July, 27 2007
POSCO project likely to be further delayed
It is reported that POSCO India’s proposed 12 million tonne integrated steel project in Orissa is likely to face further delay as the state government has said its application for mining lease would be considered on a priority basis only if the steel maker adds value to its proposal.
Mr Ashok Dalwai industry secretary of Orissa told PTI “It is not necessary that POSCO would get a mining lease in the state as there are 40 bidders in the fray. The South Korean company’s case could only be considered favorably if it adds value to its proposal.” He, however, did not elaborate on what he meant by adding more value to the proposal.
Mr Dalwai said that "The government would study all proposals for grant of captive mines, including POSCO's proposal. Particular cases in which the applicants add value to their proposal may be considered favorably.”
POSCO MoU signed in June 2005 to build the plant at a cost of INR 52,000 crore, but has not been able to make any progress in last 25 months. It is facing sever opposition form land owners, non allotment of iron ore mines and many other issues.
SAIL expects steel prices to improve from Q3
Steel Authority of India Ltd has posted INR 1525 crore in net profit during April to June 2007 up by 10% YoY as compared to INR 1,386.4 crore during April to June 2006, expects steel prices to improve from Q3 of 2007-8 onwards.
Mr SK Roongta chairman of SAIL during an interview with CNBC TV18 said that “The steel price increase is to the tune of about 10% but of our additional income during the quarter of 2007 which is about 55% came through internal measures by way of productivity improvement, higher sales of value added products, prudent financial management by way of less interest charges, higher earnings on our deposits and about 45% came trough price improvement QoQ, which was about a tune of about 10%.”
On price factor in for the next 2 quarters, Mr Roongta said that “Our margins have been quite healthy at the rate of about 34% with an improvement of about 1% and steel demand continues to be healthy and robust in current quarter as well. I see a very healthy demand for the whole year and margins and prices of course will depend upon the international price scenario and there are expectations that prices should improve further from October to December 2007 onwards. If that materializes then margins should be healthy.”
ArcelorMittal reaffirms commitment to Orissa steel project
Mr LN Mittal president & CEO of ArcelorMittal reaffirmed his commitment to set up a 12 million tonne steel project in Orissa during his recent visit of the state.
Mr Mittal after holding discussion with Mr Naveen Patnaik chief minister of Orissa told media that "We have made a detailed review of the proposed project and satisfied over the progress. The Orissa project is making faster progress.”
Mr Mittal added that "We discussed the mining lease, water, land allotment, power and other issues and a lot of work has to be done in this regard. The Orissa chief minister is keen on the Keonjhar project and has assured all support. With the assured support and cooperation of the chief minister, the project would take a highway speed."
He said that the proposed Greenfield venture in mineral rich Keonjhar district with an estimated USD 9 billion would be the first in the world by the ArcelorMittal. Mr Mittal said the detail project report for the plant would be ready by the middle of 2008. It would be set up in two phases of 6 million tonnes each.
Mittal Steel had signed a MoU with the Orissa government in December 2006 to set up the mega steel plant over the next 5 years to 7 years.
Ispat Industries unveils expansion plans
The Telegraph reported that Ispat Industries Ltd will invest INR 2,123 crore to expand the capacity of its plant at Dolvi near Mumbai and in infrastructure of the facility and a 4.5 million tonnes pellet plant at Vishakhapatnam to meet the needs at Dolvi is also in the pipeline.
Ispat had entered into a MoU with the Maharashtra government for expansion of steel capacity at Dolvi plant to 5 million tonnes. Ispat plans to increase the capacity of the HR coil plant to 3.6 million tonnes from 3 million tonnes by installing a blast furnace. This will support the firm’s sinter plant and increase the sponge iron capacity to 2.5 million tonnes a year. The projects also included a one million tons coke oven plant at Dolvi in Maharashtra and a 4.5 million tonnes pellet plant at Visakhapatnam by 2009.
Mr Pramod Mittal chairman of Ispat said that it is planning to raise USD 500 million through foreign currency convertible bonds for this purpose. Mr Mittal said a high debt burden, an absence of captive iron ore mines and high energy costs have affected Ispat’s profitability. He added that “We are taking steps to correct this situation.”
Mr Mittal said that “Steel is gradually becoming a local rather than global business in view of various costs, including the cost of logistics. With this in mind, Ispat Industries was addressing local markets with an appropriate strategy and building long term relationships with its customers.”
IIL has also signed MoU with Jharkhand for a steel plant and with Chhattisgarh for a coal based 1,200MW power plant to reduce costs and ensure greater productivity. Ispat has also received a prospecting license for a few iron ore mines in Maharashtra that have reserves of around 30 million tonnes to 60 million tonnes and work is on progress at these mines.
Global wagon builders eyeing Indian market
BS reported that the ambitious INR 30,000 crore dedicated freight corridors and metro projects of various states have attracted global rail transport giants to invest in India and several majors including Toshiba, Bombardier and GE are looking at manufacturing wagons and coaches in India.
As per reports, a high level delegation from Toshiba is in talks with Indian Railways for manufacturing coaches and locomotives, Canadian Bombardier Transportation will soon set up a multi million dollar rail car manufacturing facility in India and GE has picked up a 15% stake in private wagon maker Titagarh Wagons.
Mitsubishi Corporation is also exploring options to set up a locomotive manufacturing and maintenance facility like other global giants such as Siemens, Alstom and Itochu.
A senior railway ministry official said the government had talks with several companies including Toshiba and Bombardier for setting up locomotives and coaches to supplement the upcoming metros and the dedicated freight corridor.
Indian Railways will require INR 60,000 crore for completing its projects, including strengthening, modernizing and creating new infrastructure and the ministry is adopting private public partnership to source the funds.
ONGC and NTPC to form JV for gas based power projects
ET reported that Oil and Natural Gas Corporation and National Thermal Power Corporation are joining hands to set up gas fired mega power projects within the country and abroad.
The report cites a power ministry official as saying that “It would be a 50:50 JV. The projects of the JV will be implemented by NTPC, which will also be responsible for the maintenance and operation of the plants. ONGC will ensure fuel supply. The JV may also be allowed to vie for business opportunities abroad in the future. The JV may consider listing on the stock exchanges for raising funds.”
A senior ONGC official said “The talks in the initial stages and nothing have been firmed up yet. It will take a couple of months to reach a conclusion. The official said for us the logic is simple. We being the country’s largest exploration and production company will provide gas, the most sought after fuel for setting up power projects. If we can provide gas at a low price, the power cost will also be low. An NTPC report said red tape is hampering the proposal’s progress.”
Earlier in April 1998 the two companies had signed a MoU for a JV business but it failed to take off. A 300 MW project at Hazira proposed by the companies at that time is yet to materialize.
BEML lowest bidder for coach supply to DMRC
BL reported that Bharat Earth Movers Limited has emerged as the lowest bidder to supply 156 coaches for about INR 1,200 crore to Delhi Metro Rail Corporation.
Mr VRS Natarajan CMD of Bharat Earth Movers Limited said that “We have emerged as the lowest bidder to supply standard gauge coaches. This would be the first time when standard gauge metro coaches would be manufactured in India.”
The negotiations for the tender are going on as on date, and the coaches have to be delivered before the 2010 Commonwealth Games to be held in Delhi. Delhi Metro is building standard gauge tracks from Central Secretariat to Badarpur and Inderlok to Mundka.
Bharat Earth Movers Limited manufactures coaches in India after a transfer of technology agreement with Korean firm Rotem.
NTPC NCDEX power trading platform invites PFC and others
It is reported that the power exchange proposed to be set up by National Thermal Power Corporation led consortium has offered corporate entities such as Power Finance Corporation and others to join hands with it. National Thermal Power Corporation and National Commodity & Derivatives Exchange Limited are the other consortium members. Central Electricity Regulatory Commission’s decision on the National Thermal Power Corporation led power exchange is expected to come by November 2007.
The proposed power exchange would be a spot exchange model for developing pricing benchmark for power called a day ahead model. This is so as the estimate of supply surplus or deficit is determined a week in advance, as power suppliers and users work out the definite supply surplus and deficit figures a day before that of actual use. Thus, the surplus of one zone can be traded on the proposed spot power exchange.
The trades on the exchange can only be settled by deliveries as mandated by Central Electricity Regulatory Commission. Thus only genuine users and generators of power can use the power exchange platform. Although the bid sell and ask buy trades are matched on the spot exchange, the Power Grid Corporation transmits power to the purchaser.
Mr PH Ravikumar MD of National Commodity & Derivatives Exchange Limited said that Central Electricity Regulatory Commission has clarified that some power transmission capacity has to be reserved for the power exchanges. He added that in the long term there is a supply deficit but in the short term there are surpluses that can be traded through the spot exchange.
Power Trading Corporation is the leading provider of power trading solutions in India and is a government of India public private initiative. Power trading through PTC is done over the phone, which results in lack of transparency in the price. Multi Commodity Exchange of India has also proposed to set up a power exchange.
ABG, Bharati, L&T and Dempo in race for Western India shipyard
Exim News Service has reported that ABG Shipyard Ltd, Bharati Shipyard, Larsen & Toubro and the Dempo group are reportedly in the race to acquire the Goa based Western India shipyard Ltd.
The report added that the successful bidder might have to pay INR 120 to INR 140 crore for Western India shipyard Ltd.
Western India shipyard Ltd, which was put up for sale by institutional lenders in 2006 had incurred over INR 20 crore losses during 2006-07. In 2005-06 and 2004-05, the losses were INR 23 crore and INR 24 crore respectively.
Customs to install cargo scanners at Kandla Port soon
Exim news service reported that with manual customs checking of cargo proving to be a cumbersome and time consuming process, the Ahmedabad Customs Commissionerate has decided to go in for cargo scanners at Kandla Port.
As per report a team of Bhabha Atomic Research Center Mumbai surveyed the potential sites for installation of such scanners, submitted its report to the Directorate of Logistics New Delhi, which falls under the Customs Department and a final decision on the matter is expected soon. Sources added that container scanners might be installed at Kandla Port in about six months.
The report cites a Kandla Custom official as saying that “The team was here recently to survey the proposed site it has collected soil samples from the site to make further assessment of the scanner’s intensity. ”
The official explained "Mundra also handles huge volumes of cargo and we need to implement proper security measures there. Currently, there is no foolproof mechanism to check containers. Manual checking is a very cumbersome process. The container scanners would enable speedy inspection of cargo.”
The Customs Department and the Directorate of Logistics are likely to issue a tender notice soon after taking a final look at the Bhabha Atomic Research Centre report. Initially, the proposal was to install two scanners at Kandla one mobile and another fixed and is now planning to install the second scanner at Mundra Port.
Suzlon Q1 net profit down by 116% YoY
India’s largest wind turbine maker Suzlon Energy has posted a net profit of INR 89.40 crore for April to June 2007 quarter down by 116% YoY as against INR 193.6 crore in same period last year. It’s net sale has decreased by 11% YoY to INR 839.19 crore as against INR 933.77 crore last year. Its consolidated results recorded a net profit of INR 18.89 crore and net sales stood at INR 1,944.63 crore.
During April to June 2007 quarter, Denmark Suzlon Energy A/S’s subsidiary US based Suzlon Wind Energy Corporation has extended its contract with PPM Energy to add 300MW of wind turbine capacity to become one of the largest single contracts in the history of the company and the US wind energy industry.
Similarly, Suzlon’s US subsidiary had recently signed a contract to supply a total of 300 units of the S 88 2.1MW turbine, which is equivalent to 630MW of capacity with California based Edison Mission Group.
Suzlon Energy, which posted INR 5,380 crore turnover in the financial year 2006-07 with a profit after tax of INR 1,061 crore, is expanding to the international markets and had acquired the German wind turbine maker REpower for about INR 7,314 crore in May 2007.
NTPC to do feasibility study for Vallarpadam Puthuvype SEZ
It is reported that NTPC’s subsidiary National Thermal Power Corporation Electric Supply Co will carry out the feasibility study on electricity supply to the proposed port based special economic zone on Vallarpadam Puthuvype Islands. It will prepare a detailed project report on power supply for the proposed special economic zone.
A total of 400 hectare with 115 hectare at Vallarpadam and 285 hectare at Puthuvype have been notified for the proposed special economic zone.
Along with Cochin Port Trust, Petronet LNG, which is setting up the re gasification terminal and Bharat Petroleum Corporation Kochi Refinery will also be co developers of the special economic zone.
Meanwhile, Cochin Port Trust is revising the draft request for qualification document in connection with the proposal for setting up an international bunkering terminal. The bunkering terminal project, with an initial capacity of 1.5 million tonnes per annum is expected to cost INR 95 crore.
Badarpur Energy to commission bio mass plant in Assam
Project Today has reported that Badarpur Energy is likely to commission Assam's first 6 MW biomass power project at Devendra Nagar in Badarpurghat close to Silchar by August 2007.
The project is being set up at an approximate cost of INR 22 crore. Power generated in the plant will be transmitted through a dedicated line to the adjacent BVCL's plant as well as subsidiary, Cement International's plant and will meet the entire energy requirement of the production facility of Barak Valley Cements and contribute towards conservation of fossil fuels.
China to create four steel clusters
Mr Luo Bingsheng deputy director of China Iron & Steel Association told Shanghai Securiteis News that China aims to breed up four steel clusters through cross regional merger & acquisition in coming years.
1. Anshan-Benxi in northeast China
2. Shougang and Tanggang in North China
3. Baosteel and Maanshan Steel in East China
4. Wuhan Steel and Panzhihua Steel in middle and southwest China.
Mr Luo said “China's steel making capacity, while it far exceeds that of other countries, continues to exhibit a very low industrial concentration rate in comparison with most other producing nations. There are over 760 steel makers in China, whose combined steel output exceeds 400 million tonnes in 2006. However, only 21 steel producers boast capacity of over 5 million tonnes per year. Therefore, it's necessary to create several steel conglomerates with capacity close to some 100 million tonnes per year in a bid to beef up the competitiveness of the country's steel making sector.”
Mr Luo added that the average energy consumption of steel making has shown sign of improvement in the first five months. CISA statistics reveal that domestic comprehensive energy consumption of per ton steel dips 4.4% YoY in January to May 2007, comparable energy consumption of per ton steel slips 4.97% YoY, and water consumption of per ton steel also declines 8.7% YoY from the same comparison period of last year.
Mr Luo emphasized that creating regional steel clusters does not mean that each mill should expand their scale blindly and the authority won't put all the mills in the same province or region together without any selection.
(Sourced from MySteel.net)
MEPS sees decline in global hot band prices
MEPS reported that transaction values for flat products in Canada continued to edge downwards during July as the demand is weak, with buyers reluctant to commit to forward orders as they concentrate on reducing stock levels. It said that the continuing strength of the Canadian dollar is also impacting badly on pricing as US mills are actively selling across the border at competitive rates and import volumes from elsewhere are still low.
MEPS said that “Price movements for strip products are showing a negative tendency in China, due to a slowdown in demand and increased supply to the domestic market following the export tax changes. Sales have yet to show signs of improvement, despite the price decreases. Inventories of strip mill products are on the rise in Japan, where demand from machinery manufacturers and building construction is down on last year. Consumption by white goods and auto makers remains good, in spite of slower sales of cars to the home market. Total domestic stocks of coil held by the steel makers and service centres, at end May, climbed by 2.9% the third consecutive monthly advance. Quayside inventories escalated by 1.9% in the same time frame.”
MEPS further said that “Due to maintenance work during the third quarter, South Korea's POSCO will significantly cut export quantities of strip mill and plate products. Threatened strike action by the country's Metal Workers Union is unlikely to have much impact on steel output but could affect auto production. Demand is described as "stagnant" in the Taiwanese market at present. It is expected to pick up again in September and October when a round of new government spending begins. In general, prices remain at the higher numbers established last month for period three deliveries.”
MEPS added that “Poland's economic growth continues apace, driven by private consumption and investment. Business is also going well in the Czech and Slovak markets, despite the onset of the holidays. There is no real pressure from steel imports. Stocks are below average levels but there are no shortages. The price trend continues to be positive.”
It said that “In Western Europe, higher inventories have led to subdued demand for period three. Although third country imports are not so aggressively priced at present, ArcelorMittal has changed the plan to lift strip prices by EUR 10 per tonne. The company has announced that prices will be left at the second trimester level and that supply will be cut by 3% to 4%. Salzgitter was looking for a EUR 15 per tonne rise and Corus was talking 5% to 12%.”
MEPS however concluded that “Our research has shown either flat pricing or negative movements in all the countries reviewed.”
ArcelorMittal to acquire remaining 25.2% shares in ArcelorMittal Poland
ArcelorMittal announced that it has reached an agreement with the Polish Government to acquire the outstanding 25.2% shares of ArcelorMittal Poland currently held by the Polish State and Treasury Ministry. ArcelorMittal has agreed to acquire each share at a price of PLN 6.5 valuing the remaining 25.2% of shares at approximately PLN 436 million (USD 157 million).
ArcelorMittal initially acquired 69% of the Polish company in March 2004. As part of that agreement, ArcelorMittal received an option to purchase a further 25% from the State Treasury at a date in the future.
ArcelorMittal also agreed to an investment commitment of some PLN 2.4 billion (USD 865 million) relating to four major projects. This investment has now been implemented in full, with the largest single project the construction of a new hot strip mill having been commissioned earlier in June and formally inaugurated in Cracow on July 27th 2007.
Mr Michel Wurth Member of the Group Management Board with responsibility for Flat Products Europe said “I am delighted that we have reached an agreement with the Government to acquire the remaining 25.2% shares of ArcelorMittal Poland. Under ArcelorMittal’s ownership, the performance of the Polish operations has improved considerably. Poland’s economy is continuing to post strong growth and we are confident about the long-term prospects for the company. Following the completion of the four major investment programs, ArcelorMittal Poland boasts some of the most technologically advanced steel-making facilities in the world and is now capable of producing the highest quality products for the most sophisticated applications in all steel consuming markets.”
Ternium obtains full ownership of Grupo Imsa
Ternium SA announced today that, following the settlement of its previously announced tender offer for shares of Mexico based steel producer Grupo Imsa SAB de CV and the concurrent redemption of those shares not tendered during the tender offer, it now owns all of the outstanding share capital of Grupo Imsa. All of the shares tendered and redeemed received the same price of USD 6.4 per share in cash.
With the completion of the transactions described above, Ternium has significantly expanded its business in North America, a region that now accounts for a majority of its net sales, and has broadened its presence in Mexico, which is the second largest flat steel market in the Americas behind the United States. Ternium plans to move promptly to integrate Grupo Imsa into its industrial and supply chain systems.
To finance the transactions consummated, partially refinance existing debt and pay associated taxes and expenses, Ternium and certain of its Mexican subsidiaries including Grupo Imsa are or will become parties to syndicated term loan facilities in the aggregate principal amount of up to USD 3.8 billion. Ternium will consolidate Grupo Imsa's balance sheet and results of operations in its consolidated financial statements from July 26th 2007.
Mittal Steel gets extension for sale of Sparrow Point plant
It is reported that US Department of Justice, US District Court judge in Washington DC has granted a third extension to Mittal Steel to sell its Sparrows Point plant as the second deadline passed on last Friday. Now, Mittal Steel has until August 6th 2007 to complete the sale of the plant.
Ms Gina Talamona a spokeswoman of Department of Justice said that “The Justice Department does not plan to dispute the extension. It is just to complete the sale.”
In February, the Justice Department told Mittal Steel to sell the former Bethlehem Steel plant to avoid a monopoly of tin plate manufacturing due to its merger with Arcelor SA. Originally, Mittal was told to make a choice between the Sparrows Point plant and a similar plant in Weirton. But the department decided in February that Mittal Steel must sell Sparrows Point, the larger of the two, to prevent a monopoly.
She said that the department had no further word on which the potential buyer might be. But the Baltimore Sun reported on Sunday that two steel companies Chicago based Esmark Inc and the Brazilian Companhia Siderurgica Nacional have filed bids for the Sparrows Point plant.
Corus and Kalpinis Simos form service center JV in Greece
Corus Distribution & Building Systems Division signed a 50:50 JV agreement with Kalpinis Simos to set up a new steel distribution centre, Corus Kalpinis Simos Steel Service Centre at Thessaloniki in Northern Greece, which will offer a full range of steel products. The JV is subject to regulatory approval.
The new operation is expected to commence in the second half of 2008 and to handle a capacity of 150,000 tonnes per year. The new equipment will consist of two cut to length lines, one slitter and auxiliary equipment.
Corus Distribution & Building Systems already has a JV with Kalpinis Simos near Athens in Southern Greece, Corus Kalpinis Simos, which operates a sandwich panel line with an existing capacity of over 1 million square meters per annum. Alongside today’s JV agreement, both companies have also made an investment commitment to double capacity at CKS’ existing sandwich panel line, approaching a total capacity of 2 million square meters per annum.
Mr Scott MacDonald director of Corus Distribution & Building Systems Division at Corus said "Both companies consider the success of our existing joint venture as a firm foundation for further co-operation and growth. The ideal location of CKS SSC will allow us to supply both the Northern Greek market as well as neighboring countries including Albania, Bulgaria, Western Turkey and parts of Romania."
Kalpinis Simos is a 50 year old steel service centre business listed on the Greek stock exchange with combined sales for 2006 of 250,000 tonnes of both flat and long products as well as its own tubes production. The company runs two service centres in the Athens area and a service centre for Special Alloys.
Corus’ Distribution & Building Systems Division provides an essential link between Corus’ production facilities and steel user industries through its distribution and building products businesses, its trading and project activities and worldwide network of sales offices. Corus has stockholders and service centres in various EU countries for the distribution of finished products, a number of which offer further processing facilities to sectors such as the automotive, construction and general engineering industries.
CVRD board approves stock split
Companhia Vale do Rio Doce announced that its board of directors has approved a forward stock split proposal.
The forward-stock split has to be approved by an Extraordinary General Shareholders Meeting to be called soon and involves the exchange of each share, common or preferred class A, by two post split shares.
The split also involves the maintenance of the current American Depositary Receipt ratio at 1/1. Each ADR will continue to have one underlying share, common or preferred class A, respectively.
After a significant appreciation since the last forward stock split in May 2006, CVRD intends to position the price of its shares in a range consistent with good liquidity conditions for its shareholders.
POSCO takes 20% stake in Cockatoo Coal
POSCO announced that it has signed a deal to buy a 19.99% stake in an Australian coal company Cockatoo Coal for USD 22 million through its Australian unit POSA to secure a stable raw material supply. The purchase will be completed by September 30th 2007 making POSCO the top shareholder of the Australian company.
Under the deal, Cockatoo Coal will initially provide up to 1 million tons of semi anthracite coal from the end of 2009.
Nucor to modernize plant at Hickman in Arkansas
Nucor Corp USA announced that it awarded SMS Demag a contract for the modernization of the finishing mill at its CSP® plant at Hickman in Arkansas. The modernization of the finishing mill will be completed in the summer of 2008.
The scope of supply includes the replacement of the drive trains on mill stands F1 and F2 as well as the modification of these stands to allow the accommodation of larger work rolls. The modernization project is Nucor's plan to boost production for which the slab thickness will be raised by around 5 mm. To be able to roll the thicker slabs to the required final strip thickness mill stands F1 and F2 need to yield higher thickness reductions and the required increase in torques would be provided by changing the gear ratio.
In addition to the installation of new main gear units SMS Demag will replace the intermediate couplings mill pinion gears and Sieflex® gear spindles in the drive trains.
Revamping of the stands will include all modifications needed to accommodate the larger work rolls as well as the installation of new CVC® blocks with more powerful bending cylinders to optimize the adjusting range for work roll bending.
South Africa domestic steel sales up by 8.6% in H1 2007
According to South African Iron and Steel Institute that South Africa domestic carbon steel sales for the H1 of 2007 reached their highest level since 1981 jumping by 8.6% to 2.75 million tonnes.
But South Africa’s exports of primary carbon steel products, primary steel manufacturers, fell by more than a third in January to June 2007. Exports totaled 0,949 million tonnes representing a decrease of 32.8% over the corresponding period in 2006. Exports of flat carbon steel products amounted to 67.7% of total exports and exports of profile carbon steel products to 32.3% of total exports.
South African Iron and Steel Institute said that imports of finished carbon and alloy steel products totaled 130,658 tonnes in the first quarter of 2007 which was some 8.4% of the total apparent domestic carbon and alloy steel consumption. Imports of primary carbon and alloy steel products increased by 17.1%YoY in January to March 2007 when compared with the same period 2006 but when compared with imports during the last quarter of 2006 imports fell by 13.9%YoY.
Allegheny Technologies net income in Q2 up by 43.10%YoY
Allegheny Technologies Incorporated announced that it’s April to June 2007 quarter net income of USD 206.5 million on sales of USD 1.47 billion up by 43.10%YoY as compare to net income of USD 144.3 million on sales of USD 1.21 billion in April to June 2006.
Highlight of Quarterly Earning includes
1. Sales increased 21.5% to USD 1.47 billion
2. Net income increased 43% to USD 206.5 million.
3. Segment operating profit increased by 38% to USD 357.2 million, or 24.3% of sales
4. High Performance Metals 32.3% of sales
5. Flat Rolled Products 20.7% of sales
6. Engineered Products 9.8% of sales
7. YTD gross cost reductions of USD 54 million
For January to June 2007, its net income was USD 404.3 million on sales of USD 2.84 billion as compared to net income of USD 250.8 million on sales of USD 2.25 billion in January to June 2006.
Mr L Patrick Hassey chairman, president & CEO of Allegheny Technologies said “Allegheny Technologies Incorporated diversified global markets, broad product offerings, and operational execution delivered another quarter of double digit sales and earnings growth. Over 63% of YoD sales were generated by our key growth markets namely aerospace and defense, chemical process industry, oil and gas, and electrical energy. These key markets remain strong. We saw the benefits of our strategic growth initiatives as total shipments of Allegheny Technologies Incorporated titanium and titanium alloy products were 8.8 million pounds in the second quarter nearly 14% higher than the second quarter 2006.
Mr Hassey said “Our key growth markets remain strong, and we are well positioned to benefit from these markets. ATI’s strategic capital projects remain on track and are expected to contribute significant growth with very good returns. We are in the process of replacing our existing USD 325 million secured domestic revolving credit facility with a new USD 400 million unsecured domestic revolving credit facility. We are pleased that this new credit facility has been extremely well received by our bank group. The new facility should be in place by the end of July. In our High Performance Metals segment, titanium alloy shipments under long term agreements are expected to continue to grow with the robust aerospace build rate. We also expect key growth markets in our Flat-Rolled Products segment to remain strong in 2007. Flat rolled products orders and shipments should improve once the price of nickel stabilizes.”
Allegheny Technologies Incorporated is one of the largest and most diversified specialty metals producers in the world. Its major markets are aerospace and defense, chemical process industry, oil & gas, electrical energy, medical, automotive, food equipment and appliance, machine and cutting tools, and construction and mining. Its products include titanium and titanium alloys, nickel based alloys and superalloys, stainless and specialty steels, zirconium, hafnium, and niobium, tungsten materials, grain oriented silicon electrical steel and tool steels and forgings and castings.
Chinese HRC export offers on rebound
Mysteel learnt from trading sources that the Chinese steel makers are raising export offers in response to the rebounds in domestic prices in July 2007.
In Shanghai market, 4.5mm to 11.5mm has jumped to CNY 3730 per tonnes for 1500mm and CNY 3750 to CNY 3800 per tonnes for 1800mm from CNY 3550 to CNY 3570 per tonnes in end June.
Many steel mills are quoting at USD 530 per tonnes FOB for commercial quality for September and October shipment as compared with USD 515 to USD 520 per tonnes FOB in last weeks. Some tier one steel makers are still maintaining at USD 530 per tonnes FOB. The increase in local market prices and the continuous appreciation in CNY are believed to be bolstering the rebound of export prices.
East China based traders told Mysteel that they are offering to South East at USD 535 per tonnes FOB, citing the probably further rise in domestic prices. The trader said that “Even at this level, there is not much profit for us. Some of customers have started to return with orders, but most of them are holding back."
Buyers in South East Asia are still weighing whether the fresh export price would be sustainable and are afraid that Chinese domestic HRC prices would resume downward trend later. In the short term export quotations tend to be stable and are more dependent on trend of domestic prices.
(Sourced from MySteel.net)
Shougang seeking to raise USD 1.8 billion
XFN ASIA reported that Hong Kong listed Shougang Concord International Enterprises Co Ltd a unit of Shougang Group expects to raise net proceeds of HKD 1.76 billion from a share placement and subscription of new shares involving its controlling shareholder.
Shougang Concord in a statement said its shareholder has agreed to place 800 million company shares at HKD 2.26 per share with individuals and institutions. Shougang Holding has also agreed to subscribe to the same number of new shares at the same price.
The shares represent 11.6% of the company's enlarged capital. Proceeds will be used to boost the capital of its 76% owned unit, Qinhuangdao Shouqin Metal Materials Co Ltd.
Japan Steel asks domestic companies to become shareholders
Nikkei reported that Japan Steel Works Ltd is considering asking Tokyo Electric Power Company and other major business partners to buy stakes in it as a way to defend itself against hostile takeover bids by foreign capital. The company will ask nuclear plant builders, steel makers, electric power companies and others to buy its shares.
Nikkei added that holding an estimated 80% of the world's market for large scale steel parts used for machines such as steam generators and pressure vessels in nuclear power plants, Japan Steel is eyeing such a step amid growing global demand for nuclear power plants.
A Japan Steel executive said that "We want to increase the number of loyal shareholders that will continue to hold our shares regardless of changes in share prices as part of defense measures."
Japan Steel is concerned about takeover bids by foreign companies and investment funds.
Zhejiang Xinyongmao to commission SS CR mill in October
It is reported that Zhejiang Xinyongmao Stainless, a privately owned steel maker in Zhejiang Province China has decided to commission a new cold rolling mill in October 2007.
The new mill will produce 400 series stainless as it main product together with 200 series and 300 series as its side products. As a result, the cold rolled stainless steel of Zhejiang Xinyongmao capacity will have a raise of 43% reaching 42,000 tonnes per year.
Turkey steel production in Q1 up by 13.5% YoY
Turkish Zaman reported that steel production in Turkey jumped by 13.5% YoY in January to March 2007, reaching 6.1 million tonnes, making Turkey the world’s 11 largest producer of crude steel.
Turkey’s crude steel production figures are as under
2002 - 16.4 million tonnes
2003 - 18.2 million tonnes
2004 - 20.4 million tonnes
2005 - 20.9 million tonnes
2006 - 23.3 million tonnes
The production of sheet steel increased only 253,000 tonnes in the past 6 years. Sheet steel production was 2.89 million tonnes in 2002, 3.09 million tonnes in 2003, 3.03 million tonnes in 2004, 3.10 million tonnes in 2005 and 3.14 million tonnes in 2006. Some 761,000 tonnes of sheet steel was produced in the first quarter of 2006, rising to 809,000 tonnes in this year’s first quarter.
EU suspends AD on Chinese ferromolybdenum
European Commission announced in a bulletin to further suspend antidumping measures against Chinese ferromolybdenum until January 31st 2008.
Products involved include those under tariff codes as under
1. 72027000
2. 85281292
3. 85281293
4. 85281310
5. 85281320
6. 85281330
7. 85281340.
Earlier European Commission decided to suspend the 22.5% antidumping duty on imports of Chinese ferromolybdenum for a period of nine months on October 24th 2006 in view of market changes in member countries and over high market price for ferromolybdenum. The suspension now continues as no market upturn emerges in member countries.
(Sourced from MySteel.net)
Shanxi making good progress on closing obsolete facilities
It is reported that till June 30th2007, 135 of the 148 companies or facilities to be abandoned by the government of Shanxi Province have been shut down or closed, amounting to 91.22%.
Among these, 62 to be washed out by April 30th have been all shut down and 52 out of the 56 to be closed by June 30th have been abandoned and 21 out of 30 to be demolished by November 30th have stopped operations.
The 4 companies or facilities, which are still under operation, include No 1 and No 2 sintering machines and No 1 of 324 cube meters, No 2 of 296 cube meters and No 3 of 1200 cube meters blast furnaces in Taiyuan Iron and Steel Company Ltd, Hongtong County Gaoyi Coal Coking Company Ltd, Hongtong County Ti Viliage Bayi Coal Chemical Plant; Shanxi Xinlin Iron and Steel Company’s two 113 cubic meter blast furnaces.
According to the Shanxi provincial environment protection office, the above four companies or facilities will be forcedly shut down. The related administrative offices should watch carefully these companies or facilities listed and secure the pollution control targets.
MEA steel producers must merge for competitiveness
According to a study done by the Economics & Strategy Division of the Gulf Investment Corp the steel makers in Middle East, which is seen to increase its crude steel production by 70% to 26.1 tonnes by 2010 from 15.4 tonnes in 2006. will have to merge in order to prosper.
The report said entitled 'The Steel Industry Worldwide and Regionally: Assessment of Developments and Outlook' said that "GCC producers in order to flourish, would have to become more efficient and flexible. In the final analysis the region will be subject to the globalization forces impacting producers in both developed and developing countries."
The study said that “While the effect of globalization will not be felt by regional steel producers in the short to medium term because of GCC's strong energy sector, the long term prospects are different. The profitability of the GCC producers, however, will depend on their ability to be flexible, market oriented and efficient. It also will depend on how long an economic boom the region will enjoy in the coming years."
The study added that there are good prospects for more finished steel imports for the GCC countries, which are currently negotiating possible free trade agreements with China and India. It stressed, however, that it would be more profitable for the Gulf states to introduce a tariff incentive on imports of semi finished products such as billet, then rolling it in the region, as compared to importing finished products.
The study said that steel demand in the GCC region would be in the range of 20 million tonnes in 2007 to 30 million tonnes in 2010, while demand in the whole Middle East would increase from 70 million tonnes to 90 million tonnes for the same period.
It said that GCC net imports of products such as ingots and semis, steel tubes, seamless, hot rolled rod in coil, cold drawn wire in coil, welded tubes and cast iron pipes would fall to 5.4mt by 2010 due to the expected increase in domestic production. Kuwait, the UAE and Saudi Arabia are the giant importers of these products, followed by Oman and Bahrain.
It said the Middle East has been one of the world's active regions for steel plant suppliers in recent years because of the increasing demand from a strong construction boom, but these plants mostly started producing lower steel making base in flat products. Production of flat steel increased to 18 million tonnes in 2004 from 9.9 million tonnes in 1997, mainly because of Turkey and Iran and then Saudi Arabia and Egypt.
It added that while the Middle East steel market is "highly fragmented", with 51 of 62 producers having production capacity of below one million tonne a year, the GCC market is even "more fragmented", with 14 out of 15 companies having an annual production capacity of below one million tonne each.
While GIC is recommending steel companies to merge for greater competitiveness, it stressed that consolidating poses potential risks, including pressures on small regional producers and competition from China. Local producers in the GCC countries of Saudi Arabia, Kuwait, Bahrain, Qatar, the UAE and Oman will also have difficulty competing if there are large capacity increases in the GCC region and a slowdown in the demand. Saying that steel is a cyclical business meaning, that a change in global demand and supply due to world economic cycle will have impact on prices the study stressed that greater consolidation would reduce volatility.
Baosteel ties up with Shanghai Huayi
China's biggest steelmaker Baosteel has signed cooperation agreement with Shanghai Huayi Company and its subsidiary, Shanghai Coking & Chemical Corporation. Scrap steel the latter piles up will be reclaimed and processed by Baosteel. It is the first time to control resources from the source in China's steel industry.
Shanghai Huayi Company is a large scale state owned company boasting over 20 subsidiaries. It produces large amount of scrap every year owing to obsolete capacity elimination, thus urgently needs cooperation with a reliable and qualified partner.
Baosteel signs 1 year purchase and sale contract with the company, nailing down pricing mechanism, transportation and scrap quality determination. Shanghai Coking & Chemical Corporation is expected to provide over 5000 tonnes of scrap in this year and the cooperation will extend to other subsidiaries of Huayi Group.
Baosteel is seeking tight cooperation with scrap producer including several manufacturers of automobiles and machines, in an attempt to effectively control resources and regulate China's scrap market.
(Sourced from Mysteel.net)
Wuhan Steel strives for top ten global steel makers by 2010
News source from Wuhan Morning Post said that Wuhan Steel would try to become one of top ten global steel makers and be ranked in global 500 by 2010.
By 2010, Wuhan Steel crude steel capacity will reach 30 million tonnes per year realizing annual sales revenue of over CNY 130 billion and profits of over CNY 15 billion. Besides, the steel mill will become one of the major CR silicon steel high end automobile sheet and high performance structure steel production base.
During the first half, Wuhan Steel profits amounted to CNY 5.02 billion hitting record high.
(Sourced from MySteel.net)
BHPB Ravensthorpe nickel mine development on target
Metal Insider reported that BHP Billiton’s new Ravensthorpe nickel cobalt mine in Western Australia and the associated expansion of the Yabulu refinery are on track for start up in the first quarter of 2008.
BHP Billiton in a statement said that construction at Ravensthorpe, which will produce 50,000 tonnes per year of nickel in concentrate is nearing completion with pre commissioning more than 40% complete.
That’s in line with the revised schedule for what is one of the biggest additions to nickel supply in the short term. The project had already been pushed back from the end of this year.
Gaysk GOK puts crushing conveyor complex into operation
FIS reported that Gaysk mining and concentrating combine put into operation a crushing and conveyor complex located in horizons 990 meters to 1,070 meter of Skypovaya mine.
The combine's investments into the construction will total RUB 137.7 million. The complex is intended for the transportation of excavated mass from Skypovaya mine to the surface.
Interpipe places USD 200 million bonds
Ukrainian Journal reported that Interpipe Limited, the owner of the Ukrainian pipe and wheel producer Interpipe has placed its debut issue of 3 year eurobonds worth USD 200 million with an 8.75% coupon.
The report added that the securities were placed at face value and the placement was completed.
Interpipe Limited said that a spread to state bonds with a similar maturity was 391 basis points.
Indonesia coal production estimated to exceed target
Xinhua reported that Indonesia coal production is estimated to hit 215 million tonnes in 2007 or above the initial target of 205 million tonnes, due to demands from new markets of China and India.
Leading economic daily Bisnis Indonesia reported that Indonesia sells about 76.7% of total coal output to the export market, equivalent to about 165 million tonnes.
Mr Jeffrey Mulyono chairman of Indonesian Coal Mining Association said that "China and India are new buyers for Indonesia. The largest coal export goes to Japan and South Korea. These new markets offer an opportunity for Indonesian coal producers. If they can't meet the demand, buyers will find other suppliers, such as Australia and South Africa."
PT Dharma Henwa to launch IPO in Q3 of 2007
ANTARA News reported that coal mining contractor PT Dharma Henwa would launch an initial public offering in the Q3 of 2007 to sell up to 30% of its shares to the public.
Mr Steffen Fang VP of Dharma said the company had named PT Danatama Makmur as underwriter. He said the company with assets valued at USD 257 million and revenues at USD 171 million in 2006, was ready to go public. He added that "This year, assets are expected to increase to USD 516 million and income to rise to USD 252 million."
8 projects licensed in 3 Northern province of Vietnam
It is reported the Vietnam’s People's Committees of the northern mountainous provinces of Lang Son, Cao Bang and Bac Kan granted 8 new investment projects worth about VND 3.8 trillion (USD 237 million) at an investment promotion conference held in Hanoi on July 9th 2007.
The largest projects were a VND 1.2 trillion iron and steel plant in Cao Bang province of the Cao Bang Steel Joint Stock Company and a VND 850 billion iron and steel complex in Bac Kan to be funded by the Van Loi Mining and Metallurgy Company Ltd.
The Ngoc Linh Company Ltd registered to invest VND 519 billion in a zinc electrolysis factory in Bac Kan while the Trade and Construction Joint Stock Company will pour VND 400 billion into a five star hotel and trade centre in Lang Son. In addition, there are two hydropower projects, the VND 270 billion Thac Xang plant in Lang Son and the VND 234 billion Pac Khuoi plant in Cao Bang. The others include a wholesale distribution center with an investment capital of VND 150 billion in Lang Son and a VND 174 billion project to build a tyre and steel ingot factory in Cao Bang.
