SAIL awards BSP CHP contract to HEC

Ranchi Express reported that Heavy Engineering Corporation Limited has bagged a prestigious order worth INR 500 crore amid tough global competition for manufacturing a coal handling plant for Steel Authority of India Limited’s Bhilai Steel Plant. The project has to be completed within 30 months from the date of award of work by the steel plant.

The work order includes the design, engineering, manufacture, supply, testing and commissioning of the coal handling plant from concept to designing. The major equipment to be supplied by HEC includes wagon tippler, electric car pushers, conveyors, civil and structural work and associated auxiliary equipments.

This is the second time in February 2008 that Heavy Engineering has bagged a massive order for the Bhilai Steel Plant, bringing its total work order from a single source to a whopping INR 700 crore. Earlier, on February 1st 2008, it had clinched an order for augmentation of ore handling plant at Bhilai Steel for a total value of INR 200 crore.

Heavy Engineering got the order after competing with Larsen & Toubro, McNally Bharat Engineering Co and Elecon Engineering.

Steel minister to review scenario with steel makers

PTI reported that concerned over the demand supply mismatch in the steel sector, Mr Ram Vilas Paswan union steel minister will meet major steel producers to assess their capacity expansion plans and discuss the impediments to investments envisaged at about INR 280,000 crore by 2011-12.

The report cited a top steel ministry official as saying that "The Minister will meet leading steel producers to discuss the reasons behind the increasing demand supply gap in the steel sector and take stock of their mega expansion plans. Mr Paswan is also likely to discuss the bottlenecks impeding fructification of major investments in the country as we are envisaging an investment of INR 280,000 crore by 2011-12.”

The official said that “The minister is particularly concerned that the demand-supply gap has caused 67% rise in steel imports. Steel consumption in India is growing at nearly 12% and in view of the anticipated growth in infrastructure and manufacturing sectors, the demand is further likely to grow by 14% to 16% during the next few years. During April to December 2007, domestic steel demand grew at 12.2% over the same period of previous year. However, production has grown at 6.6% causing a 67% rise in imports.”

The companies invited to participate in the meeting include Steel Authority of India Limited, Rashtriya Ispat Nigam Limited, JSW Steel, Essar Steel, TATA Steel, Ispat Industries Limited, POSCO India and ArcelorMittal among others.

As per report, concerned secretaries of mineral rich states of Orissa, Jharkhand, Chhattisgarh, Karnataka, Madhya Pradesh and West Bengal have also been in invited for this meeting.

EEPC calls for supply of steel at competitive rates to SMEs

It is report that Engineering Export Promotion Council has urged the centre to evolve a special policy for supply of steel at competitive rates to small and medium producers and engineering goods exporters.

Mr Rakesh Shah chairman of EEPC said that "Hit by 3 adversaries namely rupee appreciation, spiraling raw material prices and static interest rates, engineering goods exports have just posted a 2.5% growth in rupee terms in December 2007."

He said that “Engineering goods exporters were hit hard by a 13% rise in the rupee value. Matters were further compounded in the aftermath of a 20% rise in prices of different categories of steel products, which are primary raw materials of engineering goods. Credit cost is another factor that seems to be out of line with international trends. Globally, banks are reducing interest rates while it remains static in India.

EEPC intends to help setting up an industrial cluster for bell metal products at one of the places in Bankura which is famous as a production hub for such products. Currently, it has joined hands with concerned stakeholders for setting up a foundry park in Howrah.

TLT sector upbeat on new T&D fund

It is reported that Indian transmission line tower majors have voiced optimism on the creation of the new fund dedicated to the transmission and distribution sector.

Mr Manish Mohnut executive director at Kalpataru Power Transmission Limited said that "The setting up of the national fund for transmission and distribution reform is a step in the right direction but its details are still unknown. It is important that the fund is created. The fund could be more focused on the transmission sector rather than distribution sector as various programs like Rajiv Gandhi Grameen Vidyutikaran Yojana and Accelerated Power Development and Reforms Program are already helping the distribution sector."

However, Mr Ramesh Chandak MD of KEC International Limited termed it a negative budget for EPC contractors in the T&D sector saying that due to the increase in the service tax, it will affect the contractors’ profits. He added that "The rate of service tax applicable to the services under works contract has increased from 2% to 4%. Therefore, the operating cost will go up by 1% for the contractors."

Export tax on chrome ore hiked

Mr P Chidambaram union finance minister has announced an increase in the export duty on chrome ore from the current INR 2,000 per tonne to INR 3,000 per tonne. Mr Chidambaram said that "The export duty has been increased in order to conserve chrome ore and make it available for value added manufacture in India."

But as per media reports, Indian ferroalloy producers feel that it would not have much effect in reducing chrome ore exports fro India

As per a report in media, Mr RK Saraf chairman of the Indian Ferro Alloys Producers Association said that “A INR 1,000 a tonne increase in export duty means that the export price will be up by USD 25 a tonne. Given that the export price is currently about USD 410 per tonne, the Chinese buyers of the ore will gladly absorb the price increase, in view of the shortage in availability of ore and its growing steel production. I do not think the proposed increase in export duty will have any impact on export of chrome ore."

Indian Railway hikes allocation for rolling stock

On the back of the Indian Railways’ cash surplus of INR 25,000 crore, Mr Lalu Prasad Yadav union railway minister has allocated INR 11,545 crore for 2008-09 for rolling stock, which is a staggering 32% more than the revised estimates of INR 8,698.02 crore which is to be spending in 2007-08.

As part of a major effort to increase the procurement of wagons, the railway ministry plans to manufacture 20,000 wagons in 2008 as compared with 15,000 wagons, which is targeted to be manufactured in 2007-08. It has also targeted manufacturing of 250 diesel with INR 3,231 crore investment and 220 electric locomotives with INR 4,343 crore investments in 2008-09.

As part of its efforts to refurbish old wagons, a new wagon reconstruction unit at a cost of INR 40 crore has been proposed at Garkha in Chapra district for reconstruction of old wagons. A new rail coach factory will be set up in Kerala.

With freight loading in 2000-09 estimated at 790 million tonnes compared with 785 million tonnes in 2007-08, and a 310 million tonnes additional freight loading forecasted in the next 3 years, Indian Railways have proposed to add 25 to 30 tonne axle load trains to carry steel and cement. Most of the new dedicated iron ore rail routes will be upgraded or constructed for 25 tonne axle load and some routes will be made suitable for running 30 tonne axle load trains.

India not to levy cess on the cargo handling

Mr Thiru TR Baalu union minister of shipping, road transport & highways said that there is no proposal for levying of any cess on the cargo handled in India.

Budget highlights for steel sector over last 4 years

Budget 2005-06
1) Duty on coking coal with high ash content reduced from 15% to 5%
2) Duty on primary and secondary metals reduced from 15% to 10%
3) Customs duty reduced from 20% to 15% on ferroalloys, stainless steel and other alloy steel, excluding seconds and defectives

Budget 2006-07
1) Customs duty on ferroalloys, stainless steel and other alloy steel has been reduced from 10% to 7.5%

Budget 2007-08
1) Duty on coking coal fully exempted
2) The customs duty on primary steel and ferroalloys stainless steel has been reduced from 7.5% to 5 %
3) The duty on seconds and defectives of steel reduced from 20% to 10%
4) Export duty has been imposed on iron ores and concentrates at INR 300 per tonne and on chrome ore and concentrates at INR 2,000 per tonne

Budget 2008-09
1. Customs duty on steel scrap and aluminum scrap has been cut to 0% versus 5%
2. Export duty on chrome ore from the current INR 2,000 per tonne to INR 3,000 per tonne

Indian Railways to invest INR 2.5 trillion for upgrading

Mr Lalu Prasad Yadav union railways minister, while presenting the Railway Budget 2008-09, said that centre will invite private investment in upgrading rail infrastructure at a cost of INR 2.5 trillion over the next 5 years.

Mr Yadav said that out of the total investment, INR 1 trillion would be in public private partnership projects to upgrade facilities at railway stations, rail equipment manufacturing, multi modal logistics parks, running of container trains. He added that "It would be difficult to finance such a large investment program solely from Indian Railways' own resources. Therefore we have started many public private partnership schemes."

He said that India also plans to increase the rail capacity of about 20,000 kilometers of high density network, coal and iron ore routes and port networks over the next 7 years at a cost of INR 750 billion. Indian Railways, running more than 14,000 trains a day, also plans commercial use of its vast land across India to boost revenues.

Mr Yadav said that work will start in the next fiscal year on the eastern corridor from Ludhiana in Punjab to Dankuni in West Bengal and the western corridor linking Delhi to Mumbai port, being built at a cost of INR 282 billion.

India is being plagued by bottlenecks in the transport sector that threaten to choke growth, and this has prompted government to build more rail lines, roads, ports and airports.

Kerala submits shipyard proposal

Mr Thiru TR Baalu union minister of shipping, road transport & highways recently said that government of Kerala has submitted a proposal proposing Poovar in Thiruvananthapuram district on the Kerala Tamil Nadu border as the possible location for setting up of international size shipyard on the West Coast of India.

The details of the proposal are as under

a) The proposed site has a waterfront area of 2.5 kilometer in length and about 800 to 1000 acres can be made available of which a part will be by land acquisition and rest by reclamation

b) Water depth of 13 meter is available within 500 meter of the shoreline. After reclamation the depth of 13 meter will be available alongside

c) The site can be easily provided with road and rail connectivity. At present, NH 47 is less than 10 kilometer from the site and Kanyakumari Thiruvananthapuram broad gauge railway line is less than 10 kilometer away

d) The new Port at Vizhinjam can be made use for the shipment of all the material required for the development and functioning of the shipyard

Mumbai Port Trust has been nominated to function as the nodal agency for setting up of international size shipyard for the West Coast of India. It has been decided in the shipping ministry that the nodal agency may take a holistic approach in suggesting suitable locations of the shipyards. It has also been decided that consultants may be appointed by the nodal agency to identify 3 or 4 alternative sites.

Container Corporation to develop 8 new container depots

Mr Lalu Prasad Yadav union railway minister recently announced that Container Corporation of India Limited is planning to develop 8 container depots while other operators will develop 40 in the coming years.

He informed that "Presently 60 container depots are operational including 3 constructed by private parties."

Mr Yadav said that currently, Container Corporation runs 146 trains while other operators run 44. He added that "The number of trains run by other operators is expected to increase by 50 to 55 by the end of 2008. The total container traffic is expected to be 26 million tonnes in 2007-08 including 2 million tonnes contributed by new operators."

Meanwhile, a spokeswoman of Container Corporation said that the depots would be operational by the end of 2009-10. She added that "Six container depots will be ready by March 2009 and the other 2 are expected by the end of calendar year 2009 or by the end of fiscal 2010. It will invest INR 400 million on an average on each depot."

It may be noted that Container Corporation had lost its monopoly on operating container trains in 2006, when the Indian Railways allowed 15 private operators to enter the business.

Gujarat to focus on ship building sector

Mr Vajubhai Vala finance minister of Gujarat, while addressing the state budget, said that further attention will be diverted to ship building industry from ship breaking industry.

He also announced that the government would undertake developmental schemes on existing ports of Gujarat Maritime Board with an expenditure of INR 175 crore, with a possibility of private investment to the tune of INR 4,267 crore being made.

Meanwhile, Mr Vala said that the government had taken new initiatives for developing ship building and repairing yards, private ports, jetties, captive jetties, VTMS system, training and introduction of new marine courses and implementation of schemes relating to roll on roll off ferry services at 22 coastal areas of the state, which will prove beneficial to development of Sagarkhedu.

Mr Vallabh Shah adviser to ABG Shipping Limited said that "It is for the first time that ports have been mentioned in detail in a Budget. While the government has talked about promoting the ship building industry, nowhere has it mentioned the promulgation of a ship building policy, which has been pending since long. Moreover, only port development is not enough. Multi model activities like better road network to link ports also need to be developed."

Mr Shah said that Budget estimates reveal that 160 million tonnes traffic will be handled from the small ports of Gujarat during 2009. He added that "After the port policy in 1995, which generated traffic of 16 million tonnes at that time, traffic had grown by 10 times already. It will rather touch the 200 million tonnes mark in the coming days. Therefore, a ship building policy should be announced soon to generate similar results."

Land acquisition for SEZ still a cause for concern – Survey

According to Economic Survey 2007-08, acquisition of land for developing special economic zones continues to be a cause of concern and the central government has advised state governments to give first priority to acquiring wastelands and single crop agricultural land before handing them over to developers for a SEZ.

The survey said "If perforce a portion of double cropped agricultural land has to be acquired to meet the minimum area requirements, especially for multi product special economic zones, the same should not exceed 10% of the total land acquired for the SEZ." It added that the board of approval, which approves SEZ proposals headed by Mr GK Pillai union commerce & industry secretary, would not give its go ahead to those SEZs that have carried out or purpose to carry put compulsory acquisition of land for such SEZs after April 5th 2007.

The survey also expressed apprehension over a possible misuse of the SEZ scheme and relocation of existing industries into SEZs. It also highlighted that exports from SEZs have been surging, registering a growth of INR 346.15 billion in 2006-07 from INR 228.40 billion in 2005-06.

So far, formal approvals have been granted to 439 SEZs, of which 195 have been notified and in various stages of operation. These are spread in 22 states and union territories and over 23 sectors. At present there are 1,277 units operating in various SEZs, providing direct employment to over 200,000 people.

Indian Railway to manufacture higher axle load wagons

It is reported that, with the objective of increasing the carrying capacity, manufacturing of 20.3 tonnes axle load BCN and BOXN wagons will be stopped and only 22.9 tonnes axle load stainless steel wagons will be manufactured from 2008-09 onwards.

The newly designed stainless steel BCN wagon has a lower tare weight. Due to the shorter length of these wagons, instead of 40 wagons, the BCN wagon train will now accommodate 58 wagons, like BOXN wagon trains. Thus, the payload of the BCN trains will increase by 78% from 2300 tonnes to 4100 tonnes. Similarly, the payload of open wagon trains will increase by 22% to 4100 tonnes.

To realize the full potential of the newly designed high capacity wagons, 5000 open wagons will be upgraded to stainless steel body in 2008-09.

HP signs agreements for 11 micro hydel projects

BL reported that Himachal Pradesh has government signed implementation agreements with independent power producers for 11 micro hydel projects.

The projects include
1. Siul phase II - 5 MW
2. Kunda Sanjoy - 5 MW
3. Upper Manglad - 5 MW
4. Todsa - 3.5 MW
5. Nogli - 3 MW
6. Nogli phase I - 2 MW
7. Satru - 2.4 MW
8. Chachiot - 3.5 MW
9. Sailan - 1.5 MW
10. Rajpur - 4.5 MW
11. Chaunda - 2.4 MW

SCI holds annual worldwide agents meet

Exim News Service reported that Shipping Corporation of India’s 3 day long annual worldwide agents meet 2008 was held during last week with the traditional lighting of the lamp by Mr S Hajara CMD and other directors.

SCI holds its worldwide agents meet every year to review the existing business strategies, identify new markets, build on professional relationships developed in the past and deliberate on issues relating to freight, documentation, venturing into other business plans, etc., besides exchange of views and opinions on global shipping trends which would eventually help the company to chart future course of action in order to stay competitive in today’s world of fierce competition.

Mr Hajara briefly discussed the world economic scenario, shipping markets and other aspects affecting performance of the shipping industry. He highlighted the impressive progress of SCI’s acquisition program and expressed confidence that SCI would acquire more vessels to cater to the tremendous growth in the exim trade in India.

Mr BK Mandal finance director of SCI said that the relationship between SCI and its overseas agents would go a long way in furthering mutual interests. He also emphasized the need for following a proper accounting system and highlighted the progress made in the implementation of the company’s new global cash management system that would be beneficial to the agents and SCI.

Mr UC Grover technical & offshore services director of SCI said that its acquisition program is going full steam ahead. He revealed that SCI would be acquiring 4,400 TEU vessels by October 2008 and also outlined the delivery schedule of the 28 vessels on order spanning up to 2012.

SCR earnings up by 16.25% YoY in 10 months

South Central Railway has posted apportioned earnings of INR 5,483.61 crore April 2007 to January 2008 period up by 16.25% YoY as against INR 4,717 crore in April 2006 to January 2007 period. The operating ratio is put at 68.50% as against 70.60%.

Mr HK Padhee GM of South Central Railway said that out of the total earnings, goods segment contributed INR 3,867.60 crore as against INR 3,341.57 crore while, the passenger segment earned INR 1,461 crore as against INR 1,214 crore. It also posted originating freight loading of 57.20 million tonnes up by 7.45% YoY as against 49.74 million tonnes.

Updates on Ganga highway project

State Environmental Impact Assessment Authority of Uttar Pradesh has accorded environmental clearance to Ganga Expressway Project in August 2007.

They received representations for the project in which issues such as intensification of sedimentation of Ganga River, impact on bio diversity, reduction in the flow have been raised.

The project proponents have been asked by the secretariat of State Environmental Impact Assessment Authority to carry out comprehensive environmental impact assessment and make necessary changes incorporating the environmental issues.

Oxiana and Zinifex plan USD 11 billion zinc merger

Australian Oxiana Limited and Zinifex Limited announced that they have entered into a definitive agreement to merge their businesses, creating a new major diversified base and precious metals mining company with global capability. The merged company will be re named and will remain headquartered at Melbourne in Australia.

The merger will be implemented by way of a Scheme of Arrangement between Zinifex and its shareholders. Zinifex shareholders will receive 3.1931 Oxiana shares for each Zinifex share they own. The terms reflect a merger of equals with the merged entity to be owned 50% by Oxiana and Zinifex shareholders, respectively.

The Board of Oxiana and the Board of Zinifex each believe that the new entity will be better positioned for growth than either company on a standalone basis. The merger will combine two companies with highly complementary operational, development and exploration profiles and create a group with

1. A market capitalization of approximately AUD12 billion, making it the 3rd largest diversified mining company listed on ASX

2. The world's second largest producer of zinc and a substantial producer of copper, lead, gold and silver

3. Five competitive mining operations in Australia and Asia and three new mining projects in development

4. A large portfolio of diversified development and exploration activities throughout Australia, Asia and North America

Upon completion of the merger, Mr Barry Cusack chairman of Oxiana will remain chairman and Mr Andrew Michelmore current CEO & MD of Zinifex will be CEO of the merged entity. All the current directors of both companies will form the board of the merged entity. The senior management team will be drawn from the two companies' existing management teams and, given the scale of the combined group and its development pipeline, overlap of roles is expected to be minimal.

EU imposes definitive AD duties on ferrosilicon

The European Commission has imposed definitive antidumping duties ranging from 5.4% to 33.9% on imports of ferrosilicon from China, Egypt, Kazakhstan, the former Yugoslav Republic of Macedonia and Russia. The definitive duties take effect from February 29th 2008.

1. China - The definitive dumping margins expressed as a percentage of the CIF European Union frontier price, duty unpaid, are 15.6% for Erdos Xijin Kuangye Co, 29% for Lanzhou Good Land Ferroalloy Factory and 31.2% for all other suppliers.

2. Egypt - Duty rates were set at 15.4% for The Egyptian Ferroalloys Co, 18% for Egyptian Chemical Industries and 18% for all others.

3. Kazakhstan - In the absence of co operation a country wide duty rate was set at 33.9%.

4. Macedonia - The duty was set at 5.4% for Silmak Dooel Export Import

5. Russia - Duty rates were set at 22.7% for the Chemk Group comprising of Chelyabinsk Electrometallurgical Integrated Plant and Kuznetsk Ferroalloy Works, 17.8% for the Bratsk Ferroalloy Plant, and 22.7% for all other suppliers.

EC rejected suggestions that the duty should be abandoned in favor of a minimum import price and also declined to accept price undertakings from several producers from the countries in question. EC said that "It was found that FeSi is imported in a wide range of different types with significantly different price levels. In addition, all cooperating exporters have different duty levels, some based on dumping margins, some on the injury margins, requiring a multitude of different minimum import prices.”

The move follows the imposition of provisional antidumping duties ranging from 2.8% to 35.5% in August 2007.

LME announces listing of steel brand Ekinciler Sariseki

London Metal Exchange announced the listing of brand = Ekinciler Sariseki for delivery against the LME’s Mediterranean and Far East Steel Contracts.

Producer: Ekinciler Demir ve Celik Sanayi A.S.
Buyukdere Cad. No.71 Nurol Plaza B Blok K.13
34398 Maslak/Istanbul
Turkey

Brand Name: EKINCILER SARISEKI
Plant Address: Organize Sanayi Bolgesi
P.K.240 Sariseki
Iskenderun/Hatay
Turkey

Annual Plant Capacity: 1,000,000 tonnes

Deliverable Shapes and piece weights
120L 1,320kg
120S 660kg
130L 1,550kg
130S 775kg

LME established for over 130 years and located in the heart of The City of London, the London Metal Exchange is the world’s premier non-ferrous metals market. It offers futures and options contracts for aluminum, copper, nickel, tin, zinc and lead plus two regional aluminum alloy contracts.

Nippon Steel profits to reduce - Nikkei

The Nikkei financial daily reported that Japan's Nippon Steel Corp, the world's second biggest steelmaker will likely fall short of its pretax profit forecast for the financial year to March because of rising iron scrap and shipping costs.

Nippon Steel Corp had forecast a rise of 0.4% in pretax profit to JPY 600 billion (USD 5.8 billion) for fiscal 2007/2008, but now expects the figure to be about JPY 580 to JPY 590 billion as compared with JPY 597.6 billion yen the previous year.

Nikkei said that Nippon Steel's group sales rose in the nine months to December 2007, but as the company raised production it was forced to use more scrap iron, the price of which has been climbing due to increased demand from China and other countries.

Nikkei added that Japan's three other big steelmakers JFE Holdings Inc, Sumitomo Metal Industries Ltd and Kobe Steel Ltd have already said they expect a decline in group pretax profit for the current financial year.

Iron ore price negotiations – Vale and ArcelorMittal

Dow Jones reported that Brazilian mining giant Companhia Vale do Rio Doce or Vale and steel titan Arcelor Mittal are in advanced talks on 2008 iron ore price contracts, but have not yet reached a deal.

Mr Roger Agnelli CEO of Vale said that "We have been conversing, and negotiations are well under way. ArcelorMittal continues to be our biggest customer, and it will continue to be our biggest customer in the world in the future.”

Mr Agnelli indicated that Vale expects to close a deal with ArcelorMittal on 2008 iron ore prices similar to last week's deals with global steelmakers. He added that "The benchmark price for iron ore has been established.”

Last week, Vale agreed to price hikes with most major Asian steelmakers and several European companies.

Metals X to restart Renison tin operation in Tasmania

Metals X provided an update on its plans to re start its Renison operation in Tasmania.

As per release Metals X expects to begin re commissioning of the Renison concentrator in mid June. For three years the mill will be fed with ore from the Mt Bischoff open pit mine and Renison underground mine. Mining has already started at Mt Bishoff and will commence at Renison in May 2008.

Metals X forecasts that Renison’s total production of tin in concentrate will be 8,500 tonnes in financial year 2008/2009, rising to a temporary peak of 10,580 tonnes in 2009/2010. Initial cash operating costs net of copper by product credits are estimated at AUD 8,400 per tonne. A feasibility study on tin tailings treatment at Renison, which could produce another 5,500 tonne per year is due to be completed later this year.

Tenaris does not see margin erosion in 2008

Tenaris SA does not expect margins to fall in 2008 compared to the last part of 2007. Tenaris posted an EBITDA margin of 34% of sales in the Q4 of 2007 and 33% in the Q3 of 2007

Tenaris SA officials in a conference call with analysts said that “We are going to maintain the level of the last part of the year adding that margins should remain stable at both the welded and seamless tubes product segments.

Officials said the level of activity in the US should remain stable or grow slightly this year, also helped by the end of the destocking process. They also said they remain cautious about the possible impact of the current financial markets situation on the overall industry developments in the second part of the year.

Bukit Asam plans USD 1.8 billion coal transport project

Reuters reported that Indonesian coal miner PT Tambang Batubara Bukit Asam Tbk PTBA.JKis planning to improve coal deliveries with new infrastructure projects worth a combined USD 1.8 billion.

As per report ageing infrastructure has hampered Bukit Asam's ability to deliver coal to its customers, who include the state electricity firm. Bukit Asam with a market value of USD 2.9 billion said that it will upgrade the existing railway linking its coal mine in Sumatra to the port and will build a new railway in the same area.

Mr Sukrisno president director of Bukit Asam said that the firm plans to form a joint venture with PT Kereta Api Indonesia to upgrade the infrastructure by improving stations, coaches, bridges and tracks. He told Reuters that "PT KA (Kereta Api) and PT BA (Bukit Asam) will work together to improve the infrastructure in a bid to raise the company's annual capacity to transport coal to 20 million tonnes by 2012.”

Bukit Asam produced 8.5 million tonnes of coal in 2007 and wants to increase its production to 9.3 million in 2008. It estimated that upgrading the railway would cost USD 734 million and could be funded out of cashflow or using bank loans. The Indonesian coal miner will team up with China Railways Engineering and PT Trans Pacific to build a second railway line and a port in Bandar Lampung on the southern tip of Sumatra.

The project, worth USD 1.1 billion, will increase its coal transport capacity by a further 20 million tonnes by 2011. Work on the project will start at the end of this year or early next year.

Rio Tinto appoints Credit Suisse to find coal mine buyer

The Daily Telegraph reported that Rio Tinto has appointed investment bank Credit Suisse to find a buyer for its non core coal assets.

As per report, the sell off is part of its USD 15 billion disposal program to streamline the company following its USD 38 billion acquisition of Alcan in 2007. It has stepped up the program in the wake of rival BHP Billiton's hostile GBP 70 billion bid.

The report added that Rio will put the “For Sale” sign only on mines where the reserves are too small for it to mine in a cost effective way.

The global price of once unfashionable coal has been pushed up because energy generators have been forced to look elsewhere due to soaring gas prices.

Rio produces 150 million tonnes of mostly thermal coal a year used in power stations from mines in the US and Australia. It announced its first disposal the Greens Creek gold and silver mine in Alaska earlier this month.

Italian rebar market remains steady in February

YIEH reported that after large market price rises, Italian domestic rebar market appears stagnant in February

According to information obtained in January 2008, rebar basic price rose by a large amount and the increased range reached EUR 320 to EUR 330 per tonne. It said that increased prices are mainly related to the surcharge that was increased by EUR 20 per tonne in December 2007.

Market price has remained steady in February 2008 and will continue to the beginning of March. The reason for the lack of market price increases is weak domestic market demand, and end users reducing purchase volume due to strong price and stagnant market conditions.

(Sourced from YIEH.com)

Vietnam shipping industry targets 10% world market share

In a press briefing to introduce the 4th International Shipbuilding, Maritime and Transport Expo Vietship 2008, Mr Nguyen Quoc Anh business general director of the Viet Nam Shipping Industry Corporation informed that Vietnam ranked in the top five of biggest ship builders in 2007.

The Vietship 2008 will be opened in Ha Noi on March 11th to 13th 2008. This is a big event of the world’s shipbuilding industry, presenting over 600 stalls of 400 companies among them two thirds come from the countries with advanced shipping industry.

Mr Anh said that "Vietship 2008 is a good chance for Viet Nam's shipping industry to approach to new environmentally friendly technologies adding that the event is a forum for domestic enterprises to increase their channels for capital mobilization in order to fulfill the goal of holding 10% of the world market share through clean technologies.

Last year, Vinashin handed over two 53,000 tonne vessels and launched four others in the series of Diamond ships exported to the United Kingdom. By December 2007, the total value of the contracts inked between Vinashin and foreign partners reached USD 12 billion.

Korean shipbuilders continue bullish moves

Staff Reporter reported that despite lingering speculation that the local shipbuilding industry may face hard times due to low demand for new ships and an increase in imported steel prices, Korean shipbuilders have been maintaining their solid pace, winning value added orders.

Korea’s industry analysts said that they don’t see any significant threat from high raw material prices as local shipbuilders are likely to pass the rise in costs onto their customers.

Although experts have generally agreed that the steady rise in prices of raw materials will continue to pose a threat to shipbuilders with its likely impact on steel prices, Hyundai Heavy has received over USD 7 billion in new orders so far in 2008, more than 50% YoY.

On Sunday, Hyundai Heavy Industries, the world’s largest shipbuilder, said it won monthly record orders of USD 5.7 billion last month thanks to a USD 1.6 billion contract with a unit of French energy giant Total to build a floating, production, storage and offloading unit in Nigeria. In February, Hyundai Heavy booked orders for 25 ships, nine container ships with a 13,100 TEU capacity each, six container ships each with an 8,600 TEU capacity, five very large crude carriers, one drill ship and FPSO, and three bulk carriers.

Mr Kim Kwang kook a spokesperson for Hyundai Heavy said that “What is impressive is that the company booked 15 high valued very large container ships. This means that we are moving toward larger sized vessels with greater focus on fuel efficiency and engine technology.” He added that “We are expanding facilities by building dock yards on our Ulsan and Gunsan plants in a bid to increase profitability.”

US scrap import in 2007 down by 23% YoY

According to statistics, the United States imported scrap for 3.69 million tons in 2007, decreasing by 23.3% YoY.

The statistics said that Canada was the main country contributing 81.4% to USA’s scrap imports in 2007, followed by Mexico and England. Besides, Mexico contributed 284,000 tonnes and 181,000 tonnes from England.

It added that the peak volume of the whole year fell in April while the import reached the bottom in February 2007

(Sourced from YIEH.com)

Honda may increase use of aluminum as steel price increases

Japan’s Honda Motor Co said that competition won't allow carmakers to pass on higher steel costs to consumers, which may accelerate the use of more aluminum in cars.

Mr Takeo Fukui president of Honda Motor told reporters that “The consumer would not accept price increases. We may see a quicker shift to aluminum.'' He added that “We need to lower costs with our production process and procurement, as steel will remain as main material for autos for the time being.”

According to analysts, Honda, Toyota Motor Corp, Nissan Motor Co and Japan's other vehicle makers may pay a total of JPY 200 billion (USD 1.87 billion) more for steel next fiscal year.

Taiwanese shipbuilding output to top TWD 50 billion for 2007

According to tallies released by the Taiwan’s Industrial Development Bureau, the production value of Taiwan's shipbuilding industry is expected to amount to TWD 52 billion (USD 1.6 billion) for 2007 up by 21% YoY.

Industrial Development Bureau officials said that this will mark the first time the country's shipbuilding output has topped TWD 50 billion predicting that the production value will further expand to more than TWD 60 billion for 2008.

For the first 11 months of this year, Taiwan's state owned shipbuilder CSBS Corp saw its revenue amount to TWD 26.2 billion and its pre tax net profit hit a record high of TWD 4 billion. The official said that as of the end of November, CSBC had held orders for 60 container vessels worth a total of TWD 125.9 billion and 30 fast missile attack boats worth a total of TWD 12.62 billion and the orders will keep the production line of CSBC's Kaohsiung shipyard busy until April 2012 and that of the Keelung shipyard occupied until July 2011.

In addition, to prepare for expected changes in the global shipping industry after the completion of the Panama Canal expansion project, CSBS has established a partnership with the American Bureau of Shipping to develop new Panamax class container vessels with a capacity of 12,500 twenty-foot equivalent units.

Meanwhile, Taiwan's largest private owned shipbuilder Jong Shyn Shipbuding Co has invested an additional TWD 1.75 billion in expanding existing shipyards and building new facilities this year and the company's annual turnover is expected to increase to TWD 4 billion after the completion of the project.

High steel costs to raise cost of Jakarta monorail project

It is reported that the cost of the monorail project to be built in Jakarta is expected to rise from the original estimate of USD 489 million.

The report quoted Mr Sukmawaty Syukur director of PT Jakarta monorail as saying that the prices of steel climbed to follow the crude price hikes in the world market. The project is to be operational in 2010 and PT Jakarta Monorail, which will operate the project.

The project will be financed with a loan of USD 340 million from a consortium of state owned banks including Bank Negara Indonesia , Bank Rakyat Indonesia, Bank Mandiri and Bank DKI which is owned by the Jakarta city administration.

Vietnamese domestic construction steel prices soaring

YIEH reported that Vietnamese domestic prices in the construction industry have continuously raised especially for cement and steel products, which had record high price levels.

As per report the main reason of that is resulted from a price hike of USD 50 per tonne for imported billet. Current prices of construction steel are at around USD 1,350 to USD 1,400 per tonne.

Market analyst predicted that some steel end users including house builders and hardware producers will increase their price as well in the near future.

Centennial Coal sales in H1 down by 5.8% YoY

Australia’s Centennial Coal Co announced that profit in the H1 of 2007 jumped to an AUD 239.5 million on a gain from the divestments. Sales fell by 5.8% YoY to AUD 352.1 million from AUD 373.8 million in H1 of 2006.

Centennial Coal in a statement said that the sale of the Anvil Hill Project and Austral Coal Ltd have had a positive impact on the half year results with the profit from significant items before tax totaling AUD 322.4 million for the period. This compares with a before tax loss of AUD 48.7 million for the 2006 period, relating to a write down of the carrying value of the group's Newstan coalmine following a decision to implement a restructure of the group's Northern operations.

Net profit excluding discontinued operations and significant items fell by 15.5% to AUD 20.1 million from AUD 23.8 million. Revenue from continuing operations fell by 5.8% YoY to AUD 352.1 million from AUD 373.8 million.

Centennial said that “Centennial's second half result should be a significant improvement on the first half. 2009 will see a substantial uplift in profitability above that expected in 2008.''

Centennial established in 1989 and listed on the Australian Stock Exchange in 1994, it is a coal mining and marketing company supplying thermal and coking coal to the domestic and export markets. The Company is a major fuel supplier to the New South Wales energy industry, fuelling approximately 47% of the State’s coal fired electricity.

Bergwerk Saar coal mine in Germany closed

It is reported that further tightening in global steam coal supply can be expected after the Bergwerk Saar coal mine in Germany was closed.

As per report coal production at the 3.7 million tonne per annum mine was halted after mining activity induced an earth tremor, causing damage to buildings.

Saarland’s state prime minister has said the closure may be permanent.

Egypt to announce Sinai mining rights auction

It is reported that after months of deliberations, held between the Egyptian ministry of petroleum and the parliament, officials have stated that several new bidding rounds are expected to be published for mineral and quarry operations in the Egyptian Sinai.

Mr Sameh Fahmy Egypt’s minister of petroleum said that several new measures will be put in place to attract indigenous and international investors and operators to take part in the development and production of minerals in the Sinai.

At present, most of Egypt's coal reserves are located in Sinai, with a total reserve potential of 50 million tonnes. Egyptian coal, however, is of poor quality, and previous plans to increase production have been abandoned due to the sector's lack of economic viability. Still, Egypt’s first coal mine was opened in 1995 in the northern Sinai area. Total production was first used for local consumption, but currently has become an export product, due to increased natural gas usage in power production.

Main mining operations are being done by Sinai Mining Company, which was founded in 1957, largely targeting the manganese deposits in Sinai Peninsula. Some other minerals also are now included such as kaolin, gypsum, bentonite, sand and manganese ore.

At present, several feasibility studies are being prepared, for which the commerciality of mining projects in the Sinai desert are being assessed. The studies are also taking into account the necessary steps to facilitate and encourage qualified Egyptian companies that will operate in Sinai in various mineral projects in order to push projects forward. In the coming weeks, meetings will be held between the Ministry, the mineral resources executive leaders and World Bank experts. The whole Endeavour will be put in place aligned with the current review of the mineral resources new draft law in Egypt, which has already been prepared in cooperation with the World Bank experts.

UAE committed to development of alternative fuels

Mr Rashid Ahmed bin Fahad UAE minister of environment & water said that UAE will go ahead with its plans to further develop its oil industries, while at the same time seeking sustainable solutions to global energy bottlenecks and concerns.

Mr Fahad said that “UAE is well aware of the important role alternative fuels such as hydrogen and ethanol will play in fuelling the global economy and mitigating the impact of climate change. We definitely back any international effort to develop such types of fuels.”

However, he admitted that alternative energy will not replace fossil fuels in the foreseeable future. He said “Despite the great attention given by the international energy community to extraction of new sources of fuels, their share in the global fuel mix is still below the aspired goals. The world needs to develop new efficient technologies for using conventional fuels in sectors such as industry, services and transport and find fresh alternative sources of energy that are clean, safe and affordable.”

Mr Fahad said that Dubai Electricity & Water Authority has signed a MoU for commissioning a USD 6 billion hydrogen power generation station while the Masdar initiative has recently signed an agreement with BP and Rio Tinto to conduct a feasibility study on the front end engineering design of an industrial scale hydrogen fired power generation project with carbon capture and storage.

The project will be the largest of its kind in the world and will provide 500 MW of clean power.

Oil price could reach USD 300 a barrel – Expert

Arabian Business quoted Mr Matthew Simmons chairman and founder of Simmons & Company International as saying that the current highs of USD 100 per barrel oil are cheap and could top USD 300 per barrel within the next 5 years.

Mr Simmons said that "I think the supply is showing some very troubling signs that we might well have already peaked and started [to slow] down. If we have not, we are very close to it. Demand on the other hand shows absolutely no sign of slowing down because we are now at USD 100 a barrel, which I still think is a preposterously cheap price. It works out at just USD 0.15 a cup. A cup of gas will get a car with 6 passengers in, with the air conditioning on and go two miles. It is a bargain."

He said that "The price does not seem to have slowed anyone down. It works out as much as USD 378 a barrel. We will never run out. What we will run out of is light sweet oil because it is the easiest to get out of the ground. So all we will be left with are massive amounts of oil in places but it is going to tend to be stains on rocks or oil sands."

Last week oil reached a new record of USD 102, closing in on its inflation adjusted peak, as a slumping dollar on lackluster US economic data triggered a surge across commodities markets.

OPEC sees no need for output boost

Reuters reported that OPEC's Economic Commission Board is holding a 2 day meeting at the group's Vienna headquarters ahead of the group's March 5th 2008 gathering and it does not see a need for the group to raise its oil output.

An official of the board said that "So far, it seems things will not change. Let's see what happens tomorrow."

Oil hit a record high above USD 102 a barrel this week, partly on expectations that OPEC will not raise production. News that a fire struck a major European natural gas terminal also pushed oil to reach its all time high. Record weakness in the US dollar encouraged oil's gains, fueling a broad commodities rally.

Mr Sam Bodman US energy secretary reiterated calls for OPEC to open the taps as US consumers struggle with the effects of rising energy costs, the mortgage crisis and the credit crunch. But OPEC ministers said that the prices are rising on speculative buying and insist global supplies are ample to cover demand.

Chinese oil firm silent on Iran gas deal

It is reported that Chinese offshore oil and gas company China National Offshore Oil Corporation has kept silent on reports that it has clinched a USD 16 billion agreement to develop Iran's North Pars gas field, while a government spokesman said the project should be viewed strictly as a commercial affair.

Mr Liu Jianchao Chinese foreign ministry spokesman said that "Cooperation between China National Offshore Oil Corporation and Iran is a business act between enterprises. We believe that the actions to address this problem should not undermine normal trade and economic co-operation with Iran."

Meanwhile, Iranian oil ministry's official SHANA website said that a signing ceremony was planned, but there was no announcement that the signing had occurred in either the Iranian or Chinese press.

SHANA said that the agreement calls for China National Offshore Oil Corporation to invest USD 5 billion in upstream gas field projects and USD 11 billion in downstream liquefied natural gas plants. The deal was first announced in 2006.

If the deal goes through, it will be the second big oil and gas contract with Iran for energy scarce China in several months, following a USD 2 billion agreement by Chinese oil refiner Sinopec to develop the Yadavaran oil field. The North Pars field is believed to contain 80 trillion cubic feet of gas. The agreement is expected to supply China National Offshore Oil Corporation with liquefied natural gas for 3 new terminals it is building to help meet burgeoning demand in China's booming eastern and southern regions.

UAE to drive GCC non-oil GDP growth

Khaleej Times reported that UAE and Qatar are expected to post the highest growth in non oil and oil GDP sectors respectively in the GCC in 2008.

UAE is expected to achieve a record high growth of 21% in non oil GDP, while the oil GDP growth in Qatar would be fuelled by increasing sales of LNG. Projected to hit USD 218 billion, UAE's non oil GDP is also expected to grow at the fastest pace in 2008 among all the other GCC countries.

Non oil nominal GDP growth has been averaging at 16% for 2002 to 2006 period and is expected to go up to 21% in 2008. In 2008, UAE's nominal GDP is expected to increase by 16% from USD 188 billion to USD 218 billion mainly on the back of growth in sectors like manufacturing, construction, financial services and tourism. Oil GDP growth is expected to be at just 6.3% due to capacity constraints in oil output.

According to a report by Economist Intelligence Unit, UAE's real GDP growth would average 7.7% per annum over the next 5 years, while its budget surplus will stay at an average 6.3% of the GDP. However, economists at Merrill Lynch said that UAE's real GDP is poised to record a slower growth rate of 6.4% in 2008 and 6.1% in 2009 compared to an 8% surge in 2007 as result of soaring prices. In 2007, nominal GDP exceeded 16%.

The aggregate GCC current account surplus is expected to grow at a rate of 16% to reach USD 212 billion.

USD 12 billion to be invested in Port Rashid redevelopment

Emirates Business reported that Nakheel has invited a large number of businessmen, developers and investors in the contracting and real estate sectors to look into the massive redevelopment of Port Rashid, which is likely to see investments worth USD 12 billion.

The area will be completely redesigned to change the skyline to towering skyscrapers and luxury resorts from the present view of massive cranes and huge ships. Once completed, the in city stretch of the coast will be transformed into a major tourism attraction and lifestyle offering with residential, commercial and hospitality projects boasting iconic structures.

The proposed redrawing of the area includes land reclamation projects adding to the city’s coastline. The reconstructed project will accommodate about 200,000 people.

The redevelopment of Port Rashid Port along with The Universe comes in line with the initiative that Nakheel called Blue Communities.

Syria to get gas from Egypt by August 2008 – Report

It is reported that commercial volumes of gas will start flowing from Egypt to Syria in August 2008 through an Arab gas pipeline.

Mr Sameh Fahmy Egyptian oil minister said that "This is the first Arab network of its kind, representing an economic success as well as a political one."

As per report, testing of the pipeline from Al Arish in Egypt to Deir Ali in Syria is due to commence in March 2008. Supplies will gradually rise from 90 million cubic meters a year in August 2008 to a 2 billion maximum depending on Syria's needs.

The project was agreed in 2000, to supply Egyptian gas to Jordan, Lebanon and Syria.

Iran will back OPEC output cut – Report

Gulf Times quoted Mr Gholam Hossein Nozari Iranian oil minister as saying that Iran will back a plan to cut oil production at next month's OPEC meeting. Mr Nozari said that "There has been always a periodic cut in the second quarter of the year and it is predicted that OPEC will decrease its production at the next meeting."

OPEC left its official daily output ceiling at 29.67 million barrels, despite US calls for an output increase to reduce high oil prices that Western countries fear will stunt economic growth and fuel inflation.

Mr Chekib Khelil president of OPEC president said that the cartel would not approve an increase in output at its next ministerial meeting. OPEC's basket price of crude oil, based on production in 12 different countries, has reached a new record of USD US94.23.

In its February report, OPEC lowered its projections for a growth in oil demand this year in response to a slowdown in world economic momentum.

Tariff hikes may not reduce power consumption – Report

According to industry observers, Dubai's decision to increase power and water tariffs will not be enough to reduce consumption levels in the emirate.

As per report, the current tariffs of AED 0.20 a kWh for electricity and AED 0.03 for a gallon of water will remain the same for most domestic, commercial and industrial consumers. From the beginning of March 2008, heavier users will have to pay up to AED 0.33 a kWh for power and up to AED 0.04 for a gallon of water.

However, UAE nationals will be exempt from the changes and will continue to pay significantly lower rates than expatriates. Locals currently pay AED 0.07 a kWh for electricity and AED 0.015 for a gallon for water.

Another source in Dubai said that the government itself is one of the largest consumers. It added that "Even though they are a minority of the population, locals are the majority of water users. The biggest users are the palaces. The government is now pushing sustainability in Dubai and Abu Dhabi. It needs to get a handle on government consumption."

DEWA's decision to change its tariff structure was triggered by its poor financial performance in 2007. It made a loss of AED 223 million over the first seven months of the year, in part because tariffs have been unchanged since January 1998, even as consumption levels have risen.

At the same time, a lack of gas feedstock has forced DEWA to import power from Abu Dhabi and run its power plants on fuel oils, which are more expensive than gas.

Power consumption in Dubai is thought to be 20,000 kWh a year for every person in the emirate, while water consumption is 130 gallons a day per person.

Saudi Arabia plans to a leader in nanotechnology

Saudi Arabia has announced that it aims to establish itself as a regional leader in nanotechnology research in a bid to lessen its dependency on oil. Saudi Arab’s research & development organization King Abdulaziz City for Science & Technology has signed an agreement with IBM Research to establish a Nanotechnology Centre of Excellence.

Dr Turki bin Saud VP of King Abdulaziz City for Science & Technology said that "Strategically this is very important technology for us. We missed the train in the past but we think this is our chance to ride the train and be part of this developed world and we think the partnership with IBM will take us there."

Under the multi year agreement, Saudi scientists and engineers will work alongside IBM scientists and engineers on advanced nano science and nanotechnology programs in 3 fields of solar power, water desalination and petrochemical applications such as recyclable materials.

The work will be conducted between teams working at IBM laboratories across Europe and America and the KACST IBM Nanotechnology Centre for Excellence in Riyadh. It is the use of nanotechnology in the petrochemicals industry that bin Saud believes will have the biggest impact on the country's economy.

In the area of water treatment, research will focus on the use of new nano membrane materials for reverse osmosis seawater desalination. Meanwhile, research into solar energy will include a focus on novel materials for the direct conversion of sunlight to electricity, known as photovoltaic.

KPC Sinopec gas deal under evaluation – Report

Kuwait News Agency reported that the USD 5 billion petrochemical project of Kuwait Petroleum Corporation and China Petroleum & Chemical Corporation's in Nansha district in China is still under serious evaluation by environmental authorities.

Mr Liu Jianwei deputy director of the Nansha district government said that "The massive petrochemical base planned for construction in Guangzhou's Nansha district will be less polluting than people believe and is still under the State's environmental assessment. The plant in the provincial capital of Guangdong will recycle all its raw materials, adhere to the most stringent global environmental standards and employ state of the art technologies."

Meanwhile, Ms Liu Yiling director of the Guangdong environmental protection technological center said that the project violates the environmental protection guideline, which designates Nansha as an area not suitable for large oil refinery, iron and steel projects. She added that "The Nansha plant would worsen air pollution problems in Guangzhou and it will have adverse impact on the air quality of cities including Hong Kong and Shenzhen."

Kuwait Petroleum International, the international refining and market arm of KPC, has formed the JV with China's biggest oil refiner Sinopec to construct the integrated complex. The refinery will be designed to process 100% Kuwaiti crude supplied by KPC, with a capacity of 13 million tonnes per year or 260,000 barrels per day, while the ethylene cracker unit is slated to have an annual production capacity of 1 million tonnes.

CISA forecast for supply and demand for 2008

In a latest China Iron and Steel Association meeting on February 17th 2008, Mr Qi Xiangdong deputy secretary general made a market focused report on behalf of the association, which includes below analysis on steel supply and demand relation this year.

China major steel production forecast in 2008

In million tonnes

First, the steel industry possesses capability of sustainable growth, yet with a slower speed. As seen from fixed asset investment in steel industry and already formed capacity description, China has had 550 million tonnes crude steel production capacity by 2007 and how to release is subject to macro environment and other external factors. In 2008, following reasons are expected to explain constraint to release of steel capacity
1. Wide surge of iron ore, coal, coke and oil prices
2. Short power supply and tight transport, esp. during the snow storm
3. Financial strains, brought up by tight monetary policy
4. Backward capacity elimination

Second, apparent consumption of crude steel on steady rise

Third, steel product and billet and slab exports present signs of abating.
Export of China's steel products hit record high in 2007, bolstered by strong demand of the international market. In 2008, neither global economy nor Chinese policy is in favor of high growth of exports again. The government put forth a slew of tax measures, raised export cost and dented competitiveness of the products for export, esp. billet/slab and long products. Meanwhile, weakening economy of the developed countries leads to slower demand for steel products, which can be observed in North America and Europe. While trade protectionism is raised, against China's big export and depreciating US dollars squeezed profit margins of its exports too.
Its predicted export of steel product and billet and slab will fall by 20 million tonnes around this year, 60% YoY plunge for the former, and a tight supply condition on the global market may widen price gap and slow export drops in turn. Import of steel product is forecast at 16 million tonnes, similar to 2007.

Fourth, steel production enters high cost era, making resource-rich enterprises increasingly competitive. The global steel industry is to unleash fiercer competition on resource acquiring, like iron ore, coal, coke, crude oil etc. Aside from hike on raw material and fuel, labor force and fixed asset investment also add to the input cost, with concerns on the national policies on bank loan, export tax, environment protection etc. In this case, those who own iron ore, coal and coke resources and well-quipped, environment-friendly and cost-economy enterprises will be advantaged.

Fifth, production cost expected as primary support to high-perched steel price Steel price rises in 2007 demonstrated the supply and demand did not lose balance. This year, the production cost will continue to rise and set floor for steel price, while closing some mills down and reducing the output. Price fluctuation is normal as long as it's within a certain degree, and the key to prevent ups and downs is believed appropriate understanding of nation's regulatory policies and preservation of fair competition order.

(Sourced from MySteel.net)

Yunnan tin plans higher production in 2008

ITRI reported that China’s Yunnan Tin Company plans to increase output of refined tin, tin products and refined lead by 12% in 2008. In an announcement of its financial results for 2007 it said that combined production of the two refined metals and tin semis would rise from 99,950 tonnes last year to 111,376 tonnes in 2008.

As per report refined tin output last year was 61,129 tonnes. The company did not provide a separate official forecast for 2008. China’s Yunnan Tin Company produced 11,838 tonnes of tin chemicals and 16,662 tonnes of tin products in 2007 and expects to produce 15,000 tonnes of each this year.

Net profit of China’s Yunnan Tin Company, the Shenzhen listed subsidiary of the Yunnan Tin Group, almost trebled to CNY 601.2 million in 2007 from CNY 206.1 million a year earlier. Operating revenue increased by 69% to CNY 8,460.1 million.

Chinese ferromoly market bullish on demand from steel mills

Platts reported that China's domestic trade on ferromolybdenum is active this week due to rising domestic demand from domestic steel mills in China.

One local trader said spot trade remained firm. He said "More steel plants in China are likely to ramp up their production in the second quarter of 2008 and this will further increase their demand for the raw materials including ferromoly.”

Another trader said that domestic demand in China for steel products traditionally picked up in March. He said that "I heard major Chinese steel plants are ramping up their output later in March and they are likely to purchase more ferromoly sooner or later."

According to industry sources, the export price of ferromoly was now quoted steady at USD 79 per kilogram to USD 80 per kilogram FOB China in thin trade.

Baosteel may change to monthly pricing mechanism

It is reported that Baosteel might dump its long time quarterly pricing system and revise the price on a monthly basis in near future as it changed the wording in the latest statement from Q2 price into April 2008 price.

It seems that Baosteel intends to adopt a more flexible pricing scheme in light of current volatile market sentiment. In addition, Baosteel has also varied the price increase magnitude for same products with different grades.

Baosteel recently raised its second quarter prices for major steel products by a higher than expected 17% to 20% to reflect higher iron ore costs and to close the gap between Baosteel's Q1 ex works prices and current market prices.

(Sourced from MySteel.net)

Chinese domestic steel price increase after spring festival

It is reported that China's steel prices in the domestic market has surged up by an average of CNY 200 per tonne to CNY 300 per tonne for majority varieties or more than that for some others after Chinese spring festival.

The movement of price in shanghai market are as follows

(In CNY)

As per report during the Chinese holiday steel products in Shanghai recorded rarely seen wide price gains and given close bearing between market price and the steelmakers' price policy works price later February 2008 is likely to boost the market up further.

(Sourced from MySteel.net)

BHP raise Mn ore price for China

It is reported that Australia's BHP Billiton has hammered out Mn ore price for China in the second quarter. It has raised quotation to USD 11.7 per dry metric tonne unit to USD 11.9 per dry metric tonne unit for 44% small grain Mn ore, USD 12.8 per dry metric tonne unit to USD 13 per dry metric tonne unit for 48% Mn ore and USD 12.1 per dry metric tonne unit to USD 12.3 per dry metric tonne unit for 44% lump ore.

Insiders forecasts on the Mn ore prices in the coming quarter in last week and circulated that price for high grade Mn ore would rise by USD 2 per dry metric tonne unit. Latest prices indicate the markup comes near USD 3 per dry metric tonne unit. Current prices have gained astonishing USD 10 per dry metric tonne unit compared with the same period of last year.

As per report 48% Australian Mn ore was priced at USD 6.8 per dry metric tonne unit, USD 7.18 per dry metric tonne unit and USD10 per dry metric tonne unit to USD 10.1 per dry metric tonne unit respectively in the third and further of last year and the first quarter of 2008. The resource will be offered at USD 12.8 per dry metric tonne unit to 13 per dry metric tonne unit in the coming quarter.

(Sourced from MySteel.net)

Dalian shipyard warns of sector slump ahead

It is reported that China's No 1 shipyard expects rosier 2008 earnings after having secured better prices, but warned slowing orders for new ships as a United States economic recession threatens to crimp global trade.

Mr Zhang Tao vice president of Dalian Shipbuilding Industry Company Ltd said that Dalian Shipbuilding Industry Company Limited, the world's No 4 builder vessels, is keeping a wary eye on an industry that China increasingly dominates. He added that it hopes to ride out any downturn by focusing on serving state backed Chinese clients and focusing more on the oil tankers and mid sized container ships it specializes in.

Mr Zhang said “We are keeping a close eye on whether the market has started to turn south after the boom of past years. We have our running shoes ready. When the bear comes, we will run faster than our rivals. He said in 2007 we had some low priced orders to fill. But contracts for this year's production were all secured at good prices.”

Mr Zhang the pace of business was definitely decelerating. Orders this year are unlikely to match the record Dalian Shipbuilding set in 2007. And cancellations had begun to emerge.

Dalian Shipbuilding plays a major role in Beijing's plan to hoist China atop the global shipbuilding sector. The country won over 40% of the world's ship orders in 2007, putting it on track to become the world's largest shipbuilding nation by 2011.

LME steel futures to propel Shanghai plans

Reuters reported that Chinese investors are warming to the idea of steel futures as the new billet contracts by the London Metal Exchange debuts, but they are more likely to participate once Shanghai offers a home grown product.

The report added that LME steel billet futures that launched recently through electronic and telephone trading aimed to offer USD 500 billion industry a hedging tool against price risk.

China's Iron and Steel Association has dropped its longstanding opposition to steel futures but Chinese steel mills that produce about one third of the world's steel are more likely to participate in a futures market once the Shanghai rebar and rods futures are launched.

Mr Yang Yinghui with Cofco Futures one of China's largest futures brokers said "If London succeeds in setting a benchmark that makes it easier for exporters. And if the LME benchmark is there, it also makes it easier for the Shanghai Exchange to come out with its own product."

Mr Yang said Chinese steel mills may eventually use steel futures to lock in sales prices and offset rising raw materials costs. He said "The recent announcement of a 65% rise in iron ore costs makes it even clearer that mills need to hedge their exposure."

Coal mine fire kills 9 in Shanxi

Xinhua reported that 9 people were killed in a coal mine fire in north China's Shanxi Province on Sunday.

According to Shanxi Provincial Work Safety Bureau the accident occurred around 4:00 AM when the conveyance belt of the mining machine caught fire at the Fengjialing Coal Mine in ShuozhouCity.

The report added that 27 miners were working in the shaft when the fire broke out. Twelve of them escaped from the scene and rescuers saved another six.

The cause of the accident is under investigation.

The coal mine, with an annual production capacity of 90,000 tonnes is a licensed one.

Iron ore price negotiations – CCCMC recognizes Vale pricing

According to China chamber of commerce of metals, minerals and chemicals importers and exporters representing the steel traders' interests noted that the price agreement between Baosteel and Vale is in accordance with the international iron ore trade rule and practice.

This suggests that China is not going to compromise to Australian miners' extra requests. To date, there is still no result for the negotiation between Chinese buyers and Australian miners.

CISA and CCCMC said global steelmakers participating into the talks and Australian miners are continuing the debate as Rio Tinto kept asking for freight compensation on top of Vale's settled price and 71% hike on the price. But it's clearly against international iron ore trade rule and practice.

(Sourced from MySteel.net)

Laigang Group rises steel pipe prices

It is reported that China’s Laigang Group has announced to increase some of the steel price.

The new price rise will be:
1. Carbon structure steel price up by CNY 320 per million tonnes.
2. Alloy steel and gear steel price up by CNY 300 per million tonnes.
3. Wire rod price up by CNY 200 per million tonnes
4. CrMo steel price up by CNY 300 per million tonnes.

(Sourced from MySteel.net)

Chinese construction industry getting greener

Xinhua reported that China's green construction system, with a market value estimated at CNY 1.5 trillion is growing through energy efficient projects.

Mr Qiu Baoxing deputy head of the ministry of construction of China said the construction area involved had increased by 2 billion square meters each year nearly half of world's total.

Mr Qiu said the total cost of these projects was estimated at CNY 200 billion to CNY 300 billion. He said that energy companies would bear much of the cost, such as the initial construction expenses. They would benefit afterwards from the operation of energy efficient systems.

Mr Qiu said that 97% of new construction designs in China met energy efficiency standards and 71% of on going construction projects some designed before the standard was introduced also did. These figures were up 1% point and 17% respectively from a year earlier. He also said that an expo of green construction and related products would be held in Beijing in late March 2008. Developed countries including the United States, Germany, the United Kingdom and France would participate.

As the largest construction market, China also has the largest amount of energy to conserve.

Sino Hua-An defers buy of China steelmaker

Sino Hua-An International Bhd which reported a 10.9% rise in net profit to MYR 127.52 million in its financial year ended December 31st 2007 despite a margin squeeze due to rising coal prices is deferring its acquisition of China’s Linyi Jiangxin Steel Co Ltd as it weighs the effects of a recession in the United States.

Mr Tunku Naquiyuddin Tuanku Jaafar executive chairman of Sino Hua-An said “We are still not ready to sign a MoU yet as we are a bit cautious in view of the US downturn. Another important point is that this is really the worst time to go to the bank to get financing for a deal like this. He said we would like to see an easing of the financial situation before we go further, but the project is still on and it was also possible it could negotiate a better deal at a later date.”

Sino Hua-An produces metallurgical coke and it’s by products. Metallurgical coke is a critical raw material used as the energy source for the manufacturing of steel. Its FY07 revenue rose 16.71% to MYR 852.73 million from MYR 730.66 million due to the continued robust and positive pricing of metallurgical coke and it’s by products.

Mr Cedric Choo executive director of Sino Hua-An said growth in FY08 would be driven by the increased capacity of its coke plant, which now stands at 1.8 million tonnes annually from 1.2 million tonnes previously. He said the company targeted to increase revenue in the year ending December 31st 2008 to MYR 1.2 billion with the additional capacity of its plant. It is also looking into investing in environmental equipment to further adhere to China’s strict pollution control regulations.

Mr Choo added that the management is also preparing a preliminary report on a secondary listing, most likely to take place in Hong Kong, out of other possible markets of Singapore and London. The report was expected to be completed next month.

CSIC expects to enter world top 500 by 2015

One of the China’s largest shipbuilders China Shipbuilding Industry Corporation is eying a to rank among the global top 500 by 2015.

Mr Li Changyin GM of CSIS said the company now held shipbuilding orders with more than 260 million tonnes up by 84% YoY.

Latest statistics showed that the company's total revenue reached CNY 87.1 billion in 2007, while the revenue from main business and the profit stood at CNY 80.6 billion and CNY 5 billion respectively.

CSIC also said it would finish shipbuilding and repair bases in eastern Qingdao and northeastern Dalian by the end of 2008, and initiate several other major construction projects this year.

According to company plan, the total revenue and main business revenue would both top 100 billion yuan in 2008.

NLMK gets Bureau Veritas certificate for SBQ grade

NLMK announced that it has successfully passed a re certification audit conducted by the certification agency Bureau Veritas for compliance with its rules governing shipbuilding slabs.

The released added that in the course of the audit, Bureau Veritas inspected the production processes of NLMK’s BOF shops and its quality control departments as well as the existing document flow of the Company’s quality management system and also tested samples of steel produced by NLMK and shipped to Europe to ensure compliance with the rules of Bureau Veritas.

The auditors have confirmed that NLMK meets the requirements of international and national standards related to the quality of steel products. The Company will be granted a new five year certificate of shipbuilding slabs compliance with the Rules of Bureau Veritas.

Apart from Bureau Veritas, NLMK’s products for shipbuilding have been certified by other national classification societies and members of International Association of Classification Societies including Germanischer Lloyd of Germany, Lloyd's Register of England, Det Norske Veritas of Norway, American Bureau of Shipping, Registro Italiano Navale and Russian Maritime Register of Shipping.

Centravis posts 2007 results

Ukrainian Centravis holding, a company involved in the seamless stainless tube market summarized its 2007 performance.

Mr Yuriy Atanasov CEO of Centravis holding said the company’s 2007 turnover made up USD 250 million which was USD 90 million better than in 2006. The holding EBITDA annual profit was USD 40 million. Its market shares in 2007 made up 70% in Ukraine, 42% in CIS countries and 9% in Western Europe. As of January 1st 2008, the total number of the company employees has grown up to 2600 people with more than 80% of them working at the Centravis Production Ukraine LLC production facilities at Nikopol in Dnipropetrovsk Oblast.

Mr Vitaliy Lyutyk CEO of Centravis production Ukraine LLC who was also present at the press conference informed that the total volume of the products manufactured in 2007 made up by17,000 tonnes. All products are distributed among the major product segments as follows
General tubes and pipes - 4%,
Heat exchanger tubing - 23%,
Boiler tubes -17%
Instrumentation tubing - 9%
Hollow bars - 7%
Furnace tubes - 2%
Ni-alloy tubes - less than 1%.

This intensive development would be impossible without massive investment. In 2007 USD 42.5 million came invested in the production facilities of Centravis international holding. In 2008 the total volume of investment in production equipment and technologies will be increased to USD 120 million. This money will be raised mainly due to credits to be received from the Western banks, as well as due to in house bond emission at Centravis Production Ukraine LLC for the sum of UAH 150 million. The primary bond allocation is planned for March 31st 2008.

According to forecasts, in 2008 the mill’s productivity will reach 20,500 tonnes and Centravis holding turnover will make up USD 287 million. The EBITDA profit is predicted to be about USD 37.6 million.

Norilsk borad begins merger negotiations with Metalloinvest

Bloomberg reported that Norilsk Nickel will start talks with the management of iron ore and steel producer Metalloinvest on combining the two companies.

Ms Yelena Kovalyova spokeswoman of Norilsk told Bloomberg that the Norilsk board of directors met Friday and agreed to begin negotiations on a possible merger. She added that "Metalloinvest said they are ready to provide all information to facilitate this deal.

Mr Alisher Usmanov owner of Metalloinvest said on February 21st 2008 that he wanted to combine Metalloinvest with Norilsk.

Mr Maxim Gubiyev CEO of Metalloinvest had said that the deal would create an USD 85 billion metals company.

Norilsk is being advised on the deal by UBS, while Dresdner Kleinwort, a unit of Dresdner Bank, is advising Metalloinvest.

Gazprom to cut gas exports to Ukraine by 25%

Russian media reported that Russian natural gas giant Gazprom will carry out its threat to cut gas exports to Ukraine by 25% from Monday

Mr Sergei Kupriyanov spokesman of Gazprom said "Considering that the situation has reached a dead end, to guarantee its own economic interests, Gazprom will reduce its gas supplies to Ukrainian consumers by 25% on March 3rd 2008 at 10.00 AM.’

Mr Kupriyanov said arrears for gas consumed in 2007 have still not been completely settled. Un formalized consumption of gas is going on this year. By this moment, about 1.9 billion cubic meters of Russian gas to a sum of about USD 600 million has moved no further than Ukraine.

Mr Kupriyanov said "Moreover, no agreements to set principles for further cooperation in the gas industry have been signed. He said since the situation is in a deadlock, Gazprom will reduce its supplies for Ukrainian consumers by 25% on March 3rd 2008 to safeguard its economic interests."

Gazprom has threatened to halt supplies if Ukraine fails to pay back USD 1 billion before March 14th 2008.

Bagliykoks to commission coke battery 7 in August

Ukranews reported that Bagliykoks intends to commission coke battery #7 with a capacity of 0.5 million tonnes per annum by August 2008. The battery is now idle.

Evraz corporation, which acquired 3 coke producing plants BKOK, Dniprodzerzhynsk Coke and Dniprokoks in late 2007 from Pryvat Group intends to fully secure them with coking coal. This would be possible after Evraz arranges problems related to last year's accidents at its Ulyanovskaya and Yubileynaya coalmines in Russia.

The source at Ukranews said increased coke production at Evraz's coke plants in Ukraine could result in a 3% increase of the total domestic coke output in 2008. He added that additional coke volumes will probably be sold in Ukraine as there is an acute coke shortage at Illich Mariupil Steelworks, which decreased purchases from Avdiivka Coke Plant.

Klyuchevsk Ferroalloy plant to cut down its production

FIS reported that the world's largest producer of metallic chromium, Klyuchevsk Ferroalloy Plant was forced to cut down production volumes planned for 1Q 2008 for the delay in the supplies of chromium ore from Kazakhstan.

The report added that Kazakh suppliers failed to fulfill their obligations because of anomalous snowfalls and frosts. The supplies are expected to be back to norm in the middle of March 2008.

Oriel Resources to boost ferrochrome capacity

It is reported that Oriel Resources has launched the remaining two furnaces at its Russian ferrochrome smelter after a short delay relating to high raw material prices and now expects capacity to hit 148,000 tonnes per year and is expected it to eventually reach 180,000 tonnes per year in 2011 as the second phase of the project comes on stream.

Referring to its Tikhvin smelter in NW Russia, it said that "The remaining two furnaces have been commissioned and are due to be fully operational by the end of the first quarter.

The third and fourth furnaces at Tikhvin, 200 kilometer east of St Petersburg, were ready in December but Oriel delayed their launch due to a global shortage of chromite ore.

Gazprom and E ON ink MoU for power station in Germany

Gazprom announced that it has signed a MoU with ON AG in Dusseldorf to jointly build and operate a gas turbine power station in the vicinity of Lubmin. Near Lubmin, there is a German landfall of the projected Nord Stream gas pipeline that will supply natural gas for the facility operation.

MoU provides for the parties to make a final investment decision on the project in 2009. It is planned that the gas turbine power station will be rated at 1200 MW. The facility will be commissioned in 2011.

Gazprom and E.ON will set up a joint venture on a parity basis in order to implement the project.

Only Naftogaz to supply gas to Ukraine from now on

Interfax cited Ms Yulia Tymoshenko PM of Ukraine as saying that only Naftogaz Ukrainy, the Ukrainian national energy provider, will be authorized to supply natural gas to the country starting from March 1st 2008.

Ms Tymoshenko said "We made a clear decision that, starting from March 1, not a single bit of gas will be supplied to anyone but Naftogaz Ukrainy. There will be no UkrGaz-Energo. She said UkrGaz-Energo's registration as a business company will be annulled and the company will be stripped of the license to sell gas on March 1st 2008.

Ms Tymoshenko said "This Company will cease to exist on March 1st 2008. She said that she was sure that there will be no restriction of gas supply to Ukraine on March 3rd 2008 and there will be no gas supply suspension."

KBR to conduct feasibility study for Trans Caspian pipelines

Interfax reported that US Company KBR formerly Kellogg, Brown& Root has won the tender to conduct a feasibility study for the construction of Trans Caspian oil and natural gas pipelines announced by the State Oil Company of the Azerbaijani Republic.

The feasibility study will be financed with a USD 1.7 million grant from the US Agency for International Development to State Oil Company of the Azerbaijani Republic.

State Oil Company of the Azerbaijani Republic said KBR which is an engineering and construction company has teamed up with the Granherne Company. An Azeri design institute, McDermott and Azekoservis and KazEcoProject will be the subcontractors.

KBR is to make initial designs of pipelines, describing their commercial, technical and legal characteristics to propose charges for shipping oil and gas to world markets and contact principal transit countries Kazakhstan, Georgia and Turkey and potential gas importers in Europe.

Russia starts construction of 5 tankers for Turkey's Palmali

RIA Novosti reported that the Nizhny Novogrod-based Krasnoye Sormovo shipyard has launched the construction of five Project RST22 tankers for the Turkish shipping company Palmali Group.

Novogrod-based Krasnoye Sormovo shipyard said the keels of five IMO2 Novaya Armada Project RST22 tankers have been laid at the shipyard.

Krasnoye Sormovo and Palmali signed the tanker contract last December. Prior to that, in February 2007, they clinched a deal for the first four tankers. The shipyard will thus build a total of nine vessels, with the last one due to be constructed in 2009. The project designed by the Odessa based Maritime Engineering Bureau has the following specifications, length, 139.95 meter, breadth 16.60 meter, deadweight sea/river, 7,000/4,700 tonnes, draught, 4.6/3.6 meter and speed, 10.5 knots.

In August 2007, Krasnoye Sormovo rolled out a Project 19619 tanker with a DWT of 13,000 tonnes for Palmali. The vessel, christened Massaly after a region in southeast Azerbaijan will operate in the Caspian Sea and be based in Azerbaijan. The tanker, designed to carry crude and oil derivatives has a double hull, preventing oil spills in the event of accidents.

The Massaly, 150 meter long, 17.3 meter wide and with a crew of 21 and capable of 20 day long voyages without refueling is the largest tanker in the Caspian basin capable of calling at any port and accessing other seas through the Volga Baltic sea route.