Iron ore export issue remains unresolved in GoM

PTI has reported that the high powered Group of Ministers, which met under the chairmanship of Mr Shivraj Patil union home minister, after examining the views and arguments put forth by Indian steelmakers and Indian iron ore miners, remained undecided on the contentious issue of iron ore exports or gradually tapering it off within the next few years.

Indian Steel Alliance told the GoM that in view of the predicted growth of the steel industry, unless iron ore exports were curbed, investors would not come and there is a need to cap ore exports at 90 million tonnes and taper it off within the next 5 years to 7 years.

Mr Moosa Raza chief of Indian Steel Alliance told the media that "We told the GoM that the total reserve of iron ore would exhaust within the next 28 years. If exports continue then they will deplete faster. So there was a need to conserve ore for value addition within the country. The steel industry will need nearly 50 billion dollars based on capacity expansion to 160 million tonnes by 2016. Nobody is going to invest unless iron ore is ensured through allocation of captive leases."

Mr Raza added that the ISA also pointed out to the GoM that Hoda Committee's recommendation on value addition within the state would leave out large number of capacities and that the emphasis should be on value addition within the country.

SAIL to get another exclusive berth at Haldia

BL reported that Steel Authority of India Limited will soon get another berth at Haldia dock for almost exclusive use and that the new berth No 2, now in final stage of construction and due for commissioning in less than a month, will extend preferential berthing facility to vessels calling at the dock on SAIL's account. The annual throughput of the berth is estimated at 3 million tonnes.

The report cites a spokesman for Haldia dock as saying that "The SAIL vessels will be given ousting priority at the new berth subject to SAIL, guaranteeing a minimum berth hire and a given volume of cargo throughput annually. We have also promised certain back up area adjacent to the new berth to SAIL to facilitate the handling of traffic."

SAIL currently uses berth No 4A of Haldia dock almost exclusively by way of back to back arrangement with ISPL, the private firm that built the berth on BOT basis. The berth is used mainly for handling imported coking coal. In 2006-07, SAIL imported 4.5 million tonnes of coking coal through Haldia with berth No 4A accounting for 3 million tonnes and balance 1.5 million tonnes split over several other berths.

SAIL is believed to have indicated to step up coking coal import through Haldia to more than 7 million tonnes per annum and as per report, SAIL plans to increase coking coal imports to 5.5 million tonnes to 6 million tonnes in 2007-08. Berth No 4A will continue to handle 3 million tonnes and the new berth the balance.

However, it is learnt that the work on the rail connectivity to the berth would take a few more months to complete.

Inox Air commissions ASU at Hazira for Essar Steel

Air Products announced that its joint venture in India, INOX Air Products Ltd, has brought a new air separation unit on stream to supply gaseous products to Essar Steel. The 900 tonnes per day ASU will supply oxygen, nitrogen and argon to support the increasing steel production of Essar Steel at Hazira in Gujarat under a long term contract. The plant will also supply liquid products to meet the fast-growing demand in the local market.

Mr Pavan K Jain MD of INOX Air Products said "This new ASU is a significant milestone for our on site business in India. It puts us in a stronger position to meet our customers' increasing needs driven by the economic growth in both the steel making sector and in overall manufacturing.

INOX Air Products is Air Products' joint venture in India. The company has more than 35 operating locations and 1,200 employees throughout India. The ASU at Essar Steel is the third major on site plant that INOX Air Products has commissioned for the Indian steel industry.

NTPC to takeover Bongaigaon power plant and set up 750MW units

National Thermal Power Corporation Limited, the Assam government and Assam Power Generation Corporation signed an agreement for transfer of the existing infrastructure of Bongaigaon Thermal Power Station of APGCL in Assam to the NTPC for setting up 3x250MW coal based thermal power station on the same location at an estimated cost of INR 3,750 crores. The existing 240MW Bongaigaon plant has remained inoperative since 1998 owing to the irregular supply of coal.

NTPCs first power plant in the North East region is expected to start generating electricity from the first 250 MW unit by 2009-end. The second unit is likely to be completed in 2010-11 and the third by 2011-12.

Mr T Sankarlingam CMD of NTPC said that "Bongaigaon Thermal Power Station will be a regional power station and power from the station will be allocated to regional constituents with an overriding priority to Assam.

Mr Sankarlingam informed that NTPC has obtained coal linkages of 1.65 million tonnes annually from North East Coalfields Limited and 0.97 million tonnes from Eastern Coalfields Ltd. The coal will come from Margherita fields in Upper Assam initially and later from ECL.

Assam has a peak demand of 800 MW, but its power generation capacity is only 350 MW. Its peak shortfall of 150 MW increases to around 200 MW in the lean hydro season. Assam will receive 400 MW power from this project.

Jharkhand invites Sinosteel to set up plant

Ranchi Express reported that Mr Sudhir Mahto deputy chief minister of Jharkhand, was also holds the charge of Industry, during his recent visit to China, has extended an invitation to the chairman of China's state run Sinosteel Corp and president of Beijing chamber of commerce to visit Jharkhand.

Mr Mahato, after returning from China, told the media persons that his visit would spell a qualitative jump in terms of steel and textile production for the State. He said that "This is because we saw the advanced technology the Chinese industry is using to turn D-grade iron ore into A-grade. They are turning 55 to 58 grade ores into 64 to 65 grades.

JSW Steel to raise USD 325 million through FCCBs

JSW Steel announced that it will raise USD 325 million through the issue of foreign currency convertible bonds proposed to be listed on the Singapore Stock Exchange.

JSW Steel in a communiquto the Bombay Stock Exchange said that the FCCBs have a conversion price of INR 953.40 per share. The price is a 50% premium over the scrip's closing price of INR 635.60 on the National Stock Exchange.

The bonds have a tenure of five years and one day and a yield to maturity of 7.25% per annum if not converted in to shares during the its tenure.

JSW had earlier authorized the finance committee of directors to decide on all matters relating to the proposed FCCB issue. The shareholders of the company approved the issue in a meeting on June 13th 2005

ABN AMRO Rothschild and Citigroup are the joint book runners and lead managers for the offering.

India to introduce news energy codes for commercial buildings

Indian Government has introduced Energy Conservation Codes for commercial buildings. Initially, implementation of the codes will be voluntary but will be made mandatory soon under the Energy Conservation Act 2001 for the buildings having connected load of 500 KW or more. The implementation of the codes will reduce energy consumption from 25% to 40% and will yield annual saving of about 1.7 billion units.

The codes sets a minimum efficiency standards for external wall, roof, glass structure, lighting, heating, ventilation and air conditioning of the commercial buildings in all the five climatic zones in the country. The state government will have the flexibility to amend these codes to suit local or regional needs and notify them accordingly.

Mr Sushil Kumar Shinde union minister for power said that the code is aimed at bringing down the energy consumption of the commercial buildings through the efficient design and use of resources. He said that efficient use of energy and check the leakages in energy consumption is must as by conserving only 20% of energy the country would save about INR 20,000 crore.

Mr Shinde said that very soon the Government would put in place appropriate institutional structure to oversee implementation of the codes throughout the country with involvement of states and other stakeholders. Effective awareness and outreach program would be launched to overcome strong first cost bias that usually needs owners to under invest in energy efficiency during building design and construction. The state governments would be requested to integrate the energy codes in city bylaws through municipalities.

PTC inks MoU with IIFC to develop power projects

PTC India Ltd announced that it has signed an MOU with India Infrastructure Finance Company Ltd on May 29th 2007 to facilitate, encourage and promote the development and construction of power projects, including thermal, hydro and other sources. The MOU is valid for a period of 5 years from the date of signing.

Mr TN Thakur CMD of PTC and Mr SS Kohli CMD of IIFC have signed the MoU under which, IIFC will undertake the due diligence process and appraisal for financing of power projects where it has signed power purchase agreement with project developer.

L&T Groups 2006-07 net up by 70% YoY

India's largest engineering and construction conglomerate Larsen & Toubro Ltd has announced the audited results for the quarter & year ended March 31st 2007

The results for the quarter ended March 31st 2007
Larsen & Toubro Ltd has posted a net profit after tax of INR 7007.7 million for the January to March 2007 period, up by 50.1% YoY as compared to INR 4668.5 million for same period last year while its total income has recorded at INR 64523.8 million for the January to March 2007 period, up by 34.91% YoY as against INR 47824.6 million for the same period last year.

The results for the year ended March 31st 2007
Larsen & Toubro Ltd has posted a net profit after tax of INR 14030.2 million for the year ended March 31st 2007 up by 38.61% YoY as compared to INR 10121.4 million for the year ended March 31st 2006 while its total income has recorded at INR 180411.3 million for the year ended March 31st 2007, up by 18.7% YoY as against INR 151986.3 million for the year ended March 31st 2006.

The consolidated results for the Year ended March 31st 2007
The companys net profit & income for the year ended March 31st 2007 attributed to consolidated group of INR 22401.4 million for the year ended March 31st 2007 up by 70% YoY as compared to INR 13172.1 million for the year ended March 31st 2006 while its total income net of excise has recorded at INR 213421.6 million for the year ended March 31st 2007, up by 25.4% YoY as against INR 170185.5 million for the year ended March 31st 2006.

Mercator Lines to set up a shipyard at Palghar

It is reported that Mercator Lines is planning to setup a shipyard at its recently bought 400 acre of land at Palghar in Maharashtra and is likely to invest around INR 1,000 crore for the purpose.

Mercator group has committed to invest about INR 2,750 crore during the past 12 months in the expansion of its fleet and offshore business with a consolidated fleet of 27 vessels with total capacity of about 2.45 million tonnes.

Jessop & Co Ltds 2006-07 net profit up by 11% YoY

Jessop & Co Ltd has reported that its net profit for the year 2006-07 has increased by 11% to INR 11.07 crore while its total income has been recorded at INR 83.92 crore up by 6.67% YoY as compared to INR 78.67 registered during 2005-06.

Mr PK Ruia chairman of Jessop & Co Ltd said that wagon production by the company has grown up by 153% during 2006-07. He said that "We hope to generate about 10% of our total revenue from the new area."

Coal wage agreement panel formed

It is reported that union ministry of coal has constituted a joint bipartite committee for the coal industry to negotiate the National Coal Wage agreement-VIII. The managements of public sector and private companies have been included in the committee.

The units included are Coal India Limited, Central Coalfields Limited, Northern Coalfields Limited, Bharat Coking Coal Limited, Western Coalfields Limited, Eastern Coalfields Limited, Singreni, Jindal Steel & Power Limited and others. According to the report, representatives of all the 5 trade unions have also been included in the committee.

POSCO sets new milestone in iron making technology with commissioning of Finex

World's 4th largest steelmaker POSCO announced that it has begun the commercial operation of its Finex technology based 1.5 million tonnes furnace at its Pohang works built at a cost of KRW 1.06 trillion (USD 1.14 billion. As per POSCO, through this technology it can produce steel at costs about 20% less than regular blast furnaces and as such it is more environmentally friendly by cutting emissions by 95%.

POSCO claims that Finex is the only true technological leap made in the last 100 years to overcome shortcomings of blast furnaces. There has been much progress in steel manufacturing technology since Germany's Krupp first developed the Bessemer process in 1869. But there has been virtually no change in the technology to produce pig iron for the last 100 years since the furnace method was developed in England in the late 19th century.

The Finex process is an iron making technology developed by Siemens and POSCO. POSCO and the South Koreas ministry of commerce, industry and energy spent KRW 58.2 billion from 1990 to 2000 to develop the technology and it took another 7 years to set up a viable system of mass production. POSCO holds all the domestic and international patents for Finex, but the company does not have any plans to transfer the technology for royalty payments

Unlike existing furnaces, the Finex system is considered revolutionary because it does away with the need to build separate sintering or coking plants. These facilities transform iron ore fines and bituminous coal into lumps that are fed into conventional furnaces. A POSCO official said that 80% of natural iron ore is in a powder like state and regular coal is 20% cheaper than the bituminous type used to make coking coal. Another advantage of Finex is the reduction of pollution, producing significantly less sulphur and nitrogen oxide than current furnaces.

Full operation of the Finex line brings the number of domestic furnaces run by POSCO to 11, including nine blast furnaces and one foundry blast furnace. POSCO has two mills, located in Pohang and Gwangyang on the south coast. POSCO expected to convert its blast furnaces step by step, starting with the furnace in Pohang. The company churned out 31.8 million tons of steel products in 2006.

POSCO also plans to adopt the Finex method in its proposed Indian project, by building two Finex furnaces by 2010, each capable of producing 2 million tonnes of crude steel annually.

CISA warn that frequent policy change would effect market stability

Mr Qi Xiangdong vice secretary general of China Iron & Steel Association told Mysteel at a recent steel conference in Shandong that "It's time to call a halt to further curbing policies on steel export. The market sentiment has been badly hurt by the host of measures to cool rampant export in one and a half months and that is detrimental to market stability. Appropriate steel export is necessary to accelerate China's steel consolidation improves its competitiveness and aid China's transformation into a more powerful player in the global iron and steel market."

The export tax has had an immediate impact on domestic steel prices, with rebar price losing CNY 30 to CNY 50 per ton commercial HRC price plummeting to CNY 3950 per ton from CNY 4150 ton the previous day. The market transactions are sluggish and traders are at a loss to handle so many tightening controls in such a short period.

CISA has always been urging to maintain steel export at around 10% of the total output. He said "Although steel export in other countries may account for 30% or even 45% of their production we believe 10% is reasonable for both domestic and global markets given our massive output and pressure from global counterparts. Domestic steel market would stay healthy if the monthly export maintains at 4 to 5 million tons. However market players would get jittery facing such frequent policy changes which would disrupt the market stability and economic growth as a whole."

Mr Qi noted that global steel demand outlook remains positive despite the string of curbing policies from China therefore steel price in overseas markets would perch on a high track this year and expects steel export will slow down from June and July which is in line with the goal of governmental steel export policy. He said leading mills would bear the brunt of the export tax since smaller producers are exporting far less tonnage due to lower quality.

(Sourced from MySteel.net)

Mr Marius Kloppers is the new CEO of BHP Billiton

The board of BHP Billiton announced that Mr Marius Kloppers would succeed Mr Chip Goodyear as CEO from October 1st 2007. Mr Kloppers will be based at the BHPBs headquarters at Melbourne in Australia. BHPB had earlier announced in February 2007 that Mr Goodyear would retire by the end of the year and that a search was underway for a new CEO.

Mr Kloppers is currently Group President Non Ferrous Materials and an Executive Director of BHP Billiton. Since the formation of the BHP Billiton Group in 2001 he has also held the positions of Chief Marketing Officer and Chief Commercial Officer.

Mr Marius was born in South Africa. He obtained a degree in Chemical Engineering from the University of Pretoria in South Africa, a PhD from MIT in USA and a MBA from Insead in France). His early career was in petrochemicals with Sasol and materials research with Mintek, both in South Africa. After obtaining his MBA he worked as a management consultant with McKinsey & Co in The Netherlands. He joined BHP Billiton in 1993.

Mr Don Argus chairman of BHPB said that the board was confident that Mr Kloppers would bring to the CEO role the skills needed to take the company to the next stage of its development. He said "We are in a time of considerable change in our industry with the emergence of new markets and sources of supply. Marius vast experience in the resources sector and his demonstrated strategic capabilities provide the skills we need in the next leader of our great company."

Mr Goodyear said that Mr Kloppers had extensive experience in the operating, marketing and strategic aspects of the natural resources industry, gained through 14 years with BHP Billiton and its predecessor companies. He said "Marius has an excellent strategic mind and delivers on his commitments. He has a very value focused leadership style and will make an excellent CEO.

Mr Kloppers said he was humbled by the trust placed in him by the Board. He said "This is an extraordinary opportunity to lead an outstanding company with talented people and I am committed to continuing the great work of Chip and his team.

Mr Goodyear will retire as CEO on 30 September and from the Group at the end of the 2007 calendar year.

Russia may introduce steel import quotas

Itar-Tass reported that Russia could introduce quotas for steel products from Europe. Mr Sergei Ivanov first deputy prime minister of Russia while commenting on the situation with unscrupulous competition on the world market told that The government should consider using analogous, mirror measures to speak straightly, to introduce quotas.

Mr Ivanov said that We are observing double standards in relations with major partners, first of all European ones. There are two ways out in an ideal, the market should be open; if this does not happen, and the government should consider using mirror measures.

Mr Anatoly Sedykh chief of the United Metallurgical Company said that he saw no fair competition on the steel market. He said An honest competition is equal conditions and the absence of benefits and preferences.

Mr Sedykh cited as example of unfair competition products of Ukraines metallurgical sector. He said Foreign markets unfairly treat Russian producers, they are in fact closed to us. 30% duties were introduced on seamless pipes in Europe and this is in essence a hindering measure.

China to get the results from export tax in H2

Chinese government has imposed 5% to 10% export tax on 84 steel products on May 21st 2007 to curb the frenzied steel export. China central government aims to lower energy consumption and reduce pollution by curbing steel export.

Mysteel doesnt think the 5% to 10% export tax will bring negative impact to Chinese steel industry and China may lose its shares on the international steel markets as the disadvantage will obviously outweigh the advantage. In spite of the new export tax, Chinas steel export will not go apparently down in May and June 2007. The export volume will see clear fall in July 2007 and on the one hand, China steel exporters will raise their quotations, and the price gap will narrow further.

The new export taxes are going to take effect just before the start of the summer vacation in Europe and US and this will bring more pressure to Chinese exporters to consume the upcoming impact.

Following is the list of 84 items on which export tax is levied

Just 21 days ago, on April 30th 2007, China Commerce Ministry and China Customs issued joint notification, deciding to introduce licensing system to certain steel exports as of May 20th 2007. On April 9th 2007, China removed export tax rebates on 83 steel products and lowered the rebate to 5% on 76 steel products including special steel, stainless steel sheet, CR products. Such continuous regulation rules indicated that Chinas steel exports could not be quenched and the governments determination to curb steel export cannot be shaken. However, if the administration fails to fulfill its goal, it will further tighten its macro control over steel and possibly adopt export qualification certificate system.

Mr Bolfo may join NLMK board Report

Russian FIS reported that Mr Bruno Bolfo owner of Dufferco is likely to join NLMK board as an independent director.

Mr Bolfo had been member of the board of directors of Evraz Group until October 2006, when he left the board to avoid the conflict of interests with NLMK, which was conducting negotiations with Duferco on the development of a joint venture.

In December last year NLMK and Duferco completed the creation of a JV in Luxemburg. NLMK paid USD 805.5 million for a 50% shareholding and Duferco contributed its steel smelting capacities and service centers in Europe and USA. The JV will be registered in Luxembourg under the name of Steel Invest & Finance SA.

New era dawns on iron & steel industry in China

The iron and steel industry has been viewed as China's economic lifeline since the planned economy era. For 50 years, China has mass produced I&S, so much so that it became the world's biggest steel producer in 1996. But a new era has begun in the I&S industry, where more is less, and less is more. Simply put, if the I&S industry improves technology, it will consume less material and emit less pollution. And if it manages to reduce waste, it will increase its global competitiveness.

That was the decision made at a meeting of the State Council, the Chinese Cabinet, in late April, where officials set the target of eliminating 30 million tons of iron and 35 million tons of steel this year of what they called "backward" production capacity. The backward capacity is to be phased out through mergers and acquisitions. The ultimate objective is to eliminate 100 million tons of iron and 55 million tons of steel from annual production capacity before 2010, according to the central government decision.

This is the first time the central government has met to specifically discuss I&S production capacity. According to industry experts, the decision is a green light for the Chinese I&S companies, most of which are already listed, to raise new money on capital markets by flagging their M&A plans for the next year and a half.

Government support, as decided at the State Council, will focus on the few largest I&S corporations, in hopes of bringing their number from 10 to 5 or 6. Through mergers and acquisitions, China will have two or three I&S corporations with 30 million or more tons of annual production capacity, and a string of companies with more than 10 million tons, according to information released by the State Council.
The target set for 2010 also includes lowering the industry's energy use from 760 kilograms of standard coal per ton of output, as reported in 2005, to 730 kilograms, as well as reducing freshwater usage from 12 tons to 6 tons. According to Vice-Premier Mr Zeng Peiyan at the State Council meeting: "If China can manage to dispose of its outdated I&S production capacity, it can save, each year, 50 million tons of standard coal and 100 million tons of freshwater, while reducing at least 400,000 tons of sulphur dioxide emission."

China has developed its I&S industry by leaps and bounds since the economy opened up in the late 1970s. Because the emphasis has been placed on mass production, the industry became a culprit of high energy use and pollution discharge. While the industry's output accounted for 3.14% of the nation's gross domestic product), it also claimed 15% of the nation's total energy consumption and discharged 10% of China's total industrial wastewater, 15% of its total industrial dust and 10%of its sulphur dioxide emissions. Even worse, most of China's I&S companies are located close to densely populated cities. Some are areas prone to water shortages or major scenic attractions, causing negative impact on the human living environment. According to China's 11th Five Year Plan, between 2006 and 2010 the nation will have to cut its energy consumption per unit of GDP by 20% and its pollution discharge by 10%.

Shedding off unwanted production capacity is also conducive to upgrading the industry in terms of geographical deployment and product structure. China has more low end steel supplies than it needs, while it still depends on imports for high end supplies used for making automobiles and ships. Eliminating its low end capacity can make the industry more competitive and in some cases, more capable of financing their relocation programs.

(Sourced from MySteel.com)

SSAB likely to sell IPSCOs tube units Report

Swedish business daily Dagens Industri has reported that Sweden's specialty steel producer SSAB, which is bidding for Canadian US steel pipe maker IPSCO, intends to sell IPSCO's steel tube division if the deal goes through. The paper said that a sale of the unit could bring SSAB near SEK 25 billion (USD 3.65 billion) and SSAB hopes to sell the division before year end.

Dagens Industri quoted a source as saying that "A divestment of the tube division has the result that the management of the new SSAB can focus on and lay all their energy on developing and strengthening the firm's leading global position within its leading products steel sheet as well as steel plate."

The two firms said at the beginning of May 2007 that SSAB had signed a deal to buy IPSCO for USD 7.7 billion in one of the largest acquisitions by a Swedish company, and that they expect to close the deal in the third quarter this year. The deal must be accepted by two thirds of IPSCO's shareholder votes and by regulators.

IPSCO makes steel tubes and plate with an annual capacity of 4.3 million tonnes from four steel mills and 11 pipe mills.

Sumitomo Metal increases domestic prices for SS seamless tubes

Sumitomo Metal Industries Ltd announced a 10% increase in price for sales of nickel based seamless stainless steel pipe to all domestic customers applicable to all contracts starting May 2007. Sumitomo Metals has already implemented a similar price hike on export sales.

It said that it has started negotiations regarding a price increase on sales of seamless stainless steel pipes with all domestic customers due to the sharp increases in the price of nickel.

The substantial increase in nickel prices has prompted Sumitomo Metals to successively increase prices on contracts after June 2006 however the price of nickel has recently risen even further to more than USD 23 per pound. If the price of nickel continues its current surge, Sumitomo Metals will consider an additional price increase of 10% and over.

Trends in Average Nickel Price

In USD per pound

The change is YoY for 2005 and 2006

The change for periods in 2007 is over 2006 average

CCCMC releases White Book on China's steel industry

It is reported that China Chamber of Commerce of Metals Minerals & Chemicals Importers & Exporters has released a white book describing operation of China's steel industry, recent movements and future trend etc with the purpose of clarifying motive of the Chinese enterprises and thus allaying US concerns over China's steel expansion. CCCMA hopes that the white book can help prevent unwanted confrontation between China and US on the steel trade.

The issues outlined in the White book include

1. Chinese demand contributed enormously to world steel industry's prosperity
Over 1980-2005, China had been a net steel importer with deficit up to tens of billions of US dollars. It was Chinese demand that enabled world steel industry to revive from valley. In fact, sustained increasing Chinese demand was a big part of the factors creating 2004 notable price recovery of the globe. At the start of 2006 and 2007, HR carbon steel price tripled that of 2003 with fluctuation staying slight.

2. Chinese steel export did not wreck global balance
Chinese big volume export is under two drivers, first strong demand in US which widens its domestic supply & demand and secondly consistently high US steel price that makes it the most conspicuous market in the world. The US steel sector neglects one fact that despite jack up imports from China, its domestic market price has sustained high and this has in turn brought it unprecedented profitability.

3. China is not a threaten either to present or future global steel balance
China's steel sector is not export oriented. Its fast growing output is required by sustained economic development and the capacity is based on infrastructure construction of the modern society. Chinese demand cannot be sourced from other countries. Its consumption and output has surpassed combined figure of US, Japan and the EU. Chinese government is not positioned to support steel export. In fact, the governmental 5 year report on steel industry's development does not involve a single word pointing to export or suggesting export is the purpose.

4. Time difference exists between inefficient capacity elimination and modern capacity building
The gist of China's steel industry development strategy is to replace backward capacity with modern, highly efficient ones. But when the fresh capacity comes out, shutdown of backward capacity goes slowly owing to strong market at home and across the world, making present capacity more than expected. This yet is temporary and will be settled in near future, with strengthened efforts to prick up elimination campaign and cool down investment in fresh projects.

5. Chinese government is actively shutting down outdated capacity
In July 2005, the NDRC issued steel industry policy with clear statement to shut down inefficient capacity and slow new capacity launch. It aims to reinforce industry consolidation, better production order and form competitive edge; reduce pig iron of 100 million tonnes and steel capacity of 55 million tonnes by 2010; and standardize steel market order by setting environment protection, energy consumption index as well as location and capital restrictions. Its planned the steel supply and demand would come to balance in five years. On April 27th 2007, the premier called a meeting asking provincial or municipal officials to commit to final targets and also set 2007 short term goal.

6. Chinese government is taking consecutive measures to taper export
During April2007, 80% of steel products come subject to cut or removal of export rebate. Further policy followed pertaining to export license system and than export tax has been implemented.

7. Steel trade should not stimulate Sino US disputes
China realizes steel output and consumption should come to balance. Without rapid capacity and output growth in China and US, a worldwide shortage will emerge. This may benefit the steelmakers but impair steel consuming sectors and their development. By contrarily, sustained overcapacity may make attractive prices that can boost the steel consuming sectors, this will however not last. China is pursuing such a balance. Chinese government is quickly responding to imbalance of capacity/output and consumption and it will achieve the balance by released policies. The government is restricting but not encouraging export.

(Sourced from MySteel.net)

Some Chinese coal suppliers agree for 28% hike with Japan for thermal coal

It is reported that some of the Chinese coal producers led by China National Coal Group Corp have agreed with Japanese buyers on a 2007 price with an increase of about 28% for thermal coal sales while other suppliers, including Yanzhou Coal Mining Co Ltd, in an unprecedented move refused to join the deal asking for prices above USD 80 per tonne on FOB basis.

The report cites an official with the China Coal Trading Association as saying that both sides settled on USD 67.9 per ton on FOB basis up by USD 14.97 from 2006. He said the two sides also settled on a coking coal export price of USD 103 to USD 106 per ton.

He added that Chinese coal miners expect to ship 5 million tons of thermal coal to Japan this year while reducing coking coal export volumes to 700,000 tons from 2 million in 2006.

Due to strong demand in China, which has pushed up domestic prices to historic highs, Chinese miners are reluctant to sell much of the fuel abroad, especially as Beijing has scrapped tax rebates in an effort to keep more of the resource at home. The gap between the Chinese and Australian prices reflects in part the difference in freight costs, which have surged to record highs this year due to China's voracious demand for iron ore.

So far this year, China has emerged a net coal importer for the first time in history, with exports falling 28.6% YoY to 15.87 million tonnes in the first four months, while imports jumped 50.4% YoY to 19.22 million tonnes during the period.

Some Chinese coal suppliers agree for 28% hike with Japan for thermal coa

PTC India Ltd announced that it has signed an MOU with India Infrastructure Finance Company Ltd on May 29th 2007 to facilitate, encourage and promote the development and construction of power projects, including thermal, hydro and other sources. The MOU is valid for a period of 5 years from the date of signing.

Mr TN Thakur CMD of PTC and Mr SS Kohli CMD of IIFC have signed the MoU under which, IIFC will undertake the due diligence process and appraisal for financing of power projects where it has signed power purchase agreement with project developer.

Xstrata and Rio may fund Australian infrastructure to keep pace with coal demand

Bloomberg reported that Xstrata Plc and Rio Tinto Group may invest in ports and railways to ease bottlenecks costing the Australian coal industry AUD 2 billion (USD 1.64 billion) a year because of missed exports to Asia.

Mr Peter Coates CEO of Xstrata in an interview said that We will buy and run infrastructure we need to do business. The plan has broad support across the industry, but a plan hasn't been put to governments yet. This is costing us money and we are also playing into the hands of our global competitors.''

Xstrata, Rio and BHP Billiton Ltd are trying to boost shipments from the world's biggest coal exporting nation as China raises imports and cuts exports to meet domestic demand. Bottlenecks at port and rail systems in New South Wales and Queensland states are hindering miners from meeting orders. Freight rates for ships carrying coal rose to the highest in more than two years this month as the queue of ships at Newcastle coal export terminal, in New South Wales lengthened to a record 74.

Bolivia to adopt JVs route in mining sector

Reuter reported that Bolivia will no longer grant concessions to mining firms under a decree issued by the leftist government this month, instead making them sign joint venture deals with the state. The decree signed by President Mr Evo Morales on May 1st 2007 means foreign miners wanting to explore or mine land in the mineral rich South American nation will have to negotiate JV contracts with state run mining firm Comibol.

Mr Luis Alberto Echazu mining minister of Bolivia told Reuters in an interview that "What has been modified are the future concessions, they are going to have to sign a contract with Comibol. We are not going to grant private concessions.

However, he said the government would respect existing concessions and the investments made by mining firms already operating in the country. Mr Echazu said that "Those who are already working in the country will continue working under the same conditions.

Earlier this month, a senior mining official said the government planned to introduce a new 10% tax on profits, in a bid to raise the tax burden on miners to 50% of net profit, from the current 35%.

Steel Technologies shareholders approve merger with Mitsui

Steel Technologies Inc announced that its shareholders have approved its proposed merger with Mitsui & Co (USA) Inc, a wholly owned subsidiary of Mitsui & Co Ltd.

The release adds that While this merger proposal has been approved by the US regulatory authorities, completion of the merger remains subjected to approval from Mexican regulatory authorities, which is expected within the next week and customary closing conditions.

Under the terms of the merger agreement, Steel Technologies' shareholders will receive USD 30 per share in an all cash transaction.

Steel Technologies processes flat rolled steel in specific sizes for automotive, appliance, lawn and garden, office furniture, agriculture, construction, hardware, and consumer goods. The Company now has 25 facilities, including its joint venture operations, located throughout the United States, Mexico and Canada.

OMK starts plate mill construction

As per earlier announced plans, United Metallurgical Company has launched USD 1.7 billion projects to build a new steel production facility called Stan 5000.

The new facility is designed to roll out wide plates for OMKs Vyksa pipe plant in the Volga area to produce pipes for trunk and underwater gas and oil pipelines operated by Gazprom, oil pipeline operator Transneft and other companies.

The new facility will enable OMK to boost large diameter pipe output from 850,000 tonnes in 2006 to 2 million tonnes in 2007 and to receive additional revenue of about RUB 40 billion (USD 1.5 billion) a year.

Germany's SMS Demag AG has won a tender to deliver technology and equipment for the Stan 5000 project and is expected to launch production in the first quarter of 2010.

Chinas hunger for nickel to increase by 61% by 2010

Demand for nickel in China, the world's biggest consumer of the metal, may raise 62% by the end of the decade because of rising demand from stainless steelmakers.

Mr Zhang Mei of Ministry of Land and Resources information centre at a conference in Shanghai said that the demand for nickel will rise to 400,000 tonne in 2010 from 247,000 tonne in 2006. He added that imports accounted for 61% of the nation's demand last year and will rise to 66% in 2010.

Mr Zhang said that Chinas Domestic production of the nickel in 2010 may rise 71% from 2005 and that most of the new capacity will come from Jinchuan Group Corp, which supplies 90% of the China's nickel.

Gerdaus price for taking stake in Inca relatively cheaper

BNamericas citing an analyst with brokerage Planner Corretora reported that Brazilian Gerdau's move to acquire 30.45% stake in Industrias Nacionales CA of the Dominican Republic for USD 42 million is relatively cheap compared to other purchases.

The analyst told BNamericas that "Gerdau is paying USD 105 per tonnes of Inca's capacity as compared to USD 110 per tones for US based steel companies Fargo Iron and Metal, USD 220 per tonnes for rebar producer Callaway Building Products and USD 172 per tonnes for Sheffield Steel."

He said that the latest Gerdau move is part of the Brazilian's strategy of growth in Central and North America.

Inca is a long steel rolling mill that produces mainly rebars in addition to pipes and other steel products and its shipments reach some 400,000 tonnes per year.

Centrex inks iron ore supply agreement with Shenyang Orient and Baotou

Centrex Metals Ltd announced that it has signed binding heads of agreement with China's Shenyang Orient Iron & Steel Co Ltd and Baotou Iron & Steel Co Ltd to supply hematite iron ore from its Wilgerup iron ore deposit in South Australia.

Centrex said that an agreement in principle had been entered into for the Chinese companies to purchase ore from its yet to be developed Wilgerup deposit is located in the central Eyre Peninsula close to rail and port infrastructure.

It said that under each heads of agreement Shenyang and Baotou have committed to purchasing one million tonnes of hematite ore per year for 5 years with the price agreed as the long term international benchmark price.

Baotou is part of the Baogang Group based in Inner Mongolia and is the tenth largest steel producer in China, while Shenyang is a privately owned medium sized steel producer.

Alcoa best fit for Alcan Industry experts

It is reported that despite speculation that global miners may be preparing bids for Alcan Inc, industry experts feel that the best strategic fit for the company would be an increased offer by Alcoa Inc. Industry analysts said that the most likely and useful offer would probably come from Alcoa even though Alcan's board urged shareholders to reject a hostile USD 27 billion cash and shares offer from Alcoa as too low.

Mr Ian Nakamoto director of research at MacDougall and MacTier Inc said that ''The logical fit is the Alcoa but I don't think the current bid is going to win it. There is a lot of synergies there and if they both exited their downstream operations, I think it would be a very attractive company with the two companies, just in their production of aluminum.''

Mr Charles Bradford, an analyst with Soleil Securities also said that advantages to tie up include mixing Alcoa's strong upstream section with Alcan's superior smelters. He said that it would be impossible to guess how much Alcan would eventually sell for, but like many others, believes the company will ultimately be acquired. He added that ''All these guys have some deep pockets or the availability of getting money. It's pretty clear that Alcoa has a lot of unused fire power as they have a new borrowing of USD 30 billion, which is only partially used by their original bid, so in effect, they could go a lot higher.''

Mr Bradford added that Australia's BHP Billiton Ltd, Anglo American PLC, Xstrata PLC and CVRD are all possible bidders, although those companies may be deterred by lack of synergies and by Alcoa's financial reserves.

Corus to increase plate and sections prices

Thomson Financial cited CORUS Group PLC as saying that it will increase basis prices on all its reversing mill plate and advance sections by GBP 20 per tonne with effect from July 1st 2007.

CORUS said that it is experiencing healthy levels of demand for sections and plates both in the UK and globally.

Hebei inks capacity elimination agreements with cities

Interfax China reported that Hebei provincial government has signed an agreement with 6 municipal governments to eliminate 3.98 million tonnes of iron smelting capacity and 5.19 million tonnes of steel smelting capacity in 33 steel mills by the end of this year.

Local governments from Tangshan City, Handan City, Shijiazhuang City, Zhangjiakou City, Xingtai City and Chengde City signed responsibility contracts with provincial government in Hebei Province to make clear their duties in obsolete steel capacity elimination.

It is known that Hebei Province has already published the first batch of 26 enterprises with out of date equipments that should be closed down this year and will publish the second batch and the third batch. It is known that Hebei Province will accumulatively eliminate about 5.69 million tons of iron-making capacity and 8.13 million tons of steel-making capacity by the end of 2010. From this year, Hebei Province will first close down BFs with cubage of less than 200 cubic meter and converters as well as EAFs of less than 20 tonnes this year, based on which all BFs with cubage of less than 300 cubic meters will be washed out by the end of 2010.

Among over 200 steel enterprises in Hebei Province, only Tangshan Steel Group, Handan Steel Group and Tangshan Guofeng Steel are capable of producing over 5 million tons of crude steel per year.

(Sourced from MySteel.net)

Philippines mining sector to attract USD 10 billion by 2010

It is reported that the Philippine mining industry is expected to attract USD 10 billion in investments to 2010 up from an earlier projection of USD 6.5 billion. Mr Benjamin Philip Romualdez president of the Chamber of Mines of the Philippines said that "This is a personal estimate which will include projects not in the pipeline."

The amount covers more than 30 projects including 24 which the government had declared as priority mining projects.

Philippine government has said the country has an estimated USD 1 trillion worth of unexplored mineral wealth and wants to attract foreign firms to help rehabilitate old mines and bring into production new ones offering 100% foreign ownership in the sector.

The Philippines mining sector was once one of the worlds biggest before falling into decline in the 1980s due to neglect environmental mishaps and clashes over land ownership.

Asian Ship owner agree to setup secretariat at Singapore

Yonhap reported that Asian ship owners have agreed to set up a permanent secretariat in Singapore to promote wide ranging industry interests. The decision was reached at the end of the two day long gathering of the Asian Shipowners' Forum at Busan in South Korea.

The secretariat would help strengthen international maritime order which would be beneficial to the industry as a whole.

According to the Korea Shipowners' Association, during the two day Asian Shipowners' Forum, chiefs of Asian shipping lines and representatives from 12 national shipping associations in the region reviewed the performance and the status of the industry.

Indonesia plans a massive steel dam to stop mud sludge

It is reported that a massive dam would be built around Indonesias disastrous mud volcano under the latest proposal to stop toxic sludge spewing from its core. It is expected to take eight months to build and would also feature a geology museum and a park estimated to cost USD 5.6 million. Tempo magazine, which has a copy of the proposal said that under the plan, the mud building up in the dam would eventually be so heavy that it could act as a counterweight to the sludge trying to emerge from the crater, blocking off the flow. Tempo said that If this technique is successful, the area will be ready to be rebuilt into a new city.

The dam wall encircling the volcano would be 10 meter thick and 120 meter in diameter and the wall itself would consist of 2 separate fences of thick steel pipes encased in concrete up to 48 meters high. The dam would also have a machine to extract water from the mud, with the liquid moving down a massive chute for piping to a nearby river.

The plan estimated to cost USD 70 million is the latest attempt to try to stem the steaming mud that started pouring from the earth after an exploratory gas drilling team pierced a layer of strata. The flow has engulfed homes, factories and farms over more than 600 hectares near Indonesias second city of Surabaya on main Java Island. The plan comes after engineers spent 2 months trying to plug the volcano by dropping concrete balls on chains into its yawning crater. The initiative has been suspended and mud building up behind dirt and rock built embankments is being channeled to the river nearby and now it is unclear that who will foot the bill for the latest plan if it is given the go ahead.

Drilling company PT Lapindo Brantas has been blamed for the disaster and the Indonesian government has ordered it to pay millions of dollars for the cost of containing the mud and providing compensation to the victims. The government has also said that it would only pay for the relocation of infrastructure, such as roads and bridges, railways and gas and power networks.

Samsung Heavy builds world's biggest offshore rig

Yonhap quoted the world's 3rd largest shipbuilder Samsung Heavy Industries Co as saying that it has completed the world's largest offshore rig to be installed in seas of Russia's Sakhalin Island.

According to Samsung Heavy Industries Co, the new rig called Piltun B is 100 meters wide, 105 meters long, 120 meters high and weighs around 33,000 tonnes.

Asian Ship owner agree to setup secretariat at Singapore

PTC India Ltd announced that it has signed an MOU with India Infrastructure Finance Company Ltd on May 29th 2007 to facilitate, encourage and promote the development and construction of power projects, including thermal, hydro and other sources. The MOU is valid for a period of 5 years from the date of signing.

Mr TN Thakur CMD of PTC and Mr SS Kohli CMD of IIFC have signed the MoU under which, IIFC will undertake the due diligence process and appraisal for financing of power projects where it has signed power purchase agreement with project developer.