Chinese HRC exports to India increase by 228% in August

China’s Customs statistics from China showed that China’s hot rolled coil exports to India increased by 227.6% in August 2007, to 88,900 tonnes as compared to August 2006.

China's HRC imports to India in January to August 2007 period up by 227.7% YoY to 1.02 million tonnes. India's consumption of Chinese HRC is second only to Korea's, which rose to 508,158 tonnes in August, up by 30.9%, bringing the eight month total to 4 million tonnes, up by 43.4% YoY.

In total, China exported 1.65 million tonnes of HRC in August, up by 59.9% bringing January to August 2007 period total to 11.99 million tonnes, up by 68.6%

Its semi finished steel exports in August slipped by 69.6% YoY to 341,649 tonnes, but was up by 10.4% YoY for the January to August period at 5.59 million tonnes.

Taiwan, the third largest consumer of China's semi finished steel, showed the greatest consumption decline in August, importing 36,544 tonnes of Chinese HRC, down by 88.6% YoY bringing its total for the January to August to 840,997 tonnes, down by 41.6% YoY.

Concreting work begins for VSP blast furnace

It is reported that the pouring of concrete for laying the foundation of the blast furnace 3 of the Visakhapatnam Steel Plant began on Friday with Mr PK Bishnoi CMD launching the work. The work is going to create a record as the concrete pouring will continue non stop for 68 hours and as many as 1,500 tonnes of cement, huge quantities of sand and about 500 tonnes VSP’s TMT bars are used for this huge concreting job.

Besides 6 batching plants for ready mix concrete and 24 transit mixers have been deployed for the work. The operation is completely mechanized now whereas in 1981 when foundation for the blast furnace I and II was laid a huge manpower was deployed.

Larsen & Toubro, the consortium partner of Paulworth of Italy, is executing the work and the latter has taken up the blast furnace project on total turnkey basis. The 3,800 cubic metre volume blast furnace will have all the latest technologies like pulverized coal injection, oxygen enrichment and copper staves for cooling.

Steel rich states to boom in the market

According to the experts, India’s eastern states like Orissa, Jharkhand and Chhattisgarh, which have more than 55% of total iron ore reserves, can take advantage of the emerging opportunities in the steel sector.

Mr Varun Jha VP of TATA Steel said that with Indian economy on the upswing steel would be the key sector to catapult these states. He added that “There is huge risk, if we do not take advantage of the opportunities.”

He said that steel demand of India will be 150 million tonnes by 2020, which will require crude steel production of about 175 million tonne. Significantly, most of the capacity additions will come from the Greenfield projects in the eastern states. Among the eastern states, Orissa is in an advantageous position and the political leaders and the executives need to change this opportunity into reality.

Mr UP Singh steel & mines secretary of Orissa said that there is huge scope for raising the per capita steel consumption in the country. It was 35 kilograms in India compared to 150 kilograms in the world and 250 kilograms in China. As per the revised target Government of India has fixed a target of 200 million tonnes steel production by 2020.

Regarding the current reserve of iron ore he said, the reserves in Orissa estimated at 5300 million tonnes is sufficient for production of 75 million ton steel over a period of 40 years.

SBI to lend USD 1.5 billion more to TATA for Corus buy

BS reported that State Bank of India will lend another USD 1 million to USD 1.5 billion to TATA Steel UK to enable the TATA group to refinance a part of the bridge loans taken by it for the acquisition of Anglo Dutch steel maker Corus.

TATA Steel is unable to raise funds from foreign banks, which have turned risk averse following the US sub prime mortgage crisis. It has therefore turned to SBI for funding support. The fresh loan will be in addition to the USD 1 billion SBI sanctioned late last month.

SBI will take the enhanced exposure to TATA Steel through its overseas branches. This will become a substantially bigger acquisition financing exposure of SBI, considering that it till now was involved in deals only of less than USD 100 million.

TATA needed refinance to pay off USD 7.2 billion of bridge loans taken for the biggest buyout by an Indian company. According to reports, over USD 500 billion of fund raising has been caught in a global credit logjam caused by risk aversion among banks and other investors.

Orissa's steel hub tense as worker dies in mishap

IANS reported that tension gripped Orissa's steel hub at Kalinga Nagar in Jajpur district Friday following the death of a worker at a steel plant.

Following the incident, hundreds of workers staged protests at the plant, demanding compensation and work for the victim's family. Production work at the plant was hampered due to the protests. Police were deployed at the site, following the huge demonstration by the workers.

Mr Ramesh Chandra Padhi officer in charge of the Jakhapura police station told IANS that “The victim was immediately rushed to a hospital, where doctors declared him brought dead.”
Mr DS Kute district police chief told IANS that “Though the situation is tense here, it is under control.”

Mr Bidyadhar Mohanty, district president of the Indian National Trade Union Congress said that “Accidents at the Kalinga Nagar steel plant is common since the management never addressed the problems of the workers.”

Trade union leaders alleged that the plant management had not taken any safety measures despite repeated pleas by the workers.

Rising iron ore prices send steel ingots up INR 1,000 per tonne

It is reported that price of steel ingots has shot up by close to INR 1,000 per tonne in the last week due to shortage in supply of iron ore.

Mr JK Arora MD of Supreme Group said that "Steel prices have been volatile as iron ore supply has been tight due to problems in the mining areas in Orissa."

According to Mr Arora, demand in India has dulled a bit due to high interest rates, which have prompted large number of payment defaults in the housing sector. This has led to a slowdown in construction, as fresh demand is not picking up. The demand was a bit slow during the monsoons, as construction had stopped.

Steel ingot production was seeing a slowdown due to shortage of both sponge iron scrap and iron ore. This is also making production of ingots expensive. Despite an export duty being imposed on iron ore, the supply is not enough to cater to the demand. However, a weaker dollar and stronger rupee will allow for some respite as imports could become lucrative.

Caparo targets manufacturing zone of Madras

It is reported that Caparo Group is to inaugurate a GBP 40 million metal engineering plant in Chennai next week, marking completion of the first stage of its GBP 100 million expansion plan in India.

The 120 acre site, on which construction began 18 months ago, already produces sheet-metal components for the global car industry. Clients include Volvo, Ford, TATA Motors and Maruti Suzuki. It also makes commercial tools. A forging facility should become operational next month and the entire plant fully commissioned by the middle of 2008.

The plant will employ about 2,000 people and is the group’s biggest single investment in India. Caparo has 12 facilities in India and is to open 16 more.

Indian Railways revenue earning up by 13.84% in tens days

It is reported that Indian Railways has recorded a total approximate earnings of INR 1768.95 crore during the period September 1st 2007 to September 10th 2007 up by 13.84% YoY as against INR 1553.87 crore during the September 1st 2006 to September 10th 2006.

INR in crore

The total number of passengers booked during September 1st 2007 to September 10th 2007 were 187.37 million up by 9.91% YoY compared to 170.47 million during September 1st 2006 to September 10th 2006. In the suburban and non suburban sectors, the number of passengers booked was 104.21 million and 83.16 million compared to 96.61 million and 73.86 million, registering an increase of 7.87% YoY and 12.59% YoY respectively.

REL to up capacity of Sasan ultra mega plant

BS reported that Reliance Power Limited, that bagged the 4,000 MW ultra mega power plant in Sasan in Madhya Pradesh, has decided to increase the capacity of the pithead coal based plant beyond 4,000 MW.

A senior executive of Reliance Power Limited said that “We have taken a decision in principle to increase the capacity of the Sasan plant beyond 4,000 MW. We are yet to decide to what level.”

The decision follows a recent resolution by the empowered group of ministers to allow promoters of ultra mega power projects to enhance the capacity beyond 4,000 MW and sell the additional power at the best price possible. It would be advantageous for the owners of the plants because they would make use of the existing infrastructure like coal, land and other facilities to generate the extra power at a competitive cost and sell it at a higher price.

Reliance Power Limited has promised to supply power from the INR 20,000 crore Sasan project at a levelised tariff of INR 1.196 per unit for 25 years. But it can sell the additional power at a higher cost.

The government has initiated the process of building 4,000 MW ultra mega power projects under the public private partnership route to plug India’s ever increasing energy deficit. 2 projects of 4,000 MW each have already been taken up for implementation by TATA Power in Mundra in Gujarat and Reliance Power in Sasan, Madhya Pradesh and 2 more projects, Tilaiya and Krishnapatnam, are slated to be handed over to the developers before March 2008. Another 6 ultra mega projects are in the pipeline.

Suzlon Energy bags Turkish order

Suzlon Energy Limited announced that it has made a breakthrough into the Turkish wind energy market with an order of 31.5 MW of wind turbine capacity. The contract with Ayen Enerji Co Inc will be supplied through 15 units of Suzlon's S88 2.1 MW turbines.

Bharati Shipyard, Apeejay forms JV for ship building unit

BL reported that Bharati Shipyard and the Apeejay Surendra group have proposed to set up an INR 2,200 crore ship manufacturing unit in Orissa and has identified Dhamara in Bhadrakh district as the location for the project.

It will be developed in 3 phases as a JV between the 2 companies. Around 1,050 acres will be required for setting up the ship manufacturing and repairs unit. The steel requirement for the plant is estimate at 75,000 tonnes per annum during the first phase, 230,000 tonnes during the second phase and 400,000 tonne during the third phase.

Mr Ashok Dalwai industry secretary of Orissa said that “The plan is in the preliminary stage of discussion and nothing has firmed up yet.”

More than 40,000 persons are likely to get direct and indirect employment under the project. According to a projection, during the first phase 2,250 persons will be directly employed. Similarly, about 7,300 persons are likely to get employment during the second phase. While 9,000 persons are likely to be benefited by indirect employment in the first phase, about 20,000 persons are likely to get indirect employment during the second phase. In total, about 41,000 persons are likely to get direct and indirect employment.

GAIL signs supply agreement for gas cracker plant in Assam

It is reported that GAIL India has signed the feedstock supply agreements for the INR 5,460 crore gas cracker plant with a capacity of 0.28 million tonnes per annum being set up at Lepetkata in Dibrugarh district of Assam.

The gas supply agreement was signed between Brahmaputra Cracker & Polymer and Oil India and naphtha supply agreement was signed between BCPL and Numaligarh Refineries.

Under the feedstock supply agreements, Brahmaputra Cracker & Polymer will source 6.0 metric million standard cubic metres per day gas from Oil India in Duliajan which shall be processed to recover C2+ liquid as feedstock for the petrochemical complex. The balance gas after recovery of C2+ liquid shall be returned back to the gas consumers. The petrochemical complex shall also utilize 0.16 million tonnes per annum of petrochemical grade naphtha from Numaligarh Refinery. In addition to fuel supplies from OIL and NRL, 1.35 metric million standard cubic metres per day gas from Oil & Natural Gas Corporation upto March 31st 2012 and 1 metric million standard cubic metres per day thereafter will be utilized by BCPL.

The petrochemical complex will comprise of a cracker unit, downstream polymer and integrated off site or utilities plants. The complex has been configured with a capacity of 0.22 million tonnes per annum of ethylene and 60,000 tonnes per annum of propylene with natural gas and naphtha as feed stock. The existing company's LPG plant at Lakwa will be modified to process gas for recovery of ethane and higher hydrocarbon fraction which will be transported to Lepetkata through a pipeline.

ABG Shipyard bags INR 1,439 crore order for 12 bulk carriers

ABG Shipyard Limited announced that it has bagged an USD 360 million (INR 1,439 crore) order for construction of 12 handy size bulk carriers of 35,000 DWT from Germany based Bereederungsgesellschaft H Vogemann GmbH of Hamburg, totaling aggregate order book stands at INR 7,121 crore.

Mr Rishi Agarwal MD of ABG Shipyard said that "This is a path breaking order and we at ABG are proud to have won it against stiff international competition."

CISA warns temporary supply shortage of iron ore

It is reported that the China Iron & Steel Association and China Chamber of Commerce for Metals and Chemicals Importers and Exporters have recently reduced the number of licensed iron ore importers from 118 to 112.

The global supply and demand of iron ore is set to move towards better equilibrium or even oversupply in the long term. However, the supply remains fairly tight in the near furture reflected by soaring iron ore freight rates these days.

According to Mr Yang Shicheng director of development & research centre of COSCO China's iron ore import volume differs considerably from month to month which has partially contributed to the balloning iron ore shipping cost.

China's iron ore import expands 31.9% in Jan from same time of last year and the monthly growth rate continues to move downward in January to June 2007. However, the imports rebound and advances 35.91% in July but again drifts to 10.78% in August 2007.

The escalating shipping rates has also pushed up landed price of iron ore, jumping 27.56% in the first seven months of this year. However, massive steel export and robust domestic demand would translate into hectic demand for the raw material in days to come.

China Iron & Steel Association estimates China's iron ore imports to add by 44 million tonnes to 370 million tonnes in 2007. If China's iron ore import increment stays at some 40 million tonnes in 2008, that is to say, global demand for seaborne iron ore would expand by 50 million tonnes to 60 million tonnes next year.

By contrary, the leading overseas ore suppliers intend to raise up their output by some 70 million tonnes in 2008. Therefore, the supply and demand appear to be in balance at large next year. However, the industrial association warns that temporary mistach is possible due to uncertainties and monopoly held by the big three.

Mr Yan Bangsong VC of CCCMC says that from November 2007, Chinese iron ore importers must provide the chamber with details of all iron ore import contracts and sales at a recent conference on raw materials held in Ningxia.

Mr Yan told the 300 delegates that the CCCMC has been assigned by China's Ministry of Commerce to collect the information. The chamber and the China Iron & Steel Association met jointly in Beijing on September 24th 2007 to discuss the matter and the training that importers would be offered on how to use a special computer program being introduced to collect the data.

(Sourced from MySteel.net)

USW in tentative pact for 400 members at Gerdau AmeriSteel

The United Steelworkers announced that tentative agreements have been reached covering some 400 USW members employed at Gerdau Ameristeel plants at Sand Springs in Okla and Calvert City in Kentucky.

The tentative agreement at Sand Springs was reached last week but USW Local 2741, representing 275 workers, delayed the ratification vote in solidarity with Calvert City workers to help USW Local 9447-5 reach an agreement covering its 135 members.

Mr Jim Stewart director of collective bargaining and lead negotiator for the union said that “These two contracts concludes a round of bargaining that began three years ago with labor agreements at 12 locations in the US and Canada. It was a long struggle but ultimately, we were successful because our membership at every plant stuck together and supported each other with extraordinary loyalty and solidarity.”

At the International union level, the USW Strategic Campaigns department organized a corporate campaign that reached across the US, Canada, South America and Europe. Representatives of Gerdau’s workers from around the world came together to share information and discuss strategy on how to develop mutual assistance. Many global solidarity actions followed with Gerdau getting the message that they would not be able to isolate any group of workers in any country.

Beijing yet to reach tax settlement on steel export

Beijing News cited a well informed Chinese industrial source as saying that China Iron and Steel Association convened an internal meeting regarding China's steel product exports in which the National Development and Reform Commission proposed to increase the export tax of steel billet to 25% from the current 15%, raise the export tax of hot rolled sheet and long products to 15% and cancel export tax rebates for high value added steel products.

According to the source in the meeting, officials from both the China’s ministry of finance and the CISA spoke in opposition to the proposal, arguing that it would be too harsh on domestic steel mills. Mr Zhang Jingang vice secretary general of CISA said that "They will continue to discuss a feasible policy in the future, as the NDRC insists that steel product exports should be lowered further in order to help maintain a trade balance, but so far no consensus has been reached."

He added that any further change in export tax in short term would exert shock on China's steel export, cautioned an industrial analyst. However, each coin has two sides. Restricted steel export would reduce China's demand for iron ore and give Chinese steelmakers better leverage over the upcoming ore price talks. Meanwhile, steel export quota system has also been proposed at the meeting. Some industrial insiders believe the quota system could help cool down China's hectic steel ouput expansion, dampen its surging demand for iron ore and bulk vessels, which would in turn help mitigate the intensifying friction with its major trading partners.

Mr Men Chaohui senior executive of Delong Steel, told the newspaper that NDRC's proposal may have little impact on China's steel export since higher export tax would again widen the price spread of domestic market and international market given current robust demand in overseas market. His view is echoed by a sales manager of Baosteel's trading unit, who wished to remain anonymous. He warns that domestic steelmakers would shoulder harsh cost pressure once the tax rebate on high value added steel export is removed.

(Sourced from Mysteel.net)

Thai Nguyen Iron Steel Company expanded

VNA reported that the second phase of a project to expand the Thai Nguyen Iron Steel Company kicked off in Thai Nguyen province on September 29th 2007.

The expansion, one of seven major projects of the Vietnamese steel industry in the 2007-2015 period aims to increase the company’s ingot production capacity to 500,000 tonnes per year. The project will cost a total of close to VND 4,000 billion (USD242.6 million) to be sourced from the Thai Nguyen Iron Steel Company’s own capital and foreign loans.

The project is expected to last for 30 months.

China to pursue other 50% of El Mutun

Bolivian press reported that China's government is ready to sign a letter of intent with the Bolivian government to develop 25% to 50% of the El Mutún iron deposit in Bolivia's Santa Cruz department.

The report noted that a delegation of Chinese businesspeople and representatives from China's state development bank will meet with Mr Evo Morales president of Bolivia to clinch the agreement. The report further added that early this week a delegation from China's development bank is expected to arrive in Bolivia.

Mr Morales signed earlier this month a letter of intent with his Venezuelan counterpart Mr Hugo Chávez to consider forming a mining steelmaking JV to develop 50% of El Mutún.

Jindal Steel and Power signed an agreement in July to invest USD 2.1 billion to develop half of the deposit which is one of the largest in the world.

The Mutun deposit, 1,500 kilometers east of La Paz, near Bolivia's southeastern borders with Brazil, contains 40 billion tonnes of iron ore and 10 billion tonnes of manganese.

JFE Steel develops new technology in auto sheet

YIEH reported that Japanese JFE Steel has planned to develop a technology which can expect the rusty life cycle of auto sheets when actual exercise to meet the strong demands from auto industry.

JFE said that this technology can evaluate the corrosion microscopically and it can help to improve the quality development and selection of auto sheets.

Besides, JFE Steel has cooperated with Earth Chemical Co and Ishihara Chemical Co to develop an insect repelling steel sheet that keeps cockroaches away. And the new sheet will be used in appliance makers for use as under panels for microwave ovens and refrigerators.

Kinder Morgan Energy acquires steel company

Houston Business Journal reported that Kinder Morgan Energy Partners LP has agreed to buy the assets of Marine Terminals Inc for about USD 100 million.

The Houston pipeline master limited partnership said Arkansas-based Marine Terminals will continue to provide handling, processing, harboring and warehousing services to Charlotte, N.C.-based Nucor Corp.

Marine Terminals, which primarily handles and stores steel and alloys, has two facilities at Blytheville in Arkansas and individual terminals in Decatur in Alabama, Hertford in North Carolina and Berkley in South Carolina. The five facilities handled about 13.4 million tons of steel products in 2006.

Kinder Morgan is owned by Houston based Knight Inc formerly Kinder Morgan Inc a privately held company.

Mechel Commissioning new self propelled drilling rigs at Urals Nickel Plant

Mechel OAO announced that it has commissioned new self propelled drilling rigs at the open pit mines of its subsidiary, Southern Urals Nickel Plant OAO. Commissioning of the new equipment will enable Mechel to increase nickel ore mining efficiency while reducing production costs.

The new Russian-made self-propelled drilling rig, UKB 5S, was commissioned at the Sakharinsk open pit mine at the Southern Urals Nickel Plant OAO this month. A similar unit was delivered to the Buruktal open pit mine administration last week. The cost of commissioning two UKB-5S drilling rigs was more than RUB 12.0 million. The designed capacity of each unit is approximately 400 running meters per month.

The acquisition of the drilling rigs will allow the plant to carry out independent operational exploration while obtaining data for reliable planning and managing quality of mined silicate-nickel ore. The new equipment will help the miners define more precise boundaries of ore bodies, volumes and quality of mineral reserves.

The commissioning of the new self propelled drilling rigs was implemented in line with Mechel’s mining subsidiaries technical re-equipment program. Mechel OAO intends to invest approximately USD 1.2 billion in its mining segment during 5 years.

Japan steel industry sets sights on record

Japan’s ministry of economy, trade and industry said that Japan's crude steel production likely will reach a new record high this year of about 119.48 million tons, up by 2.8%YoY from 2006, on the back of brisk demand including for vehicles.

The level of output will be above the existing record high of 119.32 million tons set in 1973 amid the era of high speed growth in Japan. It added that demand is strong from the manufacturing sector as a whole, including automakers who are stepping up exports, shipbuilders and industrial machine makers.

Crude steel output in the January to June 2007 period came to 59.42 million tonnes a record for a half year period.

Canadian National to buy rail line from US Steel

Canadian National Railway Company and United States Steel Corporation announced that their respective Boards of Directors have approved an agreement under which Canadian National will acquire the major portion of the Elgin, Joliet and Eastern Railway Company for USD 300 million.

The acquisition will significantly improve the fluidity of Canadian National’s rail operations in the Chicago region, rewarding customers with faster transit times and more reliable service. Under the agreement, US Steel’s Transtar subsidiary will retain railroad assets, equipment and employees that support the Gary Works site in Northwest Indiana and the steelmaking operations of US Steel. Transtar’s remaining operations will become the Gary Railway. The acquisition is subject to regulatory review by the US Surface Transportation Board. Both Canadian National and US Steel believe that if the application is approved by the STB as filed, it should allow closing in mid 2008.

Canadian National plans to invest approximately USD 100 million for integration, new connections, and infrastructure improvements to add capacity on the EJ&E line and allow network synergies to be realized over time. The acquisition, which will be financed with debt and cash-on-hand, is expected to be slightly accretive to Canadian National’s diluted earnings per share in the first year following STB approval.

Mr E Hunter Harrison president & CEO of Canadian National said “This acquisition is good news for railroading in Chicago. Chicago is essential to Canadian National’s rail operations, yet it presents us with major operational challenges. This transaction will improve rail operations on the Canadian National system and the rest of the Chicago rail network by moving Canadian National trains out of the urban core to EJ&E lines on the outskirts of the Chicago metropolitan area.”

Mr John P Surma chairman & CEO of US Steel said “This transaction is positive for all involved. Our EJ&E employees and customers, and the communities in which we operate will benefit from the EJ&E being part of a large Class I railroad, while US Steel will be able to focus on the railroad assets serving Gary Works.”

Mr Harrison said “This acquisition not only will give CN an opportunity to expand its service to the North American steel industry, but also will drive new efficiencies and operating improvements on CN’s network. Streamlined rail operations and reduced congestion resulting from this acquisition will benefit current CN and EJ&E customers, the City of Chicago, nearby communities, and the overall rail network in the region.”

Metals prices to remain strong this year

It is reported that medium term risks, such as Chinese demand, production costs, the weakening US dollar and the slowing of the US economy will harm mining credit ratings in spite of strong metals prices. While Standard & Poor's anticipates that strong metals prices will continue for the rest of this year individual mining company risks will strain their credit ratings.

According to S&P among the medium-term risks are sudden changes in Chinese demand, a significant increase in company costs because of higher energy prices, higher currencies against the dollar and a general slowing of the US economy.

Ms Marie Shmaruk analyst for S&P Credit noted that the "steady increase in metals prices over the past few years has led to numerous positive rating actions, as companies flush with cash and robust cash flow generation improved their balance sheets and financial metrics. However, while the strength of the metals cycle has generated exceptional liquidity for metal producers, this has prompted more aggressively leveraged M&A activity, a trend we expect will continue in 2008, although at a slower rate, given current constrained credit market conditions."

Ms Shmaruk suggested that several factor could limit higher credit ratings and present medium-term risks:

1. An unexpected drop in industrial production in China would likely have a serious effect on the overall worldwide metals industry.
2. Mining and metals companies are experiencing a significant rise in their overall cost profiles that has somewhat eroded the benefits of higher prices. The increased costs are due to higher energy costs, higher currencies relative to the US dollar and a scarcity of materials and labor.
3. Various producers face reserve replacement issues, declining production trends, and significant capital spending to replace production or for overseas expansion to lower their cost profiles.
4. M&A activity has flourished as companies have used strong balance sheets and high stock prices to finance acquisitions that have hurt overall credit quality. Producers are seeking to enhance business risk profiles, notably by expanding market positions, entering new markets, broadening geographic and product diversity, improving pricing power in fragmented markets and lowering cost profiles.
5. A general slowing of the US economy could weigh on pricing and volumes, reversing the positive trends for those companies that are dependent on the US market for the bulk of their sales.

While Ms Shmaruk forecasts that reasonably strong metals prices will continue for the next several quarters higher spending aimed at replenishing reserves, increasing production, enhancing efficiency, and rewarding shareholders will temper further positive ratings for companies in base metals. The event risks associated with large scale M&A activity will also likely constrain further ratings improvement.

S&P forecasts that LME aluminum prices will remain broadly stable with an average price of USD 1.23 per short tonnes. However, we expect prices to decline gradually, primarily due to significant increases in Chinese alumina capacity that will likely lead China to reopen its idled aluminum production and shift the market into a surplus. Demand should be strong enough, though, to maintain the average price considerably above the average price curve of the past five years. Although nickel price have declined dramatically, S&P noted that fundamental supply constraints remain positive for nickel prices and should limit downward pricing pressure.

S&P anticipates that copper companies will continue to generate extremely strong operating cash flows, much of which is used to increase production capacity and to reward shareholders. Given low inventory levels, the metal has acute short-term vulnerability to any type of supply disruption. Also, we view speculation rather than supply/demand fundamentals as somewhat supporting the high prices.

Ms Shmaruk noted that a number of factors support gold prices including depreciation of the dollar, inflation, investor demand, strong gold jewelry demand in India and China, and an undeterminable level of speculation. She added that despite current prices S&P suggests long-term coal industry fundamentals remain positive. Although the prospect of further greenhouse gas legislation limiting carbon dioxide emissions has quelled some of the enthusiasm for coal fired generation of electricity, coal is likely to remain the dominant fuel for generating electricity in the US for the foreseeable future alternative fuels aren't likely to displace coal any time soon.

Ms Shmaruk said S&P has a mixed outlook for steel however, we believe the consolidation in the domestic market has improved production discipline and aided cost competitiveness adding that these factors should lead to less volatile prices as producers reduce capacity to match demand.

Allied Steel site cleanup faces another problem

It is reported that the former Allied Steel property is clear of coal tar contamination, but now lead contamination and other issues are delaying the future use of the property for another two years.

The Environmental Protection Agency worked with Alliant Energy on the cleanup of the 10 acre property that formerly housed a coal gasification plant.

Mr Ken Sivertsen of Alliant Energy told the Clinton City Council that lead contamination was discovered at the southern portion of the site. He said that “We’re looking at a delay in working with the city to do something with that property of approximately two years." He added that the company already has spent USD 12 million on the cleanup.

Ms Amber Mulnik a spokeswoman of Alliant Energy said that the company plans to sell the property and will give the city the first chance to purchase it.

Council members said they appreciated the cleanup work and landscaping that has been done to this point.

Ukrainian, Russian steel giants eye multi billion dollar merger deals

One of Ukraine’s leading steel groups announced a multi billion dollar merger deal with a Russian group this week while the country’s largest steel group was said to be holding continued negotiations with yet another Russian group on a big merger deal. If they go through, both deals could produce two new top 10 world steel-producing companies that would be better able to compete in a global market shaken up by consolidation.

Metinvest, the steel holding controlled by Ukraine’s top billionaire, Mr Rinat Akhmetov revealed on September 25th 2007 plans to merge with Smart-Holding a Russian Ukrainian steel group.

Meanwhile, sources said Ukraine’s largest steel producer, Industrial Union of Donbass was still in merger talks with Russia’s Gazmetal, controlled by billionaire Mr Alisher Usmanov. ISD is controlled by Ukrainian billionaires Mr Serhiy Taruta and Mr Vitaliy Haiduk.

The Ukrainian Russian deals follow the 2006 merger of Mittal Steel and Arcelor where the world’s largest and second largest steel groups consolidated into a single company.

Smart Holding represented by Russian national Vadim Novinsky was created in 2006. Through affiliated companies, the group manages a range of enterprises and assets in Ukraine and abroad.

According to a statement released by SCM, plans envision that the Metinvest Smart Holding merger will be completed this year.

Wire rod price to boost in Taiwan

YIEH reported that one wire rod producer in Taiwan predicts that the selling price will boost to NTD 20,500 per tonnes.

China’s quoted prices hit USD 600 to USD 620 per tonnes currently, due to the tight supply of imports because of increasing prices in China.

The report further added that in the past one month, wire rod grade K already raised more than NTD 2,000 per tonnes. Current prices are between NTD 19,500 to NTD 20,000 per tonnes. A taiwan’s domestic mill said that the availability of wire rod grade K will have a serious shortage in the fourth quarter.

Brazil Usiminas earns RoHS certification

BNamericas reported that Brazilian flat steelmaker Usiminas has received certification for its entire product line under the EU's RoHS (Restriction of Hazardous Substances) Directive.

RoHS restricts the use of six substances in the manufacture of electronic and electrical equipment, including lead, cadmium and mercury.

Usiminas is the first Latin American steelmaker and the second Brazilian company to obtain the certification. It makes coils, hot and cold rolled products and coated products.

Sonasid H1 net profit up by 52% YoY

Reuters reported that Moroccan steel maker Sonasid which European steel giant Arcelor took control of last year reported a 52.5% YoY increase in January to June 2007 net profit recently.

Sonasid in a statement said that net income was AED 494.8 million Moroccan up from AED 324.5 million in the same period last year on a 20.6% increase in sales to AED 3.264 billion. Its stock was up 0.81% to AED 3,100 at Casablanca bourse recently. It said the market for steel used to reinforce concrete grew 22% in January to June 2007.

Arcelor raised its stake in Sonasid in June 2006 in a deal valuing the Moroccan company at around USD 612 million aimed at developing Sonasid in its home market and making it easier to transfer technology and expertise to its affiliate. It hopes to use Sonasid as a base for expanding in North Africa and the rest of the continent.

Sonasid which controls 80% of Morocco's market for long steel products has annual production capacity of around 1 million tonnes. Its other shareholders include SNI, the kingdom's largest private conglomerate.

China urges top 1000 enterprises to be energy efficient

China Knowledge reported that China's National Development and Reform Commission launched its "Top 1000 Enterprises Energy Efficiency Action Plan" to require the country's 1,000 large domestic enterprises to meet global energy efficiency requirements and take the lead in the field domestically.

Mr Xie Zhenhua deputy director of NDRC said the 1000 enterprises, mainly from petrochemical, coal mining, metallurgical, electricity, iron and steel, transportation and construction materials sectors, consume about one third of China's primary energy. If this plan can be carried out effectively, 100 million tons standard coal equivalents could be saved by 2010. It is in accordance with China's goal to reduce energy consumption per unit of GDP by 20% by 2010 which was set in October 2005.

However, the energy consumption per unit of GDP dropped only 1.23% last year, less than one third of the average annual goal of 4%. Therefore, the government adopted new measure to fulfill the goal, including adjusting and canceling tax rebates on exports of high energy intensity products and promoting application of energy efficient technologies.

According to NDRC in January to June 2007 the energy consumption per unit of GDP fell 2.78%. These enterprises have saved 8 million tonnes of standard coal, which is equivalent to the first 3 months alone this year. China shows its continuous effort for an energy efficient and environment friendly society.

Carpenter appoints Mr McElwee president of Dynamet Inc

Dynamet Incorporated a Pittsburgh area based subsidiary of Carpenter Technology Corporation announced that Mr Andrew McElwee has been named president, effective September 10th 2007.

Mr McElwee replaces Mr Mark S Kamon who was appointed senior vice president Advanced Metals Operations of Carpenter Technology. He will be responsible for overall leadership of Dynamet and for growth in the aerospace and medical markets and will report to Mr Mark Kamon.

Mr McElwee a 19 year veteran of Carpenter Technology has worked in a number of senior management positions, most recently as vice president – Bar Business Group. He holds a bachelor’s degree in Business Administration from West Chester University.

Dynamet manufactures titanium bar, wire, fine wire and shaped products. Carpenter Technology, a leading manufacturer and distributor of specialty alloys and various engineered products, acquired Dynamet in 1997.

EADS to propose Mr LN Mittal for board membership

Thomson Financial reported that the European aerospace group EADS would recommend the appointment of Indian steel magnate Mr Lakshmi Mittal to the company's board of directors at a shareholder general assembly October 22nd 2007.

Mr Mittal is CEO & chairman of newly formed ArcelorMittal the world's biggest steel producer, which he created through the takeover of European group Arcelor by his company, Mittal Steel.

The management of EADS is being reformed after years of infighting between French and German shareholders and board members, which led to management and operational problems at the group, particularly at plane making unit Airbus.

CMC completes purchase of Micro Steel Mill

It is reported that Commercial Metals Co has completed the purchase of land at Mesa in Arizona for around USD 14.75 million.

According to published reports Commercial Metals Co will look to build a micro minimill at the site. The mill is expected to have an annual capacity of 280,000 tons. It will use ferrous scrap as the raw material. The facility is expected to cost around USD 130 million.

Commercial Metals officials said they want to build a micro mill in east Mesa because of the area’s rapid growth and relatively strong construction markets.

The final design of the mill is not yet completed, but construction is expected to begin in early 2008 with completion by early to mid 2009.

The project which was approved by the Mesa City Council in mid July 2007 will be the first micro mill operated by Commercial Metals in the United States. East Valley Tribune

At full operation, the plant will employ 150 to 200 people.

Siemens extends tender offer for acquisition of Dade Behring

Siemens announced that it has extended the expiration date for the cash tender offer for all outstanding shares of Dade Behring Holdings, Inc on October 31st 2007 as Siemens awaits merger control clearance by the European Commission.

The European Commission’s initial investigation period will expire on October 25th 2007, unless extended US antitrust clearance was already granted on September 17th 2007. Siemens expects to receive European merger control clearance and other regulatory approvals in time to close the transaction during calendar year 2007.

Mr Joe Kaeser CFO of Siemens stated that “We have made an attractive offer and do expect a smooth completion of the transaction after we have received full clearance from the antitrust authorities.”

While Siemens previously announced that it expected to close the transaction in the first calendar quarter of 2008, it now expects to close the transaction during the fourth quarter of calendar year 2007.

Following completion of the tender offer, any remaining shares of Dade Behring will be acquired in a merger at the same price. The transaction has a value of approximately USD 7 billion. The tender offer is being made by a subsidiary of Siemens pursuant to an Agreement and Plan of Merger dated as of July 25th 2007 by and among Siemens Corporation, its subsidiary, Belfast Merger Co and Dade Behring.

Siemens is a global powerhouse in electrical engineering and electronics. The company has around 475,000 employees working to develop and manufacture products, design and install complex systems and projects, and tailor a wide range of services for individual requirements. Siemens provides innovative technologies and comprehensive know how to benefit customers in over 190 countries. Founded more than 160 years ago, the company focuses on the areas of Information and Communications, Automation and Control, Power, Transportation, Medical, and Lighting. In fiscal 2006 Siemens had sales of EUR 87.3 billion and net income of EUR 3.033 billion.

Chinese coal prices will rise to record this year - KGI

According to investment bank KGI Securities Co Chinese coal prices will rise to a record this year as demand surges. As per data from the McCloskey Group Ltd China, the biggest producer and user of coal became a net importer of the fuel for the first time this year. The resulting reduction in supply on global markets has helped push benchmark Australian prices at Newcastle Port to a record in August 2007.

Mr Steven Liao a Taipei based analyst at KGI said that Coal prices are likely to hit a new high in the fourth quarter. China’s economy will maintain steady growth and coal demand is particularly strong in the fourth quarter.

According to McCloskey Chinese spot prices for coal used by steelmakers rose to a record CNY 813 (USD 108.24) per tonne in August 2007. The price for coal used to generate power was last month just CNY 3 off its record, reached in February 2007.

Mr Huang Teng manager of Beijing’s LT Consultants Ltd said that coal prices were likely to peak in 2008 before falling in 2009 as mining companies expand capacity and better port and transportation projects are completed.

China’s economy grew at the fastest pace in 12 years in the second quarter, expanding at an annual 11.9%. Growth was powered by investment in factories and real estate.