June, 06 2008
Domestic steel price hike in India inevitable after July
It seems that a rise in Indian domestic steel prices is inevitable after July as steelmakers are reeling under huge cost pressures.
Mr SK Roongta chairman of SAIL told BL that “We have committed to the government to hold the prices until July. Beyond that, we will have to review our prices. We will definitely have to take a re look at the prices as cost pressures are enormous. To what extent and when exactly we will be raising the prices is difficult to say now.”
He said that “In fact all cost elements such as ocean freight rate, internal freight rate and fuel prices had been rising. There has been a 100% rise in input costs in one year. These are unprecedented times. We have not seen such major movements in raw material as well as steel prices in such a short time.” Mr Roongta pointed to the big spurt in the prices of coking coal globally caused mainly by the flooding of coal mines in Australia. Coking coal prices had gone up by three times within one year from USD 96 to USD 98 to USD 300 to USD 305 a tonne now.
Mr Roongta added that “Despite these pressures, the domestic steel prices are almost 25% to 30% lower than international prices. Even in long products, prices are about 20% lower than the global prices.”
Vedanta to decide steel JV partner by 2008 end - Report
Bloomberg reported that Vedanta Resources Plc is likely to agree on a JV partner for a 5 million tonne steel plant by the end of 2008 and is talking with European, Japanese and Indian companies.
As per report, it will take 3 years for the first part of the project to be completed once a partner is chosen.
The partner may be given a majority stake in the venture in Orissa and Vedanta will supply the project with iron ore.
Fitch assigns 'AAA (ind)' rating for TATA Steel long term debt
Fitch Ratings has assigned a national rating of 'AAA (ind)' to TATA Steel Limited's long term debt totaling INR 58.5 billion. At the same time Fitch has affirmed TATA Steel's national issuer rating at 'AAA (ind)', its INR 20 billion non convertible debenture program and its INR 9.75 billion short term debt rating at 'F1+(ind)'. The outlook is stable.
Nalco to invest INR 40,000 crore in expansion projects
Kalinga Times reported that Orissa based National Aluminum Company Limited has drawn up ambitious growth plans involving massive investment of around INR 40,000 crore in next 5 years. The proposed investments would be made in alumina smelter and power projects in Indonesia, South Africa and Iran and Brownfield and Greenfield growth projects within India.
Nalco, which now enjoys more managerial powers and commercial autonomy to chart its own course in the world market, has decided to start its third phase expansion after the completion of the second phase expansion work. The second phase expansion is under implementation at an investment of INR 4092 crore and the same is scheduled to be completed by 2008 end.
Now, plans are afoot for 3rd phase expansion, which is likely to entail expenditure to the tune of INR 6000 crore. Under this expansion, the bauxite mining capacity shall be enhanced to around 90,000 tonnes, alumina refining to 30,000 tonnes, aluminum smelting to 630,000 tonnes and power generation to 1700 MW per annum. The proposed third phase expansion is likely to entail an expenditure to the tune of INR 6000 crore.
Besides, Nalco also has plans to set up at least two new projects in India. A mines and refinery complex is being planned in Andhra Pradesh in which the bauxite mines capacity will be 4.2 million tonnes, while the refinery will have a capacity of 1.4 million tonnes. The draft MoU for the project is under negotiation with the Andhra Pradesh government and the project will involve an investment of INR 7000 crore.
About overseas project, Nalco has already signed a MoU with Indonesia to set up a 500,000 tonne smelter and a 1250 MW captive power plant. It plans to invest around INR 14,000 crore in this Greenfield project. Besides, it is exploring the possibilities of setting up a smelter and power plant in South Africa at an investment of around INR 16,000 crore.
In Iran, a 310,000 tonne smelter has also been planned, in two phases, as a JV with ALPHA. The MoU for the project was signed in March 2008. The project cost will be approximately INR 8000 crore.
Power demand in India to reach 335 GW by 2017 - Report
According to the McKinsey & Company’s Electric Power & Natural Gas Practice study, with soaring crude oil prices, the time has come for the Indian power sector to explore substitutes. If India continues to grow at an average rate of 8% for the next 10 years, power demands may rise from the present 120 GW to 315-335 GW by 2017, 100 GW higher than current estimates.
The study said that India is gradually progressing towards a service led economy from an agrarian economy. Supply and production have increased but demand has doubled. It added that the demand can only be met through a 5 to 10 fold rise in power production. This means investments in the power sector will increase over USD 600 billion in the next 10 years.
Consumer demand across rural and urban sectors is growing at 14% over the next 10 years, whereas India’s GDP growth is just 8% a year. The second reason is the government’s plan to provide electricity to everyone by 2012. This means 23 million below poverty line households should be added in the power grid. The third reason is the 24X7 supply of electricity to consumers and the industrial demand to switch to expensive diesel based power.
When the demand rises to 335 GW, India’s power sector will have to generate 415 to 440 GW for plant availability adjustments and 5% spinning reserves. Adding 300 GW by 2017 will mean increasing the annual capacity by 30 GW against the current growth capacity of 9 GW.
The McKinsey & Company’s report, however, said that India will be able to add only 160-180 GW by 2017 even in case of best development trajectory. If these estimates are to be broken, India needs to increase its capacity at a fast pace.
Mercator Lines inks USD 320 million contract with TATA Power
Mercator Lines Singapore Limited has announced that it signed a new 4 year contract worth USD 320 million with TATA Power Company, boosting rates to carry coal.
Mercator Lines said that the two companies renegotiated an existing contract. It added that the contract is between June 2008 and May 2012.
World Environment Day observed at SAIL SSP
World Environment Day was celebrated at Steel Authority of India’s Salem Steel Plant on June 5th 2008. Mr KP Bharathan GM (projects) of SSP hoisted the environment flag at the works office premises of the plant.
Calling for commitment to reduce carbon dioxide emissions by adopting energy efficiency measures and bringing changes in life style, Mr Bharathan administered the oath to the employees to preserve environment.
This year the theme given by the UNEP to SAIL is 'Kick the habit! Towards a low carbon economy.' In the context of industries, it is especially important to get energy efficient in order to reduce carbon emissions besides conserving energy.
In this direction, SSP employees took the pledge "On this World Environment Day, let us commit ourselves to reduce carbon dioxide emissions in future by adopting energy efficiency measures and by bringing changes in our life styles."
In order to create awareness in the periphery, targeting the school going children, a Quiz was conducted in Athikattanur village. The level of enthusiasm amongst the children to learn about the measures to control the pollution to save the air, water and earth was very encouraging.
It may be noted that, to preserve the ecological balance as early as in 1972 in the Stockholm Conference on Human Environment, the United Nations General Assembly established the World Environment Day and adopted the resolution leading to creation of United Nations Environment Program with the commitment to consider actions and to address the common tasks for preserving all life on earth.
Suzlon inks MoU to strengthen presence in US
It is reported that Suzlon Energy is among 6 others who have signed an agreement with the US government to help the country generate 20% of its electricity using wind power by 2030. The pact may aid Suzlon win more orders for power equipment and improve manufacturing technology.
As per report, US Department of Energy has signed a MoU with GE Energy, Siemens Power Generation, Vestas Wind Systems, Clipper Turbine Works, Suzlon Energy and Gamesa Corporation to improve industrial wind power manufacturing capabilities.
The 6 companies will collaborate to improve the quality of turbine components and to reduce installation and operating costs. Further, the partners, along with the US Department of Energy, will address environmental and technical issues and develop standards for turbine certification and grid connection.
Suzlon has already captured over 8% of the US wind energy market in the recent 2 to 3 years. It has received a supply order of 600 MW in 2 years from Horizon Wind Energy of Texas.
US is the fastest growing wind energy market in the world with 30% annual growth in the last 5 years and with over 25% of the global installed capacity. In 2007, its cumulative wind energy capacity reached 16,818 MW with more than 5,000 MW of wind power capacity added in 2007 at an investment of USD 9 billion. Wind power is the second largest new power generation source in the US now after natural gas.
India becomes 3rd largest importer of Chinese tyres
BS reported that, as Indian tyre manufacturers reel under the high prices of raw materials like natural rubber, crude oil and carbon black, they face a tough challenge from China even as its exports to India climbs multi fold.
According to data provided by Automotive Tyre Manufacturers Association, from 39th rank in 2002-03, India climbed to the 3rd position in 2007. During April 2007 to February 2008 period, Indian imports from China surged almost two fold to 1.2 million units from 660,000 units. The Indian tyre market comprising tyres of cars, UV, OTR, trucks and buses, is worth INR 20,000 crore currently.
Mr Rajiv Bhudhraja director general of ATMA said that "The average price of a pair of Chinese truck tyre is about INR 7,500, which is significantly lower than Indian prices which retail at about INR 13,000 to INR 15,000. More than 100,000 Chinese tyres are imported every month, totaling to about INR 900 crore yearly. More alarming is the fact that people have changed their perspective about products from China, which was once thought to be sub standard."
He added that "China has been able to sell radial tyres at such lower rates to India because of the very low cost of manufacturing in that country and also due to under voicing the imports and selling them without paying VAT here. In addition, China has huge capacities of radial tyres."
The domestic tyre market consists of leading players like MRF followed by Apollo, Bridgestone, CEAT, JK Tyres, Michelin, Goodyear, among others.
Adhunik Metaliks 2007-08 net profit up by 3.85% YoY
Adhunik Metaliks has posted net profit of INR 21.90 crore for the January to March 2008 quarter up by 2.9% YoY as compared to INR 21.58 crore during January to March 2007 quarter. Net sales for the quarter surged by 66% YoY to INR 311.92 crore as compared to INR 188.03 crore.
For year ended March 31st 2008, net profit rose by 3.85% YoY to INR 80.45 crore as against INR 77.47 crore for the year ended March 31st 2007.
In a separate press release, Adhunik Metaliks has informed that its board has approved initial public offer of its 100% subsidiary Orissa Manganese & Minerals. The board of directors has also declared a dividend of 12% for the financial year ended March 31st 2008.
Cochin Shipyard launches 5 platform supply vessels
BL reported that Cochin Shipyard Limited created history on June 2nd 2008 by simultaneously launching 5 platform supply vessels for different owners. The ships launched were the 7th in a series of 8 ships under construction for Deep Sea Supply of Norway.
The platform supply ships, which were launched on June 2nd 2008, are of the popular UT-755 L design for the offshore industry. The vessel is designed for satisfying the specific demands for transport of deck cargo, pipes, liquid cargo and cement or barite among others, and unloading to rigs, production platforms and pipe laying barges among others. They are the workhorse of the offshore oil field industry which acts as a lifeline carrying operational supplies and stores to far off installations.
The ship is built and classified under the most stringent rules and regulations of Det Norske Veritas and is classed for unmanned engine room and dynamic positioning. The vessel also satisfies ‘CLEAN’ notation of DNV, which signifies high standards of environmental safety.
Kesoram Industries suspends work in WB unit
BL reported that Kesoram Industries Limited has suspended work in Kesoram Spun Pipes & Foundries section of the company due to day to day low production, quality problems and high rejection leading to serious financial crisis.
SAIL SSP organized free medical camp
It is reported that Steel Authority of India’s Salem Steel Plant, under its corporate social responsibility, had organized a free medical camp at Karumandurai in the Eastern Ghats on June 1st 2008. Dr TN Muralidhara, chief of medical & health services at SSP had inaugurated the camp.
A team of doctors from SSP supported by para medical crew conducted the camp. Medical cards were issued to the patients giving personal details such as name, age, sex, address etc and medical information such as weight, blood sugar level, blood pressure reading, diagnosis of the ailment, treatment given along with medical advice.
A total of 540 patients benefited from the medical camp and a total of 27 patients have been identified for further treatment at SSP’s main hospital free of cost.
3 port projects in Orissa await defense ministry approval
Exim News Service reported that three port projects at Inchudi, Bahabalpur and Chandipur in north Orissa are awaiting a green signal from the union defense ministry.
Mr Jayanarayana Mishra transport & commerce minister of Orissa said that the state government is scouting for ways to avoid the restricted areas while going ahead with the port projects. He added that the state government would study the recommendations made by IIT, Chennai, on how to avoid restricted sites and develop the ports at places earlier identified by it.
The Orissa government is striving to develop about a dozen small ports along its 480 kilometers long coastline. But, it faces hurdles from not only the defense ministry, but also some environmental organizations citing danger to the existence of rare sea creatures.
While the state government has identified at least 13 locations for developing ports, the sites are yet to get clearance from the defense & environment ministries.
Zoom Developers moves to HC in Vizhinjam bidding matter
Exim News Service reported that Mumbai based Zoom Developers is reported to have moved the Kerala High Court against the state government’s decision to disqualify its consortium from bidding for building the international container transshipment terminal at Vizhinjam. The Court is expected to take a decision on the issue next week.
An official of Zoom Developers said that "There was a mistake on the part of those who did valuation of the bidding documents. They did not interpret the agreement properly because of which we were disqualified from bidding. For the project bidding, Zoom Developers has joined hands with Portia Management Services and the UK’s Peter Fraenkael and Partners."
He added that Zoom made a representation to the government and along with it went to the court seeking removal of the disqualification.
According to a Zoom Developers statement, the disqualification was not good for the image of our company and we wanted to remove the stigma attached to it.
However, an official of the Vizhinjam International Seaport Limited said that the committee entrusted with the job of scrutinizing the bidding documents found some discrepancies in the bid documents submitted by Zoom Developers and hence the consortium was disqualified from bidding in the second round.
Jai Corporation appoints Mr Gaurav Jain as new MD
Jai Corporation Limited recently announced that its board has accepted the resignation of Mr Virendra Jain as MD of the company with effect from June 4th 2008 and has appointed Mr Gaurav Jain as new MD with effect from June 4th 2008.
Jai Corporation said that Mr Virendra Jain will continue to remain on the board as a non executive director and has been appointed as VC of the board of directors.
GAIL to take up distribution projects in 17 cities
GAIL (India) Limited has recently floated a 100% subsidiary called GAIL Gas Limited to take up city gas distribution projects in 17 cities in the first phase. It has identified 230 cities for city gas distribution projects in phased manner.
The city gas distribution in the first phase will be taken up through its subsidiary company, in authorization from Petroleum & Natural Gas Regulatory Board. The subsidiary company has already been registered with an initial equity of INR 200 crore. Corresponding to this equity amount, debt shall be arranged amounting to INR 300 crore.
GAIL Gas will also take up the compressed natural gas corridor project, which involves an estimated capital outlay of INR 35 crore for setting up CNG stations along the highways.
Pre PIB meeting to take up dredging issue of JNPT channel
BL reported that the much delayed plan of deepening the approach channel of the Jawaharlal Nehru Port Trust will be taken up in a pre Public Investment Board meeting this week.
Mr SS Hussain chairman of JNPT said that it plans to dredge the channel and increase the draught from 12.5 meters to 14.5 meters to be able to handle 6,000 TEU vessels.
He added that some of the important projects would include deepening of the approach channel, purchase of new cranes, deepening of the shallow berth and possibly setting up of a fourth container terminal pending for a long time.
JNPT had handled 55 million tonnes of cargo in 2007-08 fiscal as against 44 million tonnes in 2006-07 fiscal. The total container traffic was 51 million tonnes as against 40 million tonnes, dry bulk cargo was recorded at 740,000 tonnes as against 610,000 tonnes, liquid bulk stood at 316,000 tonnes as against 337,000 tonnes and break bulk was 56,000 tonnes as against 14,600 tonnes.
For current financial year, JNPT plans to invest INR 200 crore on its capacity expansion plans. It has earlier announced a CAPEX of INR 7,000 crore to be invested over a period of 5 to 6 years on its 32 ongoing projects which would enable it to handle more capacity of cargo and bigger ships.
Urjankur Nidhi invites EoIs for bagasse co generation projects
Urjankur Nidhi Trust is inviting expression of interest from offshore and mining contractors for bagasse based co generation projects on build own and transfer basis.
These projects, with a capacity of 15 to 45 MW each, will be implemented through special purpose vehicles. The power will be generated using multiple fuels that will include bagasse, cane trash, agro waste and coal. The steam generation parameters will be 110 kilogram per square centimeter pressure and 540 degree C temperature.
Gujarat to set up logistics parks along freight corridor
Exim News Service reported that the government of Gujarat has announced plans to set up logistics parks along the Delhi Mumbai Freight Corridor. As per report, Gujarat Industrial Development Corporation will be coordinating with the DMIC project administration in this respect.
The state government proposes to establish 3 new economic corridors that will incorporate 4 special investment regions, 10 logistics parks among other industrial parks, along the dedicated corridor route. The three economic corridors identified by the state government are
1. Bharuch Dahej Umbergaon
2. Vadodara Mehsana Palanpur
3. Surendranagar Rajkot Morbi Kandla
The logistics parks will be created around the following areas
1. Palanpur Mehasana
2. Ahmedabad Surendranagar
3. Gandhidham Samakhiyali
4. Dahej Bharuch
5. Hazira Surat
Sources indicated that Gujarat Maritime Board proposes to ensure rail connectivity to its ports and will undertake to prepare a blueprint for this purpose.
Oil prices hike a sensible decision – Mr Sajjan Jindal
Mr Sajjan Jindal president of ASSOCHAM has welcomed the decision of the government to raise the prices of petrol and diesel by INR 5 and INR 3 a liter respectively, appealing all stakeholders including political parties not to take undue advantage of the price rise.
ASSOCHAM also welcomed the price rise in LPG cylinder by INR 50 saying that though it will have some inflationary impact on Indian economy but the price rise had become absolutely unavoidable in view of sky rocketing crude oil prices globally.
Mr Jindal said that as a result of the price rise, the Indian petroleum companies’ margins will not shrink to the anticipated extent as a good sense has prevailed and the government affected the price rise.
He further pointed out that its adverse impact would be on inflation as the price rise in petroleum products would have cascading effect but the time has come when each one of us should bear the burnt of the increased prices of petroleum products.
Mild steel ingots rules firm in futures market
BS reported that prices of mild steel ingots were trading firm in the futures market on the back of strong international scenario and fresh buying by traders.
In June 2008 contract, mild steel ingots were trading up by 0.3% at NR 32,800 per tonne. In July 2008 contract it, was up by 0.45% at INR 33,420 per tonne and in August 2008 contract, it was up by 1.81% at INR 33,370 per tonne.
Mr Vishal analyst at Karvy Comtrade said that international prices are strong, especially in the US and China, which is supporting the movement of mild steel ingots on the futures market. He added that the upward movement is also due to rise in volume and open interest resulting in fresh buying by traders and speculations over state run NMDC likely to hike iron ore prices at the month end.
According to Mr Tarun Satsangi head of brokerage firm Bonanza's Commodity Research, the upward movement is in continuation with last week. He said that the overall fundamentals are bullish pushing the prices of mild steel ingots further.
Deepak Fertilizers eying contract mining business
It is reported that Deepak Fertilizers & Petrochemicals Corporation Limited, which makes fertilizers and specialty chemicals, plans to foray into contract mining operations as part of a strategic growth initiative.
As per report, Deepak Fertilizers is looking at third party mining contracts in India, which will involve drilling and blasting rock on ground, mining chemicals and related products. Deepak Fertilizers is looking to secure mining contracts from coal companies that outsource the digging and blasting works. It is looking to enter into third party open cast mining of coal, limestone and other minerals, which has massive growth potential.
The new venture would be front end integration for Deepak Fertilizers, which has expertise in manufacturing mining explosives such as ammonium nitrate. It manufactures 130,000 tonne of ammonium nitrate per annum and is expanding capacity further.
TATA Group inks JV with Steel Asia for rebar plant in Philippines
MyIris reported that TATA Group has tied up with Steel Asia of Ben Yao for a PHP 3.88 billion JV that would operate the idle Bacnotan Steel Mills in Calaca for the production of reinforcing steel bars. The plant has an annual capacity of 300,000 tonnes.
The vehicle entity being formed by the JV is initially called High Street (SPV-AMC) Inc. The PHP 3.88 billion investments would be used to acquire, modernize and rehabilitate the rolling mill and melt shop for billet making and for the production of reinforcing bars.
Bacnotan Steel Industries Inc is the anchor locator of Batangas Union Industrial Park in Calaca. It used to be a JV with Japanese firms Kawasaki Corporation, Mitsui of Japan and a number of banks in 1997.
SAIL takes Velagapudi Steels on wet lease for rebars
It is reported that Velagapudi Steels Limited has signed a 3 year wet leasing agreement with Steel Authority of India Limited to produce steel rebars.
According to the wet lease agreement, SAIL would convert billets into rebars at Velagapudi's steel mill and these would be sold in the market under the SAIL brand. Velagapudi Steels will get conversion charges. SAIL will convert over 50,000 tonne of billets into rebars every year.
Velagapudi Steels is operating a 60,000 tonne capacity steel mill at Anakapalli near Visakhapatnam since the last 2 years. It uses billets as the main raw material to produce different grades of rebars. Of late, it has been facing a shortage of raw material, which has affected its business. In 2007-08 fiscal, it achieved a turnover of INR 40 crore with a profit of INR 1 crore.
RIL successfully test fires some section of East West pipeline
BS reported that Reliance Industries Limited has tested part of East West gas pipeline recently.
As per report, RIL successfully test fired gas into the first section of the pipeline from Valsad to Ankot in Gujarat after many weeks of experimental dry runs and testing using liquids. Gas will flow into the next section from Valsad to Kalyan in Maharashtra within the next 20 days.
A RIL official said that "The entire pipeline will be tested with gas and ready for operation in 2 to 3 months. We are trying to synchronize it with completion of our refinery at Jamnagar."
The 1,440 kilometers long pipeline is India's longest gas transportation pipeline from Kakinada in Andhra Pradesh to Bharuch in Gujarat. The pipeline will transport gas from the world's largest gas discovery at the Krishna Godawari basin in the Bay of Bengal to Jamnagar in Gujarat.
Essar to develop marine ecosystem in Gujarat
BS reported that, marking the World Environment Day, Essar Group has committed to undertake development of a marine ecosystem through mangrove afforestration in Gujarat. Spanning an area of 100 hectares, the ecosystem will be developed on the coast adjoining Dandi village in Surat district. The project will be executed by the group through Gujarat Ecology Commission.
Initially, as part of the project, around 2,500 mangrove saplings were planted on the coast on June 5th 2008. However, the entire proposed afforestation project will involve creation of a nursery that will nurture the 250,000 saplings needed to completely cover the 100 hectares. On its part, once the saplings are planted in a designated area after 3 months, GEC will maintain the plantation over 3 years.
Patel Engineering bags dam construction project in US
ET reported that Patel Engineering has bagged the USD 280 million Taum Sauck Upper Reservoir Dam reconstruction project in USA.
The project will be executed by Patel Engineering’s wholly owned subsidiary ASI RCC. The Taum Sauk Plant is owned and operated by Ameren UE, a subsidiary of Amren Corporation.
The scope of work involves rebuilding the existing inoperable upper reservoir with the construction of a concrete-faced symmetrical roller compacted concrete dam.
Mr Rupen Patel MD of Patel Engineering said that "This project is a landmark event in the Indian construction sector as it is for the first time that an Indian construction company has penetrated the most stringent and demanding western market."
Mr Patel added that "Successful implementation of projects demands latest technology solutions and cutting edge project management skills. These skills, coupled with inexpensive and experienced labor from India, will help us compete against some of the existing giants in the global infrastructure arena."
ASI RCC is a multi state general contractor with prime focus on roller compacted concrete dam construction. Patel Engineering acquired ASI RCC for their specific engineering expertise in roller compacted concrete used in construction of dams.
Indian Railways examining further cuts in freight rates
Mr Lalu Prasad Yadav union railway minister said that Indian Railways is examining the possibility of further reduction in freight rates to leverage its competitiveness over road transportation in the wake of the latest hike in diesel prices.
He added that reduction in freight rates is also being examined keeping in view the competitive position of the Railways in the transport market to attract more traffic and increase earnings.
The move is in line with Indian Railways’ strategy during last few years wherein it increased freight tariffs through various surcharges for long distance movement of bulk commodities like ores and minerals which do not have road transportation as a financially viable option.
SAIL JV to secure coking coal mines from CIL
BL reported that Steel Authority of India Limited is sparing no effort in securing supplies of coking coal. As per report, a JV of SAIL and TATA Steel is asking Coal India Limited to transfer 3 coal blocks to it.
Mr SK Roongta chairman of SAIL said that on the one hand domestic steel producers were suffering for want of coking coal. On the other, even the available coking coal deposits, though deficient in quality, were lying unexploited.
Mr Roongta said that developing these mines was perhaps not a priority for CIL. He added that "They have not developed them all these years. May be it is not in their plans to develop them. So well they may give it for a consideration."
He said that now, with coking coal prices having risen 3 fold in the last one year to about USD 305 a tonne and even more in the spot market, developing some of the mines with CIL and its subsidiaries had become viable. He added that "I am sure CIL will also make some investments, but it is better that their efforts are supplemented by steel companies, because they alone will not be able to make such large investments."
Mr Roongta further added that it might cost up to INR 2,000 crore to develop the mines and SAIL is in a position to spend.
Road freight to go up by 5% to 6% due to oil price hike
BL reported that, with the prices of diesel and petrol revised on June 4th 2008, logistics operators said that the increase in freight charges would vary from 5% to 6%, going up to 10% to 12%.
Mr Vineet Agarwal executive director of Transport Corporation of India said that "The revision of diesel prices in February 2008 by INR 1, along with this hike of INR 3, means that the price of diesel has gone up by 10% to 12% in the last 3 months."
He added that fuel accounts for 50% to 60% of the operating cost of trucks and with this hike the freight charges would typically be up by 5% to 6%.
Mr AK Agarwal director of DRS Logistics said that the hike in freight charges will be in the range of 10% to 15%. He added that "This is not the right time to increase charges as the demand for all commodities is growing.'
Meanwhile, Mr Vineet Kanaujia head of marketing & sales at Safexpress Logistics said that "It would be difficult to say how much we are going to increase the charges as the rates are customized according to the contacts that we have with our clients. We did not increase the freight charges at the time of the last hike. It would not be substantial this time too, maybe less than a rupee a kilogram."
Indian Railways fuel bill to increase by INR 559 crore
BL reported that train fares for passenger and freight movement will not go up immediately on account of INR 3 increase in diesel price. The high speed diesel bill of Indian Railways, which is almost INR 8,000 crore at present, will go up by about INR 559 crore for the remaining part of this year because of the price hike.
A railway ministry spokesperson said that Indian Railways, which uses a mix of diesel and electric traction, moves about half the passenger traffic and 38% of freight traffic using diesel. He added that "There will be no increase in passenger and freight tariffs as of now."
While in the short run Indian Railways will be hit on account of increase in diesel prices, on a long term basis it has planned several steps towards energy cost management. The steps include increasing bio diesel blending for controlling fuel costs, procuring high powered and more efficient locomotives and increasing electrification while trying to reduce the unit cost for electricity supply.
Suzlon Energy acquires 30% more stakes in REpower
Suzlon Energy Limited recently announced that it has signed a share purchase agreement with Areva for acquisition of Areva's total stake of approximately 30% in REpower Systems AG of Germany, totaling holding in REpower to approximately 66%.
With this acquisition and through voting pooling agreement with Martifer of Portugal, Suzlon enjoys voting rights of approximately 89% in REpower subject to certain minority protection and other rights.
Punj Lloyd inks pack with ST Kinetics for defense equipments
It is reported that Punj Lloyd Limited has signed a collaboration deal with Singapore Technologies Kinetics for the manufacture of defense equipment.
Punj Lloyd has been issued a license by the government of India for the manufacture of guns, rockets and missile artillery systems and related equipment in addition to other defense equipment. Under this agreement, both ST Kinetics and Punj Lloyd will be pooling their resources in the execution of supply contracts for union ministry of defense.
This tie up augurs well for the high growth Indian defense sector. The combined capabilities of both the companies can help the Indian army to scale up its modernization programs. This strategic collaboration to jointly provide for the requirements of the Indian defense sector is in synchronization with current government views of achieving self reliance by involving active participation by the Indian industry in the defense sector.
Punj Lloyd secures INR 649 crore contract for Barauni Refinery
It is reported that Punj Lloyd Limited has bagged a contract worth INR 649 crore from Indian Oil Corporation Limited for the motor spirit quality up gradation project at its Barauni Refinery in Bihar.
US steel import permit in May decrease by 20%MoM
Based on the Commerce Department’s most recent Steel Import Monitoring and Analysis data, the American Iron and Steel Institute reported that steel import permit applications for the month of May totaled 2,393,000 net tons. This was a 20% decrease from the 2,988,000 permit tons recorded in April 2008 and a 19% decrease from the April preliminary imports total of 2,944,000 net tons.
Import permit tonnage for finished steel in May was 1,916,000 net tons a decrease of 13% from the preliminary imports total of 2,194,000 net tons in April.
For the first five months of 2008 total steel imports were 13,058,000 net tons, down by 12% from the 14,772,000 net tons imported in the first five months of 2007. Total steel imports for 2008 would annualize at 31.3 million net tons or 6% below the 2007 12 month total.
For May 2008, the largest finished steel import permit applications for offshore countries were
1. China 285,000 net tons
2. Korea 184,000 net tons
3. India 123,000 net tons
4. Japan 113,000 net tons
5. Germany 77,000 net tons
Finished steel import permit applications for China increased 58 % in May compared to April preliminary imports and were the highest monthly total for 2008 so far.
Product categories that increased in May vs April preliminary include: 1. Hot Dipped Galvanized Sheet & Strip up by 80%
2. Oil Country Goods up by 26%
3. Heavy Structural Shapes up by 9%
4. Tin Plate up by 37%
Significant products that showed a year to date increase vs. 2007 include:
1. Oil Country Goods up by 18%
2. Line Pipe up by 16%
Mr Andrew G Sharkey III president & CEO of AISI said that “Of particular concern are the sharp increases in monthly imports from China and in galvanized sheet, where imports from China were more than one fourth of total imports of this high value product.”
Japanese FTC fines Nippon, JFE and Kubota for price fixing
Reuters reported that Japan's fair trade watchdog slapped Nippon Steel Corp, JFE Steel Corp and Kubota Corp with a fine for price fixing, bringing the industry under fresh scrutiny after admissions of lax product testing.
As per report, the Fair Trade Commission ordered the three to pay JPY 2 billion for fixing product prices, but it exempted Sumitomo Metal Industries Ltd which reported the cartel to the government agency.
The Fair Trade Commission said that the four had agreed to raise prices for steel posts used in engineering works by a certain margin in 2004 and 2005.
The Japanese industry is already in the spotlight due to quality control concerns after Japan's largest steelmakers, Nippon Steel and JFE Steel, a unit of JFE Holdings Inc, said they had failed to carry out some tests on some of their products.
Voestalpine 2007-08 revenue up by 51% YoY
Austrian steelmaker voestalpine reported lower than expected fourth quarter operating profit but proposed a forecast beating dividend and said this year's net profit should exceed the 2007-08 total.
voestalpine 2007-08 financial year highlights:
1. Revenue rose by 50.9% from EUR 6,943.8 million to EUR 10,481.2 million, thus exceeding the EUR 10 billion mark for the first time.
2. EBITDA rose by 44.9% from EUR 1,358.6 million to EUR 1,968.5 million before the pure accounting effects of the purchase price allocation arising from the BÖHLER-UDDEHOLM AG acquisition are included, and still rose to EUR 1,836.5 million after ppa was taken into account.
3. The undistorted EBIT increased by 48.6% over the previous year from EUR 1,011.4 million to EUR 1,503.0 million. The increase drops to EUR 1,152.6 million, however, when the effects of ppa are taken into account. The EBIT margin of 14.3% before ppa or 11.0% after ppa for financial year 2007/08 was below the value of 14.6% in the previous year.
4. Before ppa, the net income rose by 31.2% versus 2006/07 from EUR 764.9 million to EUR 1,003.6 million. When the pure accounting effects of BÖHLER-UDDEHOLM ppa and increased financing costs are taken into account net income for the year decreased slighly to EUR 751.9 million.
5. Due to the financing required for the BÖHLER-UDDEHOLM acquisition above and beyond the hybrid bond, net financial debt increased from EUR 526.2 million to EUR 3,571.7 million. The equity of the voestalpine Group rose by 48.8% in 2007-08 from EUR 2,882.3 million to EUR 4,289.3 million.
6. The proposed dividend of EUR 2.1 is more than 44.8% higher than the previous year. Based on the average stock exchange share price of EUR 52.59 during financial year 2007/08, this corresponds to a dividend yield of 4.0%.
7. The voestalpine Group had 41,490 employees worldwide as of March 31st 2008. This corresponds to an increase of 16,877 employees (or nearly 69%) over the previous year (24,613), due mainly to the first time consolidation of the BÖHLER UDDEHOLM Group.
Air Liquide to invest in Germany and Italy
It is reported that Air Liquide has decided to invest over 120 million to increase its production capacity in Germany and Italy to meet the increasing demand of its customers.
The release said that “A world scale new Air Separation Unit of 2,300 tonnes of oxygen per day will be built at Oberhausen in Germany and will be commissioned in 2010. It will be connected to Air Liquide's 500 kilometer pipeline network in Germany which forms the backbone for the supply of oxygen and nitrogen to numerous large customers in the iron and steel, chemical and petrochemical industries in the Rhine Ruhr area. This unit will in particular be supplying the increasing needs of Hüttenwerke Krupp Mannesmann GmbH and DK Recycling und Roheisen GmbH with whom
Air Liquide has signed new long term contracts. Air Liquide will also build a new ASU on its 650 kilometer pipeline network in the north of Italy in order to supply the new installation of Arvedi Group in Cremona with whom Air Liquide has entered into a new long term agreement. The new unit is scheduled to be commissioned by end of 2009.
Mr Guy Salzgeber member of Air Liquide's executive committee vice president for European Operations said that “With these new investments, Air Liquide is increasing its global production capacity of oxygen in Europe which represents a unique capability for customers especially in the steel industry. These two new projects are a further illustration of the Group's acceleration of its growth.”
The worldwide boom of the iron and steel industry continues despite the price increase of raw materials. In Europe, steel consumption grew more than 5% in 2007, driven mainly by the construction and automotive industry. The European steel industry is also showing overall high utilization rates and solid perspectives. Industrial gases play a significant role in the steel making process and serve to reduce production costs; ie they are used to reduce the consumption of raw materials, like the injection of oxygen in the blast furnace which allows the steel companies to consume less coking coal.
BNDES could give Vale a hand in steel plant
BNamericas reported that Brazilian development bank BNDES is interested in partnering with mining group Vale to open a steel slab plant in northern Brazil's Pará state.
Mr Luciano Coutinho president of BNDES said that "It is an interesting undertaking adding that a project of this kind requires at least a USD 5 billion investment.” But the president did not indicate the stake in the project the bank could take on.
Mr Roger Agnelli CEO of Vale said that the company plans to go ahead with the 2.5 million to 5 million tonne per year mill project regardless of whether it secures a partner.
Votorantim to build a new steel mill in Rio
Bloomberg reported that Votorantim Metais Ltda, the metals unit of Brazil's Votorantim Group, plans to start its second steel mill in Rio de Janeiro state.
Mr Evandro Ferreira de Sousa general technology manager of Votorantim said that the BRR 1 billion (USD 614 million) mill in the city of Rezende will initially produce 500,000 tonnes a year of rolled long steel products used by builders. He added that the plant will also make 500,000 tonnes of billets to be processed at other plants.
Mr de Sousa said that “Our idea is to proceed with organic growth at existing works to meet market demand. We are not planning any new acquisitions at the moment.''
Mr de Sousa said that the billets will initially be processed into higher value products at the company's Barra Mansa mill in Rio state and Argentina's Aceros Bragado SA in which Votorantim Metais bought a stake in December. The company plans to install a second production line within three years at the Rezende plant to process the billets.
Votorantim Metais is expanding to tap rising demand for steel by builders in Brazil. According to the Brazilian Steel Institute, Brazil’s domestic steel consumption climbed 30% in the first four months of this year from a year earlier.
ArcelorMittal fails in bid to buy PT Krakatau
AsiaPulse reported that ArcelorMittal saw its bid to buy a big stake in state owned steel maker PT Krakatau Steel ending in failure when it was finally decided KS is to be privatized through initial public offering.
ArcelorMittal lost strong support after Mr Sofyan Djalil state minister for state enterprises gave in to demand to drop plan to involve strategic alliance with Mittal as the likeliest choice.
Mr Sofyan had repeatedly said that the best way to privatize KS is through involvement of strategic investor and among a number of bidders Mittal came up with the best offer. He hoped that KS could launch IPO in September and sell at least 5% of its shares if the market remains unfavorable.
ArcelorMittal has agreed to be the minority shareholder in PT KS with stake of around 40% and pledged to invest up to USD 10 billion in steel industry in the country.
Huge number of vessels next year may bring down rates - Analyst
Purchasing.com reported that if the number of bulk freight vessels predicted actually hit the water on time next year, freight buyers could see a decline in ocean freight rates sometime next year.
Mr Rikard Vabo analyst of Fearnley Fonds in a recent Reuters report said that “Rising bulk ocean freight rates may continue throughout 2008, but the massive order book will probably facilitate a fall in rates sometime in 2009 or early 2010, and we do not believe cancellations and delays could save the dry bulk market from 2010.”
As per report bulk freight carriers have had much more success in recouping record high fuel costs than other logistics carriers by pushing rates to all time highs. The Baltic Exchange’s Baltic Dry Indep, which measures costs to charter bulk freighters, has climbed consistently in 2008, peaking in late May and again nearing a peak in early June.
But at least one analyst thinks that if demand for iron ore in China slows as some think it may be due to supply backing up at ports and more vessels hit the water, then bulk freight rates won’t just decline, they will plummet.
Mr Urs Dur analst at Lazard Capital Markets said that over the past six weeks some 60 million tonnes of ore had sat at Chinese ports. Now it is closing in on 65 to 70 million tonnes. Earlier in the year there was between 40 to 45. He added that “If that goes to an extraordinary amount, it would make freight rates fall off a cliff.”
Esmark unable to refinance long term debt
Steel company Esmark Inc said that it has been unable to refinance its debt on a long term basis, raising substantial doubt about its ability to continue as a going concern.
Esmark said that the statement was required by a Nasdaq rule.
It was prompted by Esmark's annual report on Form 10 K filed on May 20, which included an explanatory paragraph from the company's accounting firm.
Last week, Russian metals and mining company OAO Severstal commenced its USD 17 per share tender offer for outstanding common stock of Esmark.
Severstal's bid worth about USD 1.24 billion is backed by the United Steelworkers union, which had threatened to block an earlier offer to buy Esmark from India's Essar Steel Holdings.
Grupo Simec closes the acquisition of Grupo San
Grupo Simec SAB de CV announced the closing of the acquisition of all of the shares representing the capital stock of Corporacion Aceros DM, SA de CV and certain affiliates Grupo San.
The acquisition was announced on February 22nd 2008.
Tenaris elects directors during AGM
Tenaris SA in its annual general shareholders meeting approved the re election of the current members of the board of directors, with the exception of Mr Bruno Marchettini who did not stand for re election and the election of Mr Alberto Valsecchi former COO to serve as members of the board of directors until the next annual shareholders' meeting, which will be held in June 2009.
Tenaris board of directors subsequently confirmed Mr Amadeo Vázquez y Vázquez, Mr Jaime Serra Puche and Mr Roberto Monti as members of the Company's audit committee, with Mr Vázquez y Vázquez to continue as chairman. All three members of the audit committee are independent directors.
Tenaris also re appointed PricewaterhouseCoopers as its independent auditors for the 2008 fiscal year
Plymouth Tube appoints Mr Tom as VP
Plymouth Tube Company announced last month the appointment of Mr Tom Centa as the new VP of the CAT Group upon Mr Dennis Lasker's retirement.
Mr Tom began with Plymouth Tube in November 2004 as GM of Hot Mill. Most recently he was the Winamac Site GM where he was responsible for both Winamac operations which act as separate business units.
Mr Tom has a BS degree in Metallurgical Engineering from the Colorado School of Mines as well as MBA course work from Lamar University. In his new role, Mr Tom will provide leadership and direction for the US manufacturing and international marketing of carbon and low alloy tubular products. He will be responsible for the Carbon & Alloy Tube Group of mills, which includes the Winamac, Eupora and Streator operations.
Plymouth Tube Co with 10 manufacturing plants across the US is positioned for continued global growth supplying the aerospace, transportation, energy and industrial markets. Over the last five years Plymouth’s sales revenue has more than doubled due to market share growth and strategic acquisitions.
Mr Lindqvist appointed as new head of SSAB strip product division
Mr Martin Lindqvist has been appointed as the new Head of SSAB's Strip Products Division from August 1st2008. Mr Martin Lindqvist is currently SSAB's CFO.
Mr Olof Faxander CEO of SSAB said that “Mr Martin is a strong force in the changing process that is taking place at SSAB and has very skillfully developed the company's finance and treasury function. The solid leadership qualities he has showed equip him with what is needed to take the Strip Products Division to the next level.”
The current Head of the Strip Products Division, Mr Göran Carlsson has been appointed President of the MEFOS research institute in Lulea and will take up that position on August 1st 2008.
US weekly crude steel production decrease by 0.3%YoY
American Iron & Steel Industries reported that in the week ending May 31st 2008, US’s raw steel production was 2.114 million net tons while the capability utilization rate was 88.6%. Production was 2.121 million net tons in the week ending May 31st 2007, while the capability utilization then was 88.4%. The current week production represents 0.3% decrease from the same period in 2007.
Production for the week ending May 31st 2008 is down 1.2% from the previous week ending May 24th 2008 when production was 2.140 million net tons and the rate of capability utilization was 89.7%.
Adjusted YTD production through May 31st 2008 was 45.990 million tons at a capability utilization rate of 88.8%. That is a 3.0% increase from the 44.641 million net tons during the same period last year, when the capability utilization rate was 85.1%.
District wise production for the week ending May 31st 2008
1. Northeast Coast: 166
2. Pittsburgh/Youngstown: 214
3. Lake Erie: 85
4. Detroit: 92
5. Indiana/Chicago: 530
6. Midwest: 261
7. Southern: 672
8. Western: 94
(In thousands of net tons)
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
2 workers injured after crane collapses at steel mill in Maryland
Ap reported that two steel mill workers weren't seriously injured after a crane they were working on collapsed during a storm in Maryland.
Lt Pierre Thode with the Baltimore County Fire Department said that the men climbed down a ladder under their own power around 4:45 PM. The crane went down shortly after 4 PM. The men were working to unload materials from a barge.
Mr Thode added that the men weren't pinned down in the crane, but their ladder gave way when it collapsed, leaving them with no way down. A fire truck with a long ladder came to the rescue. The men were not taken to hospitals.
The collapse occurred at the Sparrows Point steel mill, which is owned by Russian steelmaker OAO Severstal
Mr Busse elected as chairman of AISI
The Board of Directors of the American Iron and Steel Institute have elected Mr Keith E Busse chairman & CEO of Steel Dynamics Inc to a one year term as chairman of the Institute. Mr Busse was sworn in as chairman at the Board’s spring meeting at Scottsdale in Arizona on May 4. He will succeed Mr Ward J Timken Jr.
Mr Brusse in his role as chairman, he will speak out on issues, such as climate change and trade, representing the industry on those and other important public policy issues. He has previously served as vice chairman of AISI and as chairman of the Institute’s Finance Committee.
Mr Busse said that “I am honored to serve as this year’s chairman in what I see as a crossroads year for both our industry and the Institute.” He added that “My vision for this pivotal year is to see us move forward on the high road, achieving new successes in our quest for sustainability, and finding common ground to make our voice a unified voice heard in the halls of Congress louder than ever before.”
Mr Andrew G. Sharkey III president & CEO of AISI said that “I welcome Keith’s leadership and willingness to serve the industry at a time of continuing change in the global steel industry and in America’s political landscape, a major transitional period that will impact the industry. His skills will serve us well in our efforts to speak out with a unified voice on behalf of the North American steel industry.”
Insurance compensation to SSAB confirmed
The Swedish Supreme Court has rejected Zürich's appeal regarding insurance compensation to SSAB. The judgment delivered by Svea Court of Appeal is thereby confirmed.
As earlier announced, on January 25th 2008, Svea Court of Appeal delivered a judgment according to which the insurance company, Zürich Insurance, Sweden Branch was ordered to pay SSAB's wholly owned subsidiary, SSAB Tunnplåt AB additional insurance compensation of approx SEK 161 million as well as interest and compensation for litigation costs relating to a blast furnace breakdown which occurred at the company's plant in Luleå in 1997. Including accrued interest, the awarded compensation totaled approx SEK 302 million, excluding compensation for litigation costs.
The release added that “Zürich Insurance, Sweden Branch has appealed against the judgment to the Swedish Supreme Court, which according to a decision dated June 2nd 2008, rejected the appeal. Consequently, the judgment delivered by Svea Court of Appeal is thereby finally confirmed. In addition to the insurance compensation awarded according to the judgment, approx. SEK 110 million has already been paid out in compensation as a consequence of the breakdown. The final judgment has a positive impact on SSAB's earnings in the amount of approx SEK 260 million.”
Nucor raises profit forecast on global steel demand
US’s largest steelmaker by market value, Nucor Corporation announced that strong shipments and higher margins have increased the earnings guidance for its second quarter ending June 28th 2008.
Nucor expects second quarter net earnings to be in the range of USD 1.75 to USD 1.80 per diluted share, significantly better than the USD 1.55 to USD 1.60 per share that Nucor had previously forecast. By comparison, Nucor earned USD 1.14 per share in the second quarter of 2007 and USD 1.41 per share in the first quarter of 2008.
Nucor said that “Continued strength in our sheet, plate, beam and bar businesses due to the solid global demand for steel and better than expected margins have favorably impacted the second quarter. Our upstream and downstream businesses also continue to perform well.”
It added that “The forecasted range of USD 1.75 to USD 1.80 per share for the second quarter reflects an increase in the diluted average shares outstanding over the first quarter of more than 3% due to Nucor's common stock offering of approximately 27.7 million shares that closed on May 29th 2008. While the additional shares will be outstanding only for a portion of the second quarter, they will be outstanding for all of the third quarter, resulting in an increase of more than 9% in diluted average shares outstanding from the first quarter of 2008 to the third quarter of 2008.”
Vallourec withdraws poison pill defense proposal - Echos
Les Echos citing Mr Bertand Cantegrit CEO of Vallourec SA reported that Vallourec SA has withdrawn a proposal for poison pill defense measures because management did not think they would get support from shareholders.
Mr Cantegrit was quoted as saying that “After measuring market reaction to the proposal, the company considered it would not get the required support in a shareholders vote.”
The newspaper said that the Paris based Vallourec had planned to ask shareholders to approve a resolution for distribution of free certificates to existing shareholders redeemable for new shares to thwart a hostile takeover.
Transpetro to buy SBQ plates from Usiminas
Bloomberg reported that Petrobras Transporte SA, the transport arm of Brazil's state controlled oil company Petroleo Brasileiro SA, is in final negotiations to purchase steel plates from Usinas Siderurgicas de Minas Gerais SA.
Mr Sergio Machado president of Transpetro said that “Transpetro as the unit is known is in talks to buy 12,000 tonnes of heavy plates at competitive prices.”
He added that the company will need 690,000 tonnes to build 49 tankers for Petrobras owner of the Western Hemisphere's largest oil discovery in three decades.
Mr Machado said that “Demand for steel should grow even more as Brazil is becoming a world player both in oil and in shipbuilding.”
Petrobras said that it plans to begin pumping oil by April 2009 from its Tupi field 250 kilometers off the Atlantic coast. The field may hold 8 billion barrels of recoverable oil. Mr Luiz Inacio Lula da Silva president of Brazil last month said that as much as 80% of the materials used to build the ships will be purchased from Brazilian companies.
Hyundai Heavy and Daewoo bag USD 4.9 billion orders
Korae.net reported that Hyundai Heavy Industries Co and Daewoo Shipbuilding & Marine Engineering Co have won a combined USD 4.9 billion worth of deals in the past week to build 30 vessels, including oil tankers and bulk carriers.
During an international shipping exhibition held in Greece last week, Hyundai Heavy Industries received deals valued at USD 2.4 billion to build 22 ships, including 16 oil tankers. So far this year, the shipyard has won deals worth USD 12.3 billion to build 94 vessels, up 37% YoY.
Daewoo Shipbuilding & Marine Engineering, the world's third largest shipyard, won USD 2.5 billion of orders in the past week to build 8 vessels that can carry oil and commodities as well as drill for crude.
Daewoo Shipbuilding has received USD 5.6 billion worth of orders this year, achieving about a third of this year's target of USD 17.5 billion. Its backlog reached USD 41.5 billion.
Shipyards in Korea, the world's largest shipbuilding nation, are building new docks and expanding facilities to meet increased global shipbuilding demand.
Stomana Industry opens a new steels facility
Bulgarian National Radio reported that Bulgaria's steel maker Stomana Industry officially opens a new facility for the production of special steels. With the new facility the production of Stomana Industry will reach 1.4 million tonnes.
Mr Sarados Mihios of Stomana at a press conference during the opening ceremony said that EUR 130 million have been invested so far since 2001. Mr Mihios added that another EUR 400 million are slated to be invested in the company in the next five years for new special steel, sheet and rolled iron productions of the highest quality.
The new facility opening comes just days after Stomana Industry's announcement about plans for future partnership with the US company Nucor Inc.
Cosipa restarts modernized BF at Cubatão
BNamericas reported that Blast furnace 1 at Brazilian steelmaker Usiminas' subsidiary Cosipa in Cubatão in São Paulo state of Brazil has restarted after a USD 117 million modernization process that expanded daily pig iron capacity to 4,500 tonne from 3,500 tonne.
The report added that the project applied updated technology to improve the furnace's productivity, speeding up the raw material loading process and creating a computerized control system, among other initiatives. It further added that the modernization also improved the furnace's environmental performance.
The works form part of a larger development plan underway at the Cubatão operation, which includes a new USD 1 billion cost 2.3 million tonne per year hot strip mill that will later expand to 4.7 million tonne per year. Works are due to begin in August and wrap up in April 2011. In addition the company recently started up a new continuous casting facility.
Usiminas and Cosipa have combined installed steel capacity of 9.5 million tonne per year.
Simec closes acquisition of Grupo San - Report
BNamericas reported that Mexican steelmaker Grupo Simec has closed the acquisition of all of the shares representing the capital stock of steel company Corporación Aceros DM and some of its affiliates collectively known as Grupo San.
Grupo San is a long products steel mini mill and the second largest corrugated rebar producer in Mexico, with operations based in San Luis Potosí State. The company produces some 700,000 tonne per year finished products and employs nearly 1,500 people.
Through the transaction, Simec owned by Mexico's Industrias CH looks to become the second largest producer of rebar and the largest steel producer in Mexico, with a production capacity of some 4.5 million tonne per year liquid steel and 3.8 million tonne per year finished products.
Grupo Simec is a mini mill steel producer that makes an array of non flat structural steel products. The company describes itself as the largest producer of special bar quality steel in North America.
Enel buys control of Electrica Muntenia Sud in Romania
It is reported that Italy's biggest utility by revenue Enel SpA has finalized the deal giving it control of Romania's Electrica Muntenia Sud or EMS, under a 2007 accord as it expands into fast-growing Eastern Europe.
EMS is the sole electricity distributor for residential and industrial customers in the Romanian capital Bucharest.
Enel said that it bought a 64.4% stake of EMS from the Romanian state in a deal worth EUR 820 million. The Rome based utility purchased a 50% stake in April for EUR 395 million and agreed to subscribe to an EMS share increase for EUR 425 million. It added that the remaining 23.6% stake in EMS is held by state owned Fondul Proprietatea.
Mr Fulvio Conti CEO of Enel said that "We will focus on becoming a vertically integrated energy player in Romania, pursuing generation projects in renewable, nuclear and clean coal technologies.”
He added that the utility plans to invest EUR 1 billion in EMS over the next 15 years.
CSC and Feng Hsin post record profit in May 2008
Bolstered by rising steel prices and resuming production, Taiwan’s China Steel Crop and Feng Hsin Iron & Steel Co Ltd reported record revenue in May.
CSC said that its revenue in May increased by 34.09% to record YWD 22.836 billion from the same period last year and up by 11.79% MoM from April 2008. The company’s revenue from January to May amounted to TWD 100.616 billion.
Feng Hsin posted its revenue in May has exceeded TWD 4 billion for the first time to hit TWD 4.566 billion. The company’s revenue in the first five months totaled TWD 18.688 billion, increased by 47.53% YoY
(Sourced from YIEH.com)
Turkish Erdemir Q1 2008 net profit up by 57% YoY
Turkish steel maker Erdemir has posted consolidated net profit of TRL 226.6 million for January to March 2008 quarter up by 57.3% YoY as compared with TRL 144 million.
Only a free market will end steel saga in Egypt - Experts
Daily News Egypt quoted experts and steel importers in Egypt as saying that opening up the market to steel imports and facilitating customs entry procedures is crucial to stabilizing the steel market.
As soaring steel prices recently hit EGP 8,000 per tonne, some wholesalers and investors figured that it would cost less to import steel from steel rich countries than it would to buy it locally. Even after the added customs and shipping costs, it would be cheaper to buy steel from abroad.
The report cited Mr Khalid, an investor who used to own a steel plant, as saying that "A tonne of steel in the Ukraine costs around EGP 5,500. After adding shipping and customs costs, we planned to sell a tonne of steel to retailers at a price of EGP 6,250, which is significantly lower than current local prices. So, we decided to import steel from the Ukraine, one of the most distinguished steel producing countries in the world."
Mr Rachid Mohamed Rachid minister of trade & industry recently announced that steel manufacturers will be required to set a fixed selling price at the start of every month. He added that "Prices will be monitored by the ministry of trade & industry to ensure that they are applied and strict consequences will result on those who do not abide by their set prices."
The ministry brushed off the suspicions saying that manufacturers were required to increase their production by 20,000 tons last week to meet the increasing demand and economies of scale could lead to a lower production price for Al Ezz.
3M to establish manufacturing plant in UAE
Gulf News reported that Minnesota, Mining & Manufacturing is planning to establish a manufacturing plant in the UAE in 2008.
Mr Irfan Malek MD of Minnesota, Mining & Manufacturing for Middle East and Africa said that it is looking to expand operations in the country from the manufacturing and technical and professional services aspect. He added that "If all goes as planned, we will start the construction of the plant in the next few months."
According to Mr Malek, the manufacturing and technical developments will represent a major part of investment. He said that an exact value of investment has not been decided yet as officials are still in the phase of considering operations within the plant. Thereby, if there is any specific value now, it could significantly change.
In Saudi Arabia, 3M's growth efforts revolve around elevating technical and professional services as well as geographical expansion within the country by setting up more sales and distribution offices.
Mr Malek said that "A country like Saudi Arabia cannot be covered from one point you need to expand the sales and distribution. That is where we are putting our money now. As Qatar starts to increase its construction activities and health care facilities and put money back into the economy, the market, it will be very attractive for us. All the countries are doing well but the extensive expansion plans are surely in the UAE and Saudi Arabia."
Order in PSM land case set aside
Daily news reported that a Sindh High Court division bench set aside a single judge’s order for payment of interest to the owners of the land acquired for the Pakistan Steel Mills on the compensation paid to them.
The judge had allowed the owners’ plea rectifying a 1985 judgment by another single judge. The 1985 judgment called for payment of compensation to the owners of the land acquired for the PSM in 1974 under the Land Acquisition Act. There was no mention of interest on the amount of compensation.
The owners approached the high court for payment of interest through advocate Mr Adnan Memon, saying that they were entitled to the benefit of Section 28 A of the Land Acquisition Act. The judge allowed the plea holding that the owners could not be denied the benefit of the provision.
The single judge’s order was challenged by the PSM through advocate Mr Mohammad Nawaz Shaikh. Assailing the order, the lawyer argued that the judge had wrongly assumed jurisdiction under Section 152 of the CPC.
The division bench, which consisted of acting chief justice Mr Azizullah M Memon and justice Mr Arshad Noor Khan, set aside the single judge’s order and remanded the case to him for re hearing in the light of its observations.
Iran to invest USD 120 billion to become top global LNG producer
Press TV cited Mr Ali Kheirandish MD of Iran LNG Company as saying that Iran has no problems securing investments to the tune of USD 120 billion to become the world's top exporter of liquefied natural gas within the next 12 years. He added that "It has already secured USD 5 billion in financing for investment from its own resources, partners and banks. Many financiers have come to us with very attractive offers and we expect a lot more banks to make offers."
Mr Kheirandish said that added it expects to produce 80 million tonnes a year of LNG by 2020. He added that "We could increase the level after that period but it will depend on the market and other conditions."
As per report, as much as 70% of Iran's LNG production would be sold to Asia and Europe under long term supply contracts, with the rest of the world able to make purchases on the spot market.
Iran holds the world's second largest gas reserves after Russia. However, Iran's LNG projects, like other hydrocarbon schemes in the country, are facing severe delays due to US sanctions imposed on the country over its controversial nuclear energy program and escalating project cost.
UAE may become first country in GCC to bring in VAT
According to a Dubai Customs Authority report, UAE is likely to be the first in the GCC to bring in VAT, which will replace customs duty charged at 5%.
The reported said that UAE will introduce the tax at a rate between 3% and 5%. The introduction date will be announced by the federal government within the next few months.
Mr Ahmed Butti Ahmed director general of the Dubai Customs Authority said that VAT was applied in more than 145 countries and had proved to be the world's fairest and most transparent form of taxation. He added that "The coming period will be exceptional as the UAE is likely be the first country in the Gulf to apply VAT."
Mr Ahmed said that "This will give the UAE a number of advantages and the tax will support the country's economic boom. No outside force is imposing VAT on the UAE. The UAE chose to embrace it and will deploy it to its advantage. The removal of customs duty is an important step towards forming strategic partnership with Australia, China, the European Union states and the US."
It may be noted that Dubai Customs and the International Monetary Fund have completed a study on the implementation of VAT in the GCC. Dubai began planning for the introduction of the tax as early as 2006.
Bahrain forms USD 2 billion construction company
Asharq al Awsat Newspaper reported that seven Bahraini investment firms formed a company with a capital of USD 2 billion to manufacture construction materials.
The new company, to be called Binaa, plans to produce cement, glass, steel and aluminum to meet the rising demand for construction materials.
Oil revenues in Iraq could reach USD 70 billion in 2008
Mr Hussein Al Shahrastani Iraqi oil minister said that Iraq has increased its oil production to a post war high, earning billions of dollars to fund reconstruction. Production had also climbed to a post war high of more than 2.5 million barrels per day.
Mr Shahrastani further added that he expects this year's oil production to reap earnings of USD 70 billion if oil prices remain high and there are no output disruptions. Moreover, he is confident that Iraq could pump up to 2.9 million barrels per day by the end of 2008.
AFICO to complete construction of new facility in Dammam
Arabian Fiberglass Insulation Company Limited, a JV between Owens Corning and Zamil Industrial Investment Company and a sector business of Zamil Industrial, recently announced the completion of a major capacity expansion at its manufacturing facility located in Dammam, allowing it to increase its production capacity by 50%.
With local and regional demand for the company's products rising rapidly, AFICO is well positioned to meet current demand as well as projections for increased demand into the future. It recently invested more than SAR 60 million in upgrades and expansion. In addition to this expansion, AFICO is actively progressing toward new additional capacity in Saudi Arabia.
This new facility will allow AFICO to continue to grow in proportion to the market for fiberglass insulation products utilized in residential, commercial and industrial construction projects throughout the GCC region.
Once approved, construction of the new facility in Dammam will move quickly. This facility will be built using advanced technology from Owens Corning, and feature fully automated production lines.
Mr Abdulla M Al Zamil board member of AFICO and also COO at Zamil Industrial said that "With the latest technology and the support of Zamil Industrial, AFICO is uniquely qualified to function as a regional leader in the fiberglass insulation products industry well into the future."
Pakistan trade deficit may cross USD 20 billion this fiscal - Report
Business Recorder reported that Pakistan's trade deficit is likely to cross USD 20 billion mark this fiscal mainly due to sharp rise in imports low exports.
Although the State Bank of Pakistan took some bold steps to bring down the increasing imports, analysts believe that these steps had been announced very late, when the imports and trade deficit had already breached all barriers.
The State Bank of Pakistan imposed 35% margin on all import letters of credit, except oil and some food items from May 23rd 2008, aimed to bring down imports and the rising trade deficit. Earlier, there was no percent margin on LC opening, and importers were importing goods over and above the requirement, putting extra burden on the national exchequer.
Analysts said that during the remaining two months of current fiscal year no positive impact of this step may be witnessed, as importers had already has placed huge import orders. However, they believed that in FY09 imports would definitely decline due to the 35% margin.
Economists have predicted that this year trade deficit would cross USD 20 billion or about 49%, with about USD 37.5 to USD 38.5 billion imports and USD 18 to USD 18.5 billion exports. The targeted trade deficit for the current year was USD 13.1 billion, with USD 19.2 billion exports and USD 32.3 billion exports.
Pakistan's trade deficit has already reached at all time high level of USD 16.08 billion the first 10 months of current fiscal year as imports stood at USD 32 billion and exports at USD 15.25 billion.
ME Development plans USD 200 billion Red Sea project
Dubai based Middle East Development said that it is planning to develop a project to build the first bridge across the Red Sea linking Yemen and Djibouti, and associated new urban areas, at a total cost of USD 200 billion.
Mr Issam Halabi VP for technical affairs said that Middle East Development will invest at least USD 10 billion in the project and seek to raise the remainder from other investors and financial institutions. He added that "We will have seed capital of at least USD 10 billion and USD 190 billion in project finance."
Mr Halabi said that the bridge, which will be 28.5 kilometers long and carry vehicles, trains, natural gas and water, will cost USD 14 billion, with construction completed in phases over 7 to 15 years. He added that the associated town projects in Yemen and in Djibouti will include residential, commercial, healthcare and entertainment areas.
Gaz de France and Dana Petroleum found gas resource in Egypt
Gaz de France and partner Dana Petroleum have found gas in Egypt's West El Burullus concession.
The two partners also said that they discovered natural gas deposits in the West El Burullus concession where they hold an exploration and production license.
The license, covering a total area of 1,364 square kilometers, concerns an offshore concession in the Mediterranean to the northeast of Alexandria. It is held on a 50:50 basis by Gaz de France and Dana Petroleum.
Nexans to set up a cable company in Qatar
Nexans recently announced that it has signed a JV agreement for the creation of a cable company in Qatar.
The new JV will generate revenues of about USD 150 million by 2010 at actual copper price on a market which is globally expected to grow by 10% per year. The related new manufacturing plant, located in the industrial city of Mesaieed will be Qatar’s first cable plant, employing 210 people.
Abu Dhabi plans special workers city
UAE daily The National reported that Abu Dhabi government has unveiled plans to build a series of large cities to provide housing for hundreds of thousands of limited income workers.
The cities are being planned by the government backed Higher Corporation for Specialized Economic Zones, which said in a statement that it expected half of the accommodation to be complete by the end of 2010. The government has already given approval to the project. The developments would make Abu Dhabi one of the leading destinations worldwide in terms of providing high standard accommodation for limited income workers.
The cities will have competitive rents and will be linked electronically to the ministry of interior, civil defense, the armed forces and the ministry of health for emergency response. The developments will include recreational areas, restaurants, health clinics, parks, public areas and mosques. There will also be offices where residents can access services related to visas, labor cards, health insurance and driving licenses.
The project is the result of directives from Sheikh Khalifa bin Zayed, the UAE president and ruler of Abu Dhabi and has been closely followed by Sheikh Mohammed bin Zayed, the crown prince of Abu Dhabi.
Drilling costs in MENA may reach USD 12.4 billion per year by 2012 – Report
According to 'MENA Oilfield Services Report 2008-2012' by energy analysts Douglas Westwood, expenditure within the Middle East & North African drilling and work over segments amounted to some USD 7.7 billion in 2007 and is forecast to rise to USD 12.4 billion per year by 2012.
The report said that, in order to attain forecast production levels, drilling activity, both on and offshore must grow at a dramatic rate thus increasing demand for rigs and associated drilling services.
Mr Andrew Reid MD of Douglas Westwood said that "MENA accounts for two thirds of proven global oil reserves and is regarded as the world’s most influential oil province, eclipsing all other regions by some margin. Over the next 5 years, the region will see strong growth in hydrocarbon production as the world becomes increasingly reliant on oil supplies within the region."
Mr Steve Robertson oil & gas manager at Douglas Westwood said that "The underlying modeling process on which the report’s drilling and market forecasts are built is the result of months of data collation from key industry players and represents a likely scenario for MENA oilfield services activity. This process has also enabled us to build a good understanding of the current active players in the market. The region exhibits a fascinating mix of service companies from National Oil Company subsidiaries to indigenous providers to international oilfield service companies."
The new report is based upon months of in depth research carried out first hand by Douglas Westwood’s oil & gas team.
The research has enabled an assessment to be made of each of the key sub sectors and underlying cost centers that together form the market. Whilst expenditure growth is forecast to varying degrees in all MENA countries, Saudi Arabia is set to remain one of the most prominent regional cost centers over the next 5 years.
MIS Q1 2008 revenue up by 40% YoY
UAE based Maritime Industrial Services has posted a revenue of USD 82 in January to March 2008 quarter up by 40% YoY as against USD 58 million in January to March 2007 quarter.
The main factors contributing to the reduction in profits on the first 2 new build rigs were the increased number of man hours over the original budget, impact of higher cost in man hours than originally estimated and increasing freight, inspection and coordination costs of the procured items.
Other increased costs impacting MIS in first quarter were interest and non revenue costs on Hull 106 and Hull 108, for which slots remained unsold at the end of the quarter. These increasing costs were partially offset by increased margins on the traditional works.
MIS reported that both Seawolf rigs (Hull 104 and Hull 105) remain on schedule for delivery in August and December 2008 respectively, while the 3rd rig, for KSAM2 Petrodrill (Hull 107), is well ahead of progress and contractual delivery schedule.
According to MIS, there are continuing demands for all MIS business lines. From pressure vessel fabrication, with orders currently in progress for both local and international markets; continuing land based petrochemical facility expansions throughout the Gulf area, a steady stream of offshore drilling rig refurbishments or repair, reflecting the increased level of offshore drilling and development activities in the area, all competing for available capacity with new build jackup rigs.
Rio Tinto to start Saudi aluminum smelter by 2012
Arab News reported that Rio Tinto Group is expecting to produce aluminum from its planned smelter in Saudi Arabia by late 2011 or early 2012.
Mr Tom Albanese CEO of Rio Tinto said that the first stage of the project, developed in a JV with state owned Saudi Arabian Mining Company, will produce 740,000 tonnes of aluminum.
Nabucco pipeline may get delayed due to Turkish conflict
Bloomberg reported that Nabucco pipeline may face further delays unless a transit agreement with Turkey is reached later this year. Nabucco, which already postponed its start date by a year in February 2008, now risks missing an opportunity to bid for natural gas from Azerbaijan, slated as the project's most likely first supplier.
Mr Jeremy Ellis head of business development for the trading unit of Nabucco shareholder RWE AG said that "The key is getting a transit agreement with Turkey. The competition for gas supplies is starting and getting more intense. If Nabucco misses out, the consequences are big.''
Turkey, one of the six Nabucco partners, is located at the start of a 3,000 kilometers long pipeline designed to bring non Russian gas to central Europe. As the only partner outside the European Union, Turkey has to reach an agreement on how to price the gas going into the pipeline.
Nabucco has a timeline that foresees a market sounding this month to take a snapshot of buyers' interest, followed by a so called open season of 6 months to book capacity. A final investment decision will then be made in early 2009 and operations are scheduled to begin in 2013.
Without the completion of the open season process, Nabucco's partners won't be able to discuss financing for the project, which saw its cost estimate revised by 58% to EUR 7.9 billion last month because of higher steel prices.
Pakistan may impose gas development levy
The News reported that Pakistan government is likely to impose gas development levy on gas sale to consumers that would cause a further increase in gas tariff.
Sources in the petroleum ministry said that the Economic Coordination Committee of the cabinet would consider as an option of possible imposition of gas development levy for approval that would meet under the chairmanship of Prime Minister Mr Syed Yousuf Raza Gilani.
It may be mentioned that the development levy on oil has been very controversial, which was the major reason behind the hike in oil prices in the country. The government is also charging 15 per cent general sales tax on oil and gas products and the development levy is an additional duty on oil products.
At present, the government is charging petroleum development levy on JP-4, JP-8 fuel at PKR 3 per liter, premier motor gasoline PKR 2.23 per liter and HOBC PKR 2.61 per liter.
Official sources informed that the petroleum development levy was being misused, as it was supposed to be invested in the development of the petroleum sector by developing its infrastructure. But the government was charging the development levy for controlling the budget deficit. Sources feared that the gas development levy would also be used for controlling the budget deficit and would not help in any way for the development of the gas sector.
Saudi Kayan signs USD 6 billion financing agreements for new complex
Saudi Kayan Petrochemical Company has entered into USD 6 billion financing arrangements for 15 years with a group of banks and financial institutions to finance part of the cost of its new complex in Jubail Industrial City. The complex will be the world's largest integrated petrochemical complex.
Mr Mutlaq Hamad Al Morished chairman of SAUDI KAYAN had signed the agreements on behalf of SAUDI KAYAN.
SAUDI KAYAN was advised by Arab Banking Corporation, BNP Paribas and Samba. The initial mandated lead arrangers are ABN AMRO Bank NV, Arab Banking Corporation, BNP Paribas, HSBC Bank plc and Samba Financial Group. The export credit agencies are ECGD, KEIC, K EXIM and SACE. The Public Investment Fund of Saudi Arabia is also financing the project. Al Rajhi Banking & Investment Corporation is providing an Islamic working capital facility.
The SAUDI KAYAN complex, currently under construction, is expected to go on-stream in the fourth quarter of 2010 with a total annual capacity of approximately 6 MTA of a variety of petrochemical products including ethylene, propylene, polyethylene, polypropylene and ethylene glycol. It will also manufacture a series of specialized products that will be produced locally for the first time. They include aminoethanols, aminomethyls, dimethylformamide, dimethylethanol, dimethylethanolamine, ethoxylates, polycarbonate and acetone.
SABIC holds a 35% of the shareholding in SAUDI KAYAN with a private shareholder Al Kayan Petrochemical Company holding a further 20%. The remaining 45% is held by Saudi shareholders following an initial public offering last year.
Pakistan approves PKR 541 billion PSDP for 2008-09 fiscal
APP reported that Pakistan’s National Economic Council has approved PKR 541 billion for the public sector development program 2008-09, more than 11% of the last fiscal year and also set a GDP growth target of 5.5% for the financial year 2008-09.
Mr Salman Faruqi deputy chairman of Planning Commission said that the total size of the public sector development program for the financial year 2008-09 is PKR 541 billion in which the share of federal PSDP is PKR 371 billion. The provincial PSDP is PKR 170 billion while the allocation for the earthquake reconstruction & rehabilitation authority is PKR 27 billion which is over and above the PSDP 2008-09 of PKR 541 billion.
Mr Faruqi added that the NEC has set a GDP target of 5.5% which is realistic and achievable and it could be even grow higher depending upon the economic situation of the country. He regretted that in the past including the outgoing financial year the Public Sector Development Programs were not properly implemented against the allocations announced in the Budgets but also did not release them.
Power sector has been allocated PKR 14 billion which is over and above PKR 51 billion to be spent by WAPDA from its own resources. Water sector has been allocated PKR 75 billion or 20% of the total, while food, agriculture and livestock have been earmarked PKR 20 billion.
Baosteel lifts Q3 prices in secret
According to well inform source, Baosteel has already revised steel prices for Q3, fixing on the new prices in secret with its strategic customers and the direct users respectively rather than unveiling to the public.
It is reported that Baosteel will keep the price of steel used in quake relief unchanged. Baosteel's sales center confirmed the price correction with China Securities Journal, but didn't disclose the range of price change.
Mr Zhou Tao Guojin Securities analyst predicted that Baosteel's price hike at some 15% based on usual pricing strategy, while Mr Hu Hao with Zhong Yuan Securities said, as he learned the major steels will gain some CNY 300 per tonne to CNY 600 per tonne.
Mr Hu with Zhong Yuan Securities said following four aspects can explain Baosteel's price lift.
1. The supply or demand correlation holds sound and Baosteel's advantage in producing high value added product helps pass on the additional cost
2. Away from increasing cost of past years, coke price again gained 35% while this year's ore price talk between Baosteel and Australian suppliers may turn out a higher hike percentage
3. The recent steel market is upward and the other mills are striving to raise EXW prices
4. The international steelmakers lifted Q3 prices before Baosteel's move.
Mr Zhou Tao said Baosteel's hike is able to cover the additional cost. But Mr Hu Hao didn't think this hike serves a full reflection of the market supply and demand, and believed there is still upward room for the Q4. Baosteel's products are CNY 100 per tonne cheaper than WISCO and register USD 200 per tonne gap with the overseas prices.
Chinese tube makers find US DOC decision unjustified
It is reported that some Chinese steel makers may quit the United States market if they are slapped with anti dumping and anti subsidy duties following an investigation by the US Commerce Department.
China Daily reported Chinese companies and industry analysts claimed the outcome was unjust and evidence cited by the US unfounded. Mr Qu Xiangdong spokesman of the China Iron & Steel Association was quoted as saying that it was simply unfair because the government did not subsidize steel enterprises.
The department said two Chinese manufacturers, Shuangjie Group and Jiangsu Yulong Steel Pipe Company, which withdrew from the US investigation, received an 85.55% anti dumping rate. The former faces an additional proposed countervailing duty of 615.92% one of the highest penalties imposed on Chinese products.
The US Commerce Department announced findings on May 30th 2008 that Chinese exporters sold standard pipe subsidized by the Chinese government to the country at less than normal value. The final determinant rests with the International Trade Commission which will make its decision around July 14th 2008.
Chinese steel mills cautious on further export price increase
It is reported that steel export prices have been kept at high level for most part of May and there is no great increase recently. Most Chinese steel makers dare not raise prices substantially again since transactions have been softening.
Prevailing export quotations for commercial 14mm to 30mm plate by tier two steel makers are at USD 1140 per tonne to USD 1160 per tonne FOB which compares with USD 1180 per tonne to USD 1220 per tonne FOB for similar products by tier one steel producers. But there is also much lower offer on the market. Tangshan steel is quoting 14mm to 25mm*2400/2500mm X 6m 12m commodity grade plate at USD 1030 per tonne with 100% prepayment by T/T. There would be an extra of USD 15 per tonne to USD 20 per tonne if payment is made by Letter of credit.
An east China based trader tells Mysteel that "It is harder for us to concluded business now even at USD 1030 per tonne to USD 1050 per tonne FOB. Few people dare to take material at such high level. As a matter of fact, there is meaning to set price at USD 1140 per tonne FOB since there is few contract."
(Sourced from MySteel.net)
Hyundai Heavy forms China venture to ship steel plate
Bloomberg reported that Hyundai Heavy Industries Co will set up a shipping venture in China to transport steel plates to its yards in South Korea.
Ulsan based company said in a regulatory filing that he USD 2 million ventures with Grand China Shipping Ltd will be based in Shanghai. The partners will have equal shares in the venture.
The report added that Hyundai Heavy in September 2006 agreed to buy 20% of China's Qinguangdao Shouqin Metal Materials Co to ensure a steady supply of steel plates.
Together with units Hyundai Mipo Dockyard Co and Hyundai Samho Heavy Industries Co, Hyundai Heavy expects to use about 3.9 million tonnes of steel plates this year of which 1 million tonnes will be bought from China. The companies used 3.2 million tonnes last year of which 700,000 tonnes were from China.
Chinese steel mills hike CR export offers
It is reported that Chinese steel makers have raised export quotation for cold rolled steel coil again to reflect the increase in domestic market price. Despite the remarkable increase there is not much allocation for exports.
CRC prices has jumped by USD 40 per tonne to USD 50 per tonne from end May and the strength is likely to continue in June. Export offer for 1.0mm CRC is prevailing at USD 1120 per tonne FOB and some are tagging at higher level.
Shanghai based trader said "There is less allocation than expected and even private steel makers have been almost fully booked. It is not easy to get material even at high price level."
As per report, the increases in domestic market prices are believed to be the major driver of the strength of export offers. On Shanghai market, price for 1.0 cold rolled sheet by Anshan steel is being offered at CNY 7350 per tonne, while that for 1.0mm CR coil by Maanshan steel is at CNY 7250 per tonne.
Mysteel forecasts Shanghai price for 1.0 sheet by Anshan steel is close to our target of CNY 7400 per tonne to CNY 7500 per tonne and the next one probably will be CNY 7700 per tonne to CNY 7800 per tonne and it could go past CNY 7500 per tonne. Otherwise, we could exclude the possibility of downward correction.
(Sourced from MySteel.net)
China to ink investment pact with Bekaert
It is reported that China, planned to sign an investment agreement with Belgian Bekaert Group to set up China's largest tyre cord steel wire plant at Shuangqiao District in Chongqing. The first investment fund of this project will amount to over EUR100m reportedly.
Mr Huang Renchao head of the Investment Promotion Bureau said "We have just settled on the investment specifics with Bekaert today. He said that Shuangqiao district was built up in 1970's, and now has owned over 300 auto and supporting firms producing the parts and accessories. Shuangqiao is now entering into its new development term with the establishments of a series of projects, which are expected to bring about an annual production value of RMB10b after being put into service."
Iran and China inked steel mill supply agreements.
It is reported that Iran and China have sealed a EUR 131 million deal for the construction of a major steel mill in the central Iranian province of Yazd.
Mr Ahmad-Ali Harati-Nik Deputy Industry Minister of Iran on his recent visit to China said "China will soon begin the project for the production of steel through the electric arc process at Ardakan in Yazd. He said that the EUR 131 million projects will boost Iran's steel production capacity by 1 million tonnes."
Mr Harati-Nik said the state owned China Metallurgical Construction Group is expected to commence the project in late June.
The deal is in keeping with Iran's plans to significantly increase its steel production over the next several years.
Zhenhua Fluor win USD 350 million UK wind farm deals
Reuters reported that China's Zhenhua Port Machinery and engineering group Fluor Corp have won a EUR 230 million order from a British offshore wind farm.
Shanghai based Zhenhua said in a statement that the order, for more than 110,000 tonnes of steel framework structures is scheduled for delivery in 2009 and 2010.
The report added that Zhenhua has been expanding overseas, helping to boost its net profit 25% in 2007.
China grid repairs to cost USD 5 billion
Bloomberg reported that State Grid Corp of China, the country's largest electricity distributor repairs to its national grid after last month's earthquake in Sichuan cost CNY 34.6 billion. State Grid Corp of China faces a direct economic loss of more than CNY 12 billion from the temblor that struck the southwestern province on May 12. Sichuan alone accounts for CNY 10.6 billion.
State Grid said “The lower profit is due to the two natural disasters in the first half of the year.''
Mr Lu Jian spokesman said State Grid spent CNY 70 billion in the first five months on maintaining and expanding its grid an increase of 14.5% from a year earlier. The power supplier is facing huge pressure and is trying to meet its 2008 profit target.
Mr Wang Wei an analyst with Guotai Junan Securities Co said “Natural disasters will greatly hurt State Grid's profitability this year. But the repairs will boost orders for manufacturers of power cables and equipment.''
State Grid distributes power in 26 provinces and regions, covering 80% of China.
Cosco offers highest bid for Greek ports
It is reported that China's Cosco Pacific has offered the highest bid in the tender for the concession to manage two of Greece’s three container wharfs at Piraeus Port.
Cosco's offer totalled USD 7.61 billion as compared with a Hutchison Whampoa consortium’s offer of USD 6.82 billion for 35 year concession. It pledged to invest USD 957.68 million in the project while the Hutchison consortium which includes Greece's Alapis, offered USD 546.8 million.
As per report Cosco's offer excluding the investment pledge is seven times the current market value of Piraeus Port Authority.
Hutchison Whampoa and Cosco Pacific are also bidding to manage container handling operations in Thessaloniki, Greece's second largest port. Another bidder for the same tender is Dubai Ports World.
Baoshan cancels Q3 price hike on quake - Report
Bloomberg reported that Baoshan Iron & Steel Co China's biggest steelmaker canceled plans to charge customers more in the third after the government ordered domestic mills to hold prices at the same level as before the May 12 earthquake.
Mr Chen Zudong a sales official at Baoshan said “We will keep prices for all grades unchanged at the second-quarter level.''
Mr Xu Lejiang chairman of Baoshan's parent company said the steelmaker had planned to raise prices for the three months starting July 1st 20087 to keep pace with global levels. The China Iron and Steel Association this week ordered members to hold prices at levels prevailing before the quake and ensure sufficient supplies of products such as color coated sheets.
HDG and PPGI price update for China
Boxing
0.35mm galvanized sheet made by Hengtong is quoted at CNY 7750 per tonne
0.4mm galvanized sheet is quoted at CNY 7650 per tonne
0.5mm galvanized sheet is quoted at CNY 7300 per tonne
1.0mm galvanized sheet is quoted at CNY 6950 per tonne.
Shanghai
1.0mm galvanized sheet made by Anben Group prevails at CNY 7600 per tonne up by CNY 50 per tonne to CNY 100 per tonne
0.5mm galvanized sheet made by private makers at CNY 7950 per tonne up by CNY 100 per tonne
0.5mm color-coated sheet made by Baosteel is quoted at CNY 9400 per tonne to CNY 9450 per tonne.
Beijing
1.0mm galvanized sheet made by Anben Group is priced at CNY 7350 per tonne up by CNY 50 per tonne
0.5mm galvanized sheet made by private makers is quoted at CNY 7760 per tonne up by CNY 60 per tonne
0.476 color coated sheet made by private makers is quoted at CNY 8300 per tonne.
(Sourced from MySteel.net)
Jigang commissions new coil center
It is reported that China's Jinan Iron & Steel has commissioned its first stripping line and cutting line at the new coil center.
As per report China's Jinan Iron & Steel is capable to produce hot rolled coils of 3mm to 12mm thick and up to 2,200mm wide for customers in machinery and shipbuilding sectors.
Jinan Iron & Steel is still engaging in the construction of two shearing lines and one flame cutting machine at the Weifang plant, which will work for its CRC, HDG, pre-painted steel and plate. These lines are scheduled to be started in next year.
Small Chinese steelmakers seeking foreign investments
It is reported that smaller or medium sized Chinese steel companies are wooing foreign investors in a bid to gain technology and bulk up their balance sheets, seeking to fend off the threat of getting scooped up by the country's larger state run groups.
The search for outside capital by China's smaller steel groups comes amid government calls for steel makers to consolidate, a drive that could see smaller steel mills bulldozed into the arms of the top five national firms.
These smaller steelmakers face several obstacles in their growth strategies. The government does not permit foreign control and is not keen on foreign investment in steel in general, fearing an already sprawling sector may grow out of control.
An investment banker in the sector who declined to be named for commercial reasons said "China has a policy of already having picked the winners. Everyone who's not on that list is frantically trying to expand like mad, with the view that size matters."
Yangzhou Chengde Steel Tube Co Ltd 49% owned by US private equity giant Carlyle Group has hired Lehman Brothers to help it seek strategic options which might include an outside investor.
The South China Morning Post Newspaper reported last week that Singapore listed FerroChina hired Merrill Lynch last month to find it a suitor. And Shanxi based Haixin Iron and Steel Group is also looking for a strategic investor.
Tianda Group to build special steel pipe industry
It is reported that the export value of special steel pipe of Tiangda Group in the first quarter this year reached USD 14 million up by 62.7% YoY.
As per reports, the city seized the opportunity, increased the investment of which the investment of oil pipe corrosion resistant technical transformation project with an annual output of 300,000 tonnes is expected to reach CNY 200 million. I
Its special steel pipe production capacity will reach 1 million tonnes in the three years, the output value of the group to exceed CNY 10 billion, of which the special steel pipe production value will reach CNY 8 billion.
Linggang purchases group assets for CNY 19.75 million
Linggang announced that the company and its shareholder Lingyuan Iron and Steel Group have signed stock transfer agreement.
The company purchased 100% stock right of Linggang Dalian Steel Distribution Company, Linggang Jinzhou Steel Distribution Company, and 60% stock right of Beijing Lingyuan Materials Supply and Marketing Company which are under Lingyuan Iron and Steel Group by CNY 19.753 million.
The released added that the four companies that planed to be purchased will mainly sell Linggang Stock’s products, the intention of acquisition is to standardize the company’s operations, reduce the relevancy transaction, improve the company’s sales system.
Baosteel to build second set of COREX-C3000 in 2010
It is reported that recently, Baosteel has defined the construction progress of the second step work of Pugang Luojing relocation project, it ascertained to build the second set of COREX-C3000 in 2010.
As per reports, COREX iron making project has made the detailed timetable for foreign related negotiations, contract signing, preliminary design review, equipment order and manufacturing etc.
According to the plan, 2009 will be the peak period of construction of COREX iron-making project, and is fully completed in 2010.
Shougang awards 5000mm plate mill order to China Erzhong
It is reported that recently, China’s first indigenously designed wide and heavy plate rolling mill order contract was awarded to China Erzhong by Shougang Group.
As per report plate mill is the major project for Shougang in its relocation process and has great significance for the development of Shougang Group. After the completion of the equipments, it will play an important role in adjusting Shougang’s steel industrial structure and improving the steel products quality.
The signing of this contract broke the monopoly that such equipments were all long designed by foreign countries, and speed up the realization of the own country localization of China’s major technology and equipments.
Shahepu County to build seamless pipe base
It is reported that Shahepu County, adjacent to two expressways and an airport, plans to build the largest seamless pipe base in northeastern China with an annual production value of CNY 10 billion this year.
The county plans to build 60 seamless pipe projects within this year, 12 of which have been approved, each with a capacity of 150,000- tonnes per year to 200,000 tonnes per year. It created an annual production value of CNY 5 billion from seamless pipe industry in 2007.
Seamless steel pipe for the transportation of water, LNG and oil has become increasingly popular for its corrosion resistant property amid rising demand on liquid energy because of a shortage of solid energy, secretary of the party committee of the county Yangming has told to reporters.
Zijin buys stake in Zijin Wulate Hou Qi
It is reported that Zijin Mining International Mining Company, the subsidiary wholly owned by Zijin Mining Group Company, signed with Mr Liu Daonan on purchasing agreement. Zijin International will purchase 13% rights and interests of Zijin Wulate Hou Qi, the subsidiary of Zijin group.
When the agreement is fulfilled, Zijin group will hold 73% rights and interests of Zijin Wulate Hou Qi.
As per report the trade will increase the capital as well as it s holding shares of rights and interests of Zijin Group in Zijin Wulate Hou Qi.
Zijin Wulate Hou Qi was established on August 9th 2004 which mainly deals with domestic ore mining. By December 31st 2007 and the total assets of this company passed CNY 400 million with CNY 123 million net assets, CNY 430 million profits and CNY 380 million net profit and all of which increased greatly compared with that of last year.