatadhari on the river mouth of the Mahanandi.

Industry experts forecast that shipping rates for iron ore and coal, driven by demand from China and port bottlenecks, may rise to a record this year and gain further until 2010.

Mr Lee Jong Chul CEO South Korea's largest carrier of bulk commodities STX Pan Ocean Co in an interview said that We could see a record level for moving bulk this year. The recent market sentiment, congestion at ports and unexpectedly strong demand from China will bring rates to levels last seen in 2004.''

Mr Lee said that delays at Newcastle in Australia, the world's biggest port for coal shipments, have contributed to higher rates as Vessels in Newcastle have to wait about 30 days to load because of a lack of capacity. The problem of congestion is not an issue that will be resolved quickly. As many as 300 largest bulk carriers are waiting to load or discharge at any one time, tying up 15% of global capacity.

Ms Louisa Follis GM of research at shipbroker Simpson Spence and Young in Singapore said that about 25% of the world's existing fleet of bulk vessels are on order shipyards that's less than the oil tanker industry, where 40% of the world's fleet are on order. Ms Follis said that The dry sector is fundamentally strong. Limited fleet is expected to keep tonnage shipping relatively tight.''

According to the Baltic Exchange in London, the Baltic Dry Index has risen 24% this year after an 80% surge in 2006 and it rose a record 6,208 in December 2004 averaging 4,511 in 2006 while the average so far this year is at 4,692.

Bloomberg last week reported that world's largest iron ore producer Cia Vale do Rio Doce has pledged to halt sales to pig iron companies that use material made by slaves or illegally felled timber from the Amazon rain forest.

Mr Jose Carlos Martins ED of ferrous metals division of CVRD during an interview said We will stop supplying companies where we see clear evidence of violating environmental or labor laws. We can't be an active player in this. When we see evidence of non compliance, we will act unilaterally, even at the risk of being sued for breach of contract.

CVRD plans to collect evidence of the use of slave labor or illegal deforestation to decide whether to stop supplying pig iron makers. Mr Martins said that CVRD won't wait for the government to revoke a customer's license before halting shipments to companies found to be using illegal labor or materials.

According to Brazilian labor inspectors and prosecutors, some Brazilian companies use slave labor and trees felled illegally in the Amazon to make the charcoal that's used as fuel in the production of pig iron.

CVRD sold 6 million tonnes of iron ore to Brazilian pig iron makers in 2006 accounting for just 2.2% of its total sales.

It is reported that Aquila Resources is heading for a USD 100 million plus legal showdown with US privately held coal giant AMCI in an opportunistic bid to take control of two coal and iron ore projects. The dispute has sparked speculation that AMCI was restructuring its ownership ahead of plans to sell its stake in the API iron ore project to Consolidated Minerals.

Mr Tony Poli MD of Aquila recently alleged that moves by AMCI to restructure its subsidiaries' holdings in the Belvedere coal and Australian Premium Iron joint ventures with Aquila amounted to a change of control which has triggered an option for Aquila to acquire AMCI's stakes at a price to be set by an independent valuer. Mr Poli said "It is an opportunity that has been presented by AMCI's restructuring.

Located at the southern end of Queensland's Bowen Basin, Belvedere is a hard coking coal project which could produce about 12 million tonnes a year for 40 years. A bankable feasibility study is due to start in the second half of this year, with an expected go ahead in 2010. At Belvedere the two partners are already selling 51% of the project to Brazilian giant CVRD under a deal that will allow CVRD to eventually take 100% of Belvedere.

At API, Aquila and AMCI are working to define an initial resource in Western Australia's Pilbara which would be big enough to support a 15 million tonnes to 20 million tonne a year iron ore mine for 10 years. They plan to complete a pre-feasibility study by July. Drilling has so far yielded encouraging iron ore grades of 55% to 65% iron ore.

According to Mr Poli, AMCI's stakes in the two projects are likely to be worth more than USD 100 million.

AMCI has said it will dispute Aquila's claims.

BNamericas reported that that Brazilian long steelmaking group Gerdau's move to snap up a steel mill in Mexico is strategic although the target itself is small.

Mr Pedro Galdi an investment analyst with ABN Amro Corretora told BNamericas that The price is above what Gerdau usually pays for acquisitions. Brazilian company is due to pay USD 740 per tonne crude steel for Mexico's Feld Group that owns rebars and profile producer Siderurgica Tultitlan.

The analyst said Tultitlan has installed capacity of 350,000 tonne per year steel and 330,000 tonne per year rolled products. He said "It's a small company, but strategically speaking, very important. He said "Gerdau is making a link between North and South America."

In addition, Tultitlan expansion is due for completion by year end, which will boost mill capacity to 500,000 tonne per year steel and 430,000 tonne per year rolled products.

Porto Alegre based Gerdau is the biggest long steel producer in Latin Americas with operations in Argentina, Brazil, Canada, Chile, Colombia, Peru, Uruguay, the US and Spain. It has installed capacity of 19.1 million tonne.

It is reported that Arcelor Mittal has drawn up a short list of potential buyers for its Sparrows Point plant in Baltimore, which the company is selling to comply with an antitrust ruling.

Mr Adam Warrington a company spokesman in Chicago said "A narrowed list of bidders has been invited to proceed with the analysis and diligence of the Sparrows Point plant. He did not provide other details.

As per earlier reports, a dozen potential buyers, including private equity firms and non US steel makers, had shown interest in the Sparrows Point plant. The list of suiters is likely to include Esmark Steel, CSN and many other global steel makers form Russia and India.

Sparrows Point, which can produce 3.5 million tons of steel a year, accounts for 17% of North American production capacity and as per a Credit Suisse report may fetch as much as USD 2.5 billion.

Standard & Poor's has changed its long term rating outlook on Ukraine to negative from stable based on the deteriorating political climate and the concomitant risks to economic policies deteriorating political tensions between Prime Minister Mr Viktor Yanukovich and President Mr Viktor Yushchenko. This is the first negative reaction by a credit rating agency to an escalating political crisis in Ukraine that may affect investment projects in the country.

S&P said the downgrade was prompted by Ukraine's rapidly increasing private sector leverage and the increasing external indebtedness of its largely domestic banking sector. It said that political hazards are accompanied by structural economic weaknesses adding that Ukraine is vulnerable to trade shocks, with lack of supply side reform making it harder for its economy to absorb external economic shocks.

However, S&P affirmed the country's 'BB-' long-term foreign, 'BB' long-term local, and 'B' short-term sovereign credit ratings.

Mr Valentyna Semeniuk head of Ukraine's State Property Fund during International Energy Investment Forum said that Ukraine's economy will be stable and investors should not withdraw assets from Ukraine.

South African media has reported that the South African competition tribunal will hold a prehearing at its Pretoria offices before holding full public hearings into the fine that Mittal Steel South Africa should pay for contravening the Competition Act.

Mr Lerato Motaung a spokesperson of Tribunal said that the prehearing would not be open to the public.

The tribunal had found Mittal Steel SA guilty of abusing its monopoly position by charging excessive flat steel prices. The case was filed by Harmony Gold and DRDGold. The tribunal said it would consider whether to impose a fine on the steel maker only after holding further hearings.

The maximum fine that could be imposed is 10% of Mittal Steel SA's 2003 domestic sales of flat steel products, which were about R800 million.

A spokesperson of Mittal Steel SA said that lawyers were considering whether or not to appeal against the ruling.

Churchill Mining Plc announced that its maiden drill programme at the East Kutai coal project in Kalimantan Indonesia has discovered occurrences of thermal coal in multiple seams.

The release adds that It has drilled 10 holes, eight of which intersected coal seams greater than or equal to 0.5 meters in thickness. Best intercepts included coal seams of 19.25m, 13.8m and 9.35m thickness. Apart from the high success rate of coal intercepts, the programme was notable because seven out of the 10 holes also intersected multiple coal seams.

The provisional results from those samples tested so far indicate the coal type to be sub bituminous with calorific values on air dried basis ranging from 4,542 kcal/kg to 5,506 kcal/kg with an average of 5,096 kcal/kg, a total sulphur range of 0.10% to 0.22% with an average of 0.14%, an ash range of 1.82% to 15.86% with an average of 6.58% and an inherent moisture content of between 11.96% to 21.44% with an average of 17.47%.

Mr Paul Mazak joint MD of Churchill Mining said We are encouraged by the low sulphur, low ash nature of the coal being intersected at East Kutai which is now finding new markets both as a primary coal and a blending stock. It is still early days but we are delighted weve hit such solid thicknesses and repetitions of coal in our first programme.

The East Kutai project area covers approximately 399 square kilometers made up of two blocks and is situated 110 kilometers northwest of the main population centre of Sangatta in the Regency of East Kutai.

It is reported that production at the Libyan Iron and Steel Company has exceeded 1 million tons of finished products for the second year consecutively. Its production of both long and flat products amounted to 1.070 million tons in 2006 against 1.171 million tons in 2005.

The flat products have achieved a new production figure of 564.000 tons, which is higher by 13% than the figure achieved in 2005, but the level of the long products production of bars and rods was lower than the level achieved in 2005. It was lower by 26%.

LISCOs sales in the domestic market achieved a significant increase in 2006 for the long and flat products. Its sales of flat products increased by 17% and the volume of its sales of long products amounted to 642,000 tons in 2006 as against 634,000 thousand tons in 2005.

LISCO stopped exports of long products due to higher domestic demand which was filled by import of almost 168,000 tonnes, mostly from Ukraine. But its flat products exports increased to 449,000 tonnes up by 28% YoY. LISCO also for the first time exported 68.000 tons of sponge iron and 384.000 thousand tons of hot briquetted iron. The total exports of finished and semi finished products by Libyan Iron and Steel Company exceeded one million tons

South Korea has announced plans to inject capital valued up to USD 212 million in June to fund and launch a nickel mine project in Madagascar.

The ministry of Commerce, Industry and Energy addressed that they will not only offer tax incentives but also will seek private capital through offering shares to the general public although it will be a private mutual fund.

Newly founded mine will have annual production of 60,000 tons of nickel from 2010 to 2037.

Pak Tribune reported that Non-Functional' Chief Justice Iftikhar Muhammad Chaudhry's advocate and Member National Assembly Mr Chaudhry Aitazaz Ihsan has said that the Chief Justice has been declared non functional for canceling the privatization of the Pakistan Steel Mill and refusing to act like as a government yes man.

As per report, Mr Chaudhry Aitazaz Ihsan while addressing lawyers at the Cantt Katcheri last weekend, said that the Chief Justice has been declared non functional for delivering justice to common man by taking suo motto notices, canceling steel mills privatization, and refusal to act as a yes man for the government.

Toronto based Baffinland Iron Mines Corp announced plans to complete a definitive feasibility study for deposit No.1 of its 100% owned Mary River project located 160 kilometer south of Mittimatalik in Baffin Island by December 2007.

The definitive feasibility study is being managed by Aker Kvaerner E&C, which also managed the scoping study completed in May 2006. The definitive feasibility study is expected to enhance the results if the scoping study includes
1. Expanding the annual output from deposit No 1 to 12.6 million dry tonnes per year from the 10 million tonnes per year.
2. Making Steensby Inlet on the south coast of Baffin Island the priority for the deep water port and terminal for the rail line rather than Milne Inlet on the north coast to increase shipping season to 12 months from nine months per year

These new studies are expected to use a higher iron ore price assumption than that used in the scoping study. Iron ore prices have tripled since 2002.

Baffinland Iron Mines Corp has spent almost CAD 60 million advancing the project, a potential direct shipping ore operation with grades of 66% Fe, since reactivating exploration in 2004.

Russia's 3rd largest steel maker Magnitogorsk Iron and Steel Works set the price range for its international share float at USD 12.25 to USD 15.50 per global depositary receipt. Magnitogorsk already has a small free float in Russia, but plans to issue GDRs, each equivalent to 13 ordinary shares, in London and ordinary shares, with a price range of USD 0.94 to USD 1.19, in Russia.

A banking source told Reuters that the company, also known by its Russian initials MMK, aims to raise around USD 1 billion through the offering of new shares.

The company has hired ABN Amro, Morgan Stanley and Renaissance Capital as lead managers for its international float. Bankers involved in the IPO have valued MMK at between USD 9.7 billion and USD 13.6 billion based on its existing market capitalization of about USD 11.5 billion.

Alfa Bank said in a note MMK was trading at 5.7 times EV/EBITDA (enterprise value to earnings before interest, tax, depreciation and amortisation), in line with the Russian steel sector average. "The valuation close to the current market one is quite fair," the bank added.

MMK said in a statement the offer included an over allotment option to purchase GDRs representing up to 15% of the offer.

MMK operates Russia's largest single steel plant in the southern Ural mountains. It raised crude steel output 9.4% in 2006 to 12.46 million tonnes, or 17.6% of Russia's total. Russia is the world's fourth largest steel producer, with output led by Evraz Group and Severstal. MMK last year exported 46.5% of its finished products.

Interfax reported that Hengyang Steel Tube Co Ltd a subsidiary of Hunan Valin Iron and Steel Group and a major seamless tube manufacturer in China is planning to establish two new seamless tube mills in order to boost annual capacity by 400,000 tons.

Beijing based China Minmetals Corp has signed a strategic deal with Severstal to raise its trade with the Russian company up to USD 1.5 billion in the next three years.

A spokesman of Minmetals said that under the deal, China's top trading house will import steel products from Severstal and export refractory materials to the steel mill.

Mr Zhou Zhongshu president of Minmetals signed the pact in Russia in late March as part of a delegation accompanying Mr Hu Jintao president of Chinese on a state visit. The delegate group also paid a visit to Ilich Iron&Steel Works, Mariupol, Ukraine, who expects to extend the copperation with Minmetals into other fields.

The strategic partnership is expected to strengthen Minmetals' long-term relationships with steelmakers in Russia and Ukraine, the spokesman said.

(Sourced from MySteel.net)

Vietnam News Agency has reported that local steel maker Hoa Sen Corp has starting operation of Vietnams 2nd largest cold rolled steel mill in southern Vietnam with an investment of USD 30 million out of which USD 8 million will be financed by official development assistance from the Indian government, around USD 5.3 million from the Vietnam Development Assistance Fund and the balance sourced from Hoa Sen.

The new cold rolled steel mill located in Song Than Industrial Park 2 in the Binh Duong Province with a producing capacity of 180,000 tonnes of steel per annum is the second largest cold-rolled facility in the country after the Phu My plant in the southern Ba Ria Vung Tau province, which produces 200,000 tonnes annually. Indias Flat Products Equipment Ltd was commissioned to supply the main equipment for the mill.

Hoa Sen Corp expects more than VND 1.5 trillion in sales and some VND 50 billion in after-tax profit annually out of the facility, set to come online in March next year. It also plans to invest in new steel and iron plants in Ba Ria Vung Tai and Binh Dinh provinces.

Vietnam spent USD 842 million on importing nearly 1.5 million tons of steel billets and finished products in the first quarter of this year posting YoY rises of 69.3% and 41.1% respectively.

According the Vietnam Steel Association, Vietnam imported over 5.6 million tons of steel billets and finished steel products totaling USD 2.9 billion in 2006 up by 1.8% in volume but down by 0.9% in value over the previous year. Steel makers in the country had a combined annual production capacity of some 6 million tonnes by late last year.

Datong Coal Industry Co Ltd has agreed that it would provide 140,000 tons of coal to Japan in April 2007.

Earlier Chinese coal producers had said that they would refuse any coal exports to Japan if China and Japan failed to reach steam coal price contract for fiscal 2007 before April 1st 2007 and this news indicated that splits had occurred within the alliance.

According to contractual practice between the two countries, China should offer 364,000 tons of coal in April to Japan. The 140,000 tons Datong Coal Industry Co Ltd supplies this time account for approximately 40% and thus can to a great extent ease Japan's demand pressure.

Despite that, other coal producers, including Yanzhou Coal Mining Co. Ltd., still stick to previous principle. Supplying and requisitioning parties will resume negotiation in mid April 2007.

(Sourced from MySteel.net)

Malaysian builders and property developers recently warned that the construction sector may slip back into negative growth if controls on prices of steel bars and cement are not lifted immediately.

Mr Datuk Osman Abu Bakar secretary general of Malay Contractors Association said that "The steel bars and cement supply shortage is very serious. Some of our members can no longer absorb price fluctuations on their own without facing serious cash flow problems." Mr Osman said that "In February, our members had to buy steel bars at MYR 1,900 per tonne and today, the price is MYR 2,300 per tonne. In just two months, prices jumped by 20%. How can we survive?" Osman asked. He expressed fear that if the current market distortion prolongs, it is foreseeable that many projects under the Ninth Malaysia Plan will be delayed or even abandoned.

Master Builders Association of Malaysia, representing about 600 contractors nationwide, fears that more infrastructure and housing projects will be abandoned because of the artificial shortages created by the cement and steel bar suppliers. Mr Patrick Wong president of Master Builders Association of Malaysia said that "Many of our members cannot absorb these added costs after signing fixed price contracts without any fluctuation clause for building materials and labor price increase."

Malaysian ministry of Domestic Trade and Consumer Affairs imposed ceiling prices for steel bars at between MYR 1630 and MYR 1650 per tonne. As for cement, from December 1st 2006, it is sold at maximum prices ranging between MYR 217 and MYR 233 per tonne. But when steel prices in the export market are more favorable, millers start to export more, creating an artificial shortage locally. In the end, contractors have no choice but to buy cement and steel bars above the ceiling price.

After shrinking 10 consecutive quarters from March 2004, the Malaysian construction sector finally saw some expansion, registering 0.6% in the last quarter of 2006.

Interfax reported that the China Securities Regulatory Commission has launched an investigation into Shanghai listed Hangxiao Steel Structure Co Ltd, to look into abnormal stock price fluctuations and suspected insider trading.

China's first publicly traded steel manufacturer in the US, General Steel Holdings Inc, has reported that its net sales from operations increased to USD 139.5 million in 2006, representing a 55% YoY increase from USD 89.7 million in 2005 and shipment volume increased by 68% YoY to 341,702 tons in 2006 as compared to 203,422 tonnes in 2005.

Its overall cost of sales was USD 135.3 million in 2006 as compared to USD 81.2 million in 2005 a 67% increase and gross profit decreased from USD 8.6 million in 2005 to USD 4.2 million in 2006. Selling, general and administrative expenses were USD 2.4 million in 2006 a 12.9% decrease from USD 2.8 million in 2005.

Mr Henry Yu CEO of General Steel Holdings Inc said "At the end of 2005, we made the strategic decision to become the dominant company in our industry. During 2006, we invested heavily in our operations to implement the critical steps necessary to achieve this goal: we added four new production lines, increased our capacity by 150,000 tons, increased our distributor base from 19 to 35, established three regional sales offices, hired and trained 350 new production workers, gained market share and increased our established lines productivity by 20%."

He added that "These investments hurt our short term earnings, but they laid the groundwork for our future growth plans. Although our earnings for 2006 came in below that of 2005, we are very pleased with our results. As we enter 2007, our new lines are now producing at the same levels of efficiency and capacity as our original lines. This coupled with the other investments we've made combine to make us very excited about the year ahead.

Canada's leading steel producers Stelco announced that it cuts around 300 jobs from its Hamilton mill as it transfers its entire hot strip processing to the Lake Erie mill.

Mr Rodney Mott CEO of Stelco says the Hamilton plant will not be shut down and will continue making as much steel as it ever made.

The job cut involve workers at the Hamilton hot strip mill, as well as in certain support services in maintenance, shops, and coil processing and the company says it will continue assessing aging equipment and certain product lines at its Hamilton operations. Stelco posted a CAD 145 million loss.