SAIL DSP August output up by 56% YoY

BL reported that Steel Authority of India Limited’s Durgapur Steel Plant has recorded the best ever monthly production of special steels during August 2007.

It produced 44,000 tonnes of special steels or 29% of the total saleable steel production in August 2007 up by 56% YoY over that achieved in August 2006. Also, the special steels production in August 2007 has surpassed the previous best figure of 42,134 tonnes achieved in July 2007.

In August 2007, Durgapur Steel Plant has produced 174,113 tonnes of hot metal, 156,235 tonnes of crude steel and 150,312 tonnes of saleable steel respectively.

Meanwhile, plain carbon earthquake resistant TMT billets were successfully cast for the first time through continuous casting route for rolling in merchant mill during August 2007.

TATA Steel may use Corus technology to cut steel making cost

It is reported that TATA Steel in planning to use a new technology developed by Corus that reduces the cost of steel making substantially. Mr B Muthuraman MD of TATA Steel while speaking to reporters on the sidelines of a management convention in Kolkata said that the Corus technology could come into use in the next 2 years to 3 years.

Mr Muthuraman said that the process uses iron ore fines and coal both of which are in abundant supply whereas the usual steel making process uses iron ore lumps and coking coal instead of fines and coal respectively. He indicated that TATA Steel’s new projects might use the new technology developed by Corus as fines are cheaper than lump iron ore and are available in India.

Mr Muthuraman added that TATA Steel has already started benefiting from its integration with Corus and that the integration will help TATA Steel save USD 130 million a year for the next 3 years, thereafter the savings will be USD 400 million per year.

SAIL SSP coin blanking unit gets ferritic coin orders from RBI

BL recently reported that the Reserve Bank of India has recently decided to mint coins of all denominations in ferritic stainless steel. The decision is likely to load the coin blanking plant of Steel Authority of India Limited’s Salem Steel Plant.

As per report, RBI, which in December 2006 placed indent for 700 million pieces of INR 2 ferritic stainless steel coins, has increased it to 1,500 million pieces for this denominated coins along with 500 million pieces of INR 1 coins and 300 million pieces for INR 5 coins, all to be supplied during 2007-08.

Mr PM Subramanian ED of Salem Steel Plant said that they see it as a new opportunity to revive its coin blanking potential as the RBI raising ferritic stainless steel coin indenting would mean more work orders either in the form of a direct jobbing for blanking or at least, a higher off take by the RBI owned mint.

The RBI, which did not replenish coin indent for mints during the past 2 years, in view of the comfortable coin stocks situation chose to restart indenting for coins. The higher demand for the cupro nickel INR 2 coin is attributed to the sudden disappearance of these coins made of copper nickel alloy and the suspicion that these were being melted for their metal content.

SAIL and POSCO form a joint working group

PTI reported that Steel Authority of India Limited and POSCO have formed a joint working group with 4 officials each to look into the broad cooperation agreement entered between them.

Mr SK Roongta chairman of SAIL while speaking to newspersons on the sidelines of the 34th National Management Convention said that the alliance would involve exchange of resources along with joint marketing, warehouses and service centres in India and overseas. He added that the joint working group would also look into issues such as training of personnel and sharing of resources.

It may be recalled that SAIL had entered into a strategic alliance with POSCO on August 16th 2007 for cooperation in the purchase of raw materials and sharing of the marketing network in India. Through the alliance POSCO would get a strong marketing network in India, while SAIL could benefit from the South Korean firm’s global presence.

TATA BlueScope to set up a coating facility in Jamshedpur

BS reported that TATA Steel and BlueScope Steel’s Indian JV TATA BlueScope Steel will invest INR 880 crore in setting up a metal coating facility in Jamshedpur. As per report, the plant would be on stream by the last quarter of 2009.

Mr Chetan Tolia MD of TATA BlueScope Steel while speaking on the sidelines of the AIMA-AAMO 34th National Management Convention said that The capacity of the Jamshedpur facility would be 250,000 tonnes out of which color coated steel would constitute 150,000 tonnes and zinc aluminum coated steel will account for 100,000 tonnes.

Mr Tolia added that the demand for coated steel is on the rise, with India’s current requirements being 4 million tonnes. The demand for zinc aluminum coated steel is increasing at the rate of 15% to 20%, while that for color coated steel was up by around 25%.

TATA BlueScope has already invested INR 340 crore in setting up 3 roll forming and pre engineered building facilities in Delhi, Pune and Chennai. TATA BlueScope currently sources color coated steel from the Thailand and Australian facilities of BlueScope.

Indian imports of SA coal to touch 8 million tonnes in 2007

Reuters quoted a South African transport source as saying that Indian imports of South African coal reached 5.5 million tonnes during January to August 2007, far in excess of earlier expectations.

As per report, total Indian imports of South African coal are likely to be at least 8 million tonnes in 2007 but could be as high as 9 million if demand is strong in the fourth quarter of 2007.

In 2005, India imported around 3 million tonnes of South African coal but imports have risen sharply due to India's booming demand for cement.

South Africa exports around 5 million tonnes to 6 million tonnes a month from Richards Bay Coal Terminal.

Sinosteel to increase iron ore imports from India

BS reported that China’s 2nd largest iron ore trading company Sinosteel Corp will increase imports of iron ore from India by more than a fifth in 2007 as rising demand threatens to push up global prices for a sixth year.

The report cited Mr Wang Tiezheng deputy GM of Sinosteel Trading Co as saying that purchases may reach 10 million tonnes in 2007 from 8.13 million tonnes in 2006. He added that “The recent surges in iron ore prices have made the Indian levy quite irrelevant.”

India is the second largest supplier to China, providing a quarter of total imports. But now China is seeking to diversify supply from Australia and Brazil and benefit from lower shipping rates from neighboring India, because iron ore prices have tripled in the past 5 years.

Indian government in May 2007 imposed a tax on exports of iron ore linked to the grade of the mineral to ensure supplies are enough to meet demand from domestic steel makers but has not reduced the appeal of Indian ore for Chinese buyers.

Port snag to hit iron ore exports from Goa

Reuters reported that iron ore exports from Goa are likely to drop in the coming months because of faulty handling equipment at Mormugao. The report cited Mr Glenn Kalvampara joint secretary of Goa Mineral Ore Exporter's association as saying that the problem with one of two ship loaders at Mormugao in Goa is likely cut sales by 5%.

He added that exports from Mormugao could drop by about 2 million tonnes because of the equipment failure when shipments start from October 2007 after 4 months break during the monsoon.

The report also cited a Mormugao Port official as saying that "The loader is expected to be commissioned by December 1st 2007 and the work for repair has already been handed to a firm. It has been out of action since July 2007, but exports from Goa halts during the June to September rainy season.”

Mr Kalvampara added that exports from Goa are expected to drop by 10% to 15% in 2007 due to export tax and a firmer rupee.

Goa had exported 40 million tonnes of iron ore in 2006, out of India's total sales of 90 million tonnes, with the Mormugao port accounting for 27 million tonnes.

Indian underground coal production to touch 74 million tonnes mark

Dr Dasari Narayana Rao union minister of state for coal recently informed the upper house of Indian Parliament that the coal production from opencast mines is more than the production from underground mines. The coal production achieved during 2006-07 was 373.09 million tonnes from opencast mines and 57.76 million tones from underground mines with a total production of 430.85 million tonnes.

Dr Rao informed that it is proposed to increase the production from underground mines from the current level of 57.76 million tonnes achieved in 2006-07 to about 74 million tonnes in the terminal year 2011-12 of the 11th Plan as projected by the working group on coal for formulation of the 11th Five Year Plan.

The projected year wise production from underground mining during the 11th Five Year Plan area as under

In million tonnes

Dr Rao added that the estimated coal resources of India as on January 1st 2007 are 255.17 billion tonnes, out of which the proved coal reserves are 97.92 billion tonnes. Depending upon techno economic factors, the amenability of reserves for opencast mining or underground mining is decided at the time of project implementation.

India will need 152,746 MW of power by 2011-12- Report

As per the 17th Electric Power Survey Report, India would have a peak electricity demand of 152,746 MW at power station bus bars of utility systems by 2011-12, which is more than double of 75,756 MW for 2003-04. As per the report, India’s annual energy consumption under utility systems has been estimated at 755,847 million units for 2011-12 against 362,799 million units in 2003-04.

The other main points of the 17th Electric Power Survey Report projections are
1) The all India peak load is projected to increase at a compounded annual growth rate of 9.16% between the base years 2003-04 to 2011-12 as compared to 5.29% growth rate in the past.
2) The All India electricity consumption is projected to increase at a compounded annual growth rate of 9.6% between the base years 2003-04 to 2011-12 as compared to past growth at 3.43%.
3) For the first time, electricity consumption estimates have been sub divided into the rural and urban sector.
4) The electricity consumption of the industrial sector is projected to rise by a compounded annual growth rate of 9.32% by the year 2011-12.
5) For irrigation sector, the compound annual growth rate is projected to be 7.3% by 2011-12.

Mr Sushilkumar Shinde union power minister informed the upper house of Indian Parliament the long term measures taken by the government to increase availability of power include
a) Generation capacity of 78,577 MW proposed to be added in 11th Plan. Of this, 2265 MW has been commissioned as on August 31st 2007, while 51,680 MW is under execution.
b) Creation of a national grid for optimum utilization of generation capacity and inter regional transfer of power
c) 50,000 MW hydro initiative has been launched for development of the hydro sector
d) Identification of a shelf of thermal projects aggregating over 100,000 MW
e) Power Finance Corporation and Rural Electrification Corporation have mobilized themselves to see that good generation projects are not hampered due to lack of funds
f) Rigorous monitoring of capacity addition of the on going generation projects
g) Implementation of ultra mega power projects of 4000 MW each

New National Mineral Policy to be investor friendly

Mr T Subbarami Reddy union minister of state for mines while addressing a seminar on Leveraging Mineral Resources through Mining in Jharkhand Council of the CII said that the proposed national mineral policy will bring smiles to the mineral rich states like Jharkhand, Chattisgarh and Orissa as the policy would bring in sweeping reforms the mining sector. He added that the new policy would be an investor friendly where mining leases would be granted within 15 months of filing of the applications.

Mr Reddy said that " I am clarifying, there is no apprehension that central government is overpowering. We are only helping states as the mining policy will make poor states with abundant resources into rich states. States are given liberty to decide whom to give mines, like POSCO is given in Orissa, even though there were 140 applicants."

He added that the new policy would bring down the risk factor for investors and underlined the fact that the possessing prospecting licenses could be transferred to suitable successors, as well. The centre would also set up a tribunal to hear appeals of the investors and the states concerned.

New mineral policy aims at speedy allocation of mine leases, doing away with government approvals at every stage and even gives the right to sell off the mining lease to another party. But states like Jharkhand, Chattisgarh, Orissa are opposing the policy as they fear that the center will overpower them.

MCX and FTIL power trading JV gets CERC approval

It is reported that Multi Commodity Exchange of India Limited and Financial Technology India Limited’s JV Indian Energy Exchange Limited’s proposal to set up a power trading platform has got in principle approval from the Central Electricity Regulatory Commission.

As per the application, Financial Technology India Limited and MCX together or Financial Technology India Limited alone proposes to hold 51% of the venture. PTC is looking at up to 26% stake in the venture, in which Financial Technology India Limited would provide the licensed software and Multi Commodity Exchange of India Limited the expertise in operation management.

As per report, the Central Electricity Regulatory Commission has said that at least 51% of the equity should be held by the public, other than the shareholders having the trading rights in the exchange. Central Electricity Regulatory Commission has also stated as desirable the diversified participation within the trading and non trading groups in order to discourage monopoly.

The proposed exchange would broadly enable participants to trade electricity the subsequent day through standard hourly contracts and block contracts that commit them to injecting into or drawing power from the grid a volume of electricity at a given hour at a market price. It would start as a platform for scheduled day ahead trading of electricity, under which contracts for trading would be firmed up the preceding day within a given time frame. Members could include entities that are commercially active in trading electricity, distribution licensees, generators, consumers, and other stakeholders. The broad time line for trading on the exchange involves receipt of bids for trading between 10AM and 12PM the preceding day.

NTPC and NCDEX led JV has also filed its proposal before the CERC for operating an exchange.

Mr Jena takes over as chairman of International Union of Railways

It is reported that Mr KC Jena chairman of railway board has taken over as chairman of International Union of Railways. He had taken over as the first non European chairman of UIC for 2 year term in January 2007 and will continue till December 2008.

Indian Railways have been actively associated with international union of railways since 1998 and has played an important role in its restructuring to transform it to a truly global institution. As part of the restructuring, 6 regional units of international union of railways have been formed and UIC Asia will be headquartered at New Delhi. Indian Railways will facilitate the setting up of UIC Asia regional units. It will also provide all assistance for the international railway strategic management institute that would come up at Chanakyapuri in New Delhi.

International union of railways is an international association of rail operators and organizations established in 1922 with headquarters in Paris having 224 members worldwide. It provides a forum to different railway organization in the world to undertake joint research projects, develop strategies for implementation of international projects like inter continental freight corridors and high speed rail. It also enables railway managers across the globe to develop skills through its international railway strategic management institute. The priority areas for international union of railways would be to have increased worldwide investments in rail transport. Its focus is to establish rail transport as the key link in the global logistics chain.

Railways to enhance the speed of freight trains

Indian Railways is looking into the possibility of increasing the average speed of freight trains from 25 kilometer per hour to at least 30 kilometer per hour. Given the current state of rail infrastructure, even an increase of a few km per hour would improve freight turnaround time.

As per report, one suggestion under consideration is to run the high speed goods trains on the track of the super fast mail and express passenger trains. Indian Railways is also identifying new sections where it is possible to run high speed freight trains.

Indian Railway officials feel that unless the railways increase its average turnaround time for freight trains, merely adding wagons to the fleet may not help achieve its targeted growth plans. Indian Railways is also looking at high speed and high capacity wagons and locomotives to suit the requirement of the proposed dedicated rail freight corridors.

Mr R Velu union minister of state for railways said that Indian Railways have improved the tracks structure & designed new wagons, which has enabled running of some freight trains at 100 kilometer per hour and investment in wagon design & tracks structure will help in improving rail efficiency & prove to be economical in the long run.

National transport policy committee observed that the speed differential between the mail or express & freight trains adversely affects the line capacity utilization. It felt that if freight trains could be run at speeds of 90 kilometer per hour, it would reduce turnaround time & wagon requirement.

At present, only super fast passenger trains are given priority in the matter of speed but now, the officials are looking at high speed freight trains too. Some of the new rakes may be acquired under the wagon investment scheme.

NTPC to add 1,000 MW of renewable energy capacity

It is reported that National Thermal Power Corporation Limited is planning to add 1,000 MW of renewable energy capacity, including 650 MW from wind energy, over the next few years as part of its diversification drive.

Mr Sushilkumar Shinde union power minister said that "In the corporate plan of NTPC, it is envisaged to add a capacity of 1,000 MW through renewable energy sources Out of this, 650 MW is to be added through wind energy by 2017 and it has already signed a MoU with Asian Development Bank for setting up a JV company to undertake such projects.”

Mr Shinde added that "The JV Company will be formed among NTPC, ADB and other strategic investors. Some of the strategic investors could be from private sector." He added that NTPC is in the process of assessing various potential locations for wind farms in association with centre for wind energy technology under ministry of new and renewable energy.

NTPC's foray into wind power comes after similar strategies adopted by other energy companies such as ONGC, HPCL, TATA Power, Reliance Energy and BP. It has also been looking to diversify into other energy sources and is already working on hydroelectric projects, besides a few small biomass plants.

India is the world's 4th largest wind energy producer with an installed capacity of more than 7,000 MW, only behind Germany, Spain and the US.

Baosteel plans to reach 80 million tonne by 2012

It is reported that Mr Xu Lejiang chairman of Baosteel Group specified strategic target for the group during 2007-2012. It is aiming to become world’s top 3 steel producers. Mr Xu Lejiang president of Baosteel said that "Baosteel has to increase its output, mainly through mergers and alliances with other mainland companies.

The basic strategy ideas include
1. To focus on scale expansion as major line for the future development.
2. Transformations to shift from fine product strategy to fine product plus scale strategy
3. Transformation from new capacity oriented to combination of new capacity and remerge and consolidation.
3. One foothold: to improve integrated competition to great extent and blaze a way in the development of China’s steel industry.

The plans and targets are as under
1. Try to form capacity of 80 million tonnes per year
2. To achieve sales income of USD 50 billion or more and gross profit of USD 5 billion or more.
3.Tto enter the world’s top 3 in terms of integrated competition in headline steel business and step into top 200 among the world’s top 500 enterprises.

Mr Chen Ying board secretary of Baosteel Co Ltd told China Daily that “Baosteel will mainly focus on strategic cooperation, including product complementation, with prospective partners. Some other factors like scale of operations, location and costs are also being considered.”

As per experts Baosteel's targets should not be hard to meet at the company's current pace of growth.
1. Baosteel set up an alliance with Baotou Iron & Steel Group on July 23rd 2007 in preparation for a possible takeover.
2. It paid CNY 3 billion in January 2007 for smaller rival Xinjiang Ba Yi Iron & Steel Group in January
3. Formed an alliance with Magang (Group) Holdings Co
4. It plans to build a CNY 19 billion plant in northern China with rival Handan Iron & Steel Group
5. Aims to build a 10 million tonnes a year plant in the southern city of Zhanjiang with local partners.
6. It may also merge with Taiyuan Iron & Steel Group, the nation's top stainless steel maker.
7. In Brazil, Baosteel will begin building a USD 3.6 billion mill soon to make 5 million tonnes of slabs a year starting from 2011.

Global iron ore benchmark price unlikely to fall – CCCMC

Interfax China reported that global benchmark iron ore price is unlikely to fall next year as China's demand for iron ore is still increasing, albeit at a slowing rate.

Mr Chen Haoran chairman of China’s Chamber of Commerce of Metals, Minerals & Chemicals Importers and Exporters while speaking at the 2007 International Iron Ore Market Seminar at Shanghai last week said "To some extent, next year's iron ore benchmark price will simply represent market imbalance. Global iron ore supplies are still tight, and China's ever increasing steel capacity is only going to make the situation worse."

Mr Heoran suggested that China should further control its expanding steel making capacity and ensure that the government's policy to eliminate outdated capacity is properly implemented, especially in light of the frequent difficulties that arise in policy implementation at a local level. He said "Of course we will consider it a success if next year's iron ore benchmark price falls below market predictions, but it is not practical to expect it to drop from 2007 levels.”

Moreover, in addition to tight market supply, high levels of iron ore spot market trading have led to much speculation, further driving up iron ore freight costs. As per unconfirmed reports, Chinese government intends to control iron ore price speculation by continuing to reduce the number of licensed iron ore importers from the current figure of 108.

Sumitomo Metals commissions new pickling line at Kashima

Sumitomo Metal Industries Ltd has announced that a new pickling line has been completed held on September 4th 2007 in the No 2 cold strip and galvanizing mill, thereby creating a production line for steel sheets that is exclusive for automotive use. The new pickling line is directly linked with the No 2 cold rolling mill together with the No 3 continuous galvanizing line, which started in December 2006.

The new pickling line has following features
1) Production capacity of 1.5 million tonnes per year
2) Width of 600mm to 1,880mm
3) Thickness in the range of 2mm to 6mm
4) Steel grades suitable for sheets for automotive use

The new pickling line set up with an investment of JPY 9 billion has a shallow bath and box weir type pickling equipment capable of highly efficient and stable production, a laser welder for a wide range of grades and products including highly functional products such as high tensile strength steel sheets and AWC trimmer which can provide complete automation.
1. A shallow bath is shallower than the conventional deep pickling bath. Skids built in the bath suppress the growth of the flow of hydrochloric acid that grows on the surface of steel sheets and enhances the pickling efficiency. A box weir type pickling bath has walls called box weirs at the top and bottom on both sides of the steel sheets, thereby generating a turbulent flow between the steel sheets and the box weirs, further enhancing the pickling efficiency.
2. Flash butt welders have been conventionally used. They melt the tip of steel sheets by sending a powerful current and weld steel sheets using high pressure. However, these welders had problems with stability in welding special materials including high-tensile strength steel sheets. On the other hand, laser welders can melt metal using high energy to weld steel sheets. Therefore it is possible to achieve consistent welding of special materials including high-tensile strength steel sheets.
3. AWC stands for Automatic Width Changing. Hot rolled coil usually requires side trimming as the width is not always even throughout the length. When steel sheets with different widths are trimmed, it is usual for the line to be stopped, the width of trimming to be adjusted, then for the line to be restarted. However, the AWC trimmer can automatically follow the width of the sheets, thereby making it unnecessary to stop the line.

Sumitomo Metals set up the new pickling line to accelerate focus on high-grade products to meet high grade requirements and the increasing demand for steel sheets for automotive use. Sumitomo Metals is increasing the ratio of products for automotive use by establishing the new pickling line together with the No 3 continuous galvanizing line, which commenced operation in December 2006.

Indonesian coal output to rise by 34% by 2010

Associated Press reported that Indonesia may increase its coal output by 34 % within three years as it sells more of the fuel to Japan and South Korea while Chinese exports decline and rising oil prices have led Asian electricity generators to switch to coal.

Credit Suisse forecast that “Everyone is looking at a positive market with strong demand and they are getting up to maximum production.’’ Indonesia may raise output to 259 million tonnes in 2010 from 193 million tons in 2006.”

Mr Haider Ali analyst for Credit Suisse said China the world’s biggest producer became a net importer of coal in 2007 curbing supplies to other Asian nations. He added that shipments from Newcastle, Australia and Richards Bay, South Africa have been constrained by transport bottlenecks and Indonesian producers are actively responding to the situation.

Credit Suisse said in an August 10 report that China will have net imports of 37 million tonnes in 2010 compared with net exports of 25 million tonnes in 2006. The three largest coal producers in Indonesia can supply 40 % of the power station fuel needed by China.

Massey to focus on metallurgical coal exports

It is reported that Massey plans to increase the production of coking coal by dipping into its 2 billion tons of Central Appalachian coal reserves and using cash from operations to open new mines.

Mr Don Blankenship CEO of Massey Energy while speaking during the Lehman Brothers CEO Energy and Power Conference in New York said that the aim is to retake some of the 40 million tonnes of metallurgical coal market share lost over the years to Australia amid rising demand for metallurgical coal. He added that “Australians are struggling and we are in a great position to benefit from this market.”

Massey is gambling that the price of metallurgical coal would stay high. Mr Blankenship said metallurgical coal prices should rise to the USD 80 + in the short term and perhaps higher unless something unforeseen happens. He added that several factors suggest met prices will remain high. Among them are expected increases in world demand for steel, ongoing shipping bottlenecks that limit exports from coal rich Australia, continued economic growth in China and India and the weak US dollar and high ocean freight rates favoring US export.

Mr Blankenship believes Massey is positioned to cash in. He added that Massey hasn't signed contracts setting prices on half of next year's metallurgical coal production and 85% in 2009 which he puts the company in a great position. Mr Blankenship told investors the company's five year business plan calls for expanding from 16% of Central Appalachian production to 35% and increasing coal reserves from 36% to 45% without making significant acquisitions. Massey's large reserve base allows the company to hold more coal as rivals chew through their reserves.

Massey Based in Richmond Va is the US fourth largest coal company by revenue. It operates 19 mining complexes in West Virginia, Virginia and Kentucky. Massey's stock closed up USD 1.55.

China hopes for slow down in iron ore imports

China Daily reported that China's iron ore imports are expected to increase at a slower pace because of rising domestic supply and decline in the growth of steel output capacity.

Mr Zou Jian chairman of the China Metallurgical Mining Enterprise Association at International Iron Ore Market Seminar at Shanghai said that "The domestic demand for iron ore is expected to increase around 70 million tonnes in 2007. Apart from the domestic output growth of around 40 to 45 million tonnes, we need only 30 million tons more from overseas, which rose only 9% from 2006. Large drops are expected in steel prices in 2009 because of the projected slowdown of world economic growth. He added that China's crude steel output rose only 14.64% in June 2007 dropping 11.44% points from January. The output is expected to increase slower which may lead to shrinkage in iron ore demand.”

China import of iron ore rose to 187.9 million tonnes in January to June 2007 up by 16.46%YoY. The output of large and medium sized mines in rose 29.28% to 321.28 million tonnes in January to June 2007 while the output of small mines was around 50 million tonnes.

Mr Chen Xianwen an official from the China Iron &Steel Association at the seminar said that the large scale of mining by domestic steel companies is expected to curb further rises in ore prices.

Peabody Energy may be takeover target – WSJ

The Wall Street Journal reported that traders may be expecting a takeover of Peabody Energy Corp a St Louis based coal producer as its stock rose and more call options than put options traded.

Mr Gregory Boyce CEO of Peabody while speaking at a Lehman Brothers energy conference in New York said that Shares gained 4.9% to USD 45.41.

WSJ said that traders might have been anticipating positive news. It said more than 41,900 call options on Peabody changed hands nearly twice as many put options.

The Journal citing Mr William Lefkowitz chief options strategist at Finance Investments Inc as saying that there was heavy trading in September call options which carry the right to buy the shares at USD 50 by the time they expire September 21st 2007.

Shipbuilding boom likely to propel SBQ plate demand in China

According to data released by China’s Commission of Science Technology and Industry for National Defense, China's ship completions increased by 43% YoY to 7.55 million DWT in January to June 2007, the contracting tonnage grew by 165% YoY to 42.62 million DWT surpassing the total tonnages of last year and the order book has jumped by 107%YoY to 105.4 million tonnes. The data also shows that China's shipbuilding sector has made a profit of CNY 6.4 billion in January to June 2007 up by 151% YoY.

Meanwhile, the world's leading shipbroker Clarksons revealed that China now accounts for 19% of the global ship completion, 42% of the contracting and 28% of the worldwide order. China has already risen to the world's second shipbuilding country overtaking Japan in terms of both the contracting and order tonnages. A host of ship owners from Greece, Singapore and German have opted for shifting their production base to China in recent years.

According to Ms Nie Lijuan deputy secretary general of China Association of the National Shipbuilding Industry, Chinese shipbuilders have received a total contracting tonnage of over 40 million DWT in January to June 2007 and that more than half of the global ship contracting has been won by Chinese shipbuilders.

Mr Chen Qixiang deputy GM of Jinan Iron and Steel Group Corp revealed that hectic shipbuilding market has also benefited the ship plate producers. As one of China's biggest ship plate producer, Jinan Steel have expanded their ship plate output to 850,000 tons in the first eight months of this year up by 300,000 tonnes from the total production of last year.

China's top economy planning body National Development & Reform Commission unveiled in the recent steel price monitoring report of 22 major cities that medium plate widely used in shipbuilding has seen the fastest price rise among four steel varieties including wire rod, rebar, medium plate and CR sheet. Medium plate prices have gained some CNY 89 per tonnes WoW in the last week of August 2007 to CNY 4507 per tonnes up by 24.8% from the same time of last year.

(Sourced from MySteel.net)

Ukrainian crude steel output in 8 months up by 5.6% YoY

Platts reported that Ukraine's output of crude steel during January to August 2007 increased by 5.6% YoY to 29.11 million tonnes as compared to 27.58 million tonnes in January to August 2006. In August 2007 Ukraine produced 3.7 million tonnes of steel up from 3.56 million tonnes produced in July 2007.

Ukraine's rolled metal production increased by 2.8% YoY to 24.73 million tonnes in January to August 2007 as compared with 24.05 million tonnes produced in January to August 2006. In August 2007 Ukraine produced 3.11 million tonnes of the commodity up from 3.09 million tonnes produced in July 2007.

Ukraine's production of pig iron during January to August 2007 increased by 9.3% YoY to 23.69 million tonnes as compared 21.67 million tonnes produced in January to August 2006. Ukraine produced 3.03 million tonnes of the commodity in August 2007 up from 2.91 million tonnes produced in July 2007.

The out put of Ukraine’s’ three largest steel makers is as under

Crude steel

In million tonnes

Rolled steel

In million tonnes

Pig iron

In million tonnes

Ukraine runs about 12 steel companies that are capable of producing more than 40 million tonnes of steel annually. Ukraine produced 40.8 million tonnes of crude steel in 2006, up from 37.75 million tonnes produced in 2005. Ukraine is exporting most of its steel output. In 2006 Ukraine increased roll output by 4.9% YoY to 36.62 million tonnes up from 34.91 million tonnes produced in 2005. In 2006 Ukraine produced 33.06 million tonnes of pig iron as compared with 30.66 million tonnes produced in 2005.

Tangsteel to build own iron ore fleet

China’s Tangsteel Group, the largest steel company in Hebei Province, said that it would team up with a top global shipping company to build and operate its own shipping fleet to cut transportation costs at a time when freight rates are surging.

Mr Qiu Hongwei a senior executive of Tangsteel Group said that the steel group initially plans to build two to three ships of about 300,000 tonnes each to transport the iron ore produced by Brazilian mining companies, which are its major suppliers. He added that the group is negotiating with several potential joint venture partners, including some of the largest global shipping companies. But he declined to elaborate.

Mr Qiu said that "Building our own shipping fleet is an effective way for the company to control the transport costs of raw materials, because freight rates are expected to continue to rise. The proposed joint venture company would operate independently as a profit oriented business. We need a partner with rich experience in operating a shipping company to ensure success.”

Tangsteel Group's annual output of crude steel in 2006 was 19.05 million tonnes.

Shandong to shut 4.3 million tonne of obsolete coking capacity

East China's Shandong Province will wash out 4.3 million tonnes of obsolete coke capacities and maintain coke capacity at some 30 million tonnes by 2010 to promoting energy saving and emission reduction in coke industry. Every tonne of coke is scheduled to consume less than 1.33 tonnes of washed coal and 3.5 tonnes of new water.

Besides, it also plans to develop 15 provincial level technology centers as well as two or three big and competitive enterprises with sales revenue of over CNY 5 billion.

Currently the main problems lie in low technical equipment level, low resources utilization level, low production concentration and heavy pollution. The province also urges M&As in the industry to forge over 3 million tonne coking groups and form complemented enterprise systems.

It will tighten strict control on the industry and prevent unqualified projects. In the meanwhile it will encourage the development and utilization of new technologies.

(Sourced from MySteel.net)

US weekly crude steel production down by 1.5% YoY

American Iron & Steel Industries reported that in the week ending September 1st 2007, US’s raw steel production was 2.062 million net tons while the capability utilization rate was 87.1 %. Production was 2.094 million net tons in the week ending September 1st 2006 while the capability utilization then was 88.7%. The current week production represents 1.5 % YoY decrease from the same period in 2006.

Production for the week ending September 1st 2007 is down by 2.4% from the previous week ending August 25th 2007 when production was 2.114 million net tons and the rate of capability utilization was 89.3%.

Adjusted YTD production through September 1st 2007 was 70.988 million net tons at a capability utilization rate of 85.3%. That is a 5.2% YoY decrease from the 74.897 million net tons during the same period 2006 when the capability utilization rate was 90.2%.

AISI’s estimate is based on reports from companies representing about 75% of the US’s raw steel capability and includes revisions for previous months.

Ezz Steel Q2 profit up 9.3% YoY

TradeArabia reported that Egypt's Ezz Steel Rebars posted a 9.3% rise in its second quarter net profit as growing economies in the region boosted steel demand.

Ezz Steel said its second quarter net profit after tax and minority interests were EGP 347 million (USD 61 million) as compared to EGP 317.33 million in second quarter of 2006. Its net sales gained by 10% QoQ from the first quarter to EGP 4.1 billion. EBITDA was EGP 1.1 billion in the second quarter.

It added that sales of long steel products, which include rebars and beams, accounted for 64% of total sales. It expected demand to remain strong for long steel products in both Egypt and the region.

Mr Ahmed Ezz chairman of Ezz Steel said that "We have worked hard to capitalize on robust market conditions, by making optimal use of our ability to produce a diverse product range."

Voestalpine secures 79.2% stake of Boehler-Uddeholm

Thomson Financial reported that Austrian steel company voestalpine AG said it holds 79.2% of Boehler-Uddehlom AG after its EUR 73 a share offer for the remaining Boehler shares expired on September 6th 2007.

Mr Gerhard Kuerner a spokesman of voestalpine said that 'We are extremely pleased with this result and will decide how we intend to acquire the remaining shares by Boehler's annual general meeting on September 20th 2007.”

Anshan Steel increases flat product prices for October

Northeast China based Anshan Steel has announced its October 2007 prices

HR Products
1. Low Carbon Steel, CR Structural Steel, Common Carbon Structural Steel, Corrugated Steel Coil and Sheet, Pipe Making Steel, Low Alloy Structural Steel, Ship-Building Steel, Engineering Machinery Steel
Up by CNY 300 per tonnes.
2. Automobile Steel, Cutting Tool Steel, Alloy Structural Steel, Steel Sheet for Porcelain Enameling
Up by CNY 350 per tonnes
3. High Quality Carbon Structural Steel
Up by CNY 400 per tonnes
4. Corrosion Proof Structural Steel, Bridge Building Steel
Up by CNY 200 per tonnes

CR Products
1. Common Carbon Construction Steel
Up by CNY 50 per tonnes
2. Full Hard
Up by CNY 100 per tonnes
3. Dual Phase Steel
Down by CNY 300 per tonnes
4. High-Precision Products
CNY 200 per tonnes higher than common precision products

Galvanized Steel
1. Products with thickness of less than 1.2mm
Up by CNY 100 per tonnes
2. Products with thickness of less than 1.5mm
Up by CNY 150 per tonnes
3. Products with thickness of 1.5mm or more
Up by CNY 200 per tonnes

Color Coated Steel
Products with thickness of 0.5mm or more:
Up by CNY 100 per tonnes

Others
Unchanged

(Sourced from MySteel.net)

P GOK pallet production in 7 months up by 12.4% YoY

Ukrainian Journal reported that Ukrainian iron ore producers have increased pellet production across the board in the January to July 2007 period.

Ukraine's biggest iron ore pellet producer Poltavsky GOK raised commercial pellet production tentatively by 12.4% YoY to 6.15 million tonnes and production of iron ore concentrate grew by 14.7% YoY to 7.091 million tonnes.

Poltavsky GOK produced 760,000 tonnes of pellets and 909,000 tonnes of concentrate in August 2007.

LOI to supply new roller hearth furnace to Kalibre Boru

It is reported that the Turkish company Kalibre Boru in Izmit has awarded LOI Thermprocess a contract for a new continuous roller hearth furnace to boost its production few months back. Production with the new plant is scheduled to start in 2008.

The roller hearth furnace is to be used for normalizing at 840°C to 950°C and stress relieves annealing at 550°C to 650°C. The furnace will be heated by radiant tubes with recuperator burners. The scope of supplies under the contract includes an advanced control program for open loop and closed loop control functions.

The new furnace plant is to be used for the bright annealing of high quality welded tubes made from hot rolled, descaled or cold rolled steel sheet and for cold drawn tubes in a protective controlled atmosphere. Depending on the annealing program selected, the furnace capacity will be about 4000 kilogram per hour. The furnace will have an overall length of 90.8 meter.

Kalibre Boru produces precision steel tubes especially for the automobile and machinery industries.

Jiuquan CR SS line starts trial runs

It is reported that Jiuquan Steel’s newly build 200,000 tonnes per year stainless steel cold rolling line underwent test runs on August 30th 2007.

A company official said it would go into official production in the following months, he yet didn't reveal planned output for the current year. This year's output of stainless steel slab and HRC will however rise 69% and 78%YoY respectively to 300,000 tonnes each.

Jiuquan Steel launched the 600,000 tonnes per year stainless steel smelting factory December 2005 and built a 1 million tonnes per year HR line in October 2003, which can produce stainless strip and common carbon strip as well. This line began manufacturing stainless strip when the smelting factory started production.

(Sourced from MySteel.net)

SSAB launches new hard steels

Swedish steel producer, Svenskt Staal AB has launched a new range of ultra high strength steels to be used in products as diverse as light fittings and low weight containers.

There are three groups of the new steels, with different combinations of strength and thickness as under

1. Docol Hard 450Y to 750Y
It has a minimum yield strength range of 450 N/mm2 to 700 N/mm2 and at 0.28mm to 1mm is very thin. This group supersedes conventional steels of the same or lower strength. It offers new opportunities for forming high strength products with thin, sleek lines. Weight reductions of up to 50% and cost savings of up to 25% are attainable. Typical applications include light fittings, white goods and furniture such as shelving.

2. Docol Hard 850Y to 1000Y
It has yield strengths in the range of 850 N/mm2to 1,000 N/mm2 and is in thickness between 1.5mm and 4mm. These steels are suitable for lightweight containers, load bearing beams, tubes and profiles for the building industry, and mechanisms such as seatbelt holders.

3. Docol Hard 1500Y to 1700Y
It is also produced in the very highest strengths available, with tensile strengths between 1,500 N/mm2 and 1,700 N/mm2. These steels are among the strongest and hardest in the world, and come in thicknesses of 0.42mm to 1.92mm. They are suitable for products that are exposed to heavy wear or blows and shocks and offer scope for developing products such as special low weight containers.

Mr Karl Inge Nilsson product manager at SSAB's sheet steel subsidiary SSAB Tunnplat said that "Furniture, containers and safety parts are some of the areas in which the steels have already contributed to better products."

SSAB Swedish Steel is Scandinavia's largest steelmaker and one of the world's leading manufacturers of high tensile steel.

China Coal gets shareholders approval for Shanghai offer

Shanghai Securities News reported that China Coal Energy Co got the go ahead from shareholders to list its shares in Shanghai in an initial public offering that could raise as much as USD 3.1 billion.

The report added that China Coal Energy to issue up to 1.525 billion local currency A shares for a listing on the Shanghai Stock Exchange. Calculated on the price of China Coal's Hong Kong listed H share, which closed at HKD 14.88 each, the company could raise as much as CNY 23.44 billion (USD 3.1 billion) to become the mainland's sixth largest initial public equity offer.

China Coal announced the A share plan in mid July 2007 to fund coal related projects and join a growing list of domestic firms to tap the country's buoyant stock market, including Shenhua Energy Co. But its plan still needs regulatory approval and a timetable for it’s A share issue and listing has yet to be fixed.

China, the world's largest producer and consumer of coal have seen its demand for the dirty hydrocarbon nearly double in the past five years. Coal accounts for about 70% of primary energy consumption by the world's fourth largest economy. Analysts said that coal prices should keep climbing in China thanks to double digit economic growth and as Beijing allows more market oriented pricing.

Ngarda Civil and Mining Company to operate BHPB Yarrie iron ore mine

It is reported that Ngarda Civil and Mining Company has won a AUD 300 million contract to manage and operate a BHP Billiton iron ore mine in Western Australia's Northern Pilbara region.

BHPB awarded the five year contract to Ngarda Civil and Mining with the aim that indigenous people will eventually make up 70 of the 90 workers at the Yarrie iron ore mine, 200 kilometer north east of Port Headland.

Mr Brian Taylor executive chairman of Ngarda Civil and Mining said that the contract would benefit indigenous people throughout the region. He added that "This will bring significant wages and salaries to our people in the region and assist our community in becoming sustainable for the future years ahead and not relying on the government welfare we've relied so much on in the past."

BHP Billiton also announced that it is working with Ngarda on the future establishment of an indigenous training academy at the Yarrie mine. The indigenous unemployment rate in Western Australia is 14% compared to the general rate of 3.3% throughout the state.

NSSC signs deal with Outokumpu for LX2101 duplex SS grade

Nippon Steel & Sumikin Stainless has announced an agreement with Outokumpu to acquire the European stainless mill's technology for producing its LDX 2101 grade duplex stainless.

The agreement runs from 2007−2021 and will involve some training of NSSC staff. NSSC currently produces about 800 tonnes per month of its own duplex varieties making it Japan's largest maker of this type of stainless.

US DOC conducting preliminary review on SS imports from South Korea

US government’s department of commerce which is conducting an administrative review of the countervailing duty order on stainless steel sheet and strip in coils from the Republic of Korea for the period January 1st 2005 to December 31st 2005, has preliminarily found that the net subsidy rate for the producer and exporter under review it to be 0.03% ad valorem, which is de minimis. The Department intends to issue assessment instructions to US Customs and Border Protection.

On August 6th 1999, the Department published in the Federal Register the CVD order on stainless steel sheet and strip in coils from Korea. On August 1st 2006, the Department published a notice of opportunity to request an administrative review of this CVD order. On September 29th 2006 the Department published a notice of initiation of the administrative review of the CVD order on stainless steel sheet and strip in coils from Korea covering the period of review On September 27th 2006, the Department sent questionnaires to DMC and the Government of Korea. On November 30th 2006, the Department received questionnaire responses from DMC and the GOK. On February 12th 2007, DMC and the GOK submitted responses to the Department's January 29th 2007, supplemental questionnaires. On May 9th 2007, the Department published in the Federal Register an extension of the preliminary results deadline.

This review covers only those producers or exporters for which a review was specifically requested. The only company subject to this review is DMC.

The products subject to this order are certain stainless steel sheet and strip in coils containing 1.2% or less of carbon and 10.5% or more of chromium with or without other elements. The subject sheet and strip is a flat rolled product in coils that is greater than 9.5 mm in width and less than 4.75 mm in thickness and that is annealed or otherwise heat treated and pickled or otherwise descaled. The subject sheet and strip may also be further processed provided that it maintains the specific dimensions of sheet and strip following such processing.

Excluded from the scope of this order are the following
(1) Sheet and strip that is not annealed or otherwise heat treated and pickled or otherwise descaled
(2) Sheet and strip that is cut to length
(3) Plate - Flat rolled stainless steel products of a thickness of 4.75 mm or more
(4) Flat wire - Cold-rolled sections, with a prepared edge, rectangular in shape, of a width of not more than 9.5 mm
(5) Razor blade steel - Flat rolled product of stainless steel, not further worked than cold rolled in coils, of a width of not more than 23 mm and a thickness of 0.266 mm or less, containing, by weight, 12.5% to 14.5% chromium and certified at the time of entry to be used in the manufacture of razor blades.
(6) The Department has determined that certain specialty stainless steel products are also excluded from the scope of this order. Flapper valve steel, suspension foil, foils for automotive catalytic converters, permanent magnet iron chromium cobalt alloy stainless strip and industrial blades and surgical and medical instruments.

ASSDA outlines alternative SS grades

Australian Stainless Steel Development Association has outlined new and emerging stainless steel grades, which may be considered as alternatives to the traditional and widely known varieties. According to ASSDA, the growing demand from China and the rest of the developing world has driven up the price of alloying elements added to stainless steels. Over the last five years nickel prices have risen to ten times what they were. Chromium and molybdenum have also risen strongly, and the price of stainless steel scrap, which steel makers use extensively has soared. Inevitably, stainless steels have also seen large price increases.

Growing demand and the time required to develop new supply sources mean that nickel and other alloy prices are unlikely to drop to the levels seen a few years ago. High prices are driving stainless steel users to seek a cost effective solutions. The optimum choice of grade is a blend of engineering and economic factors, and the choice may be different in a new cost environment.

The most common stainless steel grade, 304, is used in about 60% of applications for stainless steel around the world. Grade 304 contains about 8% of nickel, which is used to form the ductile austenite crystal structure. Grade 316, with 10% of nickel and higher corrosion resistance given by an addition of 2% molybdenum, is also common and it is used in marine environments.

Users are seeking cost effective alternatives to both these austenitic 300 series grades. Austenitic 200 series, duplex stainless steels and ferritic grades can all be used instead of 304 and 316, if they are selected, designed, fabricated and used appropriately. The alloying elements in stainless steel contributing to corrosion resistance are chromium and molybdenum. Within each of the alternative groups there are grades with different corrosion resistance resulting from the chromium and molybdenum contents.

The well known austenitic 300 series grades contain the highest levels of nickel. The austenitic 200 series grades contain less nickel, and manganese is added to make the austenite crystal structure form. Because the 200 series grades have the austenitic crystal structure their mechanical and fabrication properties are similar to the familiar 300 series. Ferritic grades have the same crystal structure as carbon steel, and have similar mechanical and fabrication properties and do not contain a nickel addition. Duplex grades are not fully austenitic. They are formulated to be a mixture of equal amounts of austenitic and ferritic grains in the microstructure, which generally means the nickel content is about half of that in an austenitic grade of the same chromium content.

According to ASSDA, these grades are austenitic despite their lower nickel because they have more manganese. Manganese is about half as effective in forming austenite as nickel, so for every 1% of nickel left out, about 2% of manganese has to be added at the same level of chromium, which suppresses the formation of austenite. Half the nickel in these grades has been replaced by manganese and the price of manganese is also rising strongly.

First developed in the 1930s, most of the common 200 series grades have corrosion resistance similar to the ferritic grade 430, lower than grade 304, because the chromium content is lower. Newer Indian 2/3 developments (grades J1 & J4 in the table) have centered on grades with significantly lower corrosion resistance. There are other proprietary 200 series grades with higher chromium contents used in marine and anti–galling applications. The austenitic 200 series are the closest in behavior to the 300 series of the alternative groups. Hence they are the easiest to convert to. According to ASSDA, the tensile strength of common 200 grades exceeds 600MPa, ie about 20% higher than 304. The 0.2% proof stress is more than 20% greater than that of 304 but the elongation at fracture is similar. In comparison with the physical properties of 304, the 200 series have similar density, elastic modulus, electrical and thermal properties.

According to ASSDA, the ductility and formability are similar to the 300 grades although the lower nickel gives a greater risk of delayed cracking after heavy cold forming. Welding is similar to the 300 series grades although the 200 grades may have higher carbon and may suffer sensitization if welded in sections thicker than 5 mm. Stress corrosion cracking resistance is similar to the 300 series. Like 304 and 316, 200 series grades do not respond to a magnet when in the annealed condition, but become magnetic after cold work.

According to ASSDA, the lower chromium levels mean that the 15% chromium grades have lower corrosion resistance than ferritic grade 430. Even the 16 & 17% chromium grades are somewhat inferior to 304 in corrosion resistance, since it appears that a 200 series grade has slightly less corrosion resistance than a 300 series grade with the same chromium level. This may be due to the high levels of sulphur present in 200 series grades from some sources.

According to ASSDA, as with all grade groups, it is important to choose a grade with corrosion resistance adequate for the 3/3 applications. The lower chromium 200 series grades are generally suitable for use with mild acids and alkalis including most foods (pH not less than 3). They are satisfactory with 20°C potable water and are suitable for indoor exposure. They are used extensively for cookware and serving bowls applications where the corrosion conditions are not severe since the utensils are washed and dried. The formability and deep draw ability of the 200 series are especially useful for these applications.

Votorantim plans new steel investments as financing costs drops

BNamericas citing Mr Luis Schiriak CFO of Votorantim's reported that Votorantim's international financing costs will decline by 100 points to 150 basis points in the metals, paper and pulp sectors after US risk rating firm Moody's upgraded the group to Baa3- investment grade.

He said the reduction in financing costs has given the company's expansion plans in Brazil and Latin America a new spark. He added that "Now we can think about projects that were shelved because they hadn't given enough return on investment when financing costs were higher. Especially in the steel sector, which has tighter margins."

Mr Schiriak said "We have a very aggressive investment plan to expand capacity but we also plan to expand through acquisitions He added that Votorantim Industrial plans to invest BRL 4 billion (USD 2 billion) in 2007 and BRL 5 billion in 2008. About 60% of the investment goes into the group's metals operations.

Votorantim will continue investments in steelmaker Acerías Paz del Rio in Colombia of which it acquired 52% earlier this year for nearly USD 500 million aiming to double capacity to some 700,000 tonnes per year of long steel just by maximizing production capacity and modernization works. Mr Schiriak said "The investment for this expansion won't be very big since there was lots of capacity that was not being used and point out that Votorantim also wants to expand coal production capacity in Colombia.

Paragon Steel to expand Butler plant

Paragon Steel of Fort Wayne announced that it would expand one of its two Butler plants, adding 64,000 square feet and at least 10 jobs.

The expansion, expected to be completed in November, will increase the plant's size by nearly 65% and enable additional equipment to be installed.

Mr Thomas C Barnett CEO of Paragon Steel said that "We are tremendously excited about this expansion. It will enable us to process virtually every product our primary supplier, Steel Dynamics, manufactures, while enhancing our ability to service many nearby processors."

SUEK to invest in mining equipments

Itar-Tass reported that Russian coal major Siberian Coal Energy Company has no plans to buy coalmines in Australia but will buy its equipment for the modernization of their own operations.

Mr Vladimir Rashevsky GD of SUEK while on a trip with Mr Putin to Asian Pacific Economic Cooperation summit in Australia said “Over the past 15 years Australia has almost doubled coal production and is now one of the world leaders in this field both in terms of safety and environmental protection.”

Mr Rashevsky said that “Russian coal industry is also beginning to develop intensively and needs Australian experience. We need to borrow the best practices. We are buying equipment and working with Australian consulting firms and IT programmers."

He does not fear competition from Australia in the international coal market. He said “Formally, we are suppliers in the same market, but it is so big that there will be place for everyone in it, including Russia, Australia and Indonesia. There is no need for Russia to buy Australian coal assets for the time being.”

He said that the main goal is investments inside the country in order to improve the situation after the crisis survived by the industry. He said that SUEK would spend RUB 30 billion for the development of the coal industry in the next five years under its investment program. He said “We actively invest in the development of the coal industry and purchase modern highly productive machinery that will improve occupational safety at the mines.”