Coal mining may get infrastructure status - Report

It is reported that coal mining may finally get infrastructure status as Mr P Chidambaram union finance minister of India is expected to make the announcement in Budget 2008.

As per report, the Energy Coordination Committee headed by Dr Manmohan Singh prime minister has favored the move and with the power ministry too seeking infrastructure status for coal mining, the coal ministry’s case is stronger now.

The report cited an official source as saying that “With the power sector already enjoying infrastructure status, it is felt the same should be extended to coal mining that will now extensively be undertaken by power companies under the captive route. Infrastructure status would enable coal mining activities to boost production required for meeting 78,500 mw generation capacity largely based on coal.” He added that the proposal includes grant of infrastructure status to both coal mining and coal washery activities and is likely to be cleared ahead of next year’s Budget.

It would entitle companies in the sector for a 10 year tax holiday. Under Section 80-IA (2) of the Income Tax-Act, a deduction of 100% profit is available to companies for any 10 consecutive years of the first 15 years. It would also enable companies to seek cheaper credit from financial institutions. The coal ministry had proposed duty sops for the industry to achieve economies of scale and increase production of coal to reduce demand supply mismatch. Coal companies would be also able to import capital equipment and spares at concessional rates.

It is noted that the proposal on infrastructure status for the coal sector was rejected by the finance ministry, which did not favor tax sops for a market monopolized by government owned companies. Coal mining, however, is expected to undergo a major change in the coming years with large scale production from captive coal blocks mainly by private sector companies. The production figure from captive mines is expected to rise to over 200 million tonnes in the coming years and these suits the finance ministry that rejected the proposal earlier pending a decision on opening up of the coal sector for commercial mining. The main beneficiaries would be power companies as concessions would make coal production economical that would ultimately help in keeping power tariffs low.

Infrastructure status for the coal sector would bring it on a par with other sectors such as roads, railways, oil and laying of oil and gas pipelines.

Ms Patkar to visit POSCO site amidst turmoil

SNS reported that the proposed visit of Ms Medha Patkar, a social activist and leading activist of the Narmada Bachao Andolan, to POSCO affected villages has triggered hectic activity on both pro and anti POSCO fronts with a section of the villagers of Nuagaon, Gadakujang and Govindpur threatening to prevent the entry of Ms Patkar and outsiders and the rival groups preparing to play host to Ms Patkar.

Ms Patkar, Mr Kumar Prashant founder member of the Rashtriya Yuva Sangathan and other social activists are to reach Jagatsinghpur, where they will attend a Satyagraha being staged by activists of Nava Nirman Samiti and Rashtriya Yuva Sangathan in front of the collectorate. Subsequently, they are scheduled to visit Nuagaon and a few other places to access the situation.

Ms Patkar is to attend a public meeting at Jagatsinghpur which has been organized by Zilla Gansangram Parishad. Then she will go to Nuagaon village with Satyagrahis and will interact with the villagers before staying at the village overnight. She is expected to move around the troubled Dhinkia and Govindpur villages also.

Siemens inks MoU with RITES for production of rail wagons

It is reported that Siemens has tied up with the Indian Railways’ subsidiary RITES Limited for development and production of rail bogies and a MoU was signed for the purpose.

The role of RITES would be limited to extending consulting support for product development, design, workshop management for rail bogies to primarily serve the export market.

Mr Martin Bartenstein federal minister for economics & labor of Austria, while addressing India Austria Economic Forum, said that “Austria sees India as a vast market for its products. It would like to participate in the development of India’s infrastructure and cooperate in areas such as automotive industry, environment, non conventional energy, healthcare and electrical and electronics industry.”

India’s energy sector needs USD 500 billion in 11th Plan - Report

Mr RV Sahi former union secretary at ministry of power recently said that India’s energy sector would require USD 500 billion worth of investments during the 11th Five Year Plan period. He said that, for the 11th Five Year Plan, Indian government has set a target of 78,000 MW of new capacity out of which 55,000 MW is already in the process of commissioning.

He added that Indian power sector group companies have achieved 154% growth in market capitalization indicating phenomenal amount of investors’ confidence. Quoting an international banking group, he said that the power sector companies have grown by 19% during 2006 as compared to 16% in2005.

Mr Sahi also released the ‘CII KPMG Report on India Energy Inc – Emerging Opportunities and Challenge’, which dwell about the rapidly growing Indian economy which requires an investment of around USD 120 to USD 150 billion over the next 5 years in the energy sector. It also highlights the key opportunities in the different sectors like coal, oil, gas, nuclear, hydro and renewable energy. On electricity, the report covers generation, transmission, distribution and trading.

Mr Sudhir Trehan chairman of India Energy Conclave & Energy Expo 2007 has highlighted the difference in return on investment between India and China. According to him, India offers 19.33% return on investment compared to 14.3% by China and this particular parameter indicates better investment opportunities in India compared to China.

Sponge iron price may fall a bit – Report

It is reported that following a demand fall, the prices of sponge iron may go down for a short period. According to industry experts, sponge iron prices will fall by around INR 300 a tonne next week as steel mills have started utilizing inventories. However, sponge iron is not likely to see any drastic price declines despite improvement in iron ore supply.

As per report, the sponge iron price have stagnated at INR 14,500 a tonne for 2 months as any hike may force steel mills to switch to shredded scrap.

Sponge iron for December 2007 delivery on MCX has declined by 1.8% or INR 300 recently despite traded volume reported as nil on the exchange platform. NCDEX has deferred displaying prices of sponge iron since December 2006 on account of lack of trader interest.

The operating margin for sponge iron producers has squeezed tremendously because of high iron ore price. The price of HR coil and other steel products is also on the rise. Hence, sponge iron producers would not like to cut prices heavily and end with losses. Therefore, the anticipated correction of INR 200 to 300 is not expected to exist for long.

As per report, India produced 16.28 million tonnes of DRI in 2006-07 of which gas based DRI manufacturers chipped in 5.27 million tonnes while coal based producers contributed 11.02 million tonnes.

Haldia Port strike may come to an end soon

As the strike at the Haldia Dock Complex continued for the 4th consecutive day, Mr TR Baalu union shipping minister said that Mr Buddhadeb Bhattacharjee chief minister of West Bengal has assured him that the strike will be lifted soon. Though official talks between workers’ union and Haldia dock management have not yielded any results, the negotiation process continued at an unofficial level.

Mr Rajeev Dubey deputy chairman of Kolkata Port Trust and Haldia Dock Corporation in charge said that “We are preparing a modified draft based on the last 3 days’ talks so that it is agreeable to both parties. The draft will probably be sent for the union’s consideration tonight. If the draft is agreed upon, workers are likely to resume work tomorrow.”

Mr Himangshu Das secretary of water transport workers’ federation of India said that “The strike is on. But it seems the management is ready to come to a consensus. They are going to send us a draft containing their response to our demands. If negotiations are finalized, then work will begin immediately.”

It is noted that Haldia dock workers went on an indefinite strike after the death of a loader in an accident. The port’s 4 unions, which called the strike, are demanding jobs for the next of kin of the employee and of 3 others who died in harness over the past few months. They also want better healthcare facilities.

Essar orders for 6 bulk carriers with STX (Dalian)

Essar Group recently announced that it would be investing around INR 1,536 crore (USD 390 million) for buying six new ships and that Essar Shipping Limited’s Cyprus registered Essar Shipping and Logistics has placed orders for six mini cape bulk carriers with a Chinese shipyard.

The order has been placed with STX (Dalian) Shipbuilding Co Ltd in China. The vessels with 103,000 DWT each are contracted for delivery between July 2011 and January 2012.

Essar envisages tremendous business potential for these vessels as many steel and power plants are being planned in Asia and South East Asia. The size of the vessels is suited to the potential requirements of these plants for transporting coal and iron ore.

Earlier in September 2007, Essar had placed an order with ABG Shipyard for six Supramax Bulk Carriers for USD 210 million, which are to be delivered between December 2009 and March 2011.

Essar Shipping and Logistics has a total fleet of 28 vessels with 1.5 million DWT, comprising of bulk carriers, capsize vessels, crude carriers, VLCC, tugs, DSV, product tanker, and dredgers.

Volvo and Eicher form a tie up for truck making in India

It is reported that world's No 2 truck maker Volvo plans to invest USD 350 million to expand in the fast growing Indian market through a joint venture with India's 3rd biggest truck maker Eicher Motors.

As per report, Volvo will buy 8.1% in Eicher Motors giving it 50% in the venture, which has not yet been named. Volvo will add its Indian truck sales business, valued at USD 75 million, and USD 275 million in cash to the venture. Eicher's commercial vehicle and components business will be transferred to the venture at an enterprise value of USD 506 million, and the two firms will combine their service and dealer networks for trucks in India. Volvo said that the agreement is expected to be completed before the middle of next year.

Mr Leif Johansson CEO of Volvo told a news conference that "What you really have to look at is the combination of buying into one of the world's quickest growing and largest markets. We came to the conclusion that the price is well justified given the growth opportunities and looking at the alternative costs and options that were there from our point of view."

Global truck makers are keen for a larger share of a market that is the world's 5th biggest and is forecast to expand with improving infrastructure and new emission and safety rules. Nissan Motor Co has firmed up ventures with Ashok Leyland for light trucks, engines and transmissions. Daimler, which recently began assembling some Actros trucks locally, is scheduled to announce a venture partner shortly.

Lanco terminates contract with BHEL for Nagarjuna project

It is reported that Lanco Group has terminated the engineering, procurement and construction contract with Bharat Heavy Electrical Limited for the 1,015 MW coal based Nagarjuna power project at Nandikur in Udipi district of Karnataka and instead it will be done with Lanco Infratech.

BHEL had won the INR 2,500 crore EPC contract against bids from a China machine building international group called China Non Metal Enterprises Group consortium.

Lanco Infratech has placed the orders for equipment with Chinese company Dongfang Electric Corporation. The original EPC order with BHEL was for 2 units of 507.5 MW each and now the equipment orders with Dongfang Electric Corporation are for generators of 2 units of 600 MW each. This implies that the capacity of Mangalore thermal project will now be 1,200 MW, instead of the originally estimated 1,015 MW.

Anti POSCO group stage demonstration in Jagatsinghpur

SNS reported that anti POSCO activists of Socialist Unity Centre of India has staged a mass demonstration in front of the collectorate in Jagatsinghpur in Orissa demanding cancellation of MoU between the state government and POSCO and the immediate arrest of those involved in the November 29th violence at Balitutha Bridge.

Socialist Unity Centre of India leaders expressed grave concern over the plight of villagers of Dhinkia and the alleged reign of terror that has been spread by hired goons as well as the police. They charged that people of Dhinkia are not coming out of the village fearing state repression as well as attack by hired goons.

Mr Pradipta Ram leader of Socialist Unity Centre of India said that they have sent relief materials to Dhinkia. He added that they submitted a memorandum to district collector.

L&T may tie up with Dolphin for shipbuilding project in TN

Larsen & Toubro, which has proposed to set up an INR 2,000 crore Greenfield shipbuilding yard in Tamil Nadu, has reportedly virtually struck a partnership deal with Dolphin Offshore for the purpose.

As per report, Dolphin Offshore and L&T have already had a round of talks on the issue and are now said to be going through various details of the project. The new shipyard is expected to have the facilities to manufacture big sized carriers, including tankers, for which demand is soaring.

Dolphin Offshore is a mid sized offshore drilling and maintenance company, which had posted a turnover of over INR 76 crore for April to September 2007 period. Dolphin Offshore has been seeking opportunities in the shipbuilding and rig repair sector. It had earlier bagged the mandate to build a shipyard in Jafrabad. This venture will also have the facilities to repair jack up rigs.

L&T is ramping up its shipbuilding and repair capability to take advantage of the booming demand for vessels.

NLC to acquire more land for Jayamkondam project

BL reported that Neyveli Lignite Corporation has sent a proposal for acquisition of additional lands for the Jayamkondam Lignite Power Project. It has sent the proposal to the special commissioner and commissioner of land administration of Chennai to acquire additional 8,979 hectares for the JLPP.

Official sources said that the current acquisition plan would be in addition to 4,023 hectares already taken over by the Tamil Nadu Industrial Development Corporation including 3,602 hectares of assigned land and the balance 421 hectares of land through alienation.

NLC has divided the lignite reserves in the area into 2 zones namely north block and the south block. The extent of acquisition has been estimated at 3,686 hectares in the north block and 5,293 hectares in the south block.

Mr P Vedagiri GM business development of NLC said that the annual mining capacity would be 13.5 million tonnes. A thermal station with 2x800 MW each has been planned to be set up in the north block and in the south block, one unit of 800 MW would be set up later. He added that the total project cost would be around INR 10,000 crores for the mine cut and the thermal station put together.

RINL staff union oppose divestment proposal

BS reported that employees’ unions of Rashtriya Ispat Nigam Limited are strongly opposing the move to privatize Visakhapatnam Steel Plant.

The report cited Mr Mantri Rajashaker general secretary of Visakha Steel Employees Congress as saying that “We welcome the proposal to allot 5% shares to VSP employees but at the same time we will not allow the management or the government to divest 20% shares to private parties.”

The report also quoted Mr V Dhana Raju president of Centre for Indian Trade Unions as saying that “Now because of the employees’ hard work and commitment, VSP has turned around. It has cleared all its debts and is earning profits every year. At this juncture, how can workers allow the disinvestment plans?”

RINL board had recently approved the proposal to divest 25% shares in RINL and has sent the same for center’s approval. Out of the 25%, the government has decided to allot 5% shares to the employees of RINL and the remaining 20% to private companies. Currently, the centre holds 100% stake in RINL. The divestment is expected to fetch the government INR 4,000 crore.

EIL to form JV with TATA Group for construction projects

It is reported that Engineers India Limited is likely to float a 50:50 JV with TATA Group for undertaking for engineering consultancy and construction projects in India and abroad.

As per report, Engineers India Limited has signed a MoU with TATA Projects for the purpose and is waiting for union petroleum ministry’s approval.

The proposed JV is expected to start with an authorized capital of INR 15 crore, out of which INR 10 crore will be paid up.

Engineers India Limited has nearly 14 strategic alliances with equipment and materials manufacturers besides technology developers. It also has 2 wholly owned subsidiaries called EIL Asia Pacific in Malaysia and Certification Engineers International for undertaking independent and third party inspection assignments.

AP to re invite tenders for Krishnapatnam power project

It is reported that Andhra Pradesh Power Development Corporation has cancelled the tendering process for the implementation of its 2X800 MW supercritical Krishnapatnam power project in Nellore district and has decided to re invite tenders due to poor response from the overseas power equipment suppliers.

It is learnt that, Bharat Heavy Electricals Limited was the only power equipment maker to bid for the project.

Andhra Pradesh Power Development Corporation has decided to issue 3 separate tenders for supply of the boiler, turbine and balance of the plan package, than from its earlier plans to award the turnkey contract to a single entity for the project.

The proposed INR 8,000 crore projects plan to use a mix of domestic and imported coal and have proposed to meet the cooling water requirement of the project from the nearby sea. The first and second unit of the project is scheduled for completion by May 2010 and November 2011 respectively.

Caparo seeks land to set up manufacturing units in AP

BS reported that Caparo group has recently made a formal request with the Andhra Pradesh government for allotment of about 1,500 acres of land to set up auto and aerospace component manufacturing units in Nellore district.

According to state government officials, Caparo is planning to invest up to INR 4,000 crore in the project along with facilitating other component manufacturers to set up shops in India. They added that the state industries department is currently processing the application for land and other facilities sought by Caparo.

The report cited a senior state government official as saying that Caparo's plan for establishing component manufacturing units in India was primarily driven by the offset clause, which is being introduced for all major Defence contracts awarded to overseas companies by the centre.

As per the clause, for each contract worth INR 300 crore and above, the overseas companies have to source supplies to the extent of 30% of the contract value from India. In the case of multi combat role aircraft, for which request for proposals were issued to six companies recently, it is as high as 50%.

Alternative model for deep sea port project in WB

Mr TR Baalu union shipping minister said that central government might be required to examine alternative model for inviting bids for the deep sea port project proposed to be implemented off West Bengal coast following poor response from the consultants. Mr Baalu said that “The expression of interest could not be converted into request for qualifications due to the lack of interest.”

He added that however, a meeting would be held on December 20th 2007 in the ministry with those showing EoIs.

He declined to give the details of the alternative model, except saying that it could be design, finance, build, operate and transfer instead of the build, operate and transfer as earlier planned. He said “We are still in the process of examining what could be the best alternative model.”

WB to provide land for shipyard at Sagar Island

Mr TR Baalu union shipping minister said the issue of land acquisition for the proposed ship building yard at Sagar Island too came up during his discussion with the chief minister of West Bengal recently.

Mr Baalu said “The chief minister has assured me that the land will be made available for the proposed shipyard which will be implemented on public private partnerships basis.”

The total investments in this project are pegged at INR 1500 crores.

He also informed that the first phase of the proposed dedicated container terminal at Diamond Harbor should be ready for operation by 2011-12. The estimated cost of the project, to be completed with 3 berths and 2 barge jetties, is INR 500 crore. In the second phase, 2 more berths would be added at an estimated cost of INR 250 crore.

BHP bid for Rio - Rio asks UK Panel to set deadline

Reuters reported that Rio Tinto has challenged BHP Billiton on Tuesday to make a formal bid to create a mega mining house or walk away. Rio's request follows weeks of speculation that a number of other suitors were readying offers, though none has emerged. But some analysts believe Rio Tinto could be preparing to cut a deal with its rival.

As per report, Rio asked Britain's Takeover Panel to set a deadline under a put up or shut up rule by which BHPB would have to formalize its approach, more than a month after BHP's USD 140 billion 3 for 1 share proposal was made public.

In a statement to the Australian Securities Exchange on Tuesday, Rio Tinto said it is seeking a ruling from Britain's Takeover Panel Executive to force BHP to declare its intentions. It said "Such a ruling, if made, would set a deadline by which BHP Billiton must, unless the Takeover Panel Executive consents otherwise, either announce a firm intention to make an offer for Rio Tinto PLC or announce that it does not intend to make an offer.”

Under Britain's corporate takeover regulations, once a proposal has been initiated, the target company can ask the panel to set a deadline for the bidder to formalize its intentions. If this "put up or shut up" rule is triggered, BHP would need to either make a firm offer within a designated period typically 1 month to 2 month or withdraw for at least six months before coming back with a firm bid or proposed offer.

BHP Billiton refused to comment on the move, saying it is a matter for the takeovers panel. Ms Samantha Evans spokeswoman of BHPB said "But we remain of the view that the proposal is compelling and logical and we'd still like Rio Tinto to engage with us.”

Rio has rejected BHP's overture, which it received in the form of letter, as out of the ballpark and has declined to meet BHP face to face to discuss a merger. Mr Tom Albanese CEO of Rio late last week called BHP's proposal dead in the water and said other companies were calling, though Rio had not been responsive.

US ITC to conduct sunset review on wire rod imports

The US International Trade Commission has voted to conduct full five year sunset reviews concerning the countervailing duty order on carbon and certain alloy steel wire rod from Brazil and antidumping duty orders on wire rod from Brazil, Canada, Indonesia, Mexico, Moldova, Trinidad and Tobago, and Ukraine.

With respect to Canada and Moldova, all six Commissioners found that both the domestic group response and the respondent group responses were adequate and voted for full reviews. With respect to Brazil, Indonesia, Mexico, Trinidad and Tobago, and Ukraine, all six Commissioners found that the domestic group response was adequate and the respondent group response was inadequate, but that circumstances warranted full reviews.

As a result of vote, the Commission will conduct full reviews to determine whether revocation of these orders would be likely to lead to continuation or recurrence of material injury within a reasonably foreseeable time.

ArcelorMittal acquires MT Majdalani Y Cia SA in Argentina

ArcelorMittal has announced its acquisition of leading stainless steel service center and distributor MT Majdalani Y Cia SA in Argentina. The transaction is being reviewed by the competition authorities.

MT Majdalani Y Cia SA was founded in 1941 and until now entirely owned by the Majdalani family, employs 75 people in one site located in Buenos Aires.

It sold about 12,000 tonnes in 2006 with a turnover of USD 46 million. It specializes in flat stainless steel products with cut to length and slitting facility. Its sales of sheets and tubes create a highly complementary product mix and activity which is aligned with ArcelorMittal's stainless steel activities in South America.

As per release “Highly oriented towards its end users, MT Majdalani y Cia SA is an efficient company with strongly motivated personnel which integrates perfectly within ArcelorMittal's growth plan.”

Iron ore price negotiations - Vale expects prolonged talks

It is reported that the world’s largest iron ore producer Valeexpects lengthy negotiations this year with Chinese steelmakers after spot prices rose to twice the long term contract price.

Mr Roger Agnelli CEO of Vale said that “The difference between spot and contract prices means talks will probably be prolonged.''

Mr Jose Carlos Martins head of Vale's iron ore division said that the spot price of iron ore, excluding transportation is about USD 100 per metric tonne compared with USD 50 per tonne in the 2007 supply contracts.

Mr Martins said switching to market based prices for iron ore would create more price swings in the market. He said that “Our strategy is aimed at reducing volatility in the market. We have a greater responsibility than those companies that only export to China.''

ArcelorMittal to restructure Canadian operations

ArcelorMittal announced plans to build a USD 380 million beam mill in Contrecoeur and the restructuring of its steel production activities in Canada. Flat carbon production will be consolidated in Hamilton Dofasco Facility and long carbon production in Contrecoeur ArcelorMittal Montreal.

With this restructuring, the Contrecoeur site will close down its hot mill operations on January 31st 2008 and its cold mill operations on February 29th 2008. More than 450 employees will be eligible for retirement at the Contrecoeur site in 2008 and over 250 of them have already confirmed that they will retire.

Mr Jos Jacqué CEO Long Carbon North America of ArcelorMittal said that "ArcelorMittal wants to develop a sustainable Canadian steel business. With the former Dofasco facility now part of ArcelorMittal in Hamilton, it does not make business sense to have Contrecoeur compete with a sister company in the flat carbon segment while Dofasco has unused capacity."

He stated that factors cited are the exchange rate, the cost of metallics and significant increases in iron ore and natural gas prices. In addition, Contrecoeur equipment and facilities are less competitive in today's market.

In addition, ArcelorMittal has confirmed its intention to invest in an 800,000 ton state of the art beam mill in Contrecoeur, subject to appropriate agreements. The support of the Québec government has been a determining factor in the company's decision. Once constructed, the new beam mill will employ 200 full time employees and could begin production as early as 2010.

BHP bid for Rio - Blackstone denies rumor

Leading US private equity firm Blackstone has denied a report in the London Daily Telegraph that it is planning to put together a consortium to make a bid for Australian diversified mining giant Rio Tinto.

The consortium is rumored to include a Chinese sovereign wealth fund. The Telegraph suggests lawyers are in place, and that bankers and PR firms have been approached. It also suggested that Blackstone will look to break up the miner after acquisition, going as far as to sell the recently acquired aluminum producer Alcan and, most significantly, looking to sell off Rio's iron ore assets.

Fitch sees further steel consolidation in 2008

Credit rating agency Fitch Ratings forecast further consolidation in the steel industry next year, as producers look to expand geographically and gain increased access to raw materials, but it also said that pricing pressures should surface.

Fitch said that International emerging market demand for steel is currently offsetting weakness in the United States and prices should rise across most markets in 2008. it added that however, excess production and high raw materials costs could pressure some producers' profit.

Fitch expects steel prices to rise by an average of USD 30 to USD 50 per tonne or about half of what would be needed to counter increased costs and competition from global markets.

Fitch rates the industry as "Stable."

Vallourec finalizes the sale of VPS and VCAV

World leader in the production of seamless steel tubes Vallourec announced that it finalized the sale of Vallourec Précision Soudage and Vallourec Composants Automobiles Vitry to ArcelorMittal as all the conditions necessary for completion of the transaction has been fulfilled after signing of preliminary agreement on July 20th 2007.

Vallourec Précision Soudage is specialized in the production of welded precision tubes for the automotive industry suspension and body in white components, car seats and cold drawn products. Its annual sales are around EUR 100 million.

Vallourec Composants Automobiles Vitry is specialized in chassis functions and passive safety solutions. Its annual sales are around EUR 45 million.

The combination of Vallourec Précision Soudage and Vallourec Composants Automobiles Vitry with ArcelorMittal will enable both of these companies to benefit from the strong presence of ArcelorMittal within the European automotive industry and secure their future development.

Vallourec is a world leader in the production of seamless steel tubes destined primarily for the oil and gas and power generation sectors, and other industrial applications.

Indonesian HRC and plate output forecast to decline

ANTARA reported that Indonesia's production of four types of steel products is estimated to decline by 0.6% to 21.2% YoY in 2007 as compared with 2006.

1. Light iron profile is forecast to fall by 4.4% to 1.744 million tonnes
2. Hot rolled coil by 0.06% to 1.657 million tonnes
3. Steel plate by 14.5% to 729,673 tonnes
4. Steel pipes by 21.2% to 642832 tonnes.

Steel makers have attributed the decline to large imports of cheap steel products from China causing problems for the domestic industry.

An increase, however, is predicted for slab production from 1.29 million tonnes to 1.34 million tonnes and production of steel wire from 834,070 tonnes to 919,562 tonnes.

CSC revenue up by 10.9% YoY in November

It is reported that Taiwan’s China Steel Corp November 2007, revenue has dropped by 1.07% MoM to TWD 18.24 billion from last month, but this amount has increased by 10.9% YoY as compared to November 2006.

China Steel Corp said that in January to November 2007 period its revenue totaled TWD 188.94 billion up by 17.11% YoY. The sales volume of November totaled 900,000 tonnes, as the volume was 679,500 tonnes for the domestic market and 220,400 for exporting.

That anticipation of CSC’s revenue in December will exceed TWD 18 billion and the total in whole 2007 will touch TWD 207 billion because the domestic and export prices have raised again in the fourth quarter.

Heidtman Steel to expand facility next to SDI in Indiana

Privately held US steel processor Heidtman Steel Products plans to expand operations at its facility at Butler in Indiana. The announcement was made last week in conjunction with The Indiana Economic Development Corporation.

Heidtman Steel will invest approximately USD 13.5 million to build and equip a 120,000 square foot addition to its existing operations. The project includes space for a new multi stamping, blanking and steel slitting operation.

Mr Scott Carter general manager of operations for Heidtman in a statement said that "The demand for our steel products continues to grow. This expansion allows us to upgrade our technology and meet the needs of the market."

The Heidtman facility in Butler is situated adjacent to the operations of steelmaker Steel Dynamics. It operates 15 processing locations and services customers primarily in the automotive, trailer manufacturing, metal buildings and white goods sectors.

WorldAutoSteel launches 'Future Steel Vehicle'

The International Iron and Steel Institute's automotive group, WorldAutoSteel announced the Future Steel Vehicle project at the United Nations Framework Convention on Climate Change conference in Bali.

Future Steel Vehicle will develop steel auto body concepts that address alternative power trains, such as advanced hybrid, electric and fuel cell systems. The goal of the research is the demonstration of safe, lightweight steel bodies for future vehicles that reduce GHG emissions over the entire life cycle.

Mr Ian Christmas secretary general of International Iron and Steel Institute said that "From a total vehicle cradle to grave life cycle perspective, steel is the most effective material for reduced greenhouse gas emissions. With this project, we will develop concepts that should help automakers reduce GHG emissions over the entire vehicle life."

Mr Edward Opbroek director of WorldAutoSteel said that “These previous research projects revolutionized the kinds of steels normally applied to auto bodies, as well as demonstrated innovative steel vehicle designs. The application of these research findings is seen globally in many vehicles on the road today. We expect the Future Steel Vehicle project to stimulate the same development in upcoming alternative vehicles."

Future Steel Vehicle is the fifth in a series of auto steel research projects. The previous four, representing over USD 60 million in industry investment by the world's sheet steel producers, were undertaken over the last decade to demonstrate the application of new steel grades, design techniques and manufacturing technologies for light vehicle structures. The UltraLight Steel Auto Body, UltraLight Steel Auto Closures and UltraLight Steel Auto Suspensions projects each illustrated advanced high-strength steel in high volume steel applications that significantly reduced vehicle weight while improving safety and performance and maintaining manufacturing affordability.

WorldAutoSteel, the automotive group of the International Iron and Steel Institute, continually explores steel innovation that demonstrates and communicates the value of steel in automobiles to industry and society. Its worldwide member companies pool global resources within and beyond the steel industry to deliver vital research that is central to effective steel automobile applications.

US weekly crude steel production up by 19%YoY

American Iron & Steel Industries reported that in the week ending December 8th 2007, US’s raw steel production was 2.064 million net tons while the capability utilization rate was 86.5%. Production was 1.733 million net tons in the week ending December 8th 2006 while the capability utilization then was 75%. The current week production represents 19% YoY increase from the same period in 2006.

Production for the week ending December 8th 2007 is up by 1.9% from the previous week ending December 1st 2007 when production was 2.024 million net tons and the rate of capability utilization was 84.9%.

Adjusted YTD production through December 1st 2007 was 100.294 million net tons at a capability utilization rate of 86%. That is a 2.6% YoY decrease from the 103.054 million net tons during the same period 2006 when the capability utilization rate was 87.5%.

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

POSCO to export 2 million tonnes of steel to Japan

YIEH reported that South Korean POSCO is expected to export 2 million tonnes of steel products to Japan.

It said that although the thick plate and hot rolled plates export volumes substantially reduced, but cold rolled plate, pickling plate and coated plate export volume increase, which leads South Korea increase exports to Japan.

It also expected that the export volume of next year will increase by 500,000 tons compared to this year.

Japanese steelmakers targeting increase in CR export prices

YIEH reported that Japanese steelmakers are targeting an increase of USD 50 per tonne for the export price of cold rolled coil to Asia’s markets.

The price rise is in response to soaring costs of raw materials. And they are expecting to raise the prices higher for the second quarter.

South Korea’s domestic price is remained below the USD 700 per tonne and they are seeking the same level for exporting price next year.

China’s Baosteel has also increased the price of cold rolled coil for next first quarter by CNY 500 per tonne next year and Whuan Steel will also raise by CNY 200 per tonne.

Rautaruukki to supply steel structures for the Mälkiä canal bridge in Finland

Rautaruukki has signed a contract agreement with the project consortium TYL Vt6 for supplying steel structures for the Mälkiä Bridge over the Saimaa canal at Lappeenranta in Finland.

The 315 meter long bridge is part of the development project for the stretch of motorway between Lappeenranta and Imatra, which began in autumn 2007 and will be completed at the end of 2010.

Ruukki is supplying steel pipe piles fitted with rock shoes for the foundations of the bridge, as well as supplying and installing surface treated steel structures for the bridge itself. The contract is worth around EUR 4 million to Ruukki.

Mr Jaakko Kivi from Lemcon Ltd said that “The construction of two new bridges at Mälkiä spanning the Saimaa canal is the greatest scheduling challenge in the whole highway 6 Kärki–Mattila–Muukko project. The aim of the bridge solutions chosen is to minimize construction times while ensuring that traffic beneath the bridge on the Saimaa canal continues undisturbed. The ‘TYL Vt6’ consortium got in touch with Ruukki during the early stages of tendering, and the final plan was fine tuned jointly by TYL Vt6, Ruukki and the engineering consultant Sito.”

Mr Sami Eronen head of infrastructure construction at Ruukki Construction said that “The requirements of traffic on the Saimaa canal, the need to minimize the environmental impact and the especially demanding construction schedule were all conducive to selecting the eventual solution. Successful co operation in the planning and tendering stages with the designers and contractors for the bridge has led to a competitive outcome.”

In addition to bridge structures and steel piling, Ruukki supplies infrastructure construction projects with noise barriers and guard rail systems.

New Welded Steel Pipe manual released in US

The American Iron and Steel Institute and the Steel Tank Institute & Steel Plate Fabricators Association announced that they have jointly published a steel pipe design manual titled “Welded Steel Pipe - Revised Edition 2007”. The manual focuses on the design of steel pipe up to 240 inches in diameter under either internal or external pressure.

Welded Steel Pipe Revised Edition 2007 offers a broad range of analysis on issues such as handling, installation, ring deflection, performance limits, soil mechanics, external loads and coatings and couplings, among other topics. It also includes insight and expertise from several leaders within the steel water pipe industry.

Targeted at consulting engineers and private & municipal water utility employees, the manual includes technical background and equations that address design issues for water transmission lines and distribution systems that employ welded steel pipe.

Mr Wayne Geyer executive VP of STI/SPFA said that “Welded Steel Pipe Revised Edition 2007 incorporates the latest advances in addressing the full range of issues important to pipe specifiers and, in particular, the many ways that steel provides unparalleled, long lasting service in large diameter applications.”

Mr Delbert F Boring PE vice president of Construction Market Development of AISI said that “The new manual meets a critical need in addressing the complex infrastructure issues in the United States. As design engineers and pipe specifiers look for viable solutions to the nation’s water transmission and distribution challenges, this design manual provides a wealth of information on large diameter steel pipe solutions. We’re pleased to be releasing this manual in cooperation with STI/SPFA, an important partner in our Construction Market program.”

STI/SPFA was formed in February 2004 when the Steel Tank Institute and the Steel Plate Fabricators Association combined operations.

Resident stage 40 day fast to protest against steel plant

Trinidad Times reported that residents of Pranz Gardens on Friday observed the fifth of a 40 day fast outside the National Energy Corporation building Couva to continue their protest of the construction of a steel plant in the area.

As per report, about 15 placard waving residents sang "We don't want a steel plant here" and pledged to continue the fast until they are heard. They distributed fliers describing the negative effects of the steel plant.”

The report cited Mr Ryan Sant a resident of Savonetta as saying that "The steel plant is a very dirty industry, but we are standing up for our lives and the lives of our children. If it is so safe why do they want to relocate us?"

The report quoted Mr Prem Singh HR manager of Essar as saying that "Plans for the steel plant are going good." He added that the company would be offering employment opportunities to residents and assured them that Essar had met all the regulations from the Environmental Management Authority and the plant is very safe and plans to go on stream.

Japanese scrap export dips in 2007

JMB reported that Japanese ferrous scrap export is expected to decease by around 1 million tonnes to 6.6 million tonnes in 2007 from 2006.

The report added that the exports have decreases as Taiwanese buyers shifted from break bulk to containerized shipments from global sources making Japanese scrap price relatively higher.

Moody paces Claymont Steel ratings on review

Moody's Investors Service said it has placed Claymont Steel Inc's ratings under review for possible upgrade after the announcement that Evraz Group SA, through its subsidiary Titan Acquisition Sub Inc, has agreed to buy Claymont for USD 23.5 per share for an aggregate price of about USD 565 million including debt.

Moody's Investors said that it placed on review include the custom steel plate maker's 'B2' corporate family rating, 'B2' probability of default rating and USD 105 million of 8.875% senior unsecured notes due 2015 rated 'B3'. The company's SGL-1 speculative grade rating was affirmed.

Moody's said its review will focus on the legal structure and financing arrangements for the acquisition and the strategic fit of the two companies. It added that if Claymont's debt is retired as a result of the transaction its ratings will be withdrawn.

Mangels secures USD 30 million loan to fund expansions

BNamericas reported that Brazilian metal parts producer Mangels has secured a USD 30 million loan from Dutch institution Financierings Maatschappij voor Ontwikkelingslanden.

The loan was agreed at a rate of LIBOR plus 2.5% per year. Mangels will pay biannually starting from June 15th 2011 and ending December 15th 2016.

Mangels will use the funds to finance its growth portfolio. The company aims to increase its aluminum wheel production from 1.7 million units per year to 2.3 million in 2008 after expansions at its operation in Minas Gerais.

Sandvik appoints Mr Larson as head of human resource

Sweden based Sandvik announced that Mr Peter Larson has been appointed head of human resources for the Sandvik Group effective immediately.

Mr Peter Larson has been executive vice president and a member of the group executive management since May 2000. As head of human resources, he will succeed Mr Carina Malmgren Heander who has taken up a position outside Sandvik.

Mr Lars Pettersson president & CEO of Sandvik said that “HR matters have the highest priority within the Group and comprise a strategically important and integrated part of business operations. Mr Peter has extensive experience within Sandvik and his solid knowledge of the organization and the people within it will be important qualities in the continued development of the organization, management and corporate culture.”

Western Canadian Coal completes CAD 40 million financing

Western Canadian Coal Corp announced that it has completed the final CAD 10 million of the oversubscribed CAD 40 million private placements of Convertible Debentures with a group of investors.

The Debentures issued by way of private placement are unsecured, will bear interest at 8.5% per annum, payable semi annually beginning May 31st 2008, and will mature November 30th 2010. The Debentures are convertible into common shares of the Company at any time prior to their maturity at a conversion price of CAD 0.75 per share. The Debentures are not redeemable by Western prior to their maturity. The issuance of the Debentures has been approved by the Toronto Stock Exchange.

Proceeds of the issue along with the previously completed CAD 30 million private placements announced on December 3rd 2007 will be used for working capital requirements at the Company’s Wolverine coal mine, for general corporate purposes and to reduce the current level of the principal and interest due under its existing bank debt. The bank debt will be reduced from CAD 35 million to CAD 27.5 million. The Company has also renegotiated covenants in their lending agreements to ensure compliance going forward.

Comprehensive report on Indian steel sector

The Indian steel industry is poised for massive expansion. Dramatic consumption growth over the last few years has stimulated enormous expansion plan, facilitated by unexploited iron ore raw material base. India is now being hailed as the new China, where crude steel production soared from less than 100 million tones in 1995 to over 400 million tones in 2006.

Indian crude steel output at just 38million tonnes in 2005 is starting from a much lower base, and the economic steel- consuming structure of China is substantially different from India. Nevertheless, India has recently established a long-term goal of raising crude steel production to 100 million tonnes per annum by 2020.

UK based GFMS Metals Consulting in an innovative way and value for money report on Indian steel industry includes complete statistical coverage of the industry, an unbiased and frank assessment of growth expectations, a base case outlook for each steel product & the industry as a whole with a clear view of potential risks, an assessment of raw material availability and trends and production, trade and consumption forecasts out to 2011.

The report coverage includes historic production, trade & apparent consumption of carbon steel both long and flat products, raw materials, producers, economic environment, political and other risk factors.

If you are interested to know more about it please visit GFMS Indian Steel Report or send a mail at reports@steelguru.com

Kardemir to increase production to 2 million tonnes – Report

According to a report, Turkish steel producer Kardemir will finalize its investments regarding an increase in its annual production capacity in the next 3 months.

Accordingly, Kardemir’s liquid steel capacity will reach 2 million tonnes per annum from 1 million tonne per annum currently.

DGCX update on rebar futures

Mr Ahmed Bin Sulayem chairman of DGCX, while commenting recently on the growing popularity of the contract said that "The DGCX Steel Rebar Futures contract firmly reflects our drive to develop the regional commodity derivatives market. Since its launch, steel rebar futures has evoked positive response from the steel community, traders and investors alike. This is a solid indication of the effectiveness of the contract and the value it brings to the steel trade in the region."

Mr John Short executive director of Dubai Multi Commodities Centre said that "The DGCX Steel Rebar Futures price is proving to be an accurate indicator for prices of regional rebar as well as correlated steel. This is its key early success. In the last 18 months the steel community has endured a series of vicious price swings, we are in another right now. Yet the steel market and its financial providers have not had the tools to manage the risks associated with these volatile prices. It is still very early days for our contract, but is fast gaining the favor of investors and steel traders. Last week's trade reaffirms the increasing investor confidence in the DGCX Steel Rebar Futures contract."

Mr Short said that trade in steel rebar futures was cautious initially as participants assessed its efficacy and got accustomed to screen trading of the world's first international exchange traded contract. Daily trade picked up from a modest 50 lots per day during the first week of launch reaching almost 300 lots on December 6th 2007.

The DGCX Steel Rebar Futures Contract was launched with the aim of providing a cost effective tool to traders and the steel community for hedging price risk. It also provides valuable data to participants in the physical market, bringing transparency to the forward market for steel. The exchange has stepped up awareness through road shows and seminars to detail its benefits and modalities to investors.

EIIC begins construction of wire and cable factory in Algeria

Emirates International Investment Company has announced the construction of a third wire and cable factory at Algiers in Algeria with an investment of AED 350 million as a part of its expansion plan. The factory is expected to complete in 2009.

The new factory’s product range will include low, medium and high voltage cables in copper and aluminum that adhere to best international standards.

Mr Omar Younis GM of Electrocab said that “The factory is to meet the increasing demand for power and building wire cables in the Algerian and Western Arab markets. The Algerian wire and cable factory is a direct result of the success of the Abu Dhabi facility, which has also led us to construct the magnet wire factory in Industrial City, Abu Dhabi as well.”

Saudi Arabs budget focusing on infrastructure development

Arab News reported that Saudi Arabia’s budget for the 2008 fiscal year was endorsed by the council of ministers on December 10th 2007. It maintains the focus on enhancing infrastructure and as usual is based on a prudent oil price assumption.

The highlights of the budget are

1) A projected SAR 40 billion budget surplus for 2008, based on revenues of SAR 450 billion and spending of SAR 410 billion. Defense and security, education and health care remain the main focus of government spending. Capital spending grows at a faster rate than current spending, reflecting the official policy of enhancing infrastructure.

2) A budget surplus of SAR 178.5 billion in 2007, with revenues at SAR 621.5 billion and expenditure at SAR 443 billion. This was well above the surplus of SAR 20 billion projected in the budget because of substantially higher than budgeted oil revenues. Spending exceeded its target by SAR 63 billion, broadly in line with the historical level of overspending. Spending was up only by 13% on the 2006 level.

3) Restraining the growth in government spending is important to tackling inflation. Given the run up in costs associated with capital spending, spending growth of 13% underscores the government’s seriousness in controlling inflation.

4) Preliminary data indicates that 2007 was another year of strong economic performance. Real GDP growth slowed to 3.5%, which we believe was the result of lower oil production.

5) Non oil sectors recorded robust growth, with total private sector GDP climbing by 5.9%. Non oil exports jumped by 24.9% and the current account surplus remained very high at USD 92 billion.

6) Inflation rate is put at 3.1% for the year, but this is inconsistent with the monthly data, which puts the average for the first 10 months of the year at 3.7%.

Saudi officials said that the budget once again appears to be based on a conservative oil revenue assumption. We think that oil production of 9.1 million barrels per day at a price for Saudi oil of USD 45 per barrel is consistent with the oil revenue projection in the budget. As Jadwa expects Saudi oil to average USD 72 per barrel during 2008, it forecast a budget surplus of SAR 187 billion, well in excess of the budgeted figure, even though spending is likely to exceed its target.

Iran to export electricity to UAE via undersea network

Mr Mohammad Ahmadian Iran's deputy energy minister said that Iran is planning to export electricity to the United Arab Emirates via undersea power transmission network.

Mr Ahmadian said that "UAE is willing to connect its power transmission network with that of Iran and purchase electricity from Tehran. Iran and the UAE will jointly fund a project for laying undersea cables in the Persian Gulf."

He said that Iran is currently negotiating with neighboring states, including Pakistan and Afghanistan, to boost power exchanges with them. He added that Pakistan has asked to increase its electricity imports from Iran by up to 1,000 MW, while Afghanistan has demanded construction of a new power transmission line.

Europe Persian Gulf rail link to begin by 2008 end - Report

Fars News Agency reported that operations to connect Europe by rail to the Persian Gulf via Iran are to begin by the end of 2008 by using the latest railroad technology.

Mr Hossein Tehrani executive director of Iran's railroad infrastructure projects said that "The project for connecting Iran's rail system to Europe had been designed years ago but its implementation had been delayed due to inaction on the part of Turkmenistan to make it operational.”

He added that the order to start work on the preliminary studies for the implementation of the Iranian portion of the project was immediately issued following the signing on October 16th 2007 of the tripartite agreement with Turkmenistan and Kazakhstan. He said "Construction work on the project inside Iran is set to be launched by early 2009."

The north south railroad, also known as the “Intercontinental Railroad”, is expected to serve as an important transportation link between Europe, Central Asia and the Persian Gulf via Russia and Iran. Out of the 650 kilometer length of the railroad, which is scheduled to be completed in 2011, 140 kilometer will run through Kazakhstan, 420 kilometer will be in Turkmenistan and 90 kilometer will be laid in Iran.

Turkish economy in Q3 up by 2% YoY

Turkish Statistics Institute recently said that Turkey’s economy has grown up by 2% YoY during the third quarter of 2007 from third quarter of 2006.

The institute said that Turkey’s GNP has increased by 4% YoY in January to September 2007 period as compare to the same period last year. In 2006, Turkey achieved 6% growth in GNP for the whole year as above the official forecast of 5%.

The institute added that gross domestic product has rose by 1.5% in the third quarter of 2007.

Qatar needs USD 70 billion to finance projects - Report

Business Reporter quoted Mr Yousef Hussain Kamal finance minister of Qatar as saying that Qatar’s projects under bidding or in pipeline will require finance in excess of USD 70 billion of which USD 55 billion will come through syndications and USD 15 billion in bonds.

Mr Kamal said that Qatar has projects worth over USD 70 billion being planned or under bidding, with a further USD 72 billion worth of projects either under way or just completed.

He added that in 2006 the size of the debt market in the GCC region almost trebled. He said that the growth in the bond market had been one of the key features of 2006 during which GCC companies issued USD 18 billion worth of bonds, an amount which rating agency Moody’s expects to almost double in 2007. The sectors driving these issues are energy, financial institutions, real estate and telecommunications.

Mr Kamal said that “In the latter half of 2007 we have seen considerable momentum for quality names such as the Qatar Investment Authority’s debut USD 3 billion loan syndication, notwithstanding the challenges in the wake of the credit crunch. It is clear therefore that what is essential to Gulf institutions, given the huge ongoing capital requirements of the region, is that our reputation as reliable borrowers has to be second to none. Recent trends show GCC countries, Qatar in particular, remains strongly attractive to investors and we welcome the continued support shown to well structured, high credit quality transactions.”

He further added that “Our aim is to deepen and widen the use of debt capital markets by encouraging innovation as well as scale in Qatar. We hope with the increased attention Qatar has attracted through the QFC and other initiatives, you are able to gauge for yourselves the need and opportunity to provide innovation and access to both new investors to Qatar and new opportunities here.”

Pakistan’s oil and gas output maintains upward trend

Business Recorder reported that Pakistan’s oil and gas production has maintained upward trend in July to November 2007 period, posting a growth of 4.5% YoY as against the corresponding period of last year.

As per recent data released by Pakistan Petroleum Information Services, Pakistan’s oil production has enhanced cumulatively to 693000 barrels of oil equivalent per day in July to November 2007 period. Local gas production in the period stood at 3.9 billion cubic feet per day as against 3.7 billion cubic feet per day produced during the same period last year.

The growth is mainly attributed to 9.9% and 3.9% increase in oil and gas production, respectively. This healthy growth in gas production came about despite decline in production from mature fields, somewhat offsetting impact of the production growth from new fields.

Similarly, oil production stood at 717,000 barrels per day in the period as compared to 652,000 barrels per day last year. This rise in production was mainly due to commencement of production from Mela 1 and increased oil production from Bobi, Tando Alam, Makori, Adhi, and Mela fields. Growth in gas production was mainly led by Qadirpur, Dakhni, and Kandhkot fields.

Chinese billet prices continue to surge

Billet prices are still on the rise in China and there is no sign of pause in the short term. This wave of rise from CNY 3100 per tonne in Middle of 2007 is mainly driven by ever increase in input cost and robust demand from re rollers.

In Tangshan, Q235 grade 150mm billet price have reached CNY 4250 per tonne, 20MnSi grade 150mm CNY 4400 per tonne up by CNY 100 per tonne last week. While Jiangsu market has witnessed a robust increase of CNY 120 per tonne as Q235 billet prices have jumped to CNY 4350 per tonne levels.

The efforts to protect environment by washing out obsolete capacity have put strain on billet output. At the same time, hungry construction steel producers are trying their best to secure supply of semi products. And such market situation is believed to be bolster transaction at ever updated levels.

Billet exports are diminishing and probably would stop in 2008 due to further rise in export tariff.

Chinese coking coal contract price surge by 30%

Shanghai Securities News reported that Shanxi Xishan Coal & Electricity Power Co Ltd has finished signing of the key coking coal contracts for 2008 with an over 20% hike in the price. Coking coal is completely free for pricing unlike thermal coal and follows market dynamics in China. However, the prices for thermal coal are yet to be decided between Shenhua Group and the five big electricity blocs.

Under the 2008 coking coal contracts, the prices will subject to quality of the material. The price was raised by 20% to 30% from December 1st 2007 as compared to November price levels. Prime coking coal prices are reported to have increased by about 25%.

Coking coal prices increased several times in 2007 due to policy changes and tight availability on the market. Next year, the major policy factor will rest with resource tax. Based on reports, the resource tax is expected to lift to 3%, and if coking clean coal stands at CNY 750 per tonne the tax should be CNY 22.5 per tonne up by CNY 6 per tonne.

Pig iron market in North China firm amid tight supply

It is reported that pig iron prices are on a high track with tight supply in North China. EXW price in Handan and Xingtai have reached CNY 3550 per tonne to CNY 3600 per tonne, generally flat with purchase prices, purchase price in Shandong stands at over CNY 3600 per tonne and in Tangshan at CNY 3500 per tonne to CNY 3550 per tonne.

As per report tight pig iron supply will continue as pig iron manufacturers are facing cost pressures due to higher raw material and energy prices. As cost for major crude fuel hits CNY 2750 per tonne including some other costs, production cost perches over CNY 3100 per tonne. But pig iron manufacturers, who possess coke resources and contracted imported iron ore, can enjoy much lower costs.

In addition, some small iron makers have suspended production as they are not able to get quality raw materials, even at higher prices. As per reports the situation is unlikely to improve and their closure will further tighten the supply side of pig iron market.

Against such a backdrop, pig iron price will rise further in a short term with limited advances.

Anyang reached 10 million tonne capacity after commissioning of new converter

It is reported that Henan Province based steelmaker Anyang Iron & Steel has put its converter No 3 of 150 tonne capacity in operation thus making its annual crude steel capacity cross 10 million tonne mark.

Converter No 3, which is similar to No 1 & No2 converters in automation levels, can produce over 60 varieties of 11 series of high grade steels like pipeline steel, high strength steel and bridge steel etc.

Mr Wang Ziliang Chairman of Anyang Iron & Steel said that “Anyang Iron & Steel has initialed a campaign to eliminate backward steel capacity and meanwhile began building the three modern 150 tonnes converters since 2003. The three converters are set to add close to 2 million tonnes steel and bring our actual capacity up to 10 million tonnes.”

Chinese H beam prices likely to surge in 2008

It is reported that Chinese price level of H beam will increase in December 2007 driven by hike in semis prices and it is predicted that the price level will be much higher in 2008 than 2007.

China entered the 10th year of producing H beam in large scale from several hundred tonnes per months to over 600,000 tonnes per month nowadays.

Within this year and next year some product lines will be put into production and it is estimated that Chinese H beam production capacity will reach 15 million tonnes next year and will reach 20 million tonnes in 2010.

Construction starts on EG project in Hebei Province

It is reported that recently construction started for setting up a fingerprint proof and hexavalent chrome free elctro galvanized steel facility Chengan county of Hebei Province of China started.

The project is being set up at a total investment of CNY 240 million including fixed asset investment of CNY 200 million. When complete it is expected to yield CNY 1.3 billion revenue in production value per year.

EG products are widely used for production for home appliances such as microwave oven, computer and refrigerator, automobiles components and machines.

Chinese electrical steel market upbeat for 2208

It is reported that electrical steel market in China, which although follows the trend of the overall steel market trends, has remained stable as the price hike has been small as compared to garden variety products like rebars etc.

Mr Yue Lianyuan GM of Shanghai Xiongxiang Trade Co Ltd said that “As production and demand of silicon steel are not as huge as other steel products its price fluctuations are also less.”

Mr Yue said “The silicon steel market will keep on the situation of this year but is set to be upbeat in general and would see price upswings. Like other steel products, the silicon steel will bear increasing cost next year with the raw materials' price continue escalating.”

He said that “Since the next year's steel market will go stronger amid price rises, given CNY 1000 per tonne to CNY 1200 per tonne hike for other steel products, the silicon steel price is estimated to gain some CNY 500 per tonne to CNY 600 per tonne.”

He added that “In perspective of supply and demand, the severe shortage of silicon steel is eased up at home with installation of production lines during these years. And the problem is only undersupply of certain grades or specifications in some time and regions, which suggests next year's silicon steel market to take on relatively stable operation and without sharp plunges.”

Suspension in Linfen leads to tight coking coal supply

Shanghai Security News reported that due to a gas explosion accident in Ruizhiyuan Coal Company, located in Hongdong Country, Linfen of Shanxi Province all coalmines suspended production, which makes the already existing coking coal supply tension more serious.

As per report, most of the coke manufacturers are feeding from stocks after coal mine shutdown, which can last for a maximum of 15 days to 30 days.

In terms of prices, coking coal price has increased CNY 130 per tonne to CNY 160 per tonne since the beginning of December 2007 but have remain unchanged after the mine accident.

As per reports, coke makers are feeling the pinch due to coking coal supply constraints, which has resulted in reduction in their coke production, which may lead to surge in coke prices.

The proven coking coal reserves in Shanxi are 60% of China's total, mainly scattered in Linfen, Lvliang and Taiyuan Gujiao district. Coalmines in Lvliang are also under rectification for license and overproduction checking.

Pressures on ocean freight likely to be released in 2009

Analysis from the industry foresee that pressures from international iron ore freight will be released in 2009 due to the following two factors
1. China's demand on iron ore import will become weak and the delivery
2. Operation of new ships in the world.

China's strong demand on iron ore is the main reason for pushing continuous soar of ocean freight. But As per report China's iron ore import in 2008 will increase moderately, up by about 40 million tonnes compared with that in 2007.

China to set norms for energy consumption in June

According to China’s National Standard Commission, 9 national norms of energy consumption per unit product will begin to work on June 1st 2008, which includes production of steel.

The norms have a great importance for improving China's energy utilization in high energy consumption industries and consummating the systems of national norms of energy consumption per unit product.

China closes 365 small thermal power plants in 2007

According to the National Development and Reform Commission, China has closed 365 small thermal power generators with a total capacity of 11.1 million kilowatts so far this year.

Almost half the affected capacity was located in five regions: Henan, Jiangsu, Shandong, Inner Mongolia and Sichuan. These closures involved 191 generators with 5.26 million kilowatts worth of capacity.

China's top five power enterprises, local investment corporations and local state owned enterprises carried out most of the closures, shutting down 199 generators with a total of 8.51 million kilowatts in capacity. These shutdowns comprised 76.7% of the total with the remaining 23.3% from private enterprises.

Closing these facilities is part of China energy saving and pollution reduction program. China has vowed to cut the amount of energy consumed per unit of GDP by 20% and emissions of major pollutants by 10% between 2006 and 2010.

China's November CPI jumps up by 6.9%

It is reported that China's consumer inflation jumped to its highest level in 11 years in November 2007 due to rising food prices and for a sixth interest rate hike this year.

The National Bureau of Statistics said that the Consumer Price Index, a barometer of inflation, went up by 6.9% in 2006. The gauge had hit a decade high of 6.5% in August 2007 before easing to 6.2% in September and rebounding to 6.5% in October 2007.

Food prices remain the key driving forces behind the rise in November 2007 up by 18.2%. Among food items, pork saw the biggest price increases, skyrocketing 56% followed by a 38.8% rise in poultry products. Non food items went up by 1.4%.

Adding to the price pressure, the Producer Price Index, which measures inflation at the wholesale level, jumped 4.6%% in November, the biggest monthly increase in more than two years.

Price hikes may force the central bank to raise the interest rates for the sixth time this year.

Evraz to acquire iron ore, coke and steel assets in Ukraine

Evraz Group S.A has announces signing of an agreement to acquire majority share holdings in selected production assets in Ukraine which include the following

1. A 99.25% share holding in the Sukhaya Balka iron ore mining and processing complex with a total annual production capacity of 3.75 million tonnes of iron ore

2. A 95.57% share holding in the Dnepropetrovsk Iron and Steel Works with a total annual capacity of 1.8 million tonnes of pig iron and 1.23 million tonnes of crude steel

3. Three coking plants with a total annual capacity of 3.52million tonnes of metallurgical coke.

As per release, Evraz will make a payment for the acquired assets with a combination of cash and new equity. The final terms and structure of the deal will be voted by Evraz’s board of directors based on a fairness opinion provided by a reputable international appraisers’ organization that will conduct an independent valuation of the assets. Once approved by the board, the deal will not be subject to any other, including regulatory, approvals and is expected to be closed in the first quarter of 2008.

Mr Alexander Frolov chairman & CEO of Evraz said that “We view this transaction as yet another important step in realization of our strategies. The acquisition will allow us to increase iron ore self-sufficiency and ensure further upstream integration. It will also create captive intra-group coke-making demand for the excess production of the Company’s coal mines in Siberia. This deal also represents another step in the Evraz’s geographical diversification into one of the lowest cost steel producing regions.”

MMK’s crude steel output in 11 months up by 6.8%

Interfax reported that Magnitogorsk Iron & Steel Works has increased its crude steel output by 6.8%YoY in January to November to 12.138 million tonnes.

Its finished roll production grew by 6.6% YoY to 11.736 million tonnes and finished iron ore up by 2.6% YoY to 1.368 million tonnes, while pig iron fell by 2.8% YoY to 8.707 million tonnes, sinter production down by 6.9% YoY to 9.23 million tonnes and coke output fell by 3% YoY to 4.904 million tonnes. Commercial metal output rose 8.1%YoY in the 11 months to11.135 million tonnes. Exports accounted for 39.6% of MMK's sales in January to November down by 6.6% points.

In November, MMK produced 119,500 tonnes of finished ore, 760,000 tonnes of sinter, 423,700 tonnes of coke, 750,100 tonnes of pig iron 1.092 million tonnes of crude steel and 1.058 million tonnes of finished roll. The company produced 1.011 million tonnes of commercial metal, of which 47% was exported.

MMK plans to produce 12.2 million tonnes of finished steel in 2007 and produce 13.28 million tonnes of steel.

Mechel announce January to September 2007 results

Mechel has announced results for January to September 2007

In USD billions

Mr Igor Zyuzin CEO of Mechel’s said that “In January to September 2007 Mechel has demonstrated strong financial results, supported by steadily rising production output and a favorable environment across our customer markets. Today we can say with certainty that 2007 will be the second year in a row when the Company will achieve record financial results. Net income for the first three quarters of this year far exceeded net income for the whole year of 2006 which was the best year for financial performance in Mechel’s history.”

Severstal awarded for corporate governance

It is reported that Severstal was named the company that had made the best progress in corporate governance at a “Russian Corporate Governance Leaders 2007” event on December 7th 2007.

Mr Oleg Tsvetkov Corporate Secretary of Severstal’s who received the award said, “We are happy that the investment community awards such high marks to our work to improve corporate governance. We pay a lot of attention to the process and will continue to develop and maintain the best corporate practices at Severstal. We believe that such practices protect all of our stakeholders’ interests and help to increase the company’s value.”

The Investors Protection Association’s annual event celebrates the companies that make the best progress in corporate governance. The association has among its members some 30 leading Russian and foreign investment institutions with aggregate investments in Russia exceeding USD 30 billion.

Chelyabinsk Zinc forms subsidiary to develop Amur field

Interfax reported that Russia's biggest producer of SHG zinc and zinc alloys Chelyabinsk Zinc Plant has formed OJSC Amur GOK to develop the Amur zinc deposit in the Chelyabinsk region.

Chelyabinsk Zinc Plant received a 25 year license to develop the field at the start of 2007. The company has carried out basic geological work and expects to drill all development wells by the end of 2007.

Chelyabinsk Zinc Plant expects to get the final results of estimation and prospecting works at the field in the second half of 2008, upon approval of the figures by the State Commission for Mineral Reserves. In the second half of 2008, Chelyabinsk Zinc Plant also plans to carry out auditing of mineral resources and ore reserves at Amur field according to the international standards.

Mr Vsevolod Geikhman general director of Chelyabinsk Zinc Plant said that "The performed works allow us to make optimistic conclusions that ore body thickness at the field reaches 23.4 meters while zinc content reaches 16.4%. It is possible to say with a high degree of certainty that the field deposits are two three times larger than expected according to the results of studies conducted in 1970s."

Renault to increase stake in AvtoVAZ t 50%

It is reported that a contract to give French giant Renault a 25% blocking stake in Russia’s largest carmaker AvtoVAZ should be signed by February 25th 2008.

The Russian Technology Corporation, comprising of Russia’s arms exporter Rosoboronexport, Troika Dialog brokerage and investment company subsidiary Troika Capital Partners and Renault Nissan alliance, signed a trilateral MoU in Togliatti in southern Russia, where AvtoVAZ is based.

Renault already owns 25% in AvtoVAZ, and will control the stake de facto after February 25th 2008. Russian Technology will have a 50% blocking stake in the Russian carmaker regardless.

Mr Carlos Ghosn CEO of Renault Nissan told the press that AvtoVAZ would produce 1.5 million Lada, Renault and Nissan cars a year. He said that “The parties to the agreement are committed to slashing the costs of all finished products in order to increase competitiveness. We are ready to preserve the plant’s individuality. Everyone will be a winner in these circumstances.”

Renault launched production of inexpensive Renault Logan cars in Russia in late 2005 at the Moscow based Avtoframos plant, in which the Moscow city government has a stake. The French carmaker invested USD 250 million in the project.

Nord Stream is not a rival to existing pipelines

RIA Novosti cited Mr Gerhard Schroeder former German chancellor as saying that the Nord Stream pipeline being built under the Baltic Sea to pump Russian natural gas to Germany will not be a rival to existing gas pipelines. Mr Schroeder who chairs the supervisory board of Nord Stream AG, the project's operator said growing consumption of energy resources guarantees the use of all transit routes.

Mr Schroeder during a lecture on Russia and the future of European energy security at Columbia University in New York said that "Europe currently consumes 500 billion cubic meters of gas and will require another 200 billion by 2015. The Nord Stream pipeline will be able to ensure the transportation of 55 billion cubic meters."

He said these figures suggest that the gas pipeline under the Baltic does not aim to compete with the existing transit routes via Ukraine or Baltic countries.

The project is being developed by Russia's state controlled gas giant Gazprom and Germany's E.ON and BASF at an estimated cost of USD 12 billion. The first of Nord Stream's two parallel pipelines, approximately 1,200 kilometers long, each with a transport capacity of some 27.5 billion cubic meters per year, is to become operational in 2010. In the second phase, capacity should double to about 55 billion cubic meters per year.

Gaz eyes production ventures with Chrysler

Thomson Financial reported that the Russian automaker Gaz is in talks with Chrysler and General Motors about possible joint projects in passenger car production.

Mr Leonid Dolgov CEO of Gaz said that it is no secret the company is involved in talks with Chrysler. He said "If we are successful with this first pilot with Chrysler, we would like to see how we could be of value to each other in the future.”

He added that Gaz has also signed a letter of intent with GM to develop an affordable car."

LUKoil, Gazprom, Severstal and RusAl hold 78% of total foreign assets

RIA Novosti reported that Russia's LUKoil, Gazprom, Severstal and RusAl are among the 25 Russian companies holding the largest foreign assets.

According to the ranking, researched by Columbia University and Moscow's Skolkovo Management School, independent oil major LUKoil, state controlled gas giant Gazprom, steel maker Severstal and aluminum producer RusAl cumulatively own 78% of all Russian companies' foreign assets.

LUKoil came first in the list with USD 18.9 billion of foreign assets, followed by Gazprom with USD 10.6 billion, Severstal with USD 4.6 billion and RusAl with USD 4.2 billion.

The survey said the 25 companies own a total of USD 59 billion in foreign assets and have annual overseas sales of USD 200 billion and foreign personnel numbering 130,000. These figures have roughly tripled in the past three years, suggesting the companies' dynamic activity on foreign markets. It said almost 80% of Russian assets abroad belong to raw material companies of which more than half are held by oil and gas companies.

The survey said geographically, Western Europe accounts for 52% of Russian owned foreign assets followed by CIS countries 22%, Eastern Europe 11%, North America 6%, Africa 4% and Asia and Australia 3%.

Russia China trade to exceed USD 40 billion in 2007

RIA Novosti cited a Russian senator as saying that Russian Chinese trade in 2007 will exceed USD 40 billion.

Mr Igor Rogachyov a member of the upper house of parliament said that "For the first 11 months of the year, Russian Chinese trade turnover reached USD 39.3 billion we can confidently say on year results we will surpass the USD 40 billion mark."

Mr Rogachyov took part in a conference on prospects for bilateral cooperation development in China's northeastern province of Jilin as part of a Russian Chinese trade fair. He said about 2,000 Russian and Chinese representatives took part in the exhibition, adding that foundations for further cooperation were laid.

According to targets set by the two countries' leaders, trade should reach USD 60 billion by 2010 and could possibly grow to USD 80 billion later. Last year bilateral trade stood at around USD 29 billion.