Essar Global completes Algoma acquisition

Essar Global has completed the acquisition of Algoma Steel Inc through its wholly owned subsidiary, Essar Steel Holdings Limited at a valuation of CAD 1.85 billion. Following this, Algoma Steel becomes a part of Essar Global. Mr Denis Turcotte will continue as CEO of Algoma Steel Inc.

Algoma Steel Inc. is an integrated steel producer based at Sault Ste Marie in Ontario with steel shipments of 2.4 million tons in 2006. Revenues, which totaled CAD 1.9 billion in 2006, are derived primarily from the manufacture and sale of rolled steel products including hot and cold rolled steel and plates.

Mr Shashi Ruia chairman of Essar Global said "We are delighted to welcome Algoma to the Essar family. Algoma is the keystone of our expansion into the North American markets. We look forward to working with Algoma's impressive team to take forward our vision of world class, low cost steel assets, with a global footprint. In addition, there are plenty of synergies available between our two operations."

Mr Denis Turcotte CEO of Algoma added that "As part of the Essar group, we will be able to exploit new growth opportunities and implement the best technological and engineering practices from across both organizations. This is a win-win situation for all Algoma stakeholders. Our customers, employees, and community can look forward to investment that will reposition the Company as a North American leader in steel."

The release added that “Algoma brings a whole new dimension to Essar Steel's marketing operations in North America and Algoma will now have access to Essar's range of value added products in the automobile, white goods, construction and engineering industries. The enlarged business will concentrate on further reducing costs of production, widening the product range and developing new applications.”

Anti POSCO to observe Black Week to mark 2 years of unrest

SNS reported that Anti POSCO activists have decided to observe the second anniversary of their protest, coinciding with the second year since signing of the MoU between POSCO and the Orissa government on June 22nd 2005, by observing a Black Week at Dhinkia, Nuagaon and Gadakujang villages of Orissa.

Mr Abhaya Sahoo of POSCO Pratrodha Sangram Samiti said that a black week from June 22nd 2007 to June 27th 2007 would be observed in the area affected by the proposed plant.

As per report, leaders of all opposition parties are likely to address meetings and express their solidarity with the POSCO Pratrodha Sangram Samiti. POSCO Pratrodha Sangram Samiti activist said that through out the Black Week, several program, including sporting black badges and involving school children, are to be taken up by PPSSS activists.

In the last 2 years, nothing has moved on ground as far as the project is concerned as the anti POSCO activists have debarred the district administration as well as company officials from entering the area.

JSW making good progress on WB steel project

BL reported that JSW Steel has started work on plans for additional land purchase, obtaining environmental clearances, and development of external infrastructure such as roads, water and power on its 10 million tonne steel plant in West Bengal.

Mr Sajjan Jindal vice CMD of JSW while speaking to Business Line on a range of issues confronting the JSW Group in the light of recent public backlash in West Bengal against land acquisition for industrial purposes said that a purchase committee has been formed in consultation with the local administration for the purpose of procuring some 600 acres of private land directly from land owners.

Mr Sajjan Jindal added that "This committee has identified all the land owners and the purchase activities will start soon. Once this process is accomplished, work on securing the land with a proper boundary wall would be initiated and it will be a big job as we are talking of a perimeter of over 25 kilometer."

Mr Jindal said “The ground realities of the proposed JSW site are different from the other locations in the state and we do not foresee any specific hurdle in executing the project since we have the support of both the Government and the local population.”

JSW is according highest priority to obtaining environmental clearances at the state and central levels, for which it has already set up baseline data generating stations at the site. Mr Jindal said that "The Ministry of Environment and Forests is examining our application and expect to conduct the public hearing just after the monsoon. JSW Steel has also obtained all necessary approvals from the departments concerned for the development of external infrastructure.”

NatSteel to appeal against Prudential offer for SSE & Vinausteel – Report

DNA reported that TATA Steel’s Singapore based subsidiary NatSteeel Asia will move to court against a rival bid from prudential plc of UK for Vietnam Industrial Investment Limited’s two steel plants Structure Steel Engineering Pte Limited and Vinausteel Limited.

As per report, NatSteel Asia is likely to go in for litigation on the grounds that a rival bid put in by Prudential Plc, through its Prudential Vietnam Securities Investment Fund, violated the ‘no-shop’ clause in the agreement signed between VIIL. According to NatSteel, the no shop clause meant that VIIL would not negotiate with other parties, once the agreement was signed.

NatSteel Asia has inked a conditional agreement with VIIL in March 2007 to acquire the latter’s 100% stake in SSE and another 70% controlling equity in Vinausteel Limited for a USD 41 million deal.

Orissa government to regulate the price of iron ore

PTI reported that in a bid to help upcoming steel units in Orissa, Orissa government has decided to regulate the price of iron ore traded by private players holding mines on lease. As per report the decision was taken following complaints made by several units, which have not been allotted captive mines according to the provision of the MoU with the state government.

Mr Padmanav Behera, steel and mines minister of Orissa said that "The government through Orissa Mining Corporation would fix the price of iron ore so that mines owners cannot dictate the price according to their whims."

Official sources said though the state government has signed MoUs with at least 46 companies for setting up steel industries it has not been able to allot captive mines to them. The sources added that out of the 46 companies, 25 have already reached different stages of steel production and desperately need raw material for which they purchase iron ore from the private parties at high prices.

Surana Industries eying coalmine in Indonesia

BL reported that Surana Industries Ltd is in the final stages of negotiations to secure a long term lease for a coal mine in Indonesia to feed its upcoming 0.5 million tonne integrated steel plant at Raichur in Karnataka likely to start production by March 2008.

Surana’s project has got INR 331 crore of debt funding from banks. General Insurance Corporation and United India Insurance have 1.75% and 3.69% stake in the INR 29 crore paid up capital of the company.

Surana Industries achieved a turnover of INR 778 crore in 2006-07 and a net profit of INR 30 crore. It has projected a turnover of INR 1,200 crore and a net profit of INR 100 crore in the first full year after the plant's going on stream.

ArcelorMittal confident on Orissa project

It is reported that ArcelorMittal has expressed confidence that its project in trouble prone Orissa will proceed as per schedule even as the South Korean steel major POSCO’s proposed Greenfield project is facing severe uncertainties.

Mr Sanak Mishra CEO of Mittal Steel India CEO after his meeting with Mr Naveen Patnaik chief minister of the state said that Mittal Steel has already roped in MN Dastur Co to prepare a detailed project report including rehabilitation and an environment management plan. Mr Mishra added that "Since the Orissa government has been pressing for an EMP, we have also asked the Dasturco to look into this aspect."

A reliable source said that Mittal Steel is expecting to get the DPR from Dasturco within the next 12-18 months.

Orissa rushing forest diversion proposal for POSCO plant

Times News Network reported that, the Orissa government is now racing against time to prepare the forest diversion proposal for allotment of land to POSCO’s proposed project in the state. As per report, the state forest machinery is working overtime to submit the proposal with the center, preferably before PMO undertakes a review of projects progress on June 26th 2007.

Mr Hrushikesh Panda forest and environment secretary of the state said that “We are hopeful of submitting the proposal by June 30th 2007, subject to POSCO giving us requisite documents. The government has convened a meeting in this regard here on June 21st 2007 to give final shape to the proposal.”

Orissa government had initially projected that around 800 acres of the 4004 acres required for POSCO falls under the forest category but few months back the state administration found that around 3000 acres is forestland.

Ashapura Minechem denies talk of JV with BHPB

Reacting to reports suggesting a joint venture with BHP Billiton, Ashapura Minechem has said they are purely of a speculative nature and that the company has no such plans at this point of time.

According to media reports, the Australian mining giant is expected to pick up 51% in Ashapura Minechem's INR500 crore alumina refining project in Orissa.

Orissa reviews iron ore linkages for MoU’s signed

Statesman News Service reported that the critical iron ore linkage to some of the steel plants, which have commenced production, was by the Orissa government and expeditious clearances was called for particularly for mines locked in legal wrangles. Some of mines identified for the companies are reportedly under litigation and hence there has been delay in providing or even recommending mining lease.

51 MoU have been signed, out of which 5 have been cancelled. 25 out of the 46 companies have started partial production and some of them are on trial basis. Among these 25 industries, 5 applications for mining lease have been recommended by the state to the center while the rest are being processed.

Several units, which are already under production, are purchasing their ore from the open market. As per report, the industrial houses are keen on getting iron ore at a reasonable price pending allotment of captive mines and it is suggested that the state run Orissa Mining Corporation may fix a rate for iron ore, at which even private mine operators would have sell.

The review also felt a need to reassess the iron ore deposits in the state and engage in further prospect of producing iron ore.

PFC to raise USD 1 billion from overseas loans

It is reported that Power Finance Corporation Ltd plans to raise USD 1 billion in overseas borrowings during 2007-08. PFC said that in the first tranche it would raise about USD 300 million followed by USD 200 million and USD 500 million in the subsequent tranches.

As per report PFC would use the amount to fund project term loans, lease financing, direct discounting of bills, short term loans for various power projects in the generation, transmission distribution activities as well as for renovation and modernization of existing power projects.

Alstom India wins contract for a 370MW power plant at Surat

Times News Network reported that power equipment supplier Alstom SA France’s subsidiary Alstom Projects India Limited has won an INR 950 crore contract from Gujarat State Electricity Corporation for building a 370MW combined cycle power plant at Utran in Surat district of Gujarat. This power plant will be an extension to the company’s existing combined cycle power plant. The plant is expected to commission by August 2009.

As per the contract with GSECL, Alstom will provide all engineering, procurement and construction services to set up a power plant.

Mr Frederic Lalanne MD & vice chairman of APIL said that “With a lot of gas trapped underneath this western Indian state and also in Maharashtra and Madhya Pradesh, we are in talks with lots of corporate who want our technology to set up captive gas based power plants. We are not eyeing short term projects, but in due course, we could strike deals with private players for captive power plants.”

Kandla Port likely to get approval for Tuna project soon

BL reported that Kandla Port is likely to get the final approval from the government by the end of June 2007 for setting up a satellite port with a 4 berth configuration at Tuna at an estimated of INR 1,200 crore in addition to INR 2,000 crore shipyard and 2 single point moorings at a cost of INR 700 each.

It is proposed that out of the four berths, two will be equipped with four ship unloaders having a rated capacity of 15,000 tonnes per day, which will ultimately convey the dry bulk cargoes up to the back up area. The remaining 2 berths will be equipped with four marine unloading arms with a rated capacity of pumping liquid cargoes at the rate of 4,000 cubic meters per hour.

The project will be developed on the public-private partnership model. Kandla port will call for financial bids from the 18 companies namely IL&FS, Afcons, Gammon Infrastructure, Welspun, Essar Construction, West Asia Maritime, SKIL Infrastructure, JM Baxi Group and ABG Shipyard that have expressed interest in the project when it floated global tenders inviting expression of interest bids late 2006 and it had been waiting for the government approval to come before taking the next step in the bidding process.

While some of the companies submitted EoI bids for all the three components of the project, others showed interest in specific projects. However, even though the port floated a global tender, no foreign company had responded to the invitation.

DVC’s 2x500MW Raghunathpur thermal plants gets approval

It is reported that Damodar Valley Corporation has got the cabinet approval for land acquisition for setting up two 500MW thermal power plants at Raghunathpur in Purulia district at an investment of INR 4000 crore. The plants will come up by the end of 2010.

Mr AK Barman chairman of Damodar Valley Corporation said that "Around half the land is barren land while mono cropped land is less than 50%."

He added that an additional 20MW capacity hydel power plant would be set up at Balpahari in Giridih district of Jharkhand. The central water commission of the union ministry of water affairs will submit a detailed plan report on the Baplahari Dam project by September 2007 to start talks with the participating governments and a master plan is being readied by Water and Power Consultancy Services under guidance of CWC.

BHEL to supply 27 transformers to NTPC

Bharat Heavy Electrical Limited announced that it has secured INR 139 crore order from National Thermal Power Corporation Ltd for supply and commissioning of 27 transformers. BHEL said that this is the single largest order by NTPC.

BHEL's scope of work includes supply, erection and commissioning of 15 transformers of 200 MVA, one transformer of 100 MVA capacity and 11 other transformers with total capacity of 3,548 MVA and would supply the transformers in 25 months.

BHEL would manufacture the transformers at its Jhansi and Bhopal plants.

Major Chinese SS makers to cut July production by 20% to 30%

Interfax China reported that China's major stainless steel mills including Taiyuan Iron and Steel (Group) Co Ltd, Shanghai Baosteel Co Ltd Ningbo Baoxin Stainless Steel Co Ltd, Guangzhou Lianzhou Stainless Steel and Shanghai Krupp Stainless have jointly decided to reduce monthly production by between 20% and 30% in July in order to combat falling domestic stainless steel prices.

As per report, TISCO plans to cut both hot rolled and cold rolled stainless steel sheet production by 20% in July 2007 and will not stop production cut until the market recovers. A TSCO official said “It is not a normal situation when the domestic market price for our products is much lower than the ex works price.”

Baosteel plans to reduce stainless steel production by between 20% and 30% in July 2007. A Baosteel official said that "Current product prices do not allow for any profits whatsoever. The downturn in product prices has mainly been caused by excessively high stockpiles in the domestic market, as well as the recent drop in nickel prices.”

Mr Chen Shufang, an analyst with Beijing Antaike Information Co Ltd said that "Major stainless steel producers in Europe and the United States also cut production in the second quarter, under pressure from high nickel prices, leading the market to believe nickel supply would be eased. Moreover, the joint decision by Chinese stainless steel makers to reduce production could well further ease supply. Stainless steel mills are hoping that the price will stabilize as supply tightens in the domestic market, but I have doubts as to whether they can curb production by the stated 20% to 30%. Some companies will probably cut cold rolled capacity and others hot rolled capacity, depending on how their products are stockpiled in the domestic market.”

But, this is not the first time that major Chinese stainless steel mills have pledged to cut production. Three stainless steel giants, Baosteel, TISCO and Zhangjiagang POSCO announced they would cut cold rolled stainless steel sheet production by 20% in July 2006 in order to combat rising nickel prices.

ArcelorMittal buys 90% stake of Chinese Chengshan Steel Cord

China Business News reported that ArcelorMittal has acquired a 90% stake in Shandong Province based Rongcheng Chengshan Steel Cord Co for CNY 140 million (USD 19.63 million).

Rongcheng Chengshan Steel Cord Co is specialized in production and sales of steel tyre cord and bead wire, for making of meridian tyre and was jointly built by Shandong Chengshan Group and US second largest tyre maker Cooper Tire & Rubber Company in 75: 25 JV. Rongcheng Chengshan Steel Cord Co made sales income of CNY 437 million in 2006 earning profits of CNY 38.71 million.

As per report ArcelorMittal is planning to build the steel cord company into head quarter of cord steel production in China or may be even in the whole Asian area and accordingly has acquired 90% stake so as to take charge of future arrangement. AS per report, ArcelorMittal first intended to make the Chinese steel cord company wholly foreign owned but finally left 10% option for the Chinese party.

This is ArcelorMittal’s second acquisition move in China following its buying into Hunan Valin Steel Tube in 2005.

(Sourced from MySteel.net)

Quality and sustainability are key for the future of global steel industry – Mr LN Mittal

Global steel industry needs to start benchmarking itself against leading global manufacturing and service companies in order to activate its long-term potential.

Mr LN Mittal president & CEO of ArcelorMittal while speaking at the annual Steel Success Strategies Conference in New York said “I think we are all agreed that today the industry is in a far healthier position. But similarly I feel that the new period of stability we have entered calls for a new focus. We have succeeded in proving that the steel industry has the chance of a future. Now we have to concentrate on building a steel industry for the modern age. One which is quality driven in terms of product, process and supply chain.”

Mr Mittal said that whilst the steel industry has been focused on becoming sustainable for some time, historically this had related to the ironing out of the industry’s cyclicality and volatility. He said “Now is time to work towards a sustainable model focused on customer and stakeholder satisfaction, not only self preservation. If the past few years have been about ensuring our survival, the future must be about re creating an industry admired for its operational excellence and quality of application and product.”

Mr Mittal advised steel companies to work to emulate the strict quality criteria: “We have to think more like a service company, which are customer demand led and innovative, rather than supply driven.”

Mr Mittal said that steel companies needed to work more closely with their customer base, implementing a new partnership approach to ensure they fully understand the benefits the new sustainable model can bring. He said “There are a number of benefits to our customers. It enables us to continue to invest heavily in R&D and product development. It enables us to meet the most sophisticated customer demands and improve the quality of our products. It enables us to offer global solutions with consistent quality anywhere in the world, whether a developed or developing market. It enables them to better manage their own input costs. It enables us to identify new value proposals for them.”

Furthermore Mr Mittal underlined the important positive contribution to sustainable development the industry makes at a process level but even more importantly thanks to its products, for instance in the building and construction sector: "Increasing urbanization requires safe, affordable, aesthetic, sustainable and rapid construction. Steel is the perfect material for this. It can be built more quickly. It is 50% lighter than traditional materials. It is environmentally friendlier, with 80% of steel used in construction today coming from recycling. Composite construction using steel creates considerable energy savings and reduces CO2 emissions."

NLMK declares Q1 results

Novolipetsk Steel has announced its consolidated results for the January to March 2007 quarter. Its sales revenues amounted to USD 1.750 billion up by 61% YoY and EBITDA amounted to USD 748.1 million up by 93% YoY with EBITDA margin of 43%.

NLMK’s key financials for Q1 of 2007

In million USD
Q1 2006 net profit includes gain from the disposal of interest in Lebedinsky GOK. Q1 2006 excluding gain from the disposal of interest in Lebedinsky GOK is USD 248.1 million.

In Q1 2007 the steel segment produced 2.3 million tonnes of crude steel, 0.9 million tonnes of saleable slabs and 1.3 million tonnes of rolled products.

Mr Galina Aglyamova VP Finance & CFO said “NLMK has demonstrated strong financial results in Q1 of 2007. The EBITDA margin stood at 43% while operating income surged 70% on YoY basis. The company’s sound performance was driven by growing sales volumes particularly sales of high value added products along with the favorable pricing environment in our core markets.”

Mr Aglyamova added that “We maintain a positive outlook on steel demand both on the domestic and world market in 2007. The price growth started at the end of Q1 2007 and continued through Q2 2007, plateaued in June. While we may see possible price softening towards the end of the year we believe NLMK Group should again demonstrate record financial results and strengthen its position among world’s most profitable steel making companies in 2007.”

China’s new list of products effected by export tax rebates changes

As reported earlier, China’s ministry of finance and State Administration of Taxation in a joint statement on June 19th 2007 announced that “Beginning from July 1st 2007, China will remove export tax rebates on 533 high energy consuming, high polluting and resource intensive goods, including welded pipes, in a bid to tame its rampant trade surplus and soften escalating frictions with other trading partners.”

According to the statement, all common carbon welded pipes excluding petroleum casing pipes will be deprived of the current 13% export tax rebates. The tax rebates for seamless pipes and other articles of iron and steel such as sheet piling, angles, shapes, sections, rails etc excluding petroleum casing pipes will be lowered down to 5% from 13%.

There shall be no grace period to cushion the market against this policy shift. All readjustments on export tax rebates will go into effect as of July 1st 2007.

Partial list of goods of which export tax rebates to be cancelled

Partial list of goods of which export tax rebates to be cut down to 5%:

(Sourced from MySteel.net)

SSINA releases US specialty steel market data for Q1

The Specialty Steel Industry of North America released the latest available statistical data on imports, US consumption and import penetration for January to March 2007 as compared to January to March 2006.

Imports of total specialty steel comprising stainless steel, alloy tool steel and electrical steel in YTD March 2007 were 248,169 tons a 13% increase compared to YTD March 2006. US consumption was 739,703 tons a 1% decrease; three month import penetration was 34% a four percentage point increase.

Alloy tool steel
Imports in YTD March 2007 were 24,761 tons a 5% decrease compared to YTD March 2006; US consumption and import penetration were not calculable.

Electrical steel
Imports in YTD March 2007 were 27,269 tons a 99% increase compared to YTD March 2006. US consumption was 114,714 tons a 15% increase; three-month import penetration was 24%, a ten percentage point increase.

Stainless steel
Imports in YTD March 2007 were 196,139 tons a 9% increase compared to YTD March 2006. US consumption was 605,319 tons, a 4% decrease; three-month import penetration was 32% a three percentage point increase.

In tons
Source SSINA

SSINA is a Washington DC based trade association representing virtually all continental specialty metals producers. Its member companies are AK Steel Corporation, ATI Allegheny Ludlum Corporation and ATI Allvac, Carpenter Technology Corporation, Crucible Specialty Metals, Electralloy, Haynes International Inc, ThyssenKrupp Mexinox SA de CV, North American Stainless, Outokumpu Stainless Inc, Precision Rolled Products Inc, Latrobe Specialty Steel Company, Universal Stainless and Alloy Products and Valbruna Slater Stainless Inc.

Mr Surma outlines steep challenges for global steel industry

It is reported that Mr John Surma chairman & CEO of US Steel during a presentation at the 22nd Steel Success Strategies conference said that the global steel industry faces 3 significant challenges over the next several years, the most critical being possible oversupply and under pricing by China.

Mr Surma said that "Weather forecast for the industry, the outlook is basically sunny right now, with only a small chance for rain and the biggest storm cloud on the horizon is China. It's just a drizzle now, but it could turn into a thunderstorm that might produce significant trade frictions in the future. I don't think China steel prices are based on some inherent competitive advantage. We see subsidization and government ownership in the Chinese steel sector.”

He added that how government leaders deal with the issue going forward is extremely important for the long range future of the industry. Other possible storms could arise over climate change issues. The steel industry contributes less than 2% of US greenhouse gas emissions and only 3% to 4% of global emissions however governments have shown no hesitation in regulating such matters in the past. In the future, emissions squabbles could result in trade like problems for the industry.

Mr Surma further added that "Technology is the solution for emissions for us. We need a global solution. If we don't get one, this could be a big storm cloud in the future for the steel industry. Not least, the industry faces future difficulty in finding enough qualified, well trained employees to do the job. We are all competing with each other. On the whole, however the prospects for the industry are very good when compared with a year such as 2001, when bankruptcies rippled through our industry routinely.”

Reliance Steel & Aluminum to acquire Clayton Metals Inc

Reliance Steel & Aluminum Co announced that it has reached an agreement to acquire the outstanding capital stock of Clayton Metals Inc headquartered at Wood Dale in Illinois US. Terms are not disclosed. Current management is expected to remain in place. The transaction is expected to be finalized within the next 30 days, subject to the completion of due diligence.

Clayton Metals was founded in 1976 and specializes primarily in the processing and distribution of aluminum, stainless steel and red metal flat rolled products, custom extrusions and aluminum circles through its metals service center locations at Wood Dale in Illinois, Cerritos in California, High Point in North Carolina and Parsippany in New Jersey. Clayton Metal’s net sales for the twelve months ended December 31st 2006 were about USD 123 million.

Reliance Steel & Aluminum Co, headquartered at Los Angeles in California, is one of the largest metals service center companies in the United States. Through a network of more than 180 locations in 37 states and Belgium, Canada, China and South Korea, it provides value added metals processing services and distributes a full line of over 100,000 metal products. These products include galvanized, hot rolled and cold finished steel, stainless steel, aluminum, brass, copper, titanium and alloy steels.

Oak Ridge lab develops SS alloys for high temperature applications

Journal Science UPI reported that some US based scientists at the Oak Ridge National Laboratory have created proprietary stainless steel alloys designed to allow increased operating temperatures and efficiency in energy production systems. They have potential applications in high temperature chemical and process industry applications,

The new alloys developed are said to offer superior oxidation resistance compared with conventional stainless steels, without significant increased cost or decreased resistance to creep. In addition, they have ability to form protective aluminum oxide scales instead of chromium oxide scales.

The combination of creep and oxidation resistance offered by the new alloys previously was available only with nickel base alloys, which are about five times more costly than the new stainless steels.

Klockner & Co reports best ever performance in 2006

Klockner & Co announced that outstanding earnings trend in 2006 were supported by the good business situation for metal distribution in 2006. Klockner & Co Group increased its volume of business in 2006 by 4.4% YoY to 6.1 million tonnes and its sales improved by 11.4% YoY to EUR 5.5 billion.

In terms of the operating result, 2006 was the most successful year in the history of Klockner & Co AG. Its EBIDTA was EUR 395 million, more than twice the adjusted figure of 2005. Group EBIT was increased by almost 150% YoY to EUR 337 million. Its group net income in 2006 was EUR 235 million more than four times the level of 2005.

Dr Thomas Ludwig CEO said "For our shareholders, the investment in the Klockner & Co share was worthwhile. In terms of performance, the Klockner & Co AG IPO was the most successful one in 2006."

Klockner said that its growth strategy is based on growth through acquisitions, organic growth and the STAR performance enhancing program. It said “This was the basis for the pleasing trend in 2006 and will also contribute decisively to the development of sales and earnings. After four acquisitions last year in France, the USA, Spain and Switzerland, Klockner & Co has already acquired eight companies in Europe and the USA this year thus already reaching its 2007 acquisition target of 10 to 12 companies. Total sales generated by the companies acquired in 2006 were EUR 108 million. The eight companies already acquired in the current year have annual sales of approximately EUR 500 million.”

US steel inventories drop in May as shipments reduce

US Metals Service Institute in a statement said that inventories of steel products at US and Canada metals service centers have fallen by 2% to 5% during May 2007 from April’s levels as shipments of steel products in May 2007 decreased by 11.3% YoY as compared with the May 2006 shipment.

US steel product inventories at the end of May 2007 were nearly 14.1 million tons down by 1.6% from inventories at the end of May 2006. At current shipping rates, steel supplies were sufficient for 3 months, the lowest MOH figure since June 2006.

May 2007 steel shipments from US metals service centers totaled nearly 4.7 million tons, down by 11.3% YoY from the May 2006.For the year to date shipments of 22.9 million tons are down by 6.6% YoY from the same period 2006.

Inventories of steel products at Canadian metals service centers in May 2007 rose slightly to 1.3 million tons or 4.8% more than at the end of May 2006. At current shipping rates, this represented a 3.7 month supply. Shipments of 338,800 tons were 10.9% lower than shipments in May 2006, and year to date shipments of 1.6 million tons are down 6.9% from the same period last year.

Founded in 1909, the Metals Service Center Institute has more than 420 members operating from about 1,200 locations in the US, Canada, Mexico, and elsewhere in the world. Its Metals Activity Report is based on data from metals service centers in the US and Canada and is produced by the Metals Service Center Institute and a third party econometrics and strategy firm, McCoy, Scott & Co. MSCI tracks the relationships between many external economic variables and MAR shipment levels on a regular basis.

Metalloinvest to double its capitalization in 4 years

Metalloinvest announced that it is planning to double its capitalization to USD 27 billion within the next four years by increasing production through possible mergers and takeovers in addition to CAPEX.

Mr Maxim Gubiev GD of Metalloinvest said that the capitalization of the metallurgy holding is to grow from USD 15 billion to USD 27 billion by 2012. He said that Metalloinvest is going to put more than USD 5 billion into production to reach this goal and that an IPO is expected in 2008.

He said that these investments would help Metalloinvest to increase the output of iron ore by 10 million tons to 50 million tons a year and steel from 6.3 million tons to 10 million tons.

However, Metalloinvest made it clear that the indicated growth in capitalization will depend on the development of facilities’ capacity and market forecasts. Mr Gubiev said that “Merger and takeover deals are still a far perspective. Managers and shareholders of Metalloinvest and Severstal are holding consultations, considering ways to merge capitals. Talks on the merger with Industrial Union of Donbass are still on though far from the end.”

Metalloinvest is Russia’s leading mining and metallurgy company where Mr Alisher Usmanov holds 50% with 30% in hands of Mr Andrey Skoch and 20% belonging to Mr Vasily Anisimov.

ArcelorMittal integration 80% completed

Thomson Financial quoted Mr LN Mittal CEO of ArcelorMittal at a shareholder meeting as saying that it is 6 months ahead in the schedule of synergies expected by Mittal Steel when it bought the Arcelor.

Mr LN Mittal said that the operation launched a year ago would have generated USD 830 million of synergies on June 30th 2007 out of the 1.6 billion envisaged by 2009. He added that the integration of the 2 companies was 80% complete.

Mr LN Mittal president & CEO of ArcelorMittal while speaking at the annual Steel Success Strategies Conference in New York said that “Integration is progressing very well and we are making excellent progress in creating a united culture and operational approach. Our scale has created an enormous knowledge pool from which all units can benefit. Operationally we can leverage expertise in more established markets to our operations in developing ones. Our product and geographic diversification has created a more stable earnings base. Our enhanced stability has enabled us to increase our R&D budget to ensure we produce the most sophisticated products. We are able to offer customers a global solution with a common standard.”

Highveld Steel rejects Evraz offer for minority shareholders

It is reported that the board of South Africa's Highveld Steel and Vanadium Corp advised minority shareholders to reject an offer by majority owned, Russia's Evraz Group to buy up remaining shares.

A circular to shareholders posted on Highveld's website said that shareholders should only accept the offer if they were prepared to accept a number of uncertainties, it added.

The board accepted a valuation by an independent adviser of the firm at ZAR 93 per share, well above the offer by Evraz of ZAR 82.99. The bank arrived at a value of ZAR 93 a Highveld share, based on the cash flows of the business as currently constructed. According to the circular, the evaluation also considered a range of sensitivities, including economic variables such as the forecast rand to dollar exchange rate and operational assumptions, such as forecast production and realized product prices.

The company established a committee consisting of independent directors Mr Colin Brayshaw and Mr Bheki Shongwe and chairman Mr Leslie Boyd to consider the offer and Standard Bank was appointed external adviser.

CELSA to modernize its medium section mill

It is reported that Spanish Compania Española de Laminacion SL located at Castellbisba has placed an order with German based SMS Meer for the modernization of its medium section mill. This investment will bring the CELSA medium section mill up to the latest state of the art and will enable Europe’s widest range of products to be manufactured highly flexibly and efficiently on a single mill. The new equipment will be installed during the scheduled annual shutdown in November 2007.

The scope of supply includes not only the mechanical and electrical equipment and automation system, but also the erection and commissioning supervision and the commissioning of the electrical equipment and automation system.

The modernization incorporates new work roller tables with side guard manipulators for the breakdown mill stand and a nine roller CRS® Compact Roller Straightener. The new CRS® roller straightener has hydraulic adjustment systems for the upper straightening rollers, individually driven straightening rollers mounted in bearings on both sides and a simultaneous, fully automated changing of all nine straightening rollers.

This investment in the medium section mill, delivered and commissioned by SMS Meer in 2001, has become necessary in order to allow a wider product range to be rolled. Originally the mill was designed for parallel flanged beams up to IPE 450 and wide flanged beams up to HE 260. Following the modernization it will also be possible to produce parallel flanged beams up to IPE 600 and wide flanged beams up to HEB 400. The product mix also includes angles, flat products and channels.

Arch Coal sells Mingo Logan Ben Creek complex to Alpha Natural

Alpha Natural Resources Inc revealed a definitive agreement with Arch Coal Inc to acquire Arch's Mingo Logan Ben Creek complex in Mingo County, for a purchase price of USD 40 million.

Alpha Natural said that the assets would be purchased and managed through a newly formed subsidiary, Cobra Natural Resources, and is expected to provide Alpha with 9 million tonnes to 10 million tonnes of surface and deep mine reserves.

As per the terms of the transaction, Alpha will acquire Arch's Mountaineer deep mine and Hernshaw B- contract deep mine, and also Arch's state-of-the-art Black Bear coal preparation plant and rail loading facility. The companies further noted that Arch has agreed to purchase more than 0.5 million tons of production from Cobra in 2007, and over 0.65 million tons in 2008, at market pricing.

Mr Michael Quillen CEO of Alpha said that "This is a great opportunity and is typical of the bolt on, complementary acquisitions Alpha has done many times in our brief history. Arch Coal has created a first rate facility."

Pakistani steel makers demand withdrawal of 20% sales tax

Pakistan Daily Times reported that Pakistan steel industry has demanded withdrawal of 20% general sales tax on steel products with immediate effect to reduce the prices of steel products.

Representatives of the Pakistan steel industry have informed the government that their consignments are stuck up at the seaports due to this budget decision and non availability of raw materials would lead to a steel crisis in the country.

As per report a meeting on the rise in domestic steel prices due to the increase in general sales tax was held in the chairman ship of Mr Jahangir Khan Tareen minister for industries production & special initiatives. Mr Tareen directed the Engineering Development Board of Pakistan to start immediate consultations and meetings with all the stakeholders so as to formulate measures for addressing the sudden increase in domestic steel prices.

Mr Tareen said that the government wants to provide a level playing field to the steel industry and wants the sector to be developed. He also advised the steel industry to be more competitive and efficient so as to meet challenges of globalization.

The meeting was also attended by Mr Shahab Khawaja secretary to the ministry for industries production & special Initiatives, General (Retired) Muhammad Javed chairman of Pakistan Steel Mills, representatives of the Pakistan’s Central Board of Revenue, other senior officials of ministry and the Engineering Development Board, representatives of the steel industry and the Karachi Chamber of Commerce and Industry.

ArcelorMittal to use Arcelor Finance as borrowing vehicle

ArcelorMittal Group announced that Arcelor Finance, a Luxembourg governed corporate partnership limited by shares, will become the principal borrowing vehicle of the ArcelorMittal Group.

The release said that a substantial portion of the debt currently held at the level of ArcelorMittal would be transferred to Arcelor Finance at the time of implementation of the second step of the merger process between ArcelorMittal and Arcelor.

The release added that all existing and future debt of Arcelor Finance will be fully and unconditionally guaranteed by ArcelorMittal.

Slovenian SIJ’s small shareholders protest against privatization

Slovene Press Agency STA reported that Druzba pooblascenka Ravne, a firm representing 5,844 small shareholders of steel group Slovenska Industrija Jekla, organized a peaceful protest in Ljubljana to draw attention to SIJ's privatization and the Slovenia government’s attitude towards SIJ's small shareholders and handed a letter of protest addressed to Prime Minister. SIJ's small shareholders are pointing out that they directly contributed to the recovery of Slovenia's steelworks by not receiving wages in the past and investing their ownership vouchers that they got after Slovenia opted for a voucher privatization model.

Mr Janez Klancnik chief supervisor of DPR to a group of over 300 protesters who gathered in front of the government building told that "We demand from the government to reimburse us for what we invested 15 years ago in a successful recovery of the Slovenian steel industry."

The DPR believes that the way SIJ is being privatized runs against their interest as the recent sale of a 55.35% stake in SIJ to Russian company Koks has more than halved the value of their investment in SIJ. According to them, estimates are putting the value of a share of SIJ to at least EUR 546.90, which is way above the EUR 190.73 offered by Koks to the state and now to them.

Mr Ivana Klancnik a DPR member who believes that the state owns the shareholders more than EUR 110 million and that the firm is also ready to take their demands to Brussels. He added that "The law envisaged us getting a cut in the companies which are making huge profits today, but these profits are going somewhere else."

Shanghai accounts for one sixth of Chinese steel trade

According to source from Shanghai Steel Service Industry Association, the lately established first province layer steel service body, there are 60 operating steel trade markets in Shanghai involving annual trade volume of more than 50 million tonnes representing one sixth of the China’s total trade.

As per statistics among some 6000 enterprises engaged in steel service in Shanghai over 200 are specialized processors and distributors, with 60 now under operation. Steel e commerce companies registered in Shanghai are more than 20. Aside from mature sections like purchase and circulation service, modern logistics for steel production, scrap, raw material trade, financial tenancy etc are also underway.

Officials with Shanghai's municipality said that combining service and the manufacturing sector is an important part to accelerate Shanghai's modern service industry.

(Source from MySteel.net)

POSCO to start building CR complex in Vietnam in July 2007

POSCO announced that it would begin construction of a steel mill in Vietnam next month. POSCO plans to spend a total of USD 491 million to build the cold rolling mill complex with an annual output of 1.2 million tons by 2009.

POSCO also plans to construct a 3 million-tonne hot rolling mill by 2012 at Ba Ria-Vung Tau province in Vietnam.

The construction of the two mills will cost POSCO roughly USD 1.2 billion.

POSCO also has two joint ventures in Vietnam with state run Vietnam Steel Corporation and the Southern Steel Corporation.

Metso to supply a shredder to Uralvtorchermet in Russia

Metso Minerals will supply a metal shredder to Uralvtorchermet for its metal recycling site at Beriosovsky in Sverdlovsk region of Russia. The value of the order is approximately EUR 6 million. The delivery would be completed by the end of 2007.

The order comprises a complete metal recycling shredder of 4000 hp driving power as well as erection and commissioning services.

The shredder will be used at Uralvtorhmermet's scrap processing plant to shred end of life car bodies and mixed light scrap for further melting.

Uralvtorchermet is one of the largest networks of scrap processing enterprises in Russia. At present Uralvtorchermet's enterprises are located in some 40 Russian regions, where iron and steel scrap is collected and processed at approximately 230 production sites.

Sojitz Corp and Azure Capital may build a steel plant in UAE

It is reported that Japanese trading house Sojitz Corp and Australia-based merchant bank Azure Capital may build a 1.5 million tonne steel plant in the UAE east coast port city of Fujairah to tap surging Middle East construction demand.

Mr Salem Abdo Khalil technical advisor to the government of Fujairah told Dow Jones Newswires that the project is dependent on Fujairah securing extra natural gas to be shipped through a planned Dolphin Energy pipeline from Qatar. He said “The process will require a lot of natural gas to turn iron ore pellets into steel billets, largely because it includes making so called direct reduced iron, which avoids smelting.”

Mr Khalil also said that iron ore would be turned into pellets at Fujairah. A Fujairah port spokesman said the local steel mill project, if it went ahead, would require a bulk unloaders that could handle 6million tonne a year of iron ore.

A company official at Sojitz declined to comment on the possibility of building steel works at Fujairah, saying talks are at an early stage.

Sojitz this month took a 30% stake in Australian miner Grange Resources USD 1 billion Southdown iron ore project in Western Australia state. The project, for which Grange has appointed Azure to find partners to help finance, is expected to produce about 7 million tonnes a year of iron ore, which would then be sent to Kemaman, Malaysia to be turned into iron ore pellets. The pellets would then be sold to steel makers in Asia and the Middle East.

IIB acquires 35% stake in Bahrain based Universal Rolling

TradeArabia reported that Mr Aabed Al Zeera CEO of International Investment Bank said that during the first quarter of 2007, the bank had acquired on behalf of its investors a 35% stake in a USD30 million Bahrain based steel reinforcement bar manufacturer, Universal Rolling WLL.

He said that "Exit from the investment is intended to be within 5 years and an internal rate of return in excess of 23% is targeted by IIB. Steel reinforcement bars are an important component in construction projects and generally represent around 15% of total construction costs."

Mr Aabed noted that Universal Rolling WLL is also constructing an industrial facility, which will be the first steel rolling mill in Bahrain.

International Investment Bank is a globally focused investment bank based in the Kingdom of Bahrain.

Alliance buys coal reserves from Consol Energy

It is reported that Alliance Resource Partners has purchased more than 78 million tonnes of Western Kentucky coal reserves from CONSOL Energy for USD 53.3 million. The reserves are located on 13,500 acres in Webster and Hopkins counties. Alliance Resource said that it expects to mine the coal from its adjacent Dotiki and Warrior mines.

Mr Joseph W Craft III president & CEO of Alliance in a statement said that "This strategic transaction further enhances Alliance's already strong position in the expanding Illinois Basin coal market. We believe this purchase creates the opportunity for us to extend the mine lives of our low cost Dotiki and Warrior coal mining operations by an additional 10 to 15 years, enabling us to meet the growing long-term demand for scrubber quality Illinois Basin coal."

Global refined zinc market surplus in January to April-ILZSG

The latest assessment by the International Lead and Zinc Study Group is that the global refined zinc market recorded a 53,000 tonne surplus in the January to April 2007 period.

Global refined production is estimated to have recorded relatively fast 10.2% YoY growth to 3.773 million tonnes in the period. The two countries singled out for special mention were Mexico, where production last year was hit by a prolonged outage at the San Luis Potosi refinery and China, where official figures showed production soaring by 22.6% YoY in January to April 2007.

The ILZSG estimates that global zinc usage was 3.720 million tonnes in January to April 2007 up from 3.563 million in January to April 2006. Europe saw usage grow by 8% YoY and China by 8.4% YoY but demand in the US is estimated to have fallen by 7.1%.

Chilean CAP’s shares surges on speculation of buy out

Bloomberg reported that shares in Chile's biggest steel and iron ore producer CAP SA have increased the most in 6 months on speculation it may become a takeover target. CAP’s share has surged by 6.3% or CLP 650 to a record CLP 10,900. It was the stock's steepest gain since December 26th 2006 and the biggest move on the Morgan Stanley Capital International index of Latin American shares.

Mr Cristian Ramirez, who covers the stock for Santiago based brokerage Larrain Vial said that “There are market rumors that CAP is being sold.'' He added that CAP's growth prospects justify the current share price, as it prepares to announce a series of iron projects.

Chilean daily Diario Financiero quoted Mr Roberto de Andraca chairman of CAP as saying that CAP plans to invest as much as USD 1.2 billion over 6 years to complete its La Candelaria and Cerro Negro Norte iron ore projects and expand its Huachipato steel plant. He added that CAP may build a power plant in northern Chile to supply the iron ore operations and partner miners BHP Billiton Ltd or Codelco in a liquefied natural gas power project.

Mr Jaime Charles CEO of CAP was unavailable for the comment and his assistant said that “The rumors aren't anything new and there's nothing concrete.''

Sri Lanka to expand power sector

It is reported that Sri Lanka government is embarking on a number of massive electricity projects exceeding an investment of USD 1 billion over the next few years to avert any power crisis. As per report the biggest project is the coal fired Norochcholai power plant at an investment of USD 455 million.

Mr John Seneviratne power and energy minister of Sri Lanka said that “The plant will be fully operational by 2012, adding 900 MW adding to the national grid. The 300 MW first phase will be operational by 2009.

Mr Seneviratne said that the ministry had already taken steps to add another 3,000 MW to the national grid using coal power in the next 6 years. Three new coal fired power plants are due to be constructed in Trincomalee, Hambantota and Mawella apart from the already commenced construction of the Norochcholai power plant.

He added that the ministry is also building a USD 326 million Multi Fuel Combined Cycle Power Plant in Kerawalapitiya as a more short term solution and that can be operated using diesel, furnace oil or even Liquefied Natural Gas. Initially 200 MW of power could be generated by gas turbines by July 2008 and another 100 MW generated by the steam could be added later by July 2009. The second stage of the Upper Kotmale power project is already under construction. The power station will add 150 MW to the national grid by 2010. The construction cost of the second phase the dam, tunnel and the underground power station is estimated to cost LKR 10.7 billion.

According to the Minister the Government would look into the possibility of developing all possible alternative sources of electricity such as coal fired power, wind, biogas, solar and mini hydro power to shift the heavy dependency of diesel powered electricity accountable for the 60% of total generation.

Scrap prices recover in US

YIEH reported that the sluggish scrap market has seen a small recovery recently in USA.

Currently H1 grade scrap increased by USD 5 to USD 15 per ton which will take USA long scrap surcharge for July 2007 delivery up by USD 5 per ton. At the same time, mills like Nucor announced that they will reduce the base prices of long products for July 2007 delivery by USD 5 per tons in order to offset the increase of scrap surcharge. As a result of this adjustment the ex works prices of long products will be unchanged as June 2007.

As per report by 5th June 2007 prices in Midwest region have come out with HR coil prevailing at USD 584 million ton, CR coil at USD 667 per million ton, HDG at USD 772 per million ton and USD 08 per million ton for rebar.