Indian government announces new coal distribution policy

Indian government has approved a new Coal Distribution Policy which seeks to facilitate supply of assured quantities of coal to various categories of consumers at pre determined prices in a regime of enforceable obligations on the part of both the suppliers and consumers of coal.

The new policy takes into consideration the regulatory regimes in which various sectors of the economy are functioning for classification of consumers and prioritization of coal supplies in terms of quantities. This policy also envisages an enlarged role for state governments in the supply of coal to a large number of small and medium industries. Under this policy, e-auction sale of coal will be re introduced with certain modified features to encourage emergence of proper coal market in the country.

The key features of the new Coal Distribution Policy are as under

I. Classification of consumers and supply of coal

The existing classification of coal consumers into core and non-core sectors is being dispensed with. Presently, the core sector consists of power, steel, cement, fertilizer, paper, aluminum, defense, loco, central PSUs and exports. Non core sector comprises of remaining consumers in various types of industries like textiles, rubber, engineering, glass, refractory, lime, jute, copper, foundries, crockery etc. besides seasonal consumers like brick sector.

Since power and fertilizer sectors are operating in a price regulatory regime coal to the extent of 100% of the normative requirement of the units in these two sectors will be made by the coal companies as at present but only under Fuel Supply Agreements. In view of the importance of the defense sector and railways, their total requirement will continue to be met.

For all other consumers with coal requirement of more than 4200 tons per annum 75% of their normative requirement of coal would be provided under FSAs.

Supply of coking coal to steel plants would be based on FSAs as is done at present.

In respect of small and medium sector consumers the existing cap of 500 tons of coal per year will be increased to 4200 tons per year. Since Coal India Limited and its subsidiaries cannot deal with a large number of such small and medium sector consumers, state governments will be required to take up the responsibility of identifying such consumers and arranging supply of coal to them through their designated agencies. To begin with, a quantity of 8 million tons of coal per year will be made available to meet the requirements of the small and medium sector consumers. State Governments will enter into Fuel Supply Agreements with public sector coal companies for sourcing coal for distribution through their designated agencies which could include National Cooperative Consumers Federation, National Small Industries Corporation, any state government agency and established industrial bodies.

II. Letter of Assurance and Fuel Supply Agreements

An innovative feature of the new policy is the concept of Letter of Assurance to be granted by the coal companies to the project developers as against the present system of granting coal linkages. Such LOAs will be converted into FSAs after specific milestones are achieved by the project promoters in a period of two years in case of power plants and one year in case of other consumers.

Consumers granted Letter of Assurance have to furnish a Bank Guarantee equivalent to 5% of their annual requirement of coal which will be forfeited if the suggested milestones are not achieved within the stipulated period. Bank guarantee system is being introduced to encourage only genuine consumers and to prevent pre emption of coal linkages without developing the end use projects in time as has been happening currently.

Letters of assurance in case of power including power utilities, independent power producers & captive power plants, steel plants including sponge & pig iron and cement sectors will be granted by the Standing Linkage Committee functioning in the Ministry of Coal.

For all other consumers, LOA will be issued by the Coal India Limited.

Under the new policy, Coal India Limited will be at liberty to import coal to meet their supply commitments to various consumers and in such case necessary price adjustments will be made by the coal companies.

III. Introduction of e-auction sale of coal

E-auction sale of coal will be re introduced with certain modifications like
i) There will be no floor price for bidding under e-auction scheme as was the case in the last phase of e-auction sale of coal.
ii) Coal PSUs will, however, have the liberty of having a reserve price which is not lesser than the notified prices of coal for appropriate commercial decision making.
iii) Under the new mode of e-auction there will be two platforms – one for the supply of coal for a longer period of one year or more and the other for supply of coal for shorter periods as per the frequency of offer of e-auction.
iv) All the coal PSUs will be required to announce a schedule of offer of coal for sale under e-auction mode at the start of the year for proper planning both by the coal supplies and consumers.

IV. Efficiency norms

To encourage economic and efficient use of coal by the consumers, norms of consumption for all the major sectors like power, steel, cement etc. will be reviewed taking into account continuous improvements in technology, manufacturing process and other developments.

V. Pricing of coal supplies

Coal to be supplied under FSAs will be charged at the notified prices of CIL. For supplies to small and medium consumers, state government designated agencies would be entitled to charge actual freight and 5% as service charge over and above the basic price charged by the coal company.

VI. Implementation of new policy

Various provisions of the new Coal Distribution Policy will be operationalized as per the following time schedules.

a) All the existing linked consumers shall enter into FSAs with respective coal companies within a period of 6 months failing which coal supplies can be discontinued.

b) State Governments shall put in place necessary institutional mechanisms for supply of coal to small and medium sector consumers as envisaged in the new policy within a period of 6 months.

c) Provisions of the new policy applicable to the new consumers will be given immediate effect to.

d) E-auction sale of coal to be introduced within one month and until such time the present scheme of sale of coal under e-booking will continue to operate.

The new Coal Distribution Policy has been evolved based on the extensive discussions held by the committee headed by secretary coal with all the stake holders. The committee comprised of representatives from the ministries of power, steel, law, finance, SSI, Department of Industrial Policy and Promotion, Planning Commission, Coal India Limited and Coal Mine Planning and Design Institute Limited.

Indian iron ore spot price continues to inch upward in China

It is reported that the landed price of Indian iron ore on spot basis in China has extended strong gains since the beginning of October, mostly driven by ocean freight rates. Demand from Chinese steel mills has also picked up after Chinese national holiday from October 1st to October 7th as northern Chinese steel mills move to stock more iron ore before winter hits.

As per reports, the current import prices for 63.5% Fe iron ore fines are about USD 175 to USD 180 per tonne on a CFR basis as compared to USD 155 to USD 170 per tonne in late September.

In the domestic markets, 63.5% grade Indian ore fine is offered at CNY 1330 per tonne, 62.5% at CNY 1200 per tonne and 61% at CNY 1120 per tonne.

The current freight rate for a 50,000 DWT to 60,000 DWT vessel from eastern India to China has risen to around USD 44 per tonne up from end September levels of USD 41 to USD 42 per tonne.

The freight cost for a 150,000 DWT vessel from Brazil to China is reported at USD 87.59 per tonne and USD 37.79 per tonne from Australia. Domestic waterway shipping costs for iron ore are on the increase too. In eastern China for example, freight costs rose to about CNY 27 per tonne from Beilun port in Zheijang province to Nantong in Jiangsu.

(Sourced from MySteel.net)

POSCO hopes to start work on Orissa steel plant by April 2008

It is reported that after recent events at the project site followed by meetings with state officials as well as prime minister, POSCO has postponed the date of starting construction on its proposed 12 million tonne capacity Orissa steel plant by April 2008.

Mr Lee Ku taek CEO of POSCO after a meeting with Mr Naveen Patnaik chief minister of Orissa announced that "April 1st 2008 is the 40th anniversary of POSCO and by then we will have ground breaking for the plant in India."

Mr Lee clarified that there was no question of the company closing down its project office at Kujang in Jagatsinghpur district. He said the Chief Minister assured to re send the state government's recommendation to the centre for grant of prospecting license of Khandadhar iron ore mines by December.

The board of directors of POSCO met at New Delhi on Friday after which Mr Lee along with other directors met Mr Patnaik and discussed the fate of steel project. As per report, Mr Lee met Dr Manmohan Singh prime minister also.

SAIL RSP to expand capacity to 4.5 million tonnes

Kalinga Times reported that Steel Authority of India Limited has decided to increase the capacity of its steel plant at Rourkela from the present 2.1 million tonnes to 4.5 million tonnes per annum.

The fact came to light when Mr SK Roongta chairman of SAIL and Mr BN Singh MD of Rourkela Steel Plant met Mr Naveen Patnaik chief minister of Orissa in New Delhi on October 18th 2007. They informed Mr Patnaik that the capacity enhancement of RSP will be done with an investment of INR 10,000 crore.

UGSL Q2 net profit up by 10.9% YoY

Uttam Galva Steels Limited has reported a net profit of INR 30.55 crore for July to September 2007 quarter up by 10.9% YoY as compared to INR 27.55 crore during July to September 2006 quarter. UGSL’s net sales in July to September 2007 stood at INR 870.59 crore up by 32.5% YoY.

UGSL’s net sales for April to September 2007 period amounted to INR 1,592.57 crore up by 32% YoY as compared to INR 1,206.64 crore during April to September 2006 period.

Mr Ankit Miglani director commercial of UGSL said “We have maintained a continual growth pattern in line with the market scenario. Our expansion plans are almost complete and additional capacities will be online in the second half of the year.”

Welspun Gujarat Stahl update on expansion plans

It is reported that Welspun Gujarat Stahl Rohren is increasing its LSAW pipe capacity by 300,000 tons at SEZ in Gujarat. As per report, Welspun already possessed critical equipments and this facility will be operational in just 12 months time and shall entail investments of INR 2.98 billion.

Besides this, Welspun has taken up capacity expansion and de bottlenecking of HSAW Spiral pipes at its existing facility at Anjar to increase capacity to 550,000 tonnes from 400,000 tonnes at an additional expenditure of nearly INR 1 billion.

Welspun has already started trial production of its plate cum coil mill, which would produce India’s widest plate of 4.5 meters. This 1.5 million tonnes per annum facility will be fully operational by the end of this financial year.

Similarly, the implementation of 300,000 tons project in Little Rock in US is going as per schedule and the facility is likely to be commissioned by July 2008.

Mr BK Goenka vice CMD of Welspun Gujarat Stahl said that “We strongly believe that we are poised to become one of the biggest and most respected one stop solution providers for steel pipes in the World.”

Mr Braja Mishra CEO & ED of Welspun Gujarat Stahl said that “We are growing at a rapid pace in our aggressive growth phase. Team Welspun has ensured that we remain focused, adhere to Engineering Excellence and continue to delight our customers with flawless product quality and timely delivery schedules.”

Post completion of US and Indian project, the company’s capacities will reach 1.6 million tonnes per annum.

Orissa plan for industrialization hit road block

It is reported that kidnapping and release of officials of POSCO by anti land acquisition activists recently may cast a shadow on 62 industrial facilities worth more than INR 300,000 crore planned by the Orissa government. . The delay in implementing big ticket investments is primarily being attributed to the administration's failure to acquire land.

Mr Chang ho Kwag director of POSCO Research Institute said that "This sort of activities would de motivate investors and will create an adverse impact on foreign investments that will not be in the interest of the people and the state. The efforts of the government have been to attract investment. It has to transform MoUs into a reality. Orissa has a long way to go in fructifying such projects."

Mr Sontosh Mohapatra VP of Confederation of Indian Industries said that "This is very unfortunate and sends wrong messages about Orissa, which has a lot of potential for development. All concerned should try and convince those resisting development. Or else, Orissa will lose a great opportunity for growth."

Mr Padmanabha Behera steel and mines minister of Orissa said that violence and abduction incidents would send a bad message to investors and setting up Greenfield projects is a difficult job and some problems will expectedly crop up. Mr Behera Besides said that “Mischief mongers are always there to create obstacles by reiterating the government's commitment to industrialization. There have been problems during land acquisition, but we are trying to resolve the issues. A number of small units have started production. We will sort out issues delaying the mega projects."

It may be noted that Orissa has so far inked pacts with private companies for 46 steel, 3 aluminum and 13 thermal power plants.

ABB bags power equipment contracts from JSW

It is reported that ABB has received orders worth INR 512 crore from JSW to provide turnkey power and automation solutions for steel and power plant projects including electrical balance of plant solutions for an 8x15 MW power generation facility in Rajasthan and a 300 MW power plant in Bellary in Karnataka. The projects are expected to be commissioned by 2009.

The order includes transformers, substations, electronic drives as well as a range of medium and low voltage switchgear and electrical.

NTPC inks MoU with Heavy Water Board for gas technology

National Thermal Power Corporation Limited announced that it has entered into a MoU with and Heavy Water Board of Department of Atomic Energy on October 17th 2007 for transfer of ammonia flue gas conditioning technology to the company for reduction in suspended particulate matter for implementation at all its projects.

The MOU also provides for jointly undertaking further research work in collaborative manner with equal participation from the company and HWB for enhancing efficacy of ammonia flue gas conditioning technology.

Nippon delegates visit Dempo mines

It is reported that a high level delegation of Nippon Steel Corporation led by Mr S Fujiwara GM raw material division II and accompanied by Mr A Sato manager has visited Dempo & Co’s mines at Bicholim in Goa.

As per report, the visit of the delegation, after signing a long term contract, is to further strengthen the ongoing relationship between the 2 companies.

Dempo has a long history of association with Nippon Steel, extending over 5 decades for export of quality grade iron ore to Nippon Steel Corporation.

Kamdhenu Ispat Q2 total revenue up by 19% YoY

Kamdhenu Ispat Limited has posted a total income of INR 75.68 crore in July to September 2007 quarter up by 17% YoY as against INR 64.55 crore in July to September 2006 quarter. However, the total income of July to September 2007 quarter is up by 37% QoQ from April to June 2007 quarter. The result has shown net profit growth of 19% YoY up from INR 2.81 crore in the last year corresponding quarter to INR 3.36 crore in the 2nd quarter. The net profit has registered 32% growth from the preceding 1st quarter of the same year.

Mr Satish Kumar Agarwal CMD of Kamdhenu Ispat Limited said that “Our performance this quarter is reflective of the strategic restructuring processes within the company and other developmental activities taking place within the company. However, the shareholders need not worry, as this is just a phase and we are committed to growth and better revenue propositions.”

Mr Agarwal said that “Having taken off as a reinforcement steel bar manufacturing company a decade ago, the company has realized its true potential in steel sector itself and hence we have deliberately mobilized all our strengths to restructure our business model. It is just a matter of time that the benefits of this act will start bearing fruits for all.”

PSIEC and STC to sign MoU to augment steel supplies to small units

It is reported that Punjab Small Industries & Export Corporation will enter into an agreement with State Trading Corporation to stabilize domestic steel prices in the region. The move is aimed at providing raw material to the steel consuming industries, especially small and medium enterprises of the state at a reasonable price.

Mr AR Talwar principal secretary industry & commerce of Punjab said that that both the corporations would evolve a system through which the raw material could be procured from different sources to check the prices of steel and other materials. He said that "Under this initiative, PSIEC and STC will jointly work out a system whereby the efforts would be made to stabilize the prices of steel and then supply it to the steel consuming industry of small and medium enterprises sector of the state. So far, we have received proposals for setting two ICD in Amritsar and Ludhiana for which three companies have applied."

To ascertain the potential for exportable items in the state, Punjab government is conducting a study through Indian Institute of Foreign Trade. Mr Talwar said that "The survey will highlight the items which have potential for export from Punjab."

Presently, PSIEC is one of the resources available to small and medium enterprises in Punjab for getting raw material for consumption. To encourage the private participation for setting up inland container depots and container freight station, the state government has decided to offer incentives in the shape of reduced change in land use charges.

West Bengal to get its first auto components park

It is reported that West Bengal government plans to set up its first auto components manufacturing park spread over 500 acres near Guptamoni in West Midnapore district.

Mr Nirupam Sen commerce and industry minister of West Bengal said that the state government is in talks with the developer, the Bengal Shristi Group, to finalize the details of the project. Mr Sen pointed out that his government provided incentives, including concessions in fixed capital investment and VAT. There could even be further incentives on a case to case basis.

Bengal Shrishti is in talks with some German companies that are interested in setting up manufacturing units in the park, which is likely to get SEZ status, though no final decision has been taken on the issue. Incidentally, a 16 member German delegation comprising members of the German engineering federation Verband Deutscher Maschinen und Anlagenbau was in Kolkata to explore business opportunities.

L&T inaugurates 3 new units

It is reported that L&T has inaugurated 3 new facilities at its growth centre on Coimbatore campus. The facilities are engineering centre for electrical systems, a precision machining centre and a manufacturing unit for petroleum dispensing pumps.

Mr AM Naik CMD of L&T, while inaugurating the facilities, said that it had been creating growth centers at select locations and zeroed in on Coimbatore 2 years back. He added that "We would have more facilities coming up on this campus to give the comforts of scale and earn logistic benefits."

R N Mukhija president operations and company board member said that precision machining centre and the engineering centre for electrical systems were critical to the growth of the company's business. He said that as there was big growth in fuel and gas industry, the dispensers manufacturing unit would cater to the oil and gas retail segment in India as well as Africa, Europe and South East Asia. It would also manufacture auto LPG pumps here, which would be another first to its credit in India.

Global crude steel production in September up by 6.2% YoY

International Iron and Steel Institute reported that the total crude steel production in September 2007 for the 67 countries is 110.1 million tonnes up by 6.2% YoY as compared to September 2006. The global crude steel production in January to September 2007 is million tonne up by 7.5% YoY.

The growth in crude steel production during September2007 among regions was again led by Asia as usual

In ‘000 tonnes
Source IISI

Among the top 20 nations, China as usual stood first with million tonne production of crude steel registering tremendous growth of 13.6% YoY as compared to September 2006.

In ‘000 tonnes
Source IISI

Gerdau to buy stake in Mexican Corsa

It is reported that Brazilian steelmaker Gerdau has agreed to buy 49% stake in Corsa Controladora the holding company which owns Mexican steel producer Aceros Corsa for USD 100.5 million. Grupo Gerdau and Corsa Controladora have also agreed to invest USD 400 million to build a new steel mill in Mexico with the capacity to produce 700,000 tonnes a year.

Tlalnepantla based Aceros Corsa is a mini mill with the capacity to produce 150,000 tonnes of raw steel and 300,000 tonnes of rolled steel a year.

Gerdau said the deal, which must be approved by regulatory authorities, is part of its strategy to boost its presence in Mexico.

Gerdau first broke into the Mexican market in March, when it bought Siderurgica Tultitlan for USD 259 million.

Besides Brazil, Gerdau also has operations in Canada, the United States, Spain, Colombia, Peru, Chile, Argentina and Uruguay.

Steel shipments and inventories continue their slide in US and Canada

US based Metals Service Center Institute in its latest Metals Activity Report said that demand for metals in the United States and Canada softened further in September and metals service centers continued to reduce inventories to bring supplies into better alignment with the weaker than expected economy and seasonal low order rates. It added that September shipments of steel declined from year ago levels in both US and Canada.

Shipments of steel products from US metals service centers totaled 4.02 million tonnes in September 2007 down by 8.1% YoY from September 2006 and the 13th consecutive month of year over year shipment declines. Year to date steel shipments of 40.1 million tons are 7.9% lower than the first nine months of last year.

At the end of September 2007, US steel product inventories totaled 12.56 million tonnes, the lowest level since November 2005 and 24.3% lower than inventories in September 2006. At current shipping rates, that represents a 3.1 month supply.

Canadian steel shipments of 296,100 tons were 8.9% below year earlier totals, marking the 14th consecutive month of year over year declines there. Canadian steel shipments during the first nine months of the year totaled 2.8 million tonnes down by 8.1% YoY from the 2006 period.

Canadian inventories of 1.13 million tonnes were 23.4% lower at the end of September than a year earlier, but at current shipping rates, still represented a 3.8 month supply.

The Metals Activity Report, based on data from metals service centers in the United States and Canada, is produced by the Metals Service Center Institute and a third party econometrics and strategy firm, McCoy, Scott & Co.

Founded in 1909, the Metals Service Center Institute has more than 420 members operating from about 1,200 locations in the US, Canada, Mexico, and elsewhere in the world. Together, MSCI members constitute the largest single group of metals purchasers in North America, amounting each year to more than 65 million tons of steel, aluminum, and other metals, with about 300,000 manufacturers and fabricators as customers.

Chinese domestic billet price continue to rise

It is reported that billet prices have hit record high in China, bolstered by rising raw material prices. On Tangshan market, Q235 150mm and 20MnSi 150mm billet prices climbed to CNY 3750 per tonnes and CNY 3780 to CNY 3820 per tonnes, up by CNY 50 per tonnes and CNY 30 per tonnes respectively.

The billet market is in a cost push environment in which producers are seeking to offset higher costs including continuous increase in iron ore and coke prices. On the other hand, the release of steel re rolling capacity is putting strain on billet supply.

If Q235 150mm billet prices could remain above CNY 3700 per tonnes, it is going to approach CNY 3900 per tonnes or even higher. However, whether domestic billet prices could keep going on depends on the real demand. Some market players indicate that many Tangshan based small steel makers have halted operation due to high production cost. Thus it would probably case adverse impact on billet demand. In addition, such high market prices also are likely to dampen buying sentiment.

Export prices keep firm at about USD 580 to USD 585 per tonnes FOB and they are expected remain strong due to high domestic prices and great overseas demand. Perhaps 350 thousand ton billet/slab exports for September shipment could prove how strong the demand, even at record high export prices.

Traders in SE Asia said that customers will be in the market by end November by which time they have to buy for December/January 2008 shipment for early 2008 requirements. Current workable import prices are said to be at about USD 570 to USD 580 per tonnes CFR. In addition, inventory level in SE Asia is lower than common level and users have to buy sooner or later. However, Malaysia and Taiwan cannot fill in the vacuum left by China. Thus billet export price ex China are anticipate to remain strong in the remaining days of 2007.

(Sourced from Mysteel.Net)

Baosteel chairman confirms supply demand gap in iron ore

It is reported that Baosteel Group feels that iron ore supply growth is lagging behind demand because of China's very fast expansion in steel production, as it is preparing to negotiate benchmark prices with iron ore miners.

The report quoted Mr Xu Lejiang chairman of Baosteel during the Communist Party congress in Beijing as saying that “China's steel sector grew very fast but iron ore preparation is insufficient. Annual negotiations on iron ore prices will be based on demand and supply situation and iron ore mines' profitability.''

China overtook Japan as the largest buyer of iron ore in 2003 and last year Baosteel set global benchmark prices for the first time when it agreed to a 9.5% gain, the smallest increase in four years.

CSC unit to take 19% stakes in PCM Metal

Taiwan’s China Steel Corp announced that the board of its unit China Steel Global Trading Corp has decided to indirectly invest USD 2.60 million for a 19% stake in China's PCM Metal Products Co Ltd.

CSC said that “The acquisition of the Chinese coil center is meant to further expand the company's marketing network on the mainland.”

TMK launches production of seamless pipes for jack up rigs in arctic environment

TMK announced that it is the first in Russia to launch industrial production of premium seamless pipes used in floating drilling rigs designed for Gazprom’s arctic shelf development projects. As per the announcement, TMK’s Volzhsky Pipe Plant mastered the unique technology of seamless pipe production of special steel PCF 40W, used in shipbuilding.

The release said that “New TMK’s products passed certification tests, evidencing that seamless pipes produced of PCF 40W steel exhibit higher cold-resistance and can be used in the construction of special elements in jack up rigs that are directly exposed to dynamic ice loads.”

At present TMK’s premium pipes are already used in the construction of “Arcticheskaya 100” jack up rig, designed for operation in the Barents Sea.

Mr Konstantin Semerikov CEO of TMK said “Being interested in promoting its long term partnership with Gazprom, TMK offers unique high tech products and intends to develop innovation and technological elements of its pipe business to provide solutions to the most challenging tasks related to the development of the artic continental shelf fields.”

Gazprom is now actively exploring oil and gas potential of the arctic water areas of the Barents, the Kara, the Okhotsk and the Pecherskoye Seas. In particular, it is starting implementation of its large scale project of Stockman gas field development.

Arcelor minority share group plans injunction to block merger

Reuters reported that a minority shareholder group of Arcelor said on Friday it would lodge an injunction in Luxembourg to block a meeting needed to complete the steel maker's merger with its parent ArcelorMittal.

Mr Bruno de Kerviler head of the Arcelor minority shareholder group, told Reuters "We will file an injunction in the coming days. Should the merger go ahead, despite the injunction, we will file for damages in Paris.”

Arcelor and Mittal Steel, which already function as a single entity, aim to finalize the merger in November in a shareholders meeting is due to take place on November 5th 2007.

CVRD sees no problem in funding USD 59 billion investment

Reuter reported that CVRD funding its USD 59 billion five year investment plans will not be a problem, but it is concerned about rising energy costs and transportation issues in Brazil. CVRD said that it will rely on cash flow from selling metal at current prices to finance the plan.

Mr Roger Agnelli CEO of CVRD said "Our investment was limited by physical issues, not financial issues. We could have gone beyond USD 11 billion in 2008."

Mr Agnelli said that "Our 2008 investment was not limited by a financial element, but by technical, engineering or equipment and some labor issues and also the issue of approvals for environmental permits. He said infrastructure, such as roads and power, was a major issue in some new mining projects and much of the investment would be to improve logistics at ports and roads.”

Last week, CVRD said it plans to spend USD 59 billion in 2008-2012 to more than double output of copper, expand production of iron ore and nickel and develop aluminum production. It earmarked USD 11 billion for the first year of the five year period.

MMK to supply automobile steel sheet to Chinese automakers

Interfax China reported that Russia's Magnitogorsk Iron & Steel Works intends to supply automobile steel sheet to China through its high strength steel sheet complex in the near future.

The report quoted Mr Valentin G Pugachiov acting head of MMK's strategic planning administration at the Asia Ferrous Metal Development Dialogue 2007, held in Beijing as saying that "China can produce 6 million cars per year and we expect the figure to grow to 9 million in two years. Ideally, we aim to supply up to 40% of the steel sheets needed for China's car manufacturing by then, through our new complex in Russia.

He said that “We currently only export 15,000 tonnes to 20,000 tonnes of steel products per month to China. Compared to our enormous output, these exports are nothing."

He added that "As for how MMK will supply China, it is still too early to say. We have talked with China Minmetals Corporation about possible cooperation, but no agreement has been settled yet as we have to wait until the complex becomes operational. We are also considering building stamping or car assembly joint ventures with Chinese companies in China."

Mr Pugachiov said that MMK is currently in the process of setting up the new high strength steel sheet complex in Magnitogorsk to serve the automotive industry. The complex has a designed production capacity of 2 million tons of steel sheet per annum and is scheduled to commence operations in mid 2010. The complex will use state of the art technology from ThyssenKrupp to produce advanced high strength steel sheet, and the company believes that the steel sheet produced will reduce steel consumption in automobile manufacturing by 20%

Guangdong eliminated 16 outdated steel capacities

It is reported that Guangdong Province withdrew the curtain to eliminate outdated steel capacity by scraping 16 steel plants, 10 in Xingning City, 4 in Meijiang District and 2 in Fengshun County with total capacity of around 350,000 tons in Meizhou City on October 13th 2007.

During the Eleventh Five Year Plan period of 2006-2010, the province will close and eliminate outdated steel capacity of 10 million tonnes.

Removal of US duties on Argentinean HR may not lead to exports

BNamericas reported that Argentine steelmaker Siderar is unlikely to begin exporting to the US despite the fact that the US International Trade Commission recently decided to terminate duties on hot rolled steel imports.

The report quoted Mr Cristian Reos an analyst at brokerage Allaria Ledesma as saying that "Siderar plans to expand considerably in the years to come. This decision opens the possibility of entering the US market."

However, he said that although it creates the opportunity to enter other markets, he does not believe the company will use it, because there is not a lot of surplus to be exported from Argentina. The domestic market needs almost all of its output.

Siderar sells nearly 80% of its output to the domestic market while exports are shipped mainly to Latin America and, in some cases, to Europe. According to the analyst Siderar plans to export products to Mexico, where parent company Ternium has a factory for finished products. For the first half, Siderar reported that steel demand increased on the domestic market thanks to growth in Argentina's economy, mainly in industrial activity and the construction sector.

US International Trade Commission recently reversed antidumping and anti subsidy cases in force since 2001 that affected several countries including Argentina, South Africa, Kazakhstan and Romania.

ArcelorMittal to modernize CR mill and pickling line at Kralow

It is reported that ArcelorMittal has awarded ABB Automation of Germany the contract for modernizing the cold rolling mill and pickling line at Krakow works in Poland formerly known as Huta Sendzimir.

Low alloy sheet steel is produced on the 4 stand tandem rolling mill and the connected single stand skin pass mill stand. The order with a value of approx. 14 million euros includes the complete modernization of the mechanical and electrical components. The essential part of the project are the new DC supply units for the main and auxiliaries drives, while retaining the DC motors, and the completely new motor control centers. Moreover the rolling mills will be fitted with new work roll bending control systems and completely new measuring systems for thickness and flatness control.

ABB will also supply the completely new level 1 automation systems including the technological control systems equipped with AC800PEC high speed controllers for rolling mill applications. Furthermore the scope of supply includes the Level 2 systems containing the mathematical models for the tandem rolling mill and the pass schedule computer for the skin pass mill. ABB is also responsible for all engineering services, project management, installation and commissioning.

In addition to the modernization of the cold rolling mills the refurbishment of the pickling line will start in the same mill. ABB will supply the new AC drives, the welding transformer, and the motor control centers for the new hydraulic system and the new DC supply units for the existing DC motors of the main and auxiliary drives. This project too includes level 1 and level 2 automation and all engineering services, project management, installation and commissioning.

TKC to buy new blast furnaces

TKC Steel Corp announced that it has completed negotiations with a firm in China for the purchase of two blast furnaces for CNY 11.5 million for its operating units Treasure Steelworks Corp at Iligan City in Philippines and Zhangzhou Stronghold Steel Works Co Ltd in Fujian province of China. TKC expects the blast furnaces to start operating by the fourth quarter of 2008.

TKC said that "Upon installation and full operation, these facilities will increase the present installed capacity of Treasure Steelworks Corp. from 300,000 tonnes to approximately 600,000 tonnes annually.”

It will source the funds for the acquisition from the net proceeds of its planned follow on offering in November that was estimated at a maximum of PHP 2.7 billion. TKC Steel will sell up to 235 million shares at a price range of PHP 8 to PHP 11.50 each. First Metro Investment Corp. was tapped as financial adviser and lead underwriter for the offering.

China raises banking reserve requirement ratio to 13%

It is reported that China ordered banks to set aside more money as reserves for the eighth time this year to cool speculation in stocks and real estate and curb the fastest inflation in 10 years. The People's Bank of China said Lenders must park 13% of deposits as reserves from October 25th 2007, up from 12.5%. The required ratio is the highest in almost a decade.

The central bank said in a statement that the move is aimed at strengthening liquidity management in the banking system and checking excessive credit growth. Excess liquidity could lead to price hikes and pour more fuel into the sizzling economy.

China's consumer prices surged 6.5% in August from a year earlier, the biggest jump since December 1996. The rate breached the government's annual 3% target for a fourth consecutive month, as food costs soared.

The customs authorities said China's trade surplus jumped 56% in September, taking it to USD 185.65 billion for the first nine months of the year, more than the USD 177.5 billion for all of last year.

Money supply is surging as the central bank sold the yuan to buy into the foreign currency brought into the country by the trade surplus. Some of that money is finding its way into stocks, pushing the benchmark CSI 300 Index up 181% this year. Money supply rose 18.5% in September.

China commercial banks lent out CNY 3.36 trillion in the first nine months surpassing the full year figure in 2006.

Tiantie hot rolled project launched into operation

It is reported that Tiantie hot rolled project has been completed and launched to operation in recent days. The 4.8 billion projects includes converter, LF finery, RH finery, two strand slab caster and assistant facilities, with annual capacity of over 3.8 million tonnes and expected sales income of CNY 11.8 billion per year.

World level facilities and processes that introduced from AVI, ABB and Danieli in the project includes sub lance automatic control and top blowing, pretreatment of hot metal, ladle furnace refining, RH vacuum refining, dry dust removing and on line width adjustment.

In the environment protection side, Tiantie adopted lower calorific value mixed gas double preheating heating furnace, recycling system of converter gas and so on and built 600,000 t stewing steel slag treatment item to take the lead in realizing zero emission of slag, dust, gas and water among the industry.

At present, the hot rolled project has already produced nine categories falling on over 70 specs with 1.2mm to 2mm thick and 1100mm 1500mm wide.

MMK Atakas JV orders for all major equipments

MMK has announced that it has awarded a contract to Danieli which will supply equipment for both of the JV's production sites in Iskenderun and Istanbul.

Danieli will supply following major equipments
1. 2.4 million tonne per year electric arc furnace
2. Twin ladle furnace unit
3. Twin vacuum degasser
4. A CSP complex comprised of a two strand near net shape slab caster
5. A hot rolling mill
6. A continuous pickling line
7. Two stand reversing cold rolling mill
8. Two galvanizing lines
9. Two color coating lines.

In May of 2007 the Magnitogorsk Iron and Steel Works OJSC and the Atakas Group decided to build a new steel making plant in Turkey, signing an Agreement of Participation of OJSC MMK in the authorized capital of MMK Atakas Metalurji Sanayi, Ticaret Ve Liman Isletmeciligi AS. In June of 2007 OJSC MMK became the owner of 50.0000045% of shares in the JV. The new plant will be located on two sites, with the core production to be installed in Iskenderun, and a second site in Istanbul. A sea port will also be built directly at Iskenderun for receiving ships of up to 80,000 tonnages.

The production capacity of the new JV will include 2.3 million tonnes pear year of hot rolled flats, 750,000 tonnes pear year of cold rolled flats, 900,000 tonne per year of galvanized coils and 400,000 tonnes pear year of color coated products. There are plans to set up two service centers in Inskenderun and Istanbul.

The Iskenderun installation will include an electric arc furnace, ladle furnace, vacuum degasser, thin slab caster, hot rolling mill with a nominal capacity of 2.3 million tonnes of HRC from 1mm to 20 mm thickness and 800mm to 1570 mm width and a continuous pickling line with an capacity of 1.2 million tonnes and cold rolling mill with capacity 0.75 million tonnes, hot dip galvanizing line with capacity 0.45 million tonnes, color coating line with capacity 0.2 million tonnes.

The Istanbul installation includes a hot dip galvanizing line facility with a capacity of 0.45 million tonnes and color coating line with capacity 0.2 million tonnes.

The production facilities will be commissioned in stages. The first stage will include the service centers in Iskenderun and Istanbul, followed by the continuous pickling line, the cold rolling mill and the galvanizing and color coating lines on both sites. The last to go on stream will be the EAF division in conjunction with the CSP complex in Iskenderun. During the staged commissioning of all the facilities will be supplied with input steel from MMK or other international suppliers. The implementation of the project is expected to take three years, at a cost of approx. USD 1.7 billion.

Nucor net earning in 9 months down by 18% YoY

Nucor Corporation announced consolidated net earnings for the January to September 2007 period of USD 1.11 billion down by 18% YoY from net earnings of USD 1.35 billion in January to September 2006 period. Nucor's consolidated net sales in January to September 2007 period increased by 8% YoY to USD 12.20 billion as compared with USD 11.28 billion in January to September 2006 period. Average sales price per ton increased by 8% YoY while total tons shipped to outside customers remained flat compared to the first nine months of 2006.

It’s consolidated net earnings of USD 381.2 million in Q3 of 2007 increased by 11% QoQ from the USD 344.9 million earned in Q2 of 2007 and decreased by 27% YoY as compared with USD 521.6 million earned in Q3 of 2006. In the Q3 of 2007, Nucor's consolidated net sales increased by 8% YoY to USD 4.26 billion as compared with USD 3.93 billion in Q3 of 2006 and increased by 2% QoQ as compared with USD 4.17 billion in Q2 of 2007. Average sales price per ton increased by 5% YoY from the Q3 of 2006 and decreased 1% QoQ from the Q2 of 2007. Total tons shipped to outside customers were 5,771,000 tons in Q3 of 2007, an increase of 3% YoY over the third quarter of 2006 and an increase of 3% QoQ over the second quarter of 2007.

In the steel mills segment, steel production decreased by 5% YoY to 16,503,000 tons in the first nine months of 2007, as compared with 17,318,000 tons produced in the first nine months of 2006. Total steel shipments decreased by 4% YoY to 16,663,000 tons in January to September 2007 period as compared with 17,286,000 tons in January to September 2006 period. Steel shipments to outside customers decreased by 5% YoY to 15,157,000 tons in January to September 2007 period as compared with 15,936,000 tons in January to September 2006 period.

Outokumpu Tornio Works served notice for strike - Report

Asia Business News reported that in the process of collective bargaining between the Union of Salaried Employees and the employer association Technology Industries, Union of Salaried Employees gave notice on industrial action targeted at seven Finnish metals industry companies, including Outokumpu's Tornio Works.

During the evening of October 16th 2007, the National Conciliator Juhani Salonius informed that he has no grounds to make a proposal for a settlement. Therefore, as new negotiations have not been set, the industrial action is likely to start on October 22nd 2007.

Should the industrial action start it would mean an almost immediate cessation of production of stainless steel at Outokumpu's Tornio Works. Some 400 salaried employees in Tornio would be involved, mainly at the stainless steel mill. However, he Kemi chromite mine and the Tornio ferrochrome smelter will not be affected.

Latvian Liepajas Metalurgs orders Siemens for EAF based plant

A consortium led by Siemens has been awarded a contract by Latvian steel producer Liepajas Metalurgs to build an integrated electric steel plant. The value of the contract has not been disclosed. The plant is scheduled to be started up in steps during the year 2010.

The project includes a major modernization of the scrap based steelmaking process and the construction of an entirely new rolling mill. The new plant is designed for an annual production of 810,000 tonnes of steel billets and 400,000 tonnes of steel bars and profiles.

For steelmaking, Siemens will install an electric arc furnace with a tapping weight of 100 tonnes and secondary steelmaking facilities, including a 100 tonne ladle furnace and an alloying system, as well as a dedusting plant. A billet welding line and coiling technology will enable continuous rolling to be carried out. In order to optimize the overall process, Siemens will also adjust the billet caster supplied in 2006 to the changed production conditions. The project scope of the consortium also includes the expansion of the electric power supply, the supply and modernization of crane systems, the installation of water treatment systems and the construction of the required buildings.

The new plant facilities will allow Liepajas Metalurgs's steel capacity to be increased from 540,000 tonnes to 810,000 tonnes per year and will replace the existing steel production route based on the use of the only open hearth furnaces still in operation in Europe. The new long product rolling mill will produce high quality steel profiles and twist free wound steel bars.

ZSMK Launches Reconstructed Bf No 1

FIS REPORTED THAT The Western Siberia Metal Integrated Works HAS put into operation after the first degree capital overhaul the blast furnace No 1.

Upon its startup the combine increased the total production of cast iron, The specific productivity of the blast furnace has grown and coke and energy consumption per ton of cast iron have decreased. During the reconstruction the old blast furnace was dismantled and a new case and aggregate equipment have been assembled.

California Steel reports Q3 2007 results

California Steel Industries Inc has announced its third quarter results for the July to September 2007. Its sales for the period totaled USD 335.4 million, resulting in net income of USD 1.8 million. Net income of USD 1.8 million is lower than third quarter 2006’s net income of USD 33.9 million, and lowers than second quarter 2007's net income of USD 8.2 million. EBITDA for the quarter was USD 13.0 million, compared with 2006's third quarter results of USD 62.9 million.

CSI shipped 438,525 net tons of steel products, a 13% decrease as compared to the third quarter of 2006 and at the same level as second quarter 2007. Net sales are 12% lower than third quarter 2006, although consistent when compared to second quarter 2007. Average sales prices in third quarter 2007 were 4% lower than the same period in 2006 and again consistent with second quarter 2007.

(In net tons)

YTD, sales revenues totaled USD 985.9 million, compared with USD 1,049.4 million in 2006. Net income is USD 11.3 million against USD 100.5 million in 2006. EBITDA is USD 50.1 million as compared with 2006's USD 191.8 million.

(In net tons)

Mr Masakazu Kurushima president & CEO of California Steel Industries, Inc said that "Third quarter volume and cost levels were not consistent with typical patterns. Slab prices are rising, with worldwide demand, while a soft market for our flat-rolled products continues."

Rio’s Coal & Allied July to September output dip by 14% YoY

It is reported that Rio Tinto’s subsidiary Coal & Allied Limited is continuing to face infrastructure constraints on the east coast of Australia.

Coal & Allied' share of production came in at 4.422 million tonnes of coal in the three months to September 30th 2007 a 12% increase on the previous quarter. The result was 14% lower than the corresponding period in 2006.

Coal & Allied Ltd said severe flooding in June affected the company's production potential. Its total production for nine months to September 30 sits at 12.961 million tonnes, significantly lower than the previous corresponding period's figure of 16.2 million tonnes.

Coal & Allied Ltd aid constraints in the Hunter Valley of New South Wales continued to limit production. Coal & Allied's flagship is its Hunter Valley operations which is an amalgamation of several previously independent mines. It also has a stake in the Bengalla, Mount Thornley and Warkworth operations in New South Wales.

Taiyuan Coal Exchange to open in November

The Shanghai Securities News reported that China Taiyuan Coal Exchange, the first of this kind in China, will be put into operation in November of this year at the soonest,

The coal exchange, with a total investment of CNY 1 billion includes the construction of the exchange center and a coal base in Qidong city, East China's Jiangsu Province. The coal exchange is similar to the Zhengzhou Commodity Exchange and a membership trading system will be adopted.

As per a researcher with the Shanxi Academy of Social Science, the exchange is expected to facilitate the trading of around 500 million tons of coal annually in its initial stage.

Thirty enterprises have invested in the exchange, including Shanxi Coal Transportation and Sales Group Co Ltd, the biggest shareholder, who will control 10%. Other major shareholders in the exchange are China's leading electric power groups, including China Huaneng Group, China Datang Corporation and China Guodian Corporation. Each of the three giants holds 4% of the exchange. China Power Investment Corporation and China Huadian Corporation each have 3% stake in the exchange. Shanxi based Datong Coal Industry Co Ltd, Shanxi Coking Coal Group Co Ltd, Jincheng Coal Industry Group and Yangquan Coal Industry Group Co Ltd are also shareholders. However Shenhua Group, China's biggest coal producer, has no stake in the exchange.

National Coal completes acquisition of Mann Steel

National Coal Corp announced that it has completed its previously announced Stock Purchase Agreement with Mann Steel Products Inc for USD 55 million. The transaction was funded through a combination of USD 60 million in debt financing and USD 12 million of equity. The equity financing was raised through a private placement of 4 million shares of common stock at USD 3.00 per share.

Under the terms of the agreement, National Coal Corp has acquired 100% of Mann Steel and renamed the company as National Coal of Alabama Inc. As a result of this transaction, National Coal will have more than 350 employees and a total production capacity of approximately 3 million tones. Sales during 2007 for the combined company are expected to reach approximately 2.6 million tons and are anticipated to generate about USD 140 million in annualized sales.

Mr Daniel Roling president & CEO of National Coal said that "Closing this transaction represents a significant milestone in our history and an important step in building shareholder value. In a fiscally responsible manner, we have essentially doubled our sales and increased our production capabilities by about 50%. The Mann Steel acquisition will strengthen both our financial operations and physical presence in the Central and Southern Appalachian regions. Our production mix will now change with surface mining accounting for about 65%, underground 28% and 7% from high wall mining. In addition, an increase in volume should more efficiently leverage the infrastructure investments we've made in wash plants, railroad load out facilities, and our railroad. At the close of this transaction, I believe we are closer to our goal of further defining our leadership role in the production and supply of industrial and steam coal in the Southeastern US."

Mann Steel produces coal from three surface mines which have a capacity of approximately 1 million tonnes. During 2006, Mann Steel sold approximately 860,000 tonnes of coal and generated revenues of USD 55.2 million. For the first half of 2007, coal sales totaled about 502,902 tons and generated revenues of USD 33.1 million.

Timken raises steel product prices by USD 30 per tonnes

Reuters reported that Timken Co, which makes bearings and alloy steel will increase base prices on hot rolled, cold finished and single thermal treated special bar quality products by USD 30 per ton effective with shipments beginning on December 1st 2007.

Timken said that raw material surcharges will remain in effect.

Carpenter Technology appoints Mr Guglani as VP and CMO

Carpenter Technology Corporation announced that Mr Sanjay Guglani has joined Carpenter as vice president and chief marketing officer, effective October 22nd2007. He will report to Mr Anne Stevens chairman, president & CEO.

Mr Guglani holds a bachelor's degree in Mechanical Engineering from the Indian Institute of Technology New Delhi and an MBA from the Amos Tuck School at Dartmouth in New Hampshire. He recently served as VP of marketing, business development & strategy at Textron Fluid & Power, a subsidiary of Textron Inc.

Carpenter Technology, based at Wyomissing in Panama produces and distributes specialty alloys, including stainless steels, titanium alloys, super alloys and various engineered products.

AK Steel cuts ceremonial ribbon at new HQ

It is reported that 9 board members and senior executives from AK Steel simultaneously cut a ceremonial ribbon on Thursday to open the it's new corporate office in West Chester, although the 300 employees had moved from the former headquarters in Middletown have been in place since August.

Mr Alan McCoy VP of government and public relations said that the dedication was scheduled to coincide with a board of directors meeting. He said that the new building is a quantum leap forward from the 90 year old facility it replaces. He said "There comes a time when technology jumps in front of the ability to update the building.”

AK Steel is leasing the 136,000 square-foot building from Duke Realty with a 12 year term that has two five year renewal options and an option to buy as of April 2009 according to U.S. Securities and Exchange Commission documents.