Indian iron ore spot price inching towards USD 200

The China Chamber of Commerce of Metals, Minerals and Chemicals Importers and Exporters has announced that the average reference prices for import transactions of Fe 63.5% Indian iron ore concluded last week on November 12th 2007.

The change is with respect to prices posted on October 29th 2007.

The CCCMC reference prices are average prices for import transactions of Fe 63.5% Indian iron ore concluded the week prior to issuance date of such reference prices. The reference price practice is intended to regulate the domestic trading of Indian iron ore and avoid speculation on the raw material for China's booming steel industry.

SAIL RSP hot metal output to touch 4.5 million tonnes by 2010

It is reported that hot metal production capacity of Steel Authority of India Limited’s Rourkela Steel Plant is slated to go up from around 2 million tonnes per annum at present to 4.5 million tonnes per annum by 2010. By that time, RSP will account for 18% to 20% of SAIL’s aggregate steel making capacity. Currently, RSP accounts for 13% of SAIL’s production volumes.

RSP sources said that INR 10,000 crore capacity expansion plans had been cleared and was currently under implementation. By 2010, the plant’s hot metal, crude steel and saleable steel production capacity would stand at 4.5 million tonnes per annum, 4.2 million tonnes per annum and 4 million tonnes per annum respectively. The cost of expansion would be met through internal accruals and debt in the likely ratio of 1:1.

The focus would be on a product mix that would facilitate higher profit margins. Such products would include CRNO or silicon mill products, plates and ERW and SW pipes. With focus on production of high margin products, RSP was hopeful of contributing to 20% to 25% of SAIL’s profits by 2010. Currently, RSP contributes to 13% of SAIL’s overall profits.

SAIL RSP’s CNRO products manufacturing capacity would go up from 75,000 tonnes per annum at present to 225,000 tonnes per annum. RSP is the only steel plant in India to manufacture CNRO products. These products are used in electrical items, transformers, etc.

Production focus at the plant would also shift to the manufacture of better quality CR products and high quality plates. The plant would be equipped to manufacture plates of 4.5 meter width.

SAIL RSP has targeted a turnover in excess of INR 7,000 crore in 2007-08 up from INR 6,400 crore recorded in 2006-07. The net profit in the current fiscal is expected to surpass the figure of INR 1,336 crore achieved in 2006-07.

Indian steel ministry favors ban on iron ore export

The Telegraph reported that union steel ministry is in favor of a ban on iron ore export citing exports as an option only after ensuring sufficient reserves for domestic steel manufacturers.

Mr Ram Vilas Paswan union steel minister said that “According to us, India has 25 billion tonnes of iron ore reserves. All of that will be required for the next 40 years. If people find more, which to my mind is unlikely, one can think of export.”

Poor performance for power generation capacity addition in H1

It is reported that, faced with a daunting task of adding a record 78,577 MW power generation capacity during the current Plan period, the progress made during the April to September 2007 period is far from encouraging.

According to government’s latest estimates, against a target of adding 10,159 MW during April to September 2007 period, projects totaling only 2,645 MW have materialized, a shortfall of 7,514 MW or 74% of the target. The shortfall is despite the fact that several power projects scheduled to be completed within the 10th Plan period have spilled over into 2007-08.

However, the report cited a government official as saying that “Six months is too short a time to judge the progress. Most of the spillover projects from the 10th Plan would come through during the next six months or so.”

A power ministry official said that “While projects totaling a capacity of around 52,365 MW are currently under execution, the newly formed National Power Project Management Board has been asked to ensure that placement of orders for the balance capacity of 23,632 MW by central and state power utilities is done by December 2007.”

India has been faltering on the generation capacity addition targets over the last 3 Plan periods, with achievement hovering around 50% of the set target during each of the Plan periods. The main reasons for slippages of projects during the 10th Plan, as cited by the power ministry include manufacturing constraints faced by equipment suppliers, delays in placement of orders for main plants, tardy awarding work and hold ups in investment decisions, environment and forest clearances, lack of preparedness of projects and techno economic clearance of hydro projects.

SAIL wins accolades at CUBIC Awards in USA

Steel Authority of India Limited was adjudged the Runners up in the category of “Most Innovative Industry Resource” amongst a host of organizations from across the world who participated in the “Corporate University Best in Class Awards 2007”. The award was presented to SAIL in a glittering ceremony held at Orlando in Florida State of USA recently.

The awards were announced in the Corporate University Week, a large annual event for leaders of internal training and learning organizations during November4th 2007 to November 8th 2007 that included workshops, benchmarking sessions, keynote addresses by leaders in various fields, case studies, site visits, networking and exhibitions to help heads of learning, training organizations and Corporate Universities envision, build and turn into mature and global training organizations that increase the productivity of individuals in a measurable way.

The presentation from SAIL, that focused on the innovative approach to learning through peers by solving real life problems in structured learning workshops called “Learning from each other” conducted by Management Training Institute, Ranchi, the Corporate Training Centre of SAIL was appreciated by the more than 320 delegates, many of whom proposed to adopt the same methodology in the learning efforts of their organizations. Mr Sushim Banerjee ED HRD of SAIL made the presentation and responded to the queries of the delegates.

The delegates appreciated the shift in focus from teaching to facilitating learning that was the core philosophy of these initiatives.

Mr Banerjee also made a presentation on a case study on Steel Melting Shop-I at SAIL's flagship unit, Bhilai Steel Plant titled “Turnaround through HRD and Training Intervention”.

Indian Railways sets freight target of 785 million tonnes

It is reported that Indian Railways has set the originating freight loading target of 785 million tonnes for 2007-08. Internally, the message has been sent across to all Zonal Railways to step up loading to so as to reach 800 million tonnes.

Indian Railway sources, considering the various constraints in freight movement these days, said that though it is difficult it is not impossible.

In 2006-07, the Indian Railways’ originating freight loading was 728 million tonnes. Achieving 800 million tonnes will mean handling an incremental traffic of 72 million tonnes during the year or an additional 6 million tonnes a month on an average. It is a tall demand, more so because in first six months, the throughput at 369.66 million tonnes posted more than 7% growth over the same period of the last year but less than the target set for the period. Which means more than 430 million tonnes of traffic has to be achieved by March 2008.

FM to resolve power and heavy industries ministries tussle

It is reported that Mr P Chidambaram union finance minister has been roped in to broker peace between the power and heavy industries ministries in order to ensure cohesiveness in working towards achieving the power generation capacity set for the current Plan period and beyond.

He is likely to chair a meeting of representatives from both ministries to delve on ways to sort out the serious problem of power equipment shortages. Officials from NTPC, which comes under the power ministry and equipment manufacturer BHEL, which is under the ministry of heavy industries, are expected to attend the meeting.

The meeting is expected to iron out differences between the two ministries on the placement of bulk orders for NTPC’s upcoming projects based on the new supercritical technology sets to BHEL on a negotiated basis.

NTPC’s plans to enter power equipment manufacturing on a commercial level, besides the move by the power ministry to encourage international players, including Italian firm Ansaldo, Czech Republic’s Skoda Power and South Korea’s Doosan Heavy Industries to set up manufacturing facilities here, are also likely to feature in the deliberations.

BHEL is currently in the process of absorbing technology for manufacturing sets based on the supercritical technology and has tied up with Alstom of France and Siemens of Germany for this. BHEL wants bulk orders for supercritical technology-based projects to be given to it on a negotiated basis in order to sufficiently absorb and indigenize the technology upon executing a certain minimum number of projects.

Both the power ministry and NTPC had earlier singled out delays in equipment supply by BHEL as among the major reasons for achieving slightly over 50% of the 41,000 MW target set during the 10th Plan period. The ministry has been strongly pushing NTPC’s proposed foray into equipment manufacturing. BHEL, on the other hand, dismissed the allegations and cited bunching of orders during the last couple of years of the Plan period as a reason for the demand supply mismatch.

India has set a target of 78,577 MW for the current Plan period. As against a target of adding 10,159 MW during the April to September 2007 period, projects totaling only 2,645 MW have materialized, a shortfall of 7,514 MW or 74% of the target.

Tamil Nadu approves Chennai Metro Rail system

BL reported that Tamil Nadu government has approved in principle the creation of a Chennai Metro Rail system at a cost of INR 9,757 crore and that a public sector enterprise Chennai Metro Rail Limited will be floated to implement the project, which envisages a 46.5 kilometer metro rail system on 2 routes in Chennai. According to sources, the project is expected to start in the current financial year and completed in 6 to 7 years.

In line with the detailed project report compiled by Delhi Metro Rail Corporation, one route will link Washermanpet in North Chennai to Egmore, Teynampet and the Meenambakkam airport. A second route will link the Fort, with Anna Nagar, Vadapalani, Ashok Nagar, Alandur and St Thomas Mount. Of the total distance of 46.5 kilometer on both the routes, over 20 kilometer would be below the ground level and the rest on an elevated structure.

Both the alignments are among the most congested in the city, which would benefit from a modern transportation system. The alignments were selected based on traffic studies conducted by the Chennai Metropolitan Development Authority. The alignment, which forms a triangle linking 3 key areas of North Chennai, Thirumangalam to the west and Kathipara junction to the south through Poonamallee High Road, Inner Ring Road and Mount Road would be the first phase in the infrastructure project.

Tamil Nadu government will seek the center’s assistance to fund the project through grants and loans. Also, the Tamil Nadu government expects support from the Japan Bank for International Cooperation.

Underground coal production presents an opportunity to meet demands - Report

Dr Dasari Narayana Rao union minister of state for coal, while addressing the first ever Parliamentary Consultative Committee meeting on “Underground Coal Mining – Challenges and Opportunities” said that in the context of meeting the growing demand for coal from the fast growing national economy underground coal production emerges as an opportunity.

He said that the demand for coal in India will increase to above 2000 million tones per year 2031-32 from that of 463.5 million tones in 2006-07. There is a need to make concerted efforts to ensure the energy security of India and the government has already started taking necessary initiatives in this regard.

Mr Rao said that “Regarding decrease of share of underground coal production to 13% in the total production during 2006-07 from 76% of total production, the need to increase production to meet the growing demand from power sector through the easy option of opencast mining. The other factors are difficult underground mining conditions, reserves not being amenable to adoption of underground mass production technology, low mechanization of underground mines, high cost of production etc. He said that broad strategies to be followed to increase underground coal production including planning new underground mines with mass production systems like continuous miners and long wall technology wherever feasible, entering into risk or gain sharing agreements with equipment suppliers for guaranteed level of production and maintenance of equipment, training of manpower, creation of infrastructural facilities for ventilation, coal evacuation and transportation etc.”

He stated that following the measures taken by the government to ensure timely production of coal from coal blocks, it is estimated that a production of 104 million tonnes of coal outside the domain of Coal India Limited and Singareni Collaries Company Limited during 2011-12, as against only 17 million tonnes during 2006-07 will be made. He added that the government is taking all possible steps to increase the production of coal and reducing the losses.

Bihar Tubes enters into pipe supply contract with BHEL

Bihar Tubes Ltd has informed BSE that it entered into contract with Bharat Heavy Electricals Limited for supply of galvanized pipes for one year.

Mr Mukesh Jain president marketing of Bihar Tubes Limited said "This contract for supply of galvanized tubes to BHEL is testimony of our quality and commitment and as such we could clearly see Bihar Tubes Limited emerging into a much stronger and robust Company in the year to come.”

TATAs plans expansion in China

Reuters reported that TATA Group wants to expand in China but is more likely to do so through JVs and its own start ups rather than acquisitions.

Mr Alan Rosling, executive director at TATA Sons recently told Reuters that TATA has sized up big China purchases in the past only to be deterred by corporate governance concerns, high asset prices and regulatory blocks. He added that "We in fact are increasing the emphasis on China as part of our strategy. But like most emerging markets, the bulk of what you do is going to be built in from scratch or JVs, rather than taking over an existing business."

Mr Rosling said that among the group's activities in China, TATA Steel operates finishing plants and TATA Motors sources automotive components. He added that "There are many things you can do in China that do not involve mergers and acquisitions."

Orissa congress demands cancellation of all MoUs

SNS reported that Orissa’s National Congress Party has demanded cancellation of all MoU’s signed between the state government and industrial houses till the water requirements for agriculture and industry are properly assessed.

Mr Mohapatra a leader of NCP said that “Experts have not studied the entire system. The inflow of water to Hirakud has decreased over the years due to dams and barrages constructed upstream of Mahanadi in Chattisgarh state. “

He urged chief minister to pay a visit to Hirakud, understand the dam, its canal system, dykes, gates etc and then issue statements because it is ludicrous to talk about increasing the capacity of the dam as experts have already said that the height of the dam cannot be increased, de silting is also not possible.

Dedicated freight corridors difficult to construct

It is reported that the 2,700 kilometer long east west dedicated freight corridor to link Mumbai, Delhi and Kolkata appears a distant possibility with the company created to implement it raising critical issues about the route.

A report to the railway board by Dedicated Freight Corridor India Limited has said hat there are far too many physical structures that may have to be either built or removed to lay the lines. According to the report, laying new lines would require demolishing several railways over bridges and flyovers and the construction of 3,500 odd new railways over bridges. The heights of some of the existing structures may also have to be raised since the ministry plans to run double stack container trains on these corridors, especially on the Delhi to Mumbai route.

The points raised by DFCIL suggest that the project will take 10 years to be completed instead of the targeted five and will suffer a significant cost overrun. Senior railway board officials declined to comment on the report.

These issues add to other problems with the project. First, union railway ministry is struggling to acquire land for it. Building over 3,000 physical structures would compound the problems of land acquisition. Second, the finance ministry has reprimanded the railways for not finalizing funding for the INR 28,300 crore projects before approaching the cabinet committee on economic affairs for investment clearance.

The finance ministry has described approaching the CCEA as premature, saying the land acquisition should also have been completed first. The proposed rail routes under the project are to run parallel to the Golden Quadrilateral road network covering 2,743 kilometer under the eastern and western corridors in the first phase.

The Delhi to Mumbai route is 1,483 kilometer long and the cost of constructing is pegged at INR 16,580 crore and the Delhi to Kolkata eastern corridor is 1,280 kilometer long and will cost INR 11,450 crore.

25 ships sank in Arabian Sea in last 3 years

PTI reported that as many as 25 ships have sunk in the Arabian Sea in the last 3 years due to rough weather coupled with negligence of seafarers.

Mr Deepak Kapoor nautical surveyor cum deputy DG of Shipping (Technical) said that “Data for the last 3 years on shipping casualties in the Arabian Sea have been analyzed in depth which shows 23 ships sank due to serious technical and human failure aboard such ships. The factors and primary cause of these accidents have been very severe weather conditions during the monsoon period, the negligence on part of the Indian seafarers in exercising due care and displaying their professional skills in discharging their duties.”

He added that in addition to this, poor maintenance of the vessels by the owners along with various other factors like slips, lapses, mistakes, fatigue, defect in design of ships, which have contributed towards sinking ships.

Mr Kapoor said that “Master and the crew are required to comply with the procedures set by the owner relating to safe operation of the vessel. But in this case, it was observed that either the owner or crew have failed to discharge their obligations which led to technical or human or both failures. Under the provisions of Marine Safety Act, a formal investigation by the Chief Metropolitan Magistrate has been ordered in the two cases.”

2 ships with Indian crew flying Indian and foreign flag sank in the Arabian sea in July 2007 due to poor maintenance, severe weather conditions, lack of observance of good seamanship besides safe watch keeping practices as prescribed in national and international regulations.

The operation of foreign flag ships while in Indian waters is governed under the provisions of the Marine Safety Act, which has incorporated maritime related international conventions for safety of life at sea. Similarly, Indian flag ships, wherever they may be are governed through MSA rules. It is the responsibility of the ship owner to comply with the provisions of these regulations in sending the vessel in sea worthy state and maintain this status during its operation.

L&T negotiating USD 1 billion worth ship building orders

It is reported that Larsen & Toubro Limited is negotiating with global shipping fleet owners to build ships worth over USD 1 billion but cannot finalize these orders because it still hasn’t received the requisite clearances for its shipyard from a local government.

An executive of L&T said that “We are in talks with ship owners for orders worth over USD 1 billion, but the orders are yet to be concluded mainly due to delay in getting a clearance from the Tamil Nadu government for the project.”

L&T plans to set up India’s biggest shipbuilding facility at Kattupalli in Tamil Nadu in an effort to tap growing domestic and global demand for ships. It will invest around INR 3,000 crore in the shipyard and port project and will build cargo ships, warships and offshore oil rigs. The shipyard at Kattupalli will be capable of building 25 big ships in a year and repair another 50 to 60 ships.

Mr MV Kotwal, a member of L&T’s board and senior executive VP in charge said that “L&T is an engineering firm and we will focus on building high end, high tech ships that are highly engineering intensive. We want to do what Japan and South Korea are doing, focus on high end shipbuilding where the money is.” He added that L&T would build very large crude carriers, ships to carry liquefied natural gas and compressed natural gas, car carriers, container ships, warships and frigates.

L&T has hired Germany based consultant Ingenieurtechnik und Maschinenbau GmbH to develop a master plan and design for the shipyard. It also plans to bring in a Japanese or South Korean shipyard as a technology partner at a later date.

The port facility at Kattupalli will cater to clean cargo and also handle cargo of the nearby special economic zone being developed by the state owned Tamil Nadu Industrial Development Corporation Limited. Clean cargo refers to things such as food grains, cars and other vehicles and finished products as opposed to coal, iron ore and the like. When fully operational, the shipyard and port will employ close to 10,000 people. L&T plans to begin construction of ships at Kattupalli by the end of 2009 and deliver its first ship a year later.

Orissa to raise land banks for industries

PTI reported that, worried over the resistance to land acquisition for setting up industries, Orissa government was contemplating raising land banks for upcoming industrial hubs.

AS per report, the issue relating to creation of land bank for industrial purpose was raised at the first meeting of the newly constituted committee for the inter departmental coordination. The secretaries of different departments which were linked to industrialization in the state like forest and environment, revenue, industries and steel and mines attended the meeting where the issue of creation of such banks was discussed so that land could easily be made available for the companies.

Mr Ashok Dalwai industries secretary of Orissa said that the Industrial Policy Resolution 2007 had provision for creation of land banks for the purpose. He added that the resistance to land acquisition could be contained, if the government had ready made land for housing mega industries.

SAIL RMD recruits new batch of engineers for output growth

BS reported that Steel Authority of India Limited has inducted a fresh batch of 41 engineers as management trainee in its mining outfit Raw Materials Division as part of its strategy to increase output.

The other initiatives for achieving increased output were focused on increasing production in present mines by de bottlenecking, opening new mines, adoption of world class technology for beneficiation.

It is noted that SAIL has set a target of increasing capacity to 25 million tonnes by 2011, for which iron ore requirement would be over 40 million tonnes. RMD would source around 30 million tonnes of iron ore from its seven iron ore mines scattered across Jharkhand and Orissa.

Mundra Port & SEZ Limited IPO oversubscribed by 116 times

It is reported that the initial public offerings of the Mundra Port & SEZ Limited got subscribed by 116 times, indicating investor’s confidence in the ports sector. The issue opened on November 1st 2007 and closed on November 7th 2007. The issue has received investment commitments to the tune of INR 200,000 crore.

While the subscription from the qualified institutional buyer and high net worth individuals segments were 159 times and 156 times respectively, that from the retail investors was seen to be 13 times.

Mr Sandeep Mehta CEO of Mundra Port & SEZ Limited said that the overwhelming response indicated investor’s confidence in the port and infrastructure sector.

Mundra Port & SEZ Limited is seeking to raise up to INR 1,771 crore through the IPO for development of its infrastructural facilities at Mundra and Dahej. The price band had been fixed at INR 400 to INR 440 per equity share. The issue comprises a net issue of 4.01 crore equity shares to the public and a reservation of 150,000 shares for eligible employees. The issue and the net issue will constitute 10.05% and 10.01% respectively of full diluted post issue paid up capital of the company.

It plans to utilize the proceeds of the issue to expand its infrastructure base, which include a 30 million tonne capacity coal terminal that will handle coal for TATA Power and Adani power. Part of the proceeds will also be used to set up SEZs and expand the facilities of Adani Logistics, which is entering into the container train operating business. The port has plans to increase its traffic handling capacity from 20 million tonnes to 50 million tonnes by 2010.

Kamdhenu Ispat foraying into paint business

Kamdhenu Ispat Limited has recently informed BSE that as a part of its diversification plan, it is venturing into the paints business and is setting up a plant at Bhiwadi in Rajasthan for the paint project.

Mr Satish Agarwal CMD of Kamdhenu Ispat said that it is planning to invest INR 30 crore in a new paints unit in Rajasthan as part of plan to expand its portfolio of building materials to cash in on the real estate boom in India. It plans to fund the setting up of the paint unit from internal accruals and bank term loans. He added that "It is a logical extension of our business and we plan to launch it in 6 months."

Kamdhenu Ispat, which operates 32 manufacturing units through franchisees, expects INR 100 to INR 200 crore in revenues from the paints business in the first year and reach a target of INR 1000 crore in 3 years.

2 proposed LNG terminals construction may be abandoned

BS, in its Sunday edition, reported that India may abandon plans to build INR 73 billion two liquefied natural gas terminals in Ennore and Mangalore, because of new domestic gas discoveries and tight global supplies.

The Ennore project was to be built by Indian Oil Corporation, while the Mangalore project was to be built by ONGC and its unit Mangalore Refineries and Petrochemicals Limited.

A senior petroleum ministry official said LNG imports may not be required due to the large domestic gas supply that is scheduled to start from next year.

BHPB bid for Rio – BHPB highlights value of proposal

The board of BHP Billiton has recently written to the board of Rio Tinto proposing a combination of their respective companies to create an organization without peer in the natural resources industry. The board of BHP Billiton has sought and continues to seek to engage in discussions with Rio Tinto with a view to obtaining the support and recommendation of the board of Rio Tinto for this proposal. To date Rio Tinto has not agreed to these discussions.

BHPB in a release said that “BHP Billiton now considers it appropriate to make BHP Billiton and Rio Tinto shareholders are aware of this proposal so that it can seek their support for discussions between the two companies. The highlights of the proposal are
1. Combination to create the world’s premier diversified natural resources company
2. Unique portfolio of large scale, low cost, long life assets
3. USD 3.7 billion per annum in quantified synergies achieved through efficiencies and acceleration of volumes to meet strong customer demand
4. Three BHP Billiton shares for each Rio Tinto share equivalent to a premium of approximately 28% for Rio Tinto shareholders
5. All share proposals gives Rio Tinto shareholders exposure to the world’s premier diversified natural resources company
6. Value enhancing for BHP Billiton shareholders with exposure to synergies captured, strengthened asset portfolio and unrivalled future growth pipeline
7. USD 30 billion post completion buy back intended
8. Cash flow and earnings per share accretive from the first full fiscal year following completion.

Vallourec shares rises on reports of likely bid by Metalloinvest

It is reported that shares in French steel tube producer Vallourec rose sharply after a report that Mr Alisher Usmanov's Metalloinvest had agreed to buy French investor Mr Vincent Bollors 3.97% stake in the firm.

Shares in Paris based Vallourec rose as high as 6.3% on Monday to EUR 206 following a report in The Sunday Times of London that Mr Usmanov had agreed to buy Mr Bollors stake for EUR 570 million and was preparing to launch a full takeover bid for the firm.

The paper without citing any sources, said that BNP Paribas was mandated by Metalloinvest to advise on a takeover bid and that Gazprom might support the bid financially.

Mr Bolloris the largest single shareholder in Vallourec. He recently increased his voting rights to 6.51%while retaining his capital stake at just below 4%.

But both Mr Usmanov's and Mr Bollors firms both denied the report on Monday. Gazprom spokesman also denied that the gas giant was involved in the purported deal.

BHPB bid for Rio – Makes Japanese and Korean steelmaker uncomfortable

The Australian reported that Japanese and Korean steel makers are shuddering at the prospect of a BHP Billiton Rio Tinto merger, even as they brace for separate mauling from the dominant Australian iron ore and coking coal producers at the imminent annual contract negotiations.

The report cited an official of the Japan Iron and Steel Federation as saying that "Iron ore and coal industries are moving towards an oligopoly situation, which is not favorable to keeping a balance between suppliers and buyers and it's not welcome to us.” But JISF official expected the merger proposal to ultimately succeed.

Mr Norhiro Fujito of Mitsubishi UFJ Securities said that "Though Rio has rejected the proposal at this stage, I think eventually they will merge to create an ultra-giant supplier group. Even a large Japanese steel manufacturer such as Nippon Steel cannot cope with such an ultra giant. Japanese options are very limited; it must force up raw materials prices and harm earnings."

Mr Takashi Aoki of Mizuho Asset Management told Reuters that "This kind of mega merger runs the risk of destroying the price setting mechanism, based on supply and demand. If the deal went through, the ultimate consequence would be another wave of rationalization in the Japanese steel industry. Since the last consolidation five years ago produced JFE Holdings, Japan's second largest steel maker and the world's No3, the Japanese companies and South Korea's POSCO have preferred to form loose alliances. But it may be necessary now for the main steel companies to pursue radical M&A strategies.”

Japan and South Korea are Australia's No2 and No3 customers for iron ore and coking coal, after China. Increasingly, and in competition with Chinese and Indian companies, Japanese and Korean customers are chasing security of supply by direct investments in Australian mineral and energy projects.

Newcastle thermal coal price reaches record on lack of supply

Bloomberg reported that energy coal prices at Australia's Newcastle port, the world's biggest export harbor for the fuel, rose to a record on supply bottlenecks and growing demand, adding to expectations of higher Asian contract prices next year.

According to the globalCOAL NEWC Index, Coal for delivery from Newcastle within the next three months gained USD 1.43 to USD 83.51 a tonne in the week ended November 9th 2007. It is the fourth new high in five weeks for the Asian benchmark.

The globalCOAL monthly index reached a record AUD 75.19 in October. The gains in the indexes are boosting expectations that power station coal contract prices for the Japanese fiscal year starting April 1 will reach another record.

Japanese power generators may accept a 22% increase in the contract price of coal in the year starting April 1 amid the supply constraints, Citigroup Inc. The bank forecast prices will be set at AUD 67 a tonne up from AUD 55 this year. Sydney based AME Mineral Economics is more bullish, forecasting at least AUD 70 a ton.

Mr Bouchard sees Wheeling Pitts Esmark deal vital for survival

Purchasing.com reported that Mr James Bouchard CEO of steelmaker Wheeling Pittsburgh is asking shareholders to approve the company’s merger with Esmark because it will dramatically reduce the amount of debt Wheeling Pittsburgh has on its books.

In a letter to shareholders last week, Mr Bouchard said that the company has too much debt USD 525 million to stand alone for much longer. If the merger with Esmark succeeds, that debt could be reduced to USD 275 million by year end, he contends, by changes in operations after takeover.

Mr Bouchard tells shareholders that the firm will discontinue noncompetitive product offerings, idle underutilized and noncompetitive equipment and rebalance manpower needs after the merger with Esmark, a steel distribution company with some 2,000 customers across the Midwest. Wheeling-Pitt has about 3,000 employees at plants in Ohio, Pennsylvania and West Virginia. He added that “Year 2007 has been a mild-recession year for the steel market as demand for flat rolled products is off roughly 10% to 15% in the U.S. from last year.”

Mr Bouchard said that “Wheeling Pittsburgh Steel continues to experience rising costs of energy, raw materials, labor and transportation at a time that steel prices remain soft and flat.”

The Associated Press reports that the Securities and Exchange Commission has signed off on the merger but shareholders have to vote November 27 whether to stand pat, keep their original stake and buy new shares at USD 19 each or sell to Esmark for USD 20 in cash.

Argentina's steel export decreased in first 3 quarters

YIEH reported that Argentina’s steel exports during January to September 2007 period has declined due to the restriction of tight energy supply in Winter. However, the imports have significantly increased.

According to the data, Argentina had imported about 1 million ton steel products in the first three quarter, which is higher than before by about 24.1%, while the steel exported quantity totaled 1.1 million tons only.

It added that the main import channel is through Brazil, which contributes 48.4% of Agentina’s import for the first 9 months in 2007. It is expected that the steel production will be lifted following the end of the winter. Also, in October, Argentina's automobile industry has increased the output to 55.28 million vehicles, it has increased 30.5% than before. It is predicted to generate the steel consumption in Argentina domestic market.

Exploration finds thermal coal seams in Western Queensland

ABC News reported that a coal exploration company, Waratah Coal has detected a number of thermal coal seams between Jericho and Alpha in central western Queensland.

The report quoted Mr Peter Lynch form Waratah Coal as saying that it has been drilling for several months across a large area known as the Galilee Basin. He said that “It has confirmed the presence of thermal coal which was first discovered in the area in the 1970s. From that point of view the results are good the coal is present as we thought it would be. But there is a long way to go before we could say that we're at the point where the coal that is present is enough for a coal mining operation to take place."

He said that there is unlikely to be any mining activity within the next four years. He added that "Beyond that there are still significant hurdles to overcome. The coal seems are thermal coal, so they're not as higher value as the caking coal which is found in the Bowen Basin. Additionally, the location of the coal seems is still relatively far from the coast."

Siemens to make its UK facilities center for plate rolling mills

Siemens Metals Technologies announced that its has combined its two UK locations in Sheffield and Christchurch into a special subdivision called “Plate & Aluminum Rolling” which will be responsible under the new management of Mr Hans Werner Linne for worldwide business with plate and aluminum rolling mills.

Mr Linne said that “The rapidly growing worldwide demand for heavy plate is also boosting project business with rolling mills.” He added that the sudden expansion of capacities worldwide has primarily been driven by a surge in demand in the area of shipbuilding and pipeline projects.

Mr Linne added that “In the last two years, we have more than doubled new orders. With the competencies and experience of the 450 employees in Sheffield and Christchurch plus the additional engineering resources of our partners and colleagues around the world, we have now created the preconditions for further growth in the future. There are plans to construct new plants especially in China, India and Russia, whereas, in Europe and North America, the focus is on modernization. Improving the performance of existing plants here will make a significant contribution towards enhancing productivity and thus satisfying rising demand.”

Mr Linne said that this will involve expansion in the scope of maintenance solutions on offer as well as a wider range of services for plant modernization. Mr Linne added that “To this end, we have now set up a Plate Mill Consulting Group in Sheffield in order to expand our spectrum of products, solutions and services and strengthen our leading position in modernization business. In this segment the new business unit has shares of 42 % in the plate mill market and of 48 % in the aluminum mill market. The task of the company is to take action in a time of booming Greenfield projects in order to adequately prepare for the market in the future. In the medium term, we are expecting a sharp increase in modernization business.”

Midwest applies to Takeover Panel

It is reported that Midwest has made an application to the Takeovers Panel seeking a declaration of unacceptable circumstance and final orders in relation to an off market unsolicited USD 1 billion plus scrip takeover bid from Murchison Metals subsidiary MMX Investments.

Midwest said it is objecting to a number of declarations made by MMX Investments in the bidder's statement lodged with the Australian Securities and Investments Commission, relating to the Jack Hills Project including the targeted iron ore production statements.

Mr Bryan Oliver CEO of Midwest said that elements of the bidder's statement were forward looking and did not appear to have a reasonable basis. He added that "In the absence of a reasonable basis and the provisions of appropriate qualifications, assumptions and sensitivities, the statements are materially misleading."

Mr Oliver said that Midwest was seeking orders that would obligate Murchison to provide a second supplementary bidder's statement, with Midwest shareholders given the opportunity to accept Murchison's offer after the supplementary statement is released. Midwest advised its shareholders to take no action in relation to the Murchison offer, with Mr Oliver underlining the board's unanimous position regarding the deal.

Japanese crude steel output up by 3.2% in FY 2007

It is reported that Japanese 5 integrated steel makers expect to increase annual crude steel output to about 88.7 million tonnes on non consolidated bases through fiscal 2007-08, which would up by 3.2% YoY over the previous year and continue increasing for 6 straight years since fiscal 2002.

The Steelmakers anticipate the impact of new Japanese building standard law for the demand for building material, but they prospect total output and shipment keeps firm due to strong demand for automobile, shipbuilding or construction machinery which use steel sheet and steel plate of steel makers' main products and strong order from overseas Japanese manufactures and re-rollers. Steel makers' strategy which increases high valued steel products is seemed to prove effective.

ODS Petrodata's weekly mobile offshore rig count

According to ODS Petrodata's Weekly Offshore Rig Count, the number of mobile offshore drilling rigs under contract worldwide and total worldwide offshore fleet increased this week.

The report said that today, 599 of the world's 675 offshore rigs are under contract. Worldwide offshore drilling fleet utilization remains at 88.7%. The net one rig increase in the global offshore rig fleet resulted from the delivery of two jackups this week and the removal of a rig from the fleet.

It added that

1. US Gulf of Mexico, 92 of 127 mobile offshore rigs are under contract and fleet utilization is 72.4%. While the region's total fleet size grew by one compared to last week, the number of rigs under contract was unchanged.

2. The South America offshore rig count is unchanged from last week. With 64 of the 89 offshore drilling rigs in the region under contract, South America offshore rig fleet utilization is 71.9%

3. European offshore rig fleet utilization remains at 100%. This marks the 26th consecutive week of 100% offshore rig fleet utilization in the area. The fleet is comprised of 102 rigs that are deployed in the North Sea, Mediterranean Sea and other European waters.

4. The West Africa offshore contracted rig count is unchanged from last week, but total offshore fleet size slipped by one. With 54 of the 55 offshore rigs in the region under contract, fleet utilization is 98.2%.

5. In the Asia/Australia region, both the total offshore rig fleet size and number of rigs under contract increased by one. With 98 out of 100 available rigs under contract, utilization stands at 98%.

Klein Steel acquires Gibraltar Industries warehouse

Klein Steel Service Inc recently announced that it has taken over the former Gibraltar Industries warehouse between Buffalo and Niagara Falls at Tonawanda in New York.

Klein Steel Service had been operating in western New York from a leased facility at Blasdell in south of Buffalo. It said that it chose to invest in the Tonawanda site for its proximity to customers in both Niagara and Erie counties. The 110,000 square feet building supports the company’s metal distribution and processing for customers in western New York and northern Pennsylvania. Additionally, the plant accommodates Buffalo Steel, one of Klein's two retail stores serving walk in customers.

Known as Klein Steel of Western New York, the new facility employs 37 associates, adding to the 130 members of the company's Rochester and Syracuse work forces. The company says the move to the Buffalo Niagara region reflects its growth strategy and expanding customer base. Future plans include adding to the work force this year and next.

Founded in 1971, Klein is a 10 time Rochester Top 100 company. Products include carbon, stainless steel and aluminum. The company's capacity includes a Kasto automatic storage and retrieval system an 87,000 PSI International Flow Technologies waterjet; a 5 kW Bystronic laser; a Kasto automatic miter saw; plasma contour beveling; an Anglemaster; 12 saws; five plate burning and plasma cutting tables; and two shears.

Rautaruukki launches its multi storey solutions in Sweden

Rautaruukki announced that it is introducing its innovative solutions for multi storey commercial and office buildings in the Swedish market. The new solutions package to increase the speed and efficiency of the construction of foundations, frame and envelope structures was first launched in Finland in May 2007. The solutions package includes many structural innovations which also improve building site safety.

The first project with the new pile foundation base, integrated steel frame and façades for a 27,200 square meter office complex for Technopolis in Helsinki is proceeding according to plan. The pile foundation base and most of the frame structures have already been installed and installation of façades will begin in November, 2007.

Mr Saku Sipola president of Ruukki Contruction said that “We are responding to the general challenges in the industry by employing innovations and a high degree of prefabrication. Fast and efficient design, manufacturing and construction process save our customers and partners time and resources. Our solutions also mean less financial and operative risks when the various parts of the building are designed and produced as a standard package with the same jointing technology.”

Ruukki has been present in Sweden since 1990. The new innovations combine Ruukki’s deep know how of foundation, frame and envelope construction and enable tight project scheduling for the customer’s benefit. Ruukki’s target is to carry out first foundation, frame and envelope projects in the Swedish market during 2008. Besides this, Ruukki also continues to supply versatile piling system, frame and envelope projects, depending on the customer.

Tees Port’s record steel export figures

It is reported that Tees Port operator PD Ports has handled a record number of steel slab exports over the past year. As per report the port broke through the 2 million tonnes mark earlier this month, when it loaded 3,000 tonnes of steel slab onto the Moon Sea vessel, destined for the Port of Brownsville at Texas in US.

Mr Jerry Hopkinson group COO of PD Ports said that "Our predicted slab exports volume through Teesport for the end of this year is 2.4 million tonnes. I am confident we will achieve this."

Mr Jon Bolton MD of Teesside Cast Products said that "This is an excellent example of how a true partnership can work. We have both invested time and money in order to improve productivity and our consortium members are benefiting. Teesside Cast Products is now achieving best in class performance in loading speed."

The steel slabs are produced by long term customer, Corus Teesside Cast Products, on behalf of its consortium partner Group IMSA, in Mexico. IMSA is one of four partners that purchase approximately 78% of TCP's annual production of steel slab under a ten year agreement. The other consortium members are Marcegaglia, Duferco and Dongkuk Steel.

Taiwan's HR & HDG markets remain strong

It is reported that as Chung Hung Steel, formerly known as Yieh Loong Enterprise, has increased its list price, Taiwan’s domestic price of hot rolled product by USD15 per tonnes to US 615 per tonnes and the price of cold rolled has increased by USD 12 per tonnes to USD 678 per tonnes. Due to tight domestic supply, HGI ex-work price hiked to USD 710 per tonnes and CGI ex work price to USD 740 per tonnes.

Besides, the CGI export price from China has increased by USD 15 per tonnes and therefore the CGI price will keep mounting.

HudBay’s refined zinc production cut by maintenance in Q3

Canadian producer HudBay Minerals Inc announced revenue of USD 319.8 million for the July to September 2007 quarter down by 7.63% YoY as compared with USD 346.2 million in the July to September 2006 quarter, contributing to net earnings of USD 66.5 million versus USD 169.4 million a year earlier. Its operating cash flow for the quarter was USD 113.9 million as compared with USD 166.0 million in the July to September 2006 quarter.

HudBay Minerals said that financial results were strong despite the appreciation of the Canadian dollar, which negatively affected third quarter revenues by an estimated USD 23 million and earnings before tax by approximately USD 16.8 million.

Financial highlights:

(In USD thousand)

Mr Peter Jones president & CEO of HudBay Minerals said that "Our production performance was strong for the quarter and year to date. We're firmly on track, and our exploration program has delivered the Lalor Lake discovery which positions HudBay well for the longer term."

Turkish Habas join DGCX list for rebar futures

It is reported that Turkish Rebar maker Habas has joined the list of DGCX’s list of accredited manufacturers for its rebar future contracts. Habas is among the top 10 Turkish producers and top 5 rebar exporters to the UAE with a production capacity of 1,700 tonnes per day and storage capacity of 21,000 tonnes a day.

Mr Ahmed Bin Sulayem chairman of DGCX said "The listing of Habas complements our existing producer portfolio, bringing yet more confidence to the steel and financial community of the products traded, thus spurring liquidity. So far, investor response to the contract has been encouraging with volumes exceeding 1000mt each day during its second week of trading."

Rebar producers whose physical product meets the DGCX specification and consistently trades at market prices in the UAE are invited to apply to become DGCX approved producers. Subsequent accreditation provides buyers and sellers certainty of the quality and specifications of the products traded on DGCX. Habas joins the list of DGCX approved rebar producers which includes
1. Turkish Izmir Demir Celik
2. Turkish (IDC), Ekinciler
3. Turkish Kroman
4. Turkish Diler
5. Saudi Arab’s Al Tuwairqi Group (Al Ittefaq)
6. Saudi Arab’s Sabic Steel (Hadeed)
7. Qatar Steel from Qatar
8. UAE's Emirates Steel Industries
DGCX introduced its Steel Rebar Futures Contract on October 29 with a view to providing a cost effective tool that enables traders and the steel community to hedge price risk. It also provides valuable data to participants in the physical market, bringing transparency to the forward market for steel.

Iranian pipe price on up swing due to strong demand

YIEH reported that Iranian pipe demand has exceeded the supply, and this has led a dramatic price hike as tight supply has resulted from the shortage of HR substrate.

As per report, the price of ERW pipe of 0.25 inch diameter has increased to USD 995 to USD 1,125 per tonnes.

On the other hand, manufacturers’ actual output of pipe and hollow sections is only 1.9 million tonnes per year, which is behind the expected line capacity of 4 million tonnes per year.

The Iranian government plans to build 1.5 million new apartments a year for which abound 3 million tonnes of pipe and hollow sections per year will be in demand. However, the domestic HR coil producers can only supply 1 million tonnes per year.

Due to the current high import tariff of 10% for HR imports and UN sanctions, Iranian pipe and hollow sections suppliers decide to draw back the quantity of their output.

Saipem to build LPG pipeline in Algeria

It is reported that Saipem has signed a USD 500 million contract on November 5th 2007 to build a liquefied petroleum gas pipeline between the Hassi R’Mel gas field and Arzew in the northwestern Algeria.

The contract involves building a 505 kilometer long, 24 inch diameter pipeline, a pumping station at Hassi R’Mel, a pressure regulator at Sougueur near Tiaret, a metering terminal at Arzew and 200 kilometres of fiber optic cables.

The pipeline, known as LZ2, will link up with Arzew’s 2 main LPG complexes of GL1Z and GL2Z and over time will replace the existing pipeline, LZ1. The project is part of the efforts of state energy company Sonatrach to improve the safety and security of its infrastructure.

South Oil Co laying oil pipeline between Basra and Abbadan

Kuwait News Agency reported that Iraq's South Oil Company has commenced laying an oil pipeline between Basra in Iraq and Iranian ports at Abbadan, across Shatt Al Arab River, for the export of Iraqi crude.

The export capacity of the project was 200,000 barrels of crude oil per day and would not only raise Iraq's exports, but also diversify its export ports.

The Basra based South Oil Company is the largest Iraqi oil company and is responsible for the production of crude oil in southern fields and its exports from the Basra and Ameeq ports.

Huge investment required in power & water sectors in Dubai & Saudi Arabia

It is reported that more than USD 60 billion investments are required in Dubai and Saudi Arabia to meet their water and power requirements in near terms.

Dubai Electricity & Water Authority said that it could borrow as much as USD 19 billion over 5 years for investments to feed the fastest growing appetite for power and water in the world. It will require capital expenditure of USD 19.1 billion between 2008 and 2012 and would raise most of that in loans and bonds.

Mr Saeed Mohamed Ahmed Al Tayer CEO of Dubai Electricity & Water Authority said that the cash will be used to help it meet demand for water and power and would grow at as much as 20% a year until 2012. He added that "The growth will vary between 15% and 20% annually over the next 5 years. That is the highest growth rate in the world."

Demand for power and water is surging in Dubai, driven by rapid economic and population growth. The Gulf emirate plans to achieve economic growth of 11% per year to 2015 and almost double its workforce. Electricity consumption in the desert emirate soared almost 30% to 21,475 GW per hours last year and water consumption climbed 11.3% to 64.9 billion gallons. On the other hand, Dubai plans to spend over USD 40 billion on water projects over next 2 decades.

Saudi Arabia is also planning major investments in power and water over the next 2 decades. Mr Abdullah Al Hussayen unveiled plans for the water sector at the Saudi Water and Power Forum 2007 in Jeddah. He was prevented by ill health from revealing power plans. Saudi ministry is working closely with the World Bank to develop a national strategy for managing water resources. The new strategy will focus on managing supply by providing more water sources in the Kingdom in addition to underground and desalinated water.

The ministry is constructing 115 new dams able to hold 1.3 billion cubic meters of rain water, equal to total water reserved in the past 50 years. A further 360 dams are to come with investments of SAR 3 billion. The low cost of producing drinkable water from the dams compared to desalination plants will make dams a sustainable source for potable water. Mr Al Hussayen said that the government is forming a new national water company with a start up capital of SAR 22 billion to be responsible for the privatization of the water and sewage sector.

Contracts are expected to be signed for the privatization of water and sewage services in Jeddah in the first quarter of 2008. The ministry has already issued a request for proposals for the project. Riyadh is coming closer than Jeddah as the minister expects to sign its privatization contract at the end of this year. The Saudi Electricity Co is spending over SAR 20 billion on the expansion of existing power plants in Riyadh, Jeddah, Eastern Province, and Rabigh which will be the home to new power intensive mega projects. It will add 1,200 MW of electricity to Rabigh’s power plant to meet the energy demand for Saudi Arabia’s largest petrochemical complex.

4 bids submitted for Landbridge rail link in Saudi Arabia

It is reported that 4 pre qualified consortiums have submitted bids for the contract to build the USD 5 billion Saudi Landbridge railway linking its major Red Sea and Gulf ports in Jeddah and Dammam.

The participants are
1. Saudi Mada
2. Kuwait’s Agility Logistics
3. Saudi Binladin Group
4. Tarabot consortium of South Korea’s Samsung Corporation and Australian rail group Pacific National

Technical and financial analysis of the four bids has now begun and the winner is likely to be announced in the first quarter of 2008.

Kuwait Energy to buy Cardinal Resources Ukrainian assets

Mr Robert Bensh chairman of Cardinal Resources said at a press conference last week that as a result of the deal, KEC will own 100% of statutory capital of Carpatsky Petroleum Inc, Raget Commercial Limited and Mitre Resources Limited.

These companies currently belong to Cardinal Resources Finance Limited, a 100% subsidiary of Cardinal Resources Plc.

Saudi investors urged to invest in Philippines

Arab News reported that, pointing out that some major Saudi businessmen including Prince Al Waleed ibn Talal, have invested in the Philippines, a senior Philippine diplomat has called on prospective Saudi investors to explore trade and investment opportunities in the Philippines including Mindanao.

Mr Nestor N Padalhin, deputy chief of mission & consul general of Philippines in Saudi Arab, while addressing the 2nd Integrated Mindanao Economic Forum at the Philippine Embassy, said that Prince Al Waleed bin Talal's multimillion investment in the Philippines in hotel sector is a good indication and would encourage more Saudi to invest in the country particularly in Mindanao.

He informed that “Saudi businessmen can apply freely for a renewable 21 day visa, adding that others even travel there without getting visa from the embassy.”

Dr Omar Mababaya chairman of Integrated Mindanao Economic Forum described Mindanao as an island endowed with rich resources and immense potential for growth in terms of trade and investment in view of its proximity to the ASEAN region and the Asia Pacific rim. He added that the island's competitive advantage lies in its huge potential in terms of agro business, tourism and service industries that should attract Saudi investors.

Mr Abdul Hannan Tago president of IMEF said that the objective of the forum was to highlight the economic and human resources of the Philippines in general and Mindanao in particular. It was meant to facilitate business partnerships between the 2 countries' investors so that they could exploit its untapped wealth for the benefit of the 2 countries.

The 2nd Integrated Mindanao Economic Forum is sponsored by Arab News in collaboration with Abullah Al Qahtani Group, Hamrani Trading and Import Company, Qatar Airways and the First Philippine School in Riyadh IPSR as co sponsors. A large number of Saudi businessmen were present.

Mitsubishi Motor to expand presence in Bahrain

Bahrain Tribune reported that Mitsubishi Motor Co is considering setting up a manufacturing facility in Bahrain due to its overall investment climate.

Mr Takashi Sonobe president of Mitsubishi Motor Corporation has indicated that Bahrain being a strategically located country can be a regional headquarters for MMC to reach the region's most powerful market such as Saudi Arabia and the United Arab Emirates.

He also added that Mitsubishi Motor Corporation has regained its position as a leading market player in automobile industry in the GCC with a sale of around 52,000 units for April to September 2007 which is a 43% YoY increase compared to the same period last year.

Mitsubishi Motor Corporation has achieved the total sales of around 79,000 units in the 2006 fiscal year term up by 25% YoY over the 2005 fiscal year.

Tripartite JV formed for aluminum unit

Khaleej Times reported that a USD 3 billion Saudi, Chinese and Malaysian JV is to be set up to produce mainly electrolyze aluminum with a yearly production of 1 million tonnes.

Aluminium Corporation of China Limited has signed a cooperative agreement with Binladin Group and a company from Malaysia. However, it did not disclose details about the shareholding and investment volume for each of the three companies.

Chalco is a diversified metals and mining company based in Beijing. It is focused on the Chinese and international aluminum markets but is also engaged in resource exploration and downstream operations in the fields of copper, rare metals and other non ferrous metals. It produced 3 million tonnes of aluminum and 9.2 million tonnes of alumina in 2006.

Mr Xiao Yaqing GM of Chalco said that "It is set to invest as much as CNY 30 billion in the expansion of its copper business in years ahead and the metal giant from China's mainland is in talks with several companies about acquisitions."

Industry analysts said that alumina and copper are the strategic focus of Chalco outside China. It said that "With the help of its foreign partners, Chalco will effectively deploy its overseas alumina and copper resources in a bid to avoid the throat- cutting competition in the domestic market."

Chinese October trade surplus up by 13.5%

China’s General Administration of Customs announced that China has recorded a trade surplus of USD 27.05 billion in October 2007 up by 13.5% YoY. Exports in October 2007 rose by 22.3% YoY to USD 107.73 billion while imports were up by 25.5% YoY to USD 80.67 billion.

During January to October 2007, China’s trade surplus stood at USD 212.36 billion up by 59% YoY. Exports rose by 26.5% YoY to USD 985.84 billion while imports were up by 19.8% to USD 773.48 billion.

In the 10 months to October, steel product exports rose by 63.8% YoY to 53.76 million tonnes while imports declined by 8.6% YoY to 14.19 million tonnes.

China exported 43.26 million tonnes of coal in the first 10 months, down by 17.6% YoY while exports in October alone stood at 5.25 million tonnes.

Coke exports rose by 9.4% YoY to 13.15 million tonnes during the 10 months, with exports in October at 1.42 million tonnes.

Iron ore imports in the 10 months to October stood at 313.75 million tonnes up by 16.6% YoY while imports in October were at 29.77 million tonnes.

US Steel tube makers hail finding against China

It is reported that Wheatland Tube Co and other US steel tube makers claimed an important victory recently in their battle to stem the flood of Chinese imports that have been grabbing customers.

Department of Commerce said it will impose a 16.59% duty the amount of government average subsidies on most Chinese pipe makers. The department also applied critical circumstances, making the duty retroactive by 90 days.

Mr William Kerins president of Wheatland said after a preliminary finding against Chinese subsidies of circular welded steel pipe exports to the US that "It should help us recapture some market that was lost to foreign competition, especially since 2002 when we saw a steady increase each year of Chinese product coming into this country. He said even with a favorable ruling, the domestic industry will suffer for months longer because the Chinese boosted exports to 80,000 to 90,000 tons in June, July and August after US companies filed the trade suit. He added that at best, it'll take months to work down that inventory."

Mr Leo W. Gerard president of United Steelworkers said "We are confident that consistent and tough government enforcement will lead to domestic manufacturers regaining their competitive footing, saving jobs and the rehiring of laid-off workers."

The American tube companies said Chinese pipe subject to the petition surged from 10,000 tons in 2002 to more than 750,000 tons in 2007. The increase has resulted in 500 lost jobs about 25% of the industry segment's total work force. It said the duty, known as countervailing because it's intended to offset government subsidies, will require importers to post bonds in the amount calculated by the commerce department.

Wheatland joined Sharon Tube Co., Allied Tube & Conduit, IPSCO Tubulars Inc., Northwest Pipe Co and Western Tube & Conduit Corp., along with the United Steelworkers, in filing the trade suit June 7th 2007.

POSCO scouting for Chinese partner

FT reported that South Korea’s POSCO is considering taking a minority stake in a Chinese steelmaker as it accelerates overseas expansion plans and seeks to become the world’s third-largest steelmaker.

Mr Lee Dong-hee CFO of POSCO said that advancing into Chinais inevitable. He said “We are reviewing several candidates to look for business opportunities and strengthen cooperation. The Chinese government does not allow foreign investors to become major shareholders of local steelmakers, so we want to take a minority stake but will seek to exert management control within the legal framework.”

Mr Lee declined to name the candidates but said POSCO plans to utilize its FINEX technology in a Chinese joint venture it is considering, as well as in some other plants it is building overseas. He said that “Entering China is an unavoidable choice, adding that it would be a strategic rather than profit making move. We have to read the trend of the market because it is Korea that suffers the most damage when Chinese steel exports flood in.”

Chinese HRP and HRC price moving upward

This week, HR plate and coil markets in East and North China began to take upward going. According to the figures from Steelhome, on November 8th 2007, 2.75mm and 5.75mm HR plate/coil among 28 key domestic cities were priced at CNY 4517 per tonnes and CNY 4331 per tonnes up each up CNY 32 per tonnes and CNY 37 per tonnes from October 31st 2007.

Shanghai saw resources shortage and better market demand. On November 9th 2007, HR plate and coil in shanghai gained further climbing, 2.75mm and 5.75mm HR plate & coil were priced at CNY 4520 per tonne and CNY 4260 per tonne up by CNY 60 per tonne and CNY 80 per tonne from October 31st 2007.

Tianjin saw shortages in thin sheet and normal transactions. Comparing with the rise of CNY 20 per tonnes to CNY 30 per tonnes in Shanghai, the HR plate & coil in Tianjin suffered price growth to different extent. Today, 2.75mm HR plate & coil price gained CNY 100 per tonnes rising to CNY 4500 per tonne up by CNY 100 per tonne from October 31st 2007, while 5.75mm HR plate & coil took a mild climbing by CNY 30 per tonne to CNY 4260 per tonne up by CNY 40 per tonnes from October 31st 2007.

Guangzhou saw normal demand and stable prices. HR plate & coil in Guangzhou still held smooth going, immune from the influence from Tianjin and Shanghai. 2.75mm and 5.75mm HR plate/coil respectively hit CNY 4500 per tonne and CNY 4430 per tonne flat with that on October 31st 2007.

Chengdu saw shortage among particular specifications and dealers hope for a price hike. On November 9th 2007, HR plate & coil in Chengdu underwent no turbulence after CNY 70 per tonne surge of 5.75mm HR plate & coil recently. Comparing with that of October 31st 2007, 5.75mm HR plate & coil hit main price of CNY 4450 per tonnes p by CNY 70 per tonne from October 31st 2007.

Xi'an saw resource at normal level. Comparing with that in other markets, HR plate & l in Xi’an witnessed the slightest change in price. On November 9th 2007, 2.75mm and 5.75mm HR plate & coil were priced mainly at CNY 4500 per tonnes and CNY 4300 per tonnes and no change was made from October 31st 2007.

China to issue new policy for closure of outdated capacity

It is reported that China’s National Development and Reform Commission and Ministry of Finance of China are considering of new policy to stimulate the closure of outdated iron making and steelmaking capacities.

It is revealed by an official from NDRC on November 8th 2007 that the policy would provide financial support to some provinces and the policy could not be limited in iron and steel industry. At present, NDRC is negotiating with Ministry of Financial of China on the date of issuance and the value of allowance, which would be finally decided by Ministry of Financial of China.

China Iron & Steel Association indicates that China has only completed less than 40% of the mission of closure of outdated iron making and steelmaking capacities this year. NDRC will sign the second passel responsibility papers with 18 provinces or cities including Tianjin and Inner Mongolia this month, and CISA hopes the new policy to be carried out at the same time.

Chinese HDG price outlook

In the first half of November, influenced by factors, like stabilized CR & HR prices and tightly held resources, Chinese domestic hot dip galvanized prices reported only a small drop.

In Tianjin, from early November onward, some large enterprises maintained a stable market price due to resources’ tightness. Products from Tangshan Hengtong Steel were priced downwardly by CNY 200 per tonnes. On November 9th prices of 1 mm hot dip galvanized coil originated from Benxi Steel and Tangshan Steel are fixed at CNY 5300 per tonnes to CNY 5350 per tonnes and CNY 5050 per tonnes.

With regards to the continuous price decrease in HR coil market and the weak CR coil price, hot dip galvanized customers, from early Oct, were unwilling to make many purchases, trying to use cheap products as substitutes. Dealers said that the hot dip galvanized sheet sales in Oct dropped by 20% to 30% comparing with that in September and the situation met no change in early November.

Similar to CR market, from early this year onward, hot-dip galvanized sheet brought decreasing profit for dealers. For the general market status in the first ten months, deals only enjoyed satisfactory profit in January, February, March and August, so most dealers are still waiting for steelmakers’ price policy. Some experts thought that home hot dip galvanized steel prices would keep stable in short term but the market price might temporarily go down a little due to financial matters considering of the following factors

1. Stable market demand
From November to December, the booming demand from domestic infrastructure construction, key industrial projects construction, housing construction, structural steel & color coated plate manufacturing, and technical accessory manufacturing industries would support hot-dip galvanized plate price to maintain stable.

2. Fluctuated output and slipped YoY growth rate
According to the statistics, in July, August, September 2007, daily output of coated plate averaged at 49400 tonnes, 54600 tonnes, 51000 tonnes, which marked the rising production in August, but ebbed in September, some steel mills overhauled their equipments in October which might cause production drop as a result. Meanwhile, from January to September, the YoY growth rate of domestic coated plate production touched 51.9%, down 5.7% from January to August. In conclusion, although home galvanized plate production capacity saw gradual increase year by year, .steelmakers adjusted their product mix as well as output in accordance with market demand flow. Moreover, from the perspective of current market status, the home hot dip galvanized sheet supply met no supply pressure.

3. Import and export factor
From January to August, imported galvanized plate hit 2.4285 million tonnes, up 5.28%YoY and export attained 2.7328 million tonnes up by 74.2%YoY forming a net export of 0.3043 million tonnes, which somehow released the home supply pressure. But, by September, home steel export witnessed three months consecutive fall. The effect from the further national export policy adjustment and international anti-dumping upon hot-dip galvanized plate is left unknown.

4. Other influences
Currently, the CR prices trended stable, 1.0 mm CR coil from Ansteel and Benxi Steel in Tianjin market were priced at CNY 4950 per tonnes, CNY 300 per tonnes lower than that of relevant hot-dip galvanized coil. Experts pointed out that only if CR plate price stabilizes, there should be CNY 100 per tonnes price rise space existed.

5. Production cost and EXW price influence
Currently, the iron ore, coke, kerosene cost and ocean freight saw no end of hiking. Under the pressure of production cost, steel mills suffered profit loss month by month. Therefore appropriate EXW price lift is unavoidable.

But when market demand entered into low ebb with the coming of year end, how steel mills adjust their products price policy will act as crucial role in manipulating future hot dip galvanized price flow.

Panzhihua to build 600,000 tonnes coke project

It is reported Pangang Group Chengdu Iron and Steel Company Ltd and the government of Wangcang County of Guangyuan City in China signed investment intention agreements for investing CNY 200 million in Wangcang County for building 600,000 tonnes coking projects to establish a stable supply of coke base for Panchenggang.

The project is expected to completed and put into production before the end of May 2009, can achieve annual sales of CNY 600 million.

Wang Guang Wangcang Coalfield located in the core area of coal resources in the deposit of nearly 400 million tonnes, Panchenggang 600,000 tonnes coking projects, on the one hand can achieve local processing of value added resources and comprehensive utilization, on the other hand can bring in quality coking coal resources over 200,000 tonnes from outside and become the largest coking base in northeastern of Sichuan.

Panchenggang is already included in the overall listing of the Panzhihua Iron and Steel Group.

Rebar and wire rod prices on upward trend in China

It is reported that Rebar and wire rod prices a have witnessed swift and strong rise in past days. Though some market participants regard such swift increase as speculation, experts believe that it is quite normal since that they have gone past previous peaks.

In Shanghai, HRB335 20mm rebar goes at CNY 4220 per tonne, HRB400 20mm rebar at CNY 4330 per tonne to CNY 4350 per tonne, up CNY 170 per tonnes and CNY 140 per tonne to CNY 160 per tonne recently. Q235 wire rod price has gained CNY 140 per tonne to CNY 4240 per tonne, hi speed cargo by CNY 110 per tonnes to CNY 4250 per tonne.

Actually long term price uptrend is anticipated now due to following facts

a) Fast economic development and growing fixed asset investment. FAI in cities for January to September reached CNY 7.82 trillion, up 1.64 trillion from that in the same period of last year. The rising investment in infrastructure construction has led to great growth in rebar and wire rod demand. In addition, continuous improvement in construction steel prices is quite reasonable with inflation rate keeping at high level and real estate industry remains prosperous.

b) The high billet prices are bolstering improvement in construction steel prices. The widely expected 50% rise in iron ore benchmark prices in 2008 has made steel producers to raise its EXW prices to make enough profits. In addition, the improving domestic transportation fee is also adding to cost.


Mysteel forecast HRB335 20mm rebar price in Shanghai, for example, have reached CNY 4220 per tonnes after it exceeded former peak of CNY 4030 per tonnes. If it could keep above CNY 4200 per tonnes, CNY 4500 per tonnes would be the next aim. Of course, we do not exclude short term corrections or fluctuations following such a quick jump.

With regards exports, MySteel does not believe that it could exert much adverse impact on price performances since producers are mainly targeting at domestic market. Even during export fever period, the export volume only takes 5% of total output. Even the possible increase in export tariff rate would not affect their prices taken into account the fact that construction steel exports almost have suspended even under current rate.

(Sourced from MySteel.net)

Shagang Group raises steel price for November

Shagang Group has announced to increase the price for its steel products price for shipments in middle November based on its new price policy set for exports to Taiwan.

This new price policy covered almost all steel categories. The price raise level for rebar is by CNY 160 per tonne, for large size coil by CNY 130 per tonne. For wire, it is increased by CNY 70 per tonne, for welding steel is by CNY 130 per tonne and CNY 30 per tonne for certain alloy based steel products.

The above price adjustment has included tax and effective from November 11th 2007.

China imports 29.77 million tonnes iron ore in October

Statistics from customs showed that China imported 313.75 million tonnes of iron ore in the first ten months of 2007 and the import of October is 29.77 million tonnes down by 3.47 million tonnes from September 2007 however 7.8 million tonnes higher than October 2006.

In addition, China exported 13.15 million tonnes of coke in January to October 2007 up by 9.4% YoY and 1.42 million tonne in October 2007.

Chinese iron ore import from Brazil in 10 months up by 32% YoY

According to the statistics from Brazil, total iron ore export to China in first ten months this year is already more than the total volume in the whole year of last year.

In first ten months this year, iron ore export from Brazil to China is 88.8 million tonnes up by 32%YoY, while the value is USD3.14 billion up by 46.7% in YoY.

Linggang starts making X60 pipe

It is reported that the pipe mill of Lingyuan Iron & Steel Co (Linggang) in northeast of China successfully has succeeded in making X60 pipe for the transportation of petroleum and natural gas on November 3rd 2007.

The standard is GB/T9711.2, while the specification is 219.1×5.75.

The success reflects that the pipe mill of Linggang is already able to produce high grade pipeline steel.

Chinese export of ferroalloys in January to September 2007

China’s ferroalloy export to different countries in January to September 2007 totaled 2407972 tonnes.

China exported ferroalloys to 20 countries during January to September 2007. The details are as under

(In tonnes)

(Sourced from MySteel.net)

China Shipping and Guangdong ink coal transportation pact

It is reported that China Shipping Company signed coal transport agreement with Gudangdong province.

China Shipping Company will provide long time and stable coal transport for Guangdong province including 35 million tonnes in 2008, 42 million tons in 2009 and 50 million tonnes in 2010 in accordance with the agreement according to the demand and situation in Gunagdong market.

Hebei to form a super steel enterprise

It is reported that province Hebei has got new improvement in merger of iron and steel industry.

It is known that there are two plans at present

One is to combine the planned “South Iron and Steel Group” and “North Iron and Steel Group” and make a large sized iron and steel group.

The other is to construct a super sized steel enterprise by the merger of Tangsteel and Shougang.

No matter which plan is approved, the capacity of new group would be between 45 million to 50 million tonnes per year, while the capacity of Baosteel in 2007 is 30 million tonnes which is expected to be 50 million tonnes per year by 2012. It is revealed that the final plan could come out in three months or half a year.

Baosteel developed TRIP HDG steel for cars

It is reported that recently, Baosteel has succeed in developing TRIP hot galvanized plate for automobile applications.

TRIP hot galvanized steel has high strength and high elongation is one of the high strength steel plates used in car to loose weight and save energy.

Baosteel has been working on this project along with the Institute of Automobile Steel Institute since 2002.

Erdene to build molybdenum mine in Mongolia

It is reported that Erdene Gold Inc, seeking to build Mongolia's first molybdenum mine, said increasing demand for the steel-making ingredient from neighbor China could support the potential development for as much as 20 years.

Mr Gregory Leonard, exploration manager for the Halifax said "We are right on the doorstep of the largest potential market for molybdenum projects. China has the demand for the molybdenum and we are well positioned."

Mr Leonard said the Zuun Mod project, located in 200 kilometers from the Chinese border in Southern Mongolia, may produce between 10 million pounds and 20 million pounds of molybdenum in concentrate annually over the mine's life. He said an initial estimated resource will be announced early next year. Rail lines linking the site with China and a power grid have recently been constructed.

Jinan generates 2 billion kwh electricity by heat and energy emission

It is reported that Jinan Steel, which lies in province Shandong in east of China, has totally generated 2.09 billion kwh of electricity by heat and energy emission in first ten months this year, which doubles the total volume in the whole year of last year.

Almost 50% electricity power used in Jinan Steel is self supplied and Jinan Steel has created a new record in metallurgical industry in China.

At present, Jinan Steel has primarily formed an electricity generation structure and it can reduce 16,683 tonnes of sulfur dioxide, 2 million tonnes of carbon dioxide and 4.14 billion CBM coal gas emissions per year.

Shougang Shunyi CR Co succeeds in the trial roll

It is reported that Shougang Shunyi CR co successfully trial rolled the first coil on November 8th reflecting that its CR project in Shougang Shunyi has entered a new phase.

Heavy storm causes havoc in Black Sea

It is reported that a vicious winter storm slammed into the Crimean peninsula causing an ecological disaster after about 2,000 tonnes of heating oil spilled into the Black Sea from a wrecked tanker. 4 cargo ships sank in storm which whipped up 6 meter waves and 4 other vessels including two cargo ships and two ocean going barges were grounded.

3 sailors were dead and at least 23 were missing, according to Russian television reports.

The sunk tanker Volgoneft 139 had leaked 2,000 tonnes of the 4,000 tonnes of fuel oil it was carrying into the Kerch Strait linking the Black Sea and Sea of Azov. The 13 member crew was rescued.

A few nautical miles away two cargo ships carrying a total 6,000 tonnes of sulphur were under water near Tuzla Island. Eight sailors from one of the cargo ships were missing.

A fourth sunk cargo ship, carrying steel products, was unlikely to pose a substantial threat to the environment.

Most of the cargo ships had been riding at anchor waiting their turn to move through the strait, when the storm stuck. One of the cargo ships loaded with sulphur sank after being struck by another vessel torn loose from its moorings.

Severstal to host next meeting of Living Steel program

Severestal announced that on December 3rd 2007, it will host a workshop on “Construction of Steel Framed Low Rise Housing” under the aegis of Living Steel, a collaborative international program designed to stimulate innovative and responsible housing design and construction.

The seminar will discuss steel use in residential housing projects, the potential of steel use for improvements in housing quality and the implications for the environment. Developments in Russia, Finland, France, Great Britain and Australia will be explored to illustrate the experience and trends in the construction industry.

The program will include presentations from Arcelor Mittal, Corus, BlueScope Steel, Ruukki, Roland Berger Strategy Consultants and Taldom Profile of Russia. The event will be attended by Mr Vorobyov, Head of the Construction Department of Vologda Oblast, Mr A Kruchinin, General Director of Cherepovets Steel Plant and Mr O Kuvshinnikov Head of Cherepovets City Hall.

In February 2005, the International Iron and Steel Institute joined forces with major global steel companies to set up the Living Steel Program. The program aims to explore, elaborate and introduce the most efficient solutions in residential housing projects.

Kuzbassrazrezugol coal output drops

It is reported that Kuzbassrazrezugol has reduced the output by 2.4% YoY to 35.873 million tonnes although its coke production increased by 20.7% YoY to 4.092 million tonnes. The coal delivery was fulfilled up to 101.7% YoY to 34.056 million tonnes.

The highest production volume was reached at Taldinsky Coal Pit at 7.441 million tonnes and Bachatsky Coal Pit at 7.74 million tonnes.

Kuzbassrazrezugol includes 11 divisions; Taezhny Pit being under its control. From Sep. 2006 Managing Company Kuzbassrazrezugol is under UGMK Holding management.

In 2006 the output reached 41.36 million tonnes.

High speed railway to drive Russian economic growth

Itar-Tass cited Mr Valery Shantsev region governor of Nizhny Novgorod, while speaking at a Russian Japanese meeting on cooperation in railway transport, as saying that “A high speed railway between Moscow and Nizhny Novorod is destined to become a new stimulating factor of inter regional development and on top of that, to mark a new starting point in the country's economic growth.”

Mr Shantsev said "Given Russia's span and geographic spaces, construction of high speed railways will give grounds to speak about the integration of regions and increasing mobility of their population.

He said "Japanese business community will be able to use the Nizhny Novgorod region's economic potential in full for implementing joint projects."

Mr Kunio Anzai, the chairman of the Russian-Japanese committee for economic cooperation, who spoke on behalf of Japanese businesses, stressed their interest in the stepping up of relations with Russia, including in the field of railway transport. He said broader cooperation in transport will help stimulate the growth of economic contacts on the whole. He recalled that businessmen and officials from both countries had had a fruitful exchange of opinions on the issue in Moscow and Nizhny Novgorod in July.

Mr Boris Lapidus the senior vice-president of the OAO Russian Railways RZD said at the conference that total length of high-speed railway lines in Russia will exceed 1,500 kilometers by 2030. He indicated that bullet train lines will connect Moscow with St Petersburg, Nizhny Novgorod and Smolensk and Krasnoye on the border with Belarus. Mr Lapidus said “We’ll get the first experience in running bullet train services on a line between Moscow and St Petersburg. This direction has been chosen for a pilot project considering the high density of population in that area and the maximum seat load factor. He said that at this moment, the RZD is developing an investment feasibility study for that line and the document will be ready by mid-2008. He added that “This route will have an estimated length of 650 kilometers and trains will cruise there at an average speed of 350 kilometers per hour, adding that a trip by bullet train will continue for 2.5 hours.”

Twenty bullet trains will cruise there both ways daily in both directions and the number of passengers buying this service will stand at around 8 million

Power Machines name Severstal managers to top posts

It is reported that Power Machines has named Mr Vadim Chechnev former senior manager of Severstal's business planning directorate, as director of economy and finances.

In addition, Mr Alexander Rantsev, another former senior manager of Severstal's business planning directorate, has been named Power Machines' director for strategic development and controlling

In October, Mr Igor Kostin general director of Severstal's for business planning, was elected as general director of Power Machines.

At the end of September 2007, Cyprus based Highstat Ltd, which represents the interests of Mr Alexei Mordashov head of Severstal acquired a 30.4% stake in Power Machines from Interros.

Safety checks could delay Nord Stream

The environment ministers of Sweden and Finland said that Gazprom's Nord Stream pipeline under the Baltic Sea may face additional delays unless it meets the highest ecological safety standards. Mr Andreas Carlgren Swedish Environment Minister said "It is definitely not just a formal process. We will scrutinize what the effects will be."

Ms Kimmo Tiilikainen Finnish Environment Minister said in a separate interview that the licensing process for a project the size of Nord Stream typically takes as long as three years. She said "It depends on what kind of comments or complaints the different stakeholders declare. They must be taken into consideration according to our legislation. It is very difficult to estimate the time."

Ms Tiilikainen said that "We know their hope. The better they do their work, the quicker the issue will be handled."

Dockworker strike halts rail movement to Tuapse Port

It is reported that Russian Railways has suspended shipments to Tuapse Commercial Sea Port, where as much as 138,000 tonnes of coal and grain are stranded because of a dockworker strike.

Russian Railways said in a statement recently that more than 1,000 rail cars with coal and 800 cars with grain are waiting to be unloaded. Another 500 cars have been unloaded and their goods taken to warehouses.

Russian Railways said dockworkers are continuing the strike despite a court ruling that ordered them to return to work. Some 120 dockworkers walked off the job November 4th 2007 demanding a 20% pay raise. They suspended the stoppage three days later.

Cost of Shtokman field development put at USD 12 billion

Mr Alexander Medvedev the deputy chairman of the Gazprom board of governors, while addressing students of the Moscow Institute of Foreign Relations recently said that a tentative cost of the development of the Shtokman gas field is USD 12 billion.

The cost of development work was earlier put at USD 15 billion.

Mr Medvedev said a final cost could be called after a financial evaluation of investment in the project. He said “It is no secret that prices of services and materials are permanently increasing.”

Mr Medvedev explained that the scaling down of the initial estimated cost of developing the Shtokman field was related to “optimization of expenditures”.