MMTC floats EoI for 5 million tonnes iron ore pellet plant

It is reported that MMTC Limited state owned trading company & pig iron maker is seeking a partner to set up by a 5 million tonnes pellet plant.

Eligibility Criteria for the prospective SPV partner
1. Minimum net worth of INR 250 Crores as on date of last audited balance sheet.
2. Should have experience in setting up infrastructure projects, mining of minerals, operation of pellet plant and or having mining blocks in India.

Interested parties have until July 21st 2008 to submit bids.

Welspun gets orders worth INR 30 billion

Reuters reported that Welspun Gujarat Stahl Rohren Ltd has won orders worth INR 30 billion rupees for diversified markets in India and the US taking its order book to 2.5 times last year's turnover.

Mr Akhil Jindal president of Welspun Gujarat Stahl Rohren without naming the clients said that "We have received this order from one of our existing clients. This takes our order book to 2 ½ times of last year's turnover."

Mr Jindal said higher crude oil prices have spurred demand for pipes globally with rising potential for oil exploration activities.

According to the report, Welspun reported a net profit to INR 3.4 billion on a total income of INR 40.1 billion in the year ending March 2008 on higher export orders.

Indian Railway to begin work on freight corridor this fiscal

BL reported that Indian railways are planning to begin construction work on the exclusive freight corridor this financial year. In all likelihood, it would kick off the project by taking up construction of some bridges on rivers & streams along the West coast.

Mr SK Vij member of the Railway Board said that the railways is in the process of tying up funds to meet the projected budget of INR 30,000 crore to complete the 3,000 kilometer freight corridor. He said that in connection with the inaugural of recent advances and future trends in design and construction of bridges, organized by the Indian Institute of Bridge Engineers & National Bridge’s R&D Centre.

He added that “The project was expected to be completed in 7 years. However, the first goods train on the corridor could move on still earlier as parts of the project would be ready much earlier.”

Mr Vij said that efforts were on to tie up funds for the projects. The railways had, so far, received at least 40 applications from players, showing interest in taking part in the corridor project. Stating that finding financial and human resources were some of the challenges. He said that Japan showed interest in the western corridor with a likely investment of INR 12,000 crore, the World Bank is keen on the eastern corridor.

He added that on taking up projects abroad, Rail Vikas Nigam did receive enquiries from some African countries & Indonesia.

Economic situation to improve in next few months - JSW

Bloomberg reported that Mr Seshagiri Rao finance director at JSW made following comments on the slowing pace of industrial production and rising inflation.

Mr Seshagiri Rao said that “India's inflation based on wholesale prices was 11.89% for the week ended June 28th accelerating at its fastest pace since 1995. Industrial production grew at 3.8% in May, the slowest expansion in more than six years.”

He said that “Of course there will be some slowdown but it's not a panic situation yet. I expect things to improve maybe in the third or fourth quarter because industries across the board have been on an expansion spree so the supply side of several products will improve. Also we are expecting a normal monsoon this year and that is a good sign for the agriculture sector.''

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BHEL bags INR 2,175 crore contract from TNEB

It is reported that Bharat Heavy Electricals secured a contract worth INR.2,175 crore from Tamil Nadu Electricity Board for setting up a 600 MW North Chennai coal based power project in Tamil Nadu on EPC basis.

As per the report, for the contract the boiler and its auxiliaries will be manufactured by BHEL at its Tiruchirapalli & Ranipet works in Tamil Nadu, while the steam turbine and generator will be manufactured at the company's Haridwar plant.

The pumps & heat exchangers will be manufactured at its Hyderabad plant & electricals at the Bhopal plant, while the state of the art controls and instrumentation system will be supplied by BHEL's Electronics Division in Bangalore.

This is the second order secured by BHEL for the new rating unit of 600 MW designed to sub critical parameters. TNEB has earlier placed a similar EPC contract on BHEL for setting up a 600 MW thermal power generating unit at the same power station.

Bangalore Metro invites bids for viaducts

According to an official notification, Bangalore Metro Rail Corporation Limited, a joint venture of Government of Karnataka & Government of India has initiated process for construction of 2 viaducts at a cost of INR 410 crore.

According to the notification the first viaduct 5.1 kilometer will be constructed in North to South corridor, excluding station portions in Reach 3 between Yeshwwanthupur & Swastik Terminal at a cost of INR 200 crore.

The second viaduct 5.9 kilometer will be constructed in East to West corridor, excluding station portions in Reach2 between Magadi road & Mysore road Terminal. The estimated cost of the viaduct is about INR 210 crore.

The viaducts are part of first phase of Bangalore Metro consisting of 2 corridors of double line electrified will cover a total of 33 kilometer. Out of this, 6.76 kilometer will be underground near City Railway Station, Vidhana Soudha, Majestic & City Market and most of the rest will be elevated.

The East to West corridor will be 18.10 kilometer long, starting from Byappanahalli & terminating at Mysore Road terminal. The 14.90 kilometer North to South corridor will begin at Yeshwantpur Terminal & terminate at RV Road terminal.

Indian cement shipments in June up by 8.7% YoY

According to data from the Cement Manufacturers' Association showed, cement shipments up by 8.7% YoY in June from a year ago. Sales up by to 14.79 million tonnes in June, compared with 13.61 million tonnes a year ago, while production up by 7% YoY to 14.67 million tonnes in the month.

According to the data, shipments in April to June 2008 are up by 6.2% YoY at 44.37 million tonnes and production is up by 6% YoY at 44.59 million tonnes.

ECR and SER achieve higher throughput in June

BL reported that despite disruptions in rail movement in June caused by the breaches on railway lines submerged in floods, both South Eastern Railway and East Coast Railway succeeded in achieving higher freight throughput during the month compared with the same month last year.

According to the report, in June 2008 the traffic throughput of SER was 9.38 million tonnes compared with 8.64 million tonnes in the same month last year and the corresponding figures for ECoR were 7.23 million tonnes and 6.7 million tonnes respectively. The targets for the month were 9.86 million tonnes for SER and 8 million tonnes for ECoR.

Cumulatively, the first quarter traffic throughput of SER was 29.19 million tonnes and of ECoR 23.15 million tonnes. The targets for the period were 30.4 million tonnes for SER and 24.6 million tonnes for ECoR. Thus, the shortfall from the target was around 1 million tonnes for SER and about half a million tonnes for ECoR.

According to a spokesman for SER, “Rail movement between Bhadrak and Balasore remained completely suspended for full one week and thereafter the movement resumed though on a limited scale. He said that even now, the movement is restricted to the single line.”

A spokesman for ECoR said for 2008-09, the freight traffic target for SER has been set 124 million tonnes and for ECoR at 100 million tonnes. He said that “The first and second quarter targets are not fixed on pro-rata basis because of the monsoon which starts from May or June and continues beyond September.”

Trading of renewable power on the anvil

BL reported that the development of a Renewable Energy Certificate mechanism is on the anvil. It is aimed at evolving a mechanism to designate green power as a tradable commodity and promote inter state sales of renewable generation.

The move comes in the wake of a number of State Electricity Regulators having firmed up Renewable Purchase Obligation, making it mandatory for all distribution utilities to source a minimum quantum of electricity annually from renewable sources.

According to the report, the Government is in the process of hiring consultants for the development of a REC mechanism for India on the lines of green tags being used in the US and the UK, which would provide a platform for trading between renewable energy surplus and deficit States, with provisions for a clearing house mechanism and energy accounting framework to recognize RECs as a tradable commodity.

While States such as Tamil Nadu and Karnataka have already approached the 10% mark for renewable procurement, many States are not procuring even 1% of their obligation. As a result, States which have already reached very high level of renewable procurement are reluctant to procure more green power while those with lower potential are not able to procure power from renewable rich States.

The report further cited a Government official involved in the exercise as saying that the certifications would essentially create a nationwide market for renewable energy, enabling renewable deficit States to tide over their RPOs and spur higher green power generation in surplus States.

Metso to design CFBC boiler for Indian power sector

BL reported that a JV for knowledge process outsourcing Finnish power & engineering major Metso have got its toe into the Indian market, but the EUR 9 billion group is looking for a number of other opportunities as well.

According to the report, Metso formally signed a joint venture agreement with the Chennai based EPT Engineering Services. The venture will provide engineering and design services for Metso group worldwide. JV of Metso & EPT, Metso Power India Private Limited, will function out of a new facility at Guindy in Chennai. Initially, it would employ 50 people this number would treble in 3 years.

Mr Lennart Ohisson President of Metso Power AB said that its R&D is working on making products suitable for India. But even when ready, Metso is not likely to enter India with a manufacturing unit. The company would prefer to sub-contract manufacturing and that too, without licensing technology.

Mr Ohisson said that “EPC contracts, where a company undertakes to do the entire engineering, procurement and construction of a project is not quite the way to go about it. EPC wave is today at its peak but will die down, because EPC contracts load up costs. It would be easier for companies to do implement the project themselves, perhaps with the help of consultants.”

India unlikely to meet export target of USD 200 billion

It is reported that according to majority of exporters surveyed by the FICCI, India would not be able to meet the export target of USD 200 billion for 2008-09 fiscal due to various reasons.
1. Surge in ocean freight rates
2. Slowdown in the US and European markets
3. Slack in construction and real estate business in Western markets
4. Export restrictions in the domestic market.

FICCI in a release stated that an overwhelming 75 % of companies participating in the FICCI’s export survey felt that the export target of USD 200 billion for 2008-09 would be missed.

As per report, the companies were from sectors such as automotive, consumer durables, food and food processing, leather, marine products, gems and jewellery, FMCG, textiles, handicrafts, metal and metal products, heavy engineering, IT, pharmaceutical and chemicals.

323 export companies with turnovers ranging from INR 1 crore to INR 20,000 crore were surveyed.

Indian inflation increase to 11.63% in late June

It is reported that Indian inflation accelerated to 11.63 % in late June, above forecasts and its highest since the series began in 1995, raising the likelihood of an interest rate increase this month to follow two hikes in June.

The wholesale price index, India's most widely watched measure, rose 11.63 % in the 12 months to June 21st, above the previous week's annual rise of 11.42 %.

Inflation for the week ended April 26th was revised upwards to 8.27 % from 7.61 %.

The report added that the cash reserve ratio is the proportion of funds banks have to keep on deposit with the central bank. It is due to rise to 8.75 % in two 25 basis point stages on July 5th and July 19th. The RBI holds its next review on July 29th.

Kochi Port plans 15% YoY growth in cargo handling

BL cited Mr N Ramachandran chairman of The Cochin Port Trust as saying that the Cochin Port Trust is targeting a growth of over 15%YoY in cargo throughput in 2008-09. He said that “We handled around 15.85 million tonnes in 2007-08. We expect to improve that by at least 15% this year with an improved performance from the container segment.”

He added that the port’s performance was muted in 2007-08 because of lower revenue from the Cochin Refinery, which imports crude oil through the port, after it developed own single point mooring to anchor crude carriers.”

Mr N Ramachandran said that “The mooring is under the port trust but our revenue share has decreased. However, the port expects to make up for the loss this year with a better growth in container handling and also by “

He said that “We are looking at back loading, by which we will handle very large crude carriers for ports like New Mangalore and Mumbai and then unload the oil in smaller ships. These ports can only accommodate smaller ships. He added that the year 2009-10 is likely to be even better because by then the international container transshipment terminal at Vallarpadam is likely to be commissioned and the draft will also be increased.”

At present, 70% of CPT’s revenue comes from crude oil, while 20% is from containers and the rest from dry bulk cargo. CPT has floated tenders to deepen its draft from the current 12.5 meters to 14.5 meters. The contract is likely to be finalized soon after the tenders close on July 29th 2008. This will allow larger container ships with capacity of 8,000 TEUs to enter the port.

PGCIL board approves subsidiary for power system operation

Power Grid Corporation of India Ltd has informed BSE that its board of directors at its meeting held on July 12th 2008 has granted in principle approval to the setting up a wholly owned subsidiary Company of the Company responsible for Independent Power System Operation.

The released said this is in line with the advice of government of India on the arrangement of the operation of national and regional load dispatch centers received by the company.

Era Infra to set up thermal plant in Madhya Pradesh

Project Today reported that Era Infra Engineering will set up a 1,200 MW thermal power plant at Jatwar village in Umaria district of Madhya Pradesh.

According to the report, Era Infra Engineering has already entered into to sell for the purchase of land for the purpose.

Foundation stone laid for Thiruchopuram Port

It is reported that Nagarjuna Oil Corporation Ltd plans to develop an all weather port at Thiruchopuram in Cuddalore district of Tamil Nadu at an investment of INR 1,500 crore. Mr M Karunindhi Chief Minister laid foundation stone for the project here at Thiruchopuram.

According to an official release, the port will handle imported coal for the power plants in the district including for Tamil Nadu Electricity Board and for others. Initial capacity of the port will be 25 million tonnes.

The port will also serve for the proposed petrochemical and petroleum investment region in Cuddalore and Nagapattinam districts.

Rise in diesel price to push road freight rates

BL reported that any hike in diesel price is bound to push up the road freight rates, more so because the diesel cost accounts for nearly 70% of the operating cost, yet the freight increase need not necessarily fully reflect the price increase.

According to the report, immediately after the announcement of the price hike, there will be a spurt in freight rates which gradually get adjusted to lower levels depending on the market condition. This happens due to various reasons. First, the road transport industry being unorganized with individuals having one or two vehicles dominating the industry, the freight rates are always negotiated rates. These vehicle owners cum operators do not have much say in the determination of rates.

As per report, it is the middlemen and the brokers who call the shots. The negotiations over rates are finalized at their levels. As a result, the vehicle owners cum operators are not always fully compensated for the price increase. But they cannot keep their assets idle either because such idling is not in their interests. In fact, individual transport operators are opposed to diesel price hike as they do not benefit from it. Their condition, in fact, worsens with every increase as the middlemen take away the cream.

According to a major transport company, it is the market that determines the extent of freight increase as a sequel to diesel price hike. If the extent of price increase is small, the market absorbs it more quickly than if it is not so small. Higher increases take time to get adjusted to the market condition. Generally the market does not always absorb it in full.

The report further added that there are other factors. Any steep increase in freight might render the road transport industry uncompetitive through the railways. So, major road transport companies will desist from such increases. Also, with hike in fuel price, the level of adulteration increases. Finally, with the monsoon due to break out soon, this is certainly not the best time for the road transport sector to effect any significant rise in freight rates. The road movement as it is remains at a low key during the monsoon.

India - Ship plate cuttings prices at Alang (WEEK 28)

Alang
Plate cuttings
Rolling
1”

Price in INR per tonne
Inclusive of ED and VAT
Delivery – FOT

(Sourced from www.steelprices-india.com)

India - Domestic rebar price trends (WEEK 28)

TMT (Local mills)
Fe 415
12mm

Price in INR per tonne
Inclusive of ED and VAT
Delivery – FOT

(Sourced from www.steelprices-india.com)

India - Domestic steel scrap price trends (WEEK 28)

Melting scrap
80:20
HMS

Price in INR per tonne
Inclusive of ED and VAT
Delivery – FOT

(Sourced from www.steelprices-india.com)

India - Domestic pencil ingot price trends (WEEK 28)

Pencil ingot

Price in INR per tonne
Inclusive of ED and VAT
Delivery – FOT

(Sourced from www.steelprices-india.com)

India - Domestic wire rod price trends (WEEK 28)

WRC
SWR14
5.5/6

Price in INR per tonne
Inclusive of ED and VAT
Delivery – FOT

(Sourced from www.steelprices-india.com)

India - Domestic light sections price trends (WEEK 28)

ANGL
GR A
65x6

Price in INR per tonne
Inclusive of ED and VAT
Delivery – FOT

CHNL
GR A
75/100

Price in INR per tonne
Inclusive of ED and VAT
Delivery – FOT

(Sourced from www.steelprices-india.com)

India - Domestic medium beam price trends (WEEK 28)

JSTI
GR A
250x125

Price in INR per tonne
Inclusive of ED and VAT
Delivery – FOT

(Sourced from www.steelprices-india.com)

India - Domestic CR price trends (WEEK 28)

CR
DSK
0.63x1000

Price in INR per tonne
Inclusive of ED and VAT
Delivery – FOT

(Sourced from www.steelprices-india.com)

India - Domestic GP price trends (WEEK 28)

GP / HDG
100Gms
0.4

Price in INR per tonne
Inclusive of ED and VAT
Delivery – FOT

(Sourced from www.steelprices-india.com)

India - Domestic plate price trends (WEEK -27)

PLTS
GRB
12-20x2.5

Price in INR per tonne
Inclusive of ED and VAT
Delivery – FOT

(Sourced from www.steelprices-india.com)

India - Domestic patra price trends (WEEK 28)

Patra / Narrow strip

Price in INR per tonne
Inclusive of ED and VAT
Delivery – FOT

(Sourced from www.steelprices-india.com)

India – Domestic HRC price trends (WEEK 28)

HRC
Tube
2.5x1250

Price in INR per tonne
Inclusive of ED and VAT
Delivery – FOT

(Sourced from www.steelprices-india.com)

Monday Market Monitor – India (WEEK 28) – Stable trend

After witnessing eruption during WEEK 25 and WEEK 26 and corrections in WEEK 27, India - Domestic steel market achieved a balance in WEEK 28 with minor corrections at some locations, due to lag and local factors.

Correction in long products was more or less over in WEEK 27, but correction was seen at flat products in several locations in WEEK 28.

Price movement for Mumbai market during WEEK 28 is given below

Price in INR per tonne
Inclusive of ED and VAT
Delivery – FOT

Chennai market, which was somewhat stable in WEEK 27, saw fall in steel prices in WEEK 28 across categories

Price in INR per tonne
Inclusive of ED and VAT
Delivery – FOT

This week is likely to see further corrections, as the buyers and stockiest are assured of no increase by steel majors at least during July 2008. This sentiment has prompted them to limit buying putting pressures on secondary steel makers and stockiest in short term.

Readers may note that the price levels indicated in this article represent the market fairly and are outlined to give trends only, but could be in variance with some transactions at different levels for smaller volumes etc.

(Sourced from www.steelprices-india.com)

Venezuela extends negotiations with Ternium

Bloomberg reported that Venezuela will negotiate with Ternium SA beyond July 12th 2008 deadline about government compensation for taking over the company's local steelmaking unit.

Mr Hugo Chavez president of Venezuela in comments broadcast by state television said that Ternium agreed to extend talks for two months and the government formally assumed control today of the company's Venezuelan subsidiary.

Mr Chavez said that “We are going to count pipe by pipe and screw by screw and set in two months the real and definitive price that we are going to pay.”

Recession reports - World economy between recession and inflation

According to Mr Strauss Kahn MD of IMF, the world economy remains stuck between the ice of recession and the fire of inflation. Mr Strauss Kahn while addressing a conference in Ukraine’s Black Sea resort of Yalta said that the world financial market crisis was largely over, though its consequences would be felt for some time to come.

Mr Kahn said that “Emerging market economies, were experiencing good growth, though inflation, linked to high oil and food prices, remained a serious problem. The biggest part of the crisis is probably behind us. Some parts could be still in front of us. The economic consequences of the crisis are obviously in front of us.”

He described the world response to the crisis as broadly adequate. The central banks collaborated well together and finally they solved the question that avoided a crisis. But conditions in the world economy remained troubling.

Mr Kahn said that “No one can say that the world economy is at a good temperature. We are just between the ice of recession and the fire of inflation.” He added that joint inflation and turmoil on financial markets amounted to the first crisis of the 21st century with the problem originating in the United States.

Mr Kahn said that “It was the strongest economy and it was at the top of the pyramid of power. What happened now is that the pyramid is a bit upside down. It is no longer a pyramid of risk. But emerging market economies were coping well.”

He said that “The good news is after decades of stop and go cycles emerging economies are really emerging, he said, citing strong economic growth not only in India and China but in other regions, like West Africa. Inflation, however, remained a huge problem. It’s a case of life and death”, attributable to imports of oil and food key components in price indices. He added that “They have almost no tools to deal with this.”

Oil hits USD 147 as supply fears intensify

Oil leapt USD 5 to a new record high near USD 147 a barrel on Friday, spurred by growing worries of threats to supplies from Iran and Nigeria and the possibility of a strike by Brazilian oil workers next week.

Oil, which had been on the retreat for much of the week, reversed course on Thursday as fears of supply disruptions from potential hot spots, OPEC members Iran and Nigeria, resurfaced. A spate of missile tests by Iran, the world's fourth-largest oil exporter, in the last two days against a backdrop of rising tensions with Israel and the United States has left the oil markets worried.

The Movement for the Emancipation of the Niger Delta, the main militant group in Nigeria's oil producing region said that it was abandoning a ceasefire to protest against a British offer to help tackle lawlessness in the region. Rebel attacks on oil infrastructure in Nigeria, the world's eighth biggest exporter, have also been partly responsible for the nearly 50% rise in prices this year.

Workers at Brazil's Petrobras threatened to launch a five day strike next week that would affect all 42 Campos basin offshore platforms, which account for more than 80% of daily oil output of around 1.8 million barrels.

Analysts said that the threat of supply disruptions provided the bullish backdrop, as the demand picture was unlikely to change much until after the Beijing Olympics. Mr Adam Sieminski Deutsche Bank analyst in a note said that "We continue to believe that the downside risk to oil prices remains relatively low until the non OECD countries begin to show greater price and income elasticity response than has been evident to date.”

Corus starts producing SBQ plates for aircraft carriers

It is reported that Corus steelworks employees started work on building the Royal Navy's two new aircraft carriers, HMS Queen Elizabeth and HMS Prince of Wales. The plate steel from Scunthorpe will be used to build the hulls of the two ships, as part of the GBP 3.8 billion investment on defense.

As per report Corus will supply more than 80,000 tonnes of structural steel for the carriers and the bulk of it will be made in the Scunthorpe plate mill. It said that the first steel plate to be produced in the mill was inspected for quality by the team of Mick Malynowskj, Nigel Bratton and Dave Quibell and it passed with flying colours.

Mr Richard White a Corus spokesman said that "We secured this prestigious contract in the face of competition from a number of steel producers. It is great news for Corus and the Scunthorpe workforce. It confirms our ability to produce world-class steel, and is a welcome boosts for the three Corus UK sites involved in the manufacturing program."

The new carriers the biggest and most powerful surface warships ever constructed for the Royal Navy will be built in sections and assembled at Rosyth dockyard in Fife. Each carrier will be 284 meters long and 56 meters tall six meters taller than Nelson's Column in London. They will each carry 40 aircraft on flight decks equivalent in size to 49 tennis courts or three football pitches. HMS Queen Elizabeth will enter service in 2014 followed by HMS Prince of Wales two years later.

Shipyards in Clyde, Portsmouth and Barrow in Furness will also be involved in the construction.

AISI appoints Mr Gibson as president and CEO

The American Iron and Steel Institute announced the selection of Mr Thomas J Gibson as the association’s president & CEO. Mr Gibson currently senior VP of advocacy for the American Chemistry Council will assume his new responsibilities on September 1st 2008.

Mr Gibson will succeed Mr Andrew G Sharkey III president & CEO of AISI, who has announced his retirement after leading the Institute over the past 15 years and following a distinguished 30 year career leading steel related trade associations.

Mr Keith E Busse chairman of AISI in a letter to AISI’s board of directors said that “Tom brings an impressive record of achievement in government service and industry advocacy that will equip him to lead a strong, policy-focused AISI going forward. With his leadership experience at ACC and as the top government affairs officer for the Portland Cement Association, Tom will effectively spearhead AISI’s advocacy efforts on critical policy issues, such as access to affordable energy, climate change, trade and pro-manufacturing policies.”

He praised Mr Gibson’s credentials at the Environmental Protection Agency where he served as Chief of Staff to Administrators Christine Todd Whitman and Michael Leavitt, and with the U.S. Senate Committee on Environment and Public Works. He said that “Tom’s strong Washington background will enhance the steel industry’s commitment to advance a technology driven, global sectoral approach to climate change. We look forward to the insights Tom brings from his diverse government and industry background to lead the industry in its commitment to a sustainable future.”

Mr Gibson said that “I am proud to be joining the institute at this critical time and appreciate the opportunity to build on Andy's record of accomplishment. The North American steel industry has a tremendous record of innovation and achievement. I look forward to bringing that story to decision makers at all levels of government as we advance our advocacy agenda.”

Thai tinplate producers looking for domestic price hike

TEX reported that Thailand's tinplate manufacturers Siam Tinplate Co Ltd and Thai Tinplate Mfg Co Ltd will request the Ministry of Commerce shortly to approve a price increase in their domestic sales of tinplate from August 2008.

According to information made available in Tokyo, the government of Thailand first approved a price increase of THB 3,000 per tonne (USD 100) both in local and export sales of tinplate from the July to September quarter under the government's commodity price control in force. Afterward, though, the government rejected a price increase of domestic tinplate in July while having approved a tinplate price increase for export.

As a result, Siam Tinplate and Thai Tinplate Mfg have given up a domestic price increase in July. But they admit that they could end up reducing what they produce unless they can execute a domestic price increase from August in rising costs of TMBP. They also point out a possibility that a serious scarcity of tinplate will arise if the worst happens. Aware of a tough situation, both companies are contemplating seeking government approval shortly of a domestic price increase from August.

In Thailand, tinplate is in high demand, particularly for pineapple cans. As a result, can manufacturers find themselves in hasty production to meet what pineapple growers. For their part, Japan's integrated steelmakers are willing to respond with sufficient TMBP supplies for Siam Tinplate and Thai Tinplate Mfg. The Japanese steelmakers are set to watch how things go in Thailand, given the existing circumstances. In this connection, Thailand's tinplate imports are on the decrease. Last year, there were massive arrivals of tinplate imports from Brazil and elsewhere. As a result, it is understood that Thailand's current environment permits a domestic price increase of tinplate.

(Sourced from TEX Report Ltd)

CMC elects Mr Murray McClean as chairman

Commercial Metals Co announced the Board of Directors elected Mr Murray McClean chairman of the Board in addition to his responsibilities as president & CEO effective upon the previously announced retirement of Mr Stanley Rabin chairman on August 31st 2008.

Mr McClean joined Commercial Metals in 1985 as MD of its marketing and distribution office at Sydney in Australia. In 1993, he was appointed President of the International Division of the Marketing and Distribution segment. Following his appointment as President of CMC's Marketing and Distribution segment in 1999, Mr McClean relocated to the company's headquarters at Dallas in Texas, was named executive vice president & COO in September 2004. He was appointed President in January 2006 and CEO in September 2006.

US Steel to increase flat rolled prices by USD 40 per ton

Pitsburg Tribune Review reported that US Steel Corp will boost prices for flat rolled steel to USD 1,100 a ton to pass on rising costs. People familiar with the matter said that the increase of USD 40 a ton will be applied to shipments starting in September.

Purchasing magazine in a report on June 30th said that US Steel hasn't publicly announced the change. Steel sheet prices in the United States rose to a record USD 1,052 a ton in June after producers took advantage of lower imports and inventories to pass on higher raw material costs.

Mr Michelle Applebaum who runs a steel equities research firm in Highland Park said that "This was entirely predictable. There's not a lot of foreign steel in the US at the moment."

Vietnam construction steel sales down

Sales volumes of construction steel in Vietnam declined by 60,000 tonnes to some 250,000 tonnes in June from the previous month. The main reason of that is due to upcoming rainy season and the government is inspecting carefully about the new building projects.

Construction steel is being offered for VND 16.6 to VND 16.7 million per tonne in southern area and prices are about VND 1.1 million per tonne lower in northern area.

(Sourced from YIEH.com)

Maersk to slash Kaohsiung Port operations by half

Reuters reported that AP Moller Maersk plans to slash about half its container handling capacity in Taiwan's Kaohsiung, the latest blow to a harbor that has been losing ground steadily to South Korea and China.

The Kaohsiung Harbour Bureau confirmed that Maersk, Kaohsiung's largest foreign operator, intends to give up berths 118 and 119, two of the four it operates in the harbor, when their leases expire in October.

According to the report, the move by Maersk is expected to further hurt Kaohsiung's declining position as one of Asia's top ports. But the bureau hopes to convince Maersk to at least move some of its capacity to a berth adjacent to the two berths that will remain following Maersk's departure, arguing that will help the company cut costs.

Mr Huang Kuo Ying deputy director general of Kaohsiung Harbor Bureau said that we are in talks to have them move to berth 75 and relocate the existing operator. He also said that the talks are scheduled to be concluded around August.

Mr Huang conceded that Maersk's throughput in Kaohsiung declined in 2007 after the company moved some of its volume to terminals in China's Xiamen port, across the Taiwan Strait. He added that since the company also has terminal investments in Xiamen, its demand here is not as big as before.

Metalrax closes Down & Francis

Birmingham based engineering group Metalrax has announced the formal closure of its structural steel business Down & Francis with immediate effect.

Metalrax, which supplies specialist engineering and consumer durable products said that the closure was part of a company restructure. Actions to strengthen management and systems at the Kings Norton firm had not had the desired effect with the result that order intake failed to improve and losses continued.

The closure had been expected following the company’s announcement in May that it planned to shut the business subject to employee consultation.

The closure will result in the loss of 36 jobs although 10 staff have been retained for the next three months in order to complete outstanding contracts.

Mr Andy Richardson CEO of Metalrax said that the group regretted the closure but had been left with no alternative after failing to find a buyer for the business. He said that Metalrax had been trying to offload the business for three years but had failed and the decision to close had been taken for the good of the whole company.

He added that the group now intended to focus on its restructuring which will see the company reorganized into two divisions: consumer durables and specialist engineering.

El Paso to expand Colorado Interstate gas pipe line

Reuters reported that El Paso Corp would expand its Colorado Interstate Gas Co natural gas pipeline that serves the growing Raton Basin.

According to the report, the expansion will provide 130 million cubic feet per day of incremental firm capacity from the area of the basin in Las Animas County, Colorado, northward along the Front Range of Colorado to the Cheyenne Hub.

El Paso Corp said that the expected cost of USD 146 million is supported by long term shipper commitments for nearly all of the capacity. It also said it expected to file with the Federal Energy Regulatory Commission by early 2009, with construction beginning in late 2009 for an in service target of the Q2 of 2010.

El Paso said that the Raton expansion will consist of 118 miles of 16 inch pipeline, increasing CIG's capacity from the basin to more than 540 million cubic feet per day. The report further added El Paso saying that it had entered into a fixed price contract for the purchase of steel pipe for the expansion.

El Paso owns North America's largest interstate natural gas pipeline system and one of North America's largest independent natural gas producers.

Mallory acts as supplier during Nucor construction

Bizjournal reported that with Nucor Corp set to start production at its new Memphis facility July 12th 2008, Mallory Alexander International Logistics was given the task of distributing and warehousing at times more than 75,000 square feet of material needed for construction of the new steel mill.

The material supported construction of the USD 300 million Nucor facility that will produce 850,000 tonnes of steel product a year and employ about 225 people once it is fully operational.

Mallory Alexander, which specializes in global logistics and cotton warehousing with about 2 million square feet of warehouse space, was able to take on the challenge thanks to a prior relationship with Nucor.

Mr Thad Solomon GM of the Nucor Memphis facility said that "We have had some business relationships in the past moving material in and out of the country, be it products or equipment, as we build steel mills around the country. I think it certainly allowed us to have a lot of confidence by knowing what we were getting into and who we were dealing with."

Tanzanian scrap dealer call for change in imports bill

The Guardian reported that small scale traders in Tanzania have expressed fears that the proposed law on importation of scraps metals which will be tabled in Parliament soon stands to harm them more than improve their lot. As a result, they have advised the government to exercise care in its review.

The proposed law draft, unveiled recently by Industry, Trade and Marketing ministry restricts the business among large scale dealers, in order to control haphazard trading in scrap metal.

Mr Sheikh Saidi one of the agents in scrap metal trade said that the government has the responsibility to ensure any decision it makes does not negatively affect the lives of many people. Mr Saidi said that it is necessary to revise the proposed law because, as it is now, it may cause more harm than good to small scale traders.

Mr Saidi explained that through the business, many people had turned entrepreneurs, in both rural and urban areas, as a way of eradicating poverty.

The scrap metal dealers were responding to a recent statement made in Parliament by Industry, Trade and Marketing minister, Dr Mary Nagu that the government was planning to table a bill which would bar small dealers from doing scrap metal business.

Aleris announces closure of Cap de la Madeleine facility

Aleris Light Gauge Products, a business unit of Aleris International Inc, announced that it will be permanently closing its aluminum rolling mill facility located at Cap de la Madeleine in Quebec, following an orderly shut down of all remaining activities at the facility.

All new production has already ceased. Aleris made this decision because of the permanent and irreparable damage suffered by the operations as a result of the ongoing labor issues.

The unionized production and maintenance workforce at the facility has been working without a collective bargaining agreement since February 2008, when the prior labor agreement expired. Management and representatives of the union engaged in negotiations and discussions regarding a new collective bargaining agreement for many months. Those negotiations and discussions were unsuccessful, and the union failed to ratify a new agreement. This impasse resulted in management imposing a lock out on July 2nd 2008 and ceasing all new production. The union voted to reject management's final proposal on two occasions, first on July 1st 2008 and again on July 10th 2008.

Aleris International, Inc is a global leader in aluminum rolled products and extrusions, aluminum recycling and specification alloy production. The Company operates 47 production facilities in North America, Europe, South America and Asia, and has approximately 8,800 employees.

MMK ATAKAS JV awards power and automation contract to ABB

ABB, the leading power and automation technology group has won a USD 28 million contract for equipment to provide a new steel plant in Turkey with the reliable power supply needed to ensure high quality production. The contract was awarded by MMK-ATAKAS, a joint partnership between Atakas Metallurgy and Port Management Inc and Magnitogorsk Iron and Steel Works a Russian company.

ABB will supply technology including a Static Var Compensator, which compensates for fluctuations in the voltage and current of power supplies that can harm production quality in industrial plants.

The order includes transformers, high and medium voltage switchgear, a substation supervisory control and data acquisition system and flexible AC transmission system. In addition to the SVC system, ABB will supply four power transformers, a 380/34.5 kilovolt complete turnkey switchyard, and a 72.5 kV open switchyard. The company will also supply and install medium-voltage panels along with the SCADA and communications system.

The initial phase of the project is scheduled to be operational by April 1st 2009. Backed by more than 30 years of experience in SVC systems for the steel industry, ABB solutions will shorten melting times and decrease energy loss, lowering energy costs and reducing consumption of materials.

Mr Peter Leupp head of ABB’s Power Systems division said that “This is an excellent example of one stop shopping. The technical support provided by ABB experts in the initial phase proved extremely worthwhile for the customer and we collaborated closely on the development of a tailored solution.”

The project is the largest single private investment in the iron and steel industry in Turkey and will have the capacity to produce 2.5 million tonnes of hot flat rolled products and 1.2 million tonnes of cold rolled products. The plant will also produce galvanizing steel, dyed sheet steel and rolled steel.

Turkish crude steel production in January to May 2008

Turkey production of crude steel in May 2008 totaled 2.523 million tonnes up by 13.6% YoY As compared to 2,221 tonnes in May 2007 and totaled production of January to May 2008 totaled 11.686 million tonne up by 10.6 YoY as compared to 10.569 million tonnes in January to May 2007.

In ‘000 tonnes
Source – IISI

The MoM growth rate is as under

In ‘000 tonnes
Source – IISI

JV formed to produce steel structure in Syria, UAE and Egypt

Gulf News reported that Construction Products Holding Company and Arabian Roots have set up a USD 80 billion joint venture to produce pre engineered steel structure buildings in the UAE, Syria and Damascus. Through the alliance, the companies would form Roots Steel to target construction companies in Saudi Arabia, Europe and other Middle Eastern Countries.

The Damascus and Cairo factories, each with a capacity of 100,000 tonnes per year would begin operating in November 2008 and February 2009 respectively. The Abu Dhabi plant would have a production capacity of 100,000 tonnes per year and would begin operating in March next year.

Dr Faisal Alaquil business development director of Construction Products Holding said that "Construction Products Holding has the Middle East's highest standard in the field of contracting and construction. Our business vision and philosophy is to serve as a catalyst for a One Stop Shop outlet providing all the needs of modern construction.”

The formation of Roots Steel is in line with Construction Products Holding's mission to target the markets of Saudi Arabia, Europe other Middle East countries, Southeast Asia and the US.

ETA Star to build cement plant at Ras Al Khaimah

Gulf News reported that Dubai based reported that ETA Star Group, a property developer and construction company, will be investing USD 150 million (AED 550 million) in a new cement plant in Ras Al Khaimah under the company called Star Cement.

Mr Hamed Salahuddin MD of ETA Star Group said that the new plant, commissioned for last quarter of this year, will add two million tonnes of production capacity to their existing 3.5 million tonnes. He added that "We are pushing ourselves in the direction of manufacturing.”

Mr Salahuddin said that we also investing heavily in steel manufacturing. With a steel rolling mill in place, the company is looking to back it with a steel mill shop, set to be located somewhere in Abu Dhabi.

Mr Salahuddin said that "Currently, we are looking for a location adding that their total production will reach about 800,000 tonnes of billets and 400,000 tonnes of rolled steel products.”

Sayegh Group launches lines for recycling copper

Sayegh Brothers for Engineering Industries Company of Jordan announced that it has launched new production lines for recycling scrap copper.

Sayegh Group said that the new production lines have ovens for melting scrap copper of all shapes and forms. The copper will be processed with devices equipped with inbuilt examining mineral rates. The raw material will then be produced as plates or ingots.

Mr Michael Sayegh chairman of Sayegh Brothers said that “With the continuous rise of copper prices in the world, we are committed to manufacture our own products with the international standards and affordable prices, since copper is used in many industries.”

UAE oil will last 92 years at current production levels

According to the 2008 BP Statistical Review of World Energy, UAE's oil would last 92 years at current production levels. UAE's proven oil reserves of 97.8 billion barrels make up 7.9% of the world's total reserves.

Latest data by the International Energy Agency show that the UAE's crude oil output on average rose 1.53% to 2.66 million barrels per day for the quarter ended June as compared with the January to March quarter.

Mr Dalton Garis associate professor of economics at the Petroleum Institute in Abu Dhabi told Gulf News that "The non OPEC oil production is decreasing. As this happens, more and more of the world's oil requirements would be OPEC sourced particularly Gulf. This should be good news as long as prices don't get very much higher than the current levels.”

He said that "The higher the price of oil, the greater the political will and attitude adjustment on the part of oil consuming nations who are sitting on a mountain of coal to develop oil from coal.”

BP said that Middle East's proven oil reserves stood at 755 billion barrels or 61% of the world's total, while the global proven oil reserves amounted to 1.24 trillion barrels. Its aid that the UAE's oil consumption rose 7.7% on the year to 450,000 barrels per day in 2007, one of the highest growth rates in the Middle East.

Pakistan inflation in June surges to 21.53%

The News reported that spiraling food prices and weakening rupee pushed up Pakistan inflation to an all time high of 21.53% in June 2008, after a 2.10% rise in consumer prices over May 2008.

Last year in June, CPI inflation stood at 7%. Twelve month (July-June 2007-08) average inflation also went up to 12% against 7.77% recorded last fiscal, which is about 550 basis points above the set target of 6.5% for fiscal year 2007-08.

According to data released by the Federal Bureau of Statistics, in June 2008, prices of food and beverages rose by 32.05%; house rent by 12.39%; fuel and lighting by 11.38%; transport and communications by 24.91%; clearing laundry and personnel appearances 17.74%, medicare 14.16% and household furniture and equipment 10.43% over June 2007.

Inflationary pressure is also building up for another increase in fuel prices if crude oil prices head further. Besides, the present government gradually withdrawing subsidies on gas, electricity and petroleum till December 2008 could further push up inflation. Dwindling rupee value is also making imports costlier, another contributing factor for inflation.

Economic experts said that a weakening rupee has contributed to a rise in the cost of living. Inflation dangers pose a headache for the SBP. Sensing sliding rupee impact on economy and general prices, the central bank few days back also took some decision to control the rupee form freefall and certainly it showed encouraging results.

Economists believe that for each one per cent increase in inflation, more and more people fall into poverty indicating that inflation was hitting poor consumers of the country harder than the more affluent ones. Specifically, the poor are highly sensitive to the price changes in food, particularly staple food items.

POGC starts construction of South Pars phase 12 refinery

MNA reported that construction of the South Pars gas field’s phase 12 refinery kicks off at Tonbak in Bushehr province.

Mr Ali Vakili MD of Pars Oil and Gas Company said that the contract value at USD 284 million and its duration at 34 months. He explained that “The project has been developed in the form of an EPC1 detailed engineering, procurement, construction, commissioning, and operation contract and vested in an Iranian consortium.”

Mr Vakili said that “After commencement of the construction operations, industrial and side buildings including administrative and residential units will be built.”

He added that “In addition to the oil minister, the oil industry’s senior officials, South Pars development project managers, as well as local and provincial officials will attend the ceremony.”

MEA - Domestic HEA price trends (WEEK 28)

HEA
Medium
S275 JR

Price in per tonne
USD rates derived on current exchange rates

(Sourced from www.steelprices-middleeast.com)

MEA – Domestic light structural price trends (WEEK 28)

Structural Light
Light
Commercial

Price in per tonne
USD rates derived on current exchange rates

(Sourced from www.steelprices-middleeast.com)

MEA – Domestic plate price trends (WEEK 28)

Plates 2x6
6-20x2x6
A36/SS400

Price in per tonne
USD rates derived on current exchange rates

Plates 3x12
8-40x3x12
S275 JR

Price in per tonne
USD rates derived on current exchange rates

(Sourced from www.steelprices-middleeast.com)

MEA – Domestic HRS price trends (WEEK 28)

Sheets HRC
4-20xuptox1500XL
SS400/A36

Price in per tonne
USD rates derived on current exchange rates

(Sourced from www.steelprices-middleeast.com)

MEA – Domestic HDG price trends (WEEK 28)

HDG
0.7x1000
COILS

Price in per tonne
USD rates derived on current exchange rates

(Sourced from www.steelprices-middleeast.com)

MEA – Domestic CR price trends (WEEK 28)

CRS
0.7x1000
Commercial

Price in per tonne
USD rates derived on current exchange rates

(Sourced from www.steelprices-middleeast.com)

MEA - Domestic rebar price trends (WEEK 28)

Rebar
8mm-25mm
BS 4449 Grade 460 B

Price in per tonne
USD rates derived on current exchange rates

(Sourced from www.steelprices-middleeast.com)

Chinese billet market predicted to drop in July

It is reported that domestic billet market will drop in July 2008 due to the sluggish demand from downstream rolled plants.

As per report, many factors caused the billet market to drop in July.
1. Rolled plants will reduce the billet purchasing due to the raining days in the month.
2. There is little demand from downstream section and wire rod enterprises for the production stop during Olympic Games on the surrounding areas of Beijing. This will reduce the billet demand.

As per report, some billet plants will turn to export for easing the pressure, the billet export in August predicted to increase to a certain point.

Ningbo Steel completes 2 years of operations

It is reported that Ningbo Steel held a ceremony for 2 years anniversary recently.

Ningbo Steel produced 421,900 tonnes of metallurgical coke, 1.037 million tonnes of hot metal and 1.028 million tonnes of billet in 2007. At the same time, the sales income was CNY3.3 billion and tax was CNY 36.09 million.

The aim for 2008 in Ningbo Steel is to produce 1.07 million tonnes of coke, 3.36 million tonnes of iron, 3.5 million tonnes of crude steel and 1 million tonnes of finished steel products, to obtain a sales income of CNY 13.5 billion and profit of CNY 800 million.

Ningbo Steel would also commission No.2 BF, No.3 converter and new coking plant on time according to the program.

Angang Steel and Vesuvius to form refractory JV

China Knowledge reported that Angang Steel Co Ltd has inked an agreement with the UK Vesuvius Group to set up a refractory materials production joint venture in China.

Based on the terms of the cooperation contract, Angang and Vesuvius will hold 50% each of the new company. Both sides will jointly construct two plants with five production lines. In order to help make products which can meet the group's international standards, the British industrial equipment manufacturer will provide the needed patents rights and special technologies.

Newspaper reports said the cooperation is a substantial development after the two companies signed a cooperation framework agreement on August 21st 2007. The 50:50 joint venture will help Angang reduce consumption of refractory materials in steel production and enhance global competitiveness of its refractory materials. It is also a significant development for the company's non-steel business.

Vesuvius is the world's largest refractory materials producer and services provider with more than 70 manufacturing facilities and over 40 marketing and technology services centers in 35 countries across the world.

Liugang H1 sales revenue broke through CNY 20 billion

It is reported that in H1 Liugang totally produced 2.72 million tonnes of iron, 3.034 million tonnes of steel, 2.92 million tonnes of materials, the output all have exceeded the same period of last year. It realized sale revenue of CNY 21.2 billion up by 62.86% YoY. The exported volume reached 302,400 tonnes valued at US 235 million.

In H1 2008, Liugang Group completed technical transformation investment at CNY 2.477 billion, made technical transformation on the No 1 and No 2 blast furnace, 150 tonnes new converter, No 5 billet continuous caster, 360 square meters sintering machine, No 6 coke oven, new cold rolled production line etc.

The goal of Liugang this year is to produce 8 million tonnes of steel and realize CNY 33 billion of income.

Energy consuming industries developing too fast in China

According to the Chinese State Council, industries with high energy consumption and emissions are developing too fast in China, along with the quick economic growth. State Councilors heard at a meeting focusing on energy saving and emission reduction, chaired by Premier Mr Wen Jiabao that the traditional industry structure remained unchanged, while the service sector and high tech manufacturing weighting fell in the national economy.

Meeting the energy saving and emission reduction targets set in the 11th Five Year Plan remained an arduous task they agreed. With performances in conserving energy and reducing pollutant emissions introduced into administrative evaluation, those who fail to meet the goals are to be put under public scrutiny.

The State Council said industries with high energy consumption and pollution should be resolutely curbed, and the land use, energy consumption and environment impact assessment should be considered in approving new projects.

This year should see the closure of small thermal power plants with a generation capacity of 13 million kilowatts. Outdated production capacity in cement, aluminum electrolysis, paper making, iron and steel industries should be eliminated.

The government will fund key environment protection projects, including the construction of the sewage treatment facility network.

CNY 50.8 billion investment plan in Chongqing

It is reported that recently, China’s 16 well known national enterprises and Chongqing Municipality State owned Assets Supervision and Administration Commission and some state owned enterprises in Chongqing Municipality signed investment agreements and decided to invest CNY 50.8 billion in Chongqing.

As per report, the 16 well known national enterprises include
1. China Packaging Corporation
2. China Everbright Bank
3. China Electronics Technology Group Corporation
4. Tianjin Steel Pipe Co Ltd.
5. Double Coil Group, Huadian International etc.

According to the project contract, Chonggang Group will cooperate with Tianjin Steel Pipe Group, China Electronics Technology Group Corporation will invest CNY 3.5 billion in Chongqing to establish electronic information industry base. China Everbright Bank credited CNY 16 billion to Chongqing Municipality.

Major restructuring continues in Chinese steel industry

It is reported that a new round of major restructuring in China's steel industry aims to improve adjustment within the sector as well as boost competitiveness of steel products in the country.

A string of mergers and acquisitions have led to the creation of several new entities. The newly formed Hebei Steel Group in Shijiazhuang city boasts an impressive production capacity of more than 300 million tonnes a year a volume that makes it the largest steel maker, at least for the moment in China.

As per report merger between local companies has created the Shandong Steel Group, while Guangzhou Iron and Steel Enterprise Group boasts a 3 way merger, with Baosteel as the major stake holder.

Automakers to resist higher steel price

According to survey by Shanghai Securities News, Chinese automakers are found in stalemate of price negotiation with the steelmakers. In the meanwhile, the automakers in Europe and Japan are also resisting spike steel price, declaring not to accept surcharge on the agreed supply contract.

The industrial experts said that “It is one of first strong signals to steelmakers that their hardest hit customers have reached a tipping point and may not be able to withstand higher prices.”

Chief of the nation's auto industry association hoped the auto sector to help steelmakers with reform and minimize the effect of the spiking steel price.

Most steelmakers in the US, including ArcelorMittal, US Steel Corp and AK Steel Corp are engaged in the latest cycle of negotiations with Ford Motor Co, General Motors Corp, Toyota Motor Corp and others to set the price and terms of steel bought on a contract.

In Japan, the auto steel sheet price gained yen 20,000 per tonne to 25,000 per tonne in May, bringing the price up to yen 100,000 per tonne.

China State Shipbuilding plans to raise USD1 billion

Reuter reported that China State Shipbuilding Co Ltd plans to raise up to CNY 7.4 billion by issuing convertible bonds and warrants.

According to the report, the firm aims to issue no more than CNY 3.7 billion in convertible bonds and CNY 3.7 billion in warrants to raise funds for eight major shipbuilding projects.

Shigang H1 profit up by 53% YoY

It is reported that Shijiazhuang Iron and Steel Company has posted sales revenue of CNY 5.25 billion in the first half year up by 54% YoY, profit tax of CNY 650 million up by 53% YoY, net profit of CNY 390 million up by 60% YoY respectively.

It produced 996,000 tons of iron, 1.014 million tonnes of steel and 970,000 tonnes of steel materials.

According to the statistic, since this year Shijiazhuang Iron and Steel Company focus on the energy saving and emission reduction and products structure adjustment two aspects.

At present, the international bearing steel produced by Shigang has become the country’s leader; the bearing steel was used by domestic well known and first class bearing steel manufacturers

CNPC to sell stake in major Chinese CBM developer

Interfax China reported that China National Petroleum Corp intends to sell its stake in China United Coalbed Methane Co Ltd. According to China Securities Journal, Mr Sun Maoyuan GM of China CBM's said that CNPC will sell its entire 50% stake in China CBM to an undisclosed buyer.

A company official who wished to remain anonymous confirmed the report with Interfax and said that a change in the company's shareholding structure is also in the pipeline. The official said the change is required by the central government, and is aimed at introducing more competition into China's CBM industry.

He said that the company's current shareholder structure, in which CNPC and China National Coal Group Corp. both hold equal shares, is not good for the company's management as no party has a controlling interest.

CNPC has already started to develop its own CBM business. The company has CBM mining rights in several blocks in Shanxi Province, and signed last July a letter of intent with Australian company Arrow Energy NL regarding a CBM exploitation project in the Xinjiang Autonomous Region.

Chinese output cut pushes global aluminum price to a record

It is reported that 20 Chinese smelting producers have agreed to cut aluminum output by 5% to 10% since this month to support the primary aluminum price and reduce electricity consumption.

According to World Bureau of Metal Statistics show the news boosted the outlook for softening overcapacity and aluminum price have hit a new record again recently in international market, the second time triggered by Chinese output cutback. The world has seen 458,000 tonnes of aluminum supply glut in the first four months.

Insiders close to source said the output of China's leading 20 aluminum producers, including Aluminum Corp of China in May accounts for 71.3% of the nation's total output in the month. And it's still unknown how long the cutback plan will continue.

China produces some 1.3 million tonnes of primary aluminum per annum and cut 5% to 10% output means 600,000 tonnes 1.2 million tonnes disruption which is enough to change the current global supply and demand situation.

China finds big gold mine reserves in Guangxi Province

It is reported that China National Gold Group Corporation had found a new vein with an estimated 15 tonnes of gold at one of its mines. An unnamed official with the country's leading gold producer said the Na Neng gold mine in the northwest Guangxi Province was previously thought to have a proven reserve of 5 tonnes

China currently has 330 large scale gold mines nationwide, with a daily output of 11,000 tonnes. The CNGGC announced earlier the Ministry of Finance had provided it with CNY 47.75 million from the 2008 central budget in a bid to help it prospect new mines.

In 2008, China surpassed the United States to become the world's second largest gold producer behind South Africa. In 2007 its gold output reached 270.491 tonnes up by 12.67% YoY.

China's gold consumption had presented a strong growth momentum in recent years. Sales in China, including Hong Kong and Taiwan, hit a record 363.3 tonnes last year.

Monday Market Monitor – China (WEEK 28) – Down trend

Chinese domestic steel price continue to go down last week. The closing levels at Tianjin are given below with USD equivalent to give a sense of prevailing domestic prices in China on representative basis

Raw material and semis

Price in per tonne
Including VAT
Delivery FOT

Long products