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For many years, we have been witnessing in almost all forums that western economies are being saturated and are nearing a plateau. This process has only accelerated in the last few years. The epicenter of global industry has now shifted to Asia. The metallurgical industry is said to be the mother of all industries, and naturally most of the growth in this industry is being generated in the Asian region. The Asian metallurgical companies are setting new records of production and profits whereas their western counterparts are somewhat trapped in a scenario of no growth. Rising inputs, increasing wages and stiff competition primarily from Asia is resulting in losses and erosion of valuable capital. This is true for ferrous as well as non-ferrous metal companies.

This phenomenon has not only changed the material and money flow dynamics, but under shareholder's pressure, it has also started influencing the ownership structure of these companies. In the last few months, we have witnessed two major takeovers. The First one being Mittal Steels acquisition of Arcelor, this made L.N.Mittal the biggest steel producer in the world. The second one was also in steel industry under which Tata Steel took over Corus and made TISCO, the 5th largest steel producer in the world. Of course the journey was not smooth in any respect for the parties involved in the acquisition. Both Mittal and Tata had to face counter bids and ultimately had to increase their own bid substantially to close the deal in their favour.

Today the big news is Hindalco's taking over Novelis, a US based Aluminium Giant !! This will not only help Hindalco penetrate highly valued US and other western markets (Novelis has operations in 11 countries) but also help the shareholders to regain their investment (Novelis is presently a loss making company). One thing that we cannot afford to ignore as of now is the prospect of Hindalco facing competition from Russian Aluminium by way of a likely counter bid. In this likelihood Hindalco would have to enhance its offer to turn the deal in its favour like in the earlier two cases .

In any case, this is a great time for Indian metallurgical industry. I am sure the other Indian steel companies are also thinking on similar lines and we would be witnessing many such acquisitions and mergers in coming the months and years. But one thing that we have to take into consideration is the fact that all the futures acquisitions and takeovers would very much depend on the condition and performance of the concerned industry. The financial institutions which have played a crucial role in these acquisitions would only continue to support such restructuring plans looking at the performance of the industry in the Asian region and whether it would be able to sustain the growth in the long run. It is only then that that the industry could guarantee the financial institution good returns on the huge amount money that is being pumped in.

 D.A.Chandekar
Editor & CEO

 

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Lanco, Jindal Steel buy Globeleq Singapore

Lanco Infrastructure and Jindal Steel & Power (JSPL) have acquired Globeleq Singapore to take the onus of implementing the Rs 16,000 crore ultra mega power project in Sasan. Lanco and JSPL have purchased 60 per cent and 40 per cent shareholding, respectively, in the Singapore-based subsidiary of the investment arm of DFID, a development agency of the British government. J Suresh Kumar, CFO, Lanco Infrastructure, said the consideration for the acquisition was nominal. “The project has a licence to generate power. The transfer of shares will take place for a nominal value. The new owners will now have the responsibility to chip in funds to implement the project,” he added.

“While Lanco is capable of developing the project on its own, it has roped in Jindal Steel to address the concerns of the government over the successful completion of the project in the light of Globeleq's exit from the consortium,” Kumar explained. Less than two months ago, the Lanco-Globeleq consortium emerged as the winning bidder of the Sasan project. Lanco had 30 per cent stake, while Globeleq had 70 per cent stake in the consortium. With the acquisition of Globeleq's stake, Lanco will have 72 per cent interest, direct and indirect, over the Sasan project while JSPL will have 28 per cent stake. JSPL reserves the right to scale up its holding to 49 per cent in the project in five years. The shareholders will chip in Rs 3,200 crore as equity contribution towards the project while the remaining Rs 16,000 crore will be generated through debts Lanco may look at other assets of Globeleq which are put on the block.

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Essar Steel Net Zooms 29.70% in Dec’06 Qtr

Essar Steel has reported a 29.70% increase in net profit to Rs 1795.60 million for the quarter ended Dec`06 as compared to Rs 1384.40 million for the quarter ended Dec`05. Net sales for the quarter rose 46.30% to Rs 21073.60 million as against Rs 14404.20 million in the correspoding quarter, a year ago. Total income (net) grew 46.30% to Rs 21154.90 million from Rs 14415.70 million last year. Domestic sales were marginally lower at 4.53 lakh tones compared with 4.70 lakh tonnes last year. The company`s focus on construction, auto and oil & gas segments resulted in a growth of 44% in sales in this segment. EBIDTA for the quarter grew 76% to Rs. 5294.4 million from Rs. 3006.7 million in the preceeding year. Earnings per share of the company reduced to Rs 1.56 from Rs 3.24 in the same quarter last year. During the quarter, Essar Steel completed the expansion of its steel manufacturing capacity to 4.6 million tonnes at its Hazira Complex in Gujarat, India. The expansion project was completed in 18 months at an investment of Rs. 19750 million, which ranks among the lowest for a brown field expansion of comparable scale.

The production of flat products for the quarter under review registered a growth of 14% at 7.55 lakh tonnes as compared to 6.64 lakh tonnes in the corresponding quarter of the last year. The company is engaged in only one segment, steel. Hence, there are no reportable segments. Recently, the board of directors decided to obtain the consent of shareholders to de-list the equity shares of the company from Bombay Stock Exchange and National Stock Exchange. The Essar Group is one of India`s largest corporate houses, with interests spanning the core and infrastructure sectors of industry - steel, oil & gas, power, telecom & BPO, shipping & logistics and construction. It has an asset base in excess of USD 6 billion (Rs 27,000 crore). It employs 15,000 people and has offices in over 50 locations worldwide.

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Salem Stainless Shines

Salem Steel Plant (SSP) of the Steel Authority of India Ltd (SAIL) has bagged an order for supply of 11,300 tonnes of ferritic stainless steel strips to the Government of India Mint at Kolkata. The strips, to be used for minting coins, will be supplied in grade 430 in two widths and thicknesses, as specified by the Mint. SSP will supply the first lot of the Rs. 117-crore order within this month.SSP, in collaboration with the Government of India Mints, pioneered the use of stainless steel coinage in the country. The Tamil Nadu-based plant produces both coin blanks and stainless steel coils/strips for coinage purposes. During April-December of the current financial year, stainless steel production by SSP touched 64,000 tonnes, an increase of around 30% over the corresponding period last year. SAIL is presently expanding SSP's production capacity at an estimated cost of Rs. 1,553 crore as part of its own Corporate Plan 2010. M.N. Dastur & Company (P) Ltd of Kolkata has been appointed as the consultant-cum-project manager for the plant's expansion scheme. Under the plan, new steel melting and continuous casting facilities will be installed to enable the plant to produce 180,000 tonnes per annum (tpa) of stainless steel slabs. The capacity of SSP's existing Cold Rolling Complex will also be expanded to hike production of cold-rolled stainless steel to 146,000 tpa.

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Small sponge iron units ride steel buoyancy

In a bid to cash in on the current perkiness in the steel sector, small and medium size sponge iron units are rapidly coming up in the country's iron ore-rich regions including Orissa and Chhattisgarh. Each of these units typically has a kiln capacity of up to 1,00,000 tonne. Steel prices have surged by Rs 500 a tonne across the board over the past month on domestic surging demand. Although no official data on the fresh capacity additions by existing unorganised sector players and the new units set up in these regions are available, experts believe as long as prices and availability of melting scraps remain a problem, consumption of sponge iron will continue to rise.

The share of steel production through the sponge iron route has jumped to approximately 60 per cent now from around 40 per cent two-three years ago. With the steel industry currently banking on locally available raw materials owing to higher prices of melting scraps, sponge iron producers are expected to see good days going forward. Prices of iron ore the raw material for sponge iron remain stagnant over the past few months, while those of finished products are going up. On the other hand, prices of sponge iron the major raw material for manufacturing of steel have gone up by Rs 500 per tonne in the past month and Rs 1,500 a tonne over the past three months, as unlike before, steel producers currently depend solely on local raw material. The prices are set to rise further, to the tune of Rs 1,000 a tonne. This is on rising demand from steelmakers in the wake of a handsome offtake of TMT and structurals by the construction sector. Experts say in the coastal regions such as Orissa, prices of sponge iron are slightly lower, in the range of Rs 11,000-11,500 a tonne, which still reflects a gain of Rs 1,000 a tonne over the past month. In the organised market, coal-based sponge iron is currently quoting at Rs 12,500 a tonne, while gas-based product is selling at Rs 13,500 a tonne. However, riding on scorching demand unorganised sector players are, reportedly, realising higher prices. Steel scrap another raw material for steel making is scarce in the domestic market and its imports have declined drastically.

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Tata Steel revises target to 100 mtpa by 2015

Only a few weeks after acquiring Corus Group plc for $12.1 billion, Tata Steel has revised the company's production target from 30 million tonnes per annum (mtpa) to 100 mtpa by 2015, managing director B Muthuraman said in Jamshedpur amidst celebrations. The new target signifies the group's ambitions in the global steel market and would most certainly pit it against the world's largest steel maker, Arcelor Mittal itself forged from quick fire mergers and acquisitions to emerge the biggest in the world. Though Arcelor Mittal, which produced 110 mtpa of steel in 2006, has not spelled out its future capacity, analysts say it will need to add at least 50 mtpa by 2015 to maintain 7% global market share.

If the Tatas or Arcelor Mittal are to achieve the target, they would need to buy or merge with one of the other global biggies. Japan's Nippon Steel produced 32 mtpa in 2006, South Korea's Posco 30 mtpa, Japan's JFE 29 mtpa, China's Baosteel and Anben 24 mtpa and 20 mtpa, respectively, and Nucor 20 mtpa. US Steel produced as much as Corus, 19 mt, in 2006. Tata Steel's growth plans would consist of a mixture of acquisitions as well as greenfield and brownfield projects. He said that while too many acquisitions could result in loss of advantage from raw materials sourcing, only greenfield projects could mean a dearth of capacity. “So, we have to balance both; we would roughly keep a 50:50 balance,” he added, saying 100 mtpa by 2015 was a moving target. “I said 2015, it may be 2018 or 2020, or even earlier, if we acquire another company,” he said. In comparison, steel minister Ram Vilas Paswan has set a capacity target of 120 mtpa for India's steel industry by 2020. State-owned Sail has already spelled out its intentions to increase capacity from 13 mtpa to 23 mtpa by 2010. Among other private players, Essar plans to grow from 4.5 mtpa to 20 mtpa by 2010. JSW from 3.8 mtpa to 10 mtpa by 2010, Ispat from 3.6 mtpa to 8.2 mtpa by 2010 and JSPL from 2.9 mtpa to 13 mtpa by 2010.

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Jindal to set up steel plant in Himachal Pradesh

Jindal Steel is hunting for land in Himachal Pradesh's Sirmaur district to set up a Rs 3,000-crore steel plant, officials said. Sources said Rajiv Sehgal, a top official of Jindal Steel met top state industries department officials recently. The company is looking for over 400 bigha land at Kala Amb, Poanta Sahib or Dhaula Kuan industrial areas of Sirmaur. “As soon as the company is able to find suitable land, work would start to set up the steel plant,” said Gopal Sharma, a state industries department official. Officials said the company had applied some two years, to the state industries department single window clearance, for setting up a plant in the state but for some reason the process was delayed until last week when the company decided to set up the plant. Since tax holiday began in early 2003, some four years ago, the state has attracted a proposed investment of Rs 23,000 crore from over 7,000 small, medium and large industrial units from across the country who have been largely attracted by the excise package of the Central government which will expire in 2010.

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Jindal Steel to Gassify Coal

Jindal Steel and Power Limited (JSPL), which is setting up a six million tonne steel plant at Angul, has decided to utilise coal gasification technology for its project. According to the Executive Director, JSPL, O P Jha, coal gas or synthetic gas generated from the coal gasification process is an ideal substitute for natural gas in sponge iron manufacturing. This technology for steel making has a substantial growth potential as it eliminates the need for metallurgical coal, reduces the production cost, minimises the problem associated with transportation logistics and supports sustainable development. Jha had recently said,the strategy of the company is to utilise the country's vast reserve of non-cocking coal, which is having ash percentages up to 40 to 45 percent.

While the coking coal reserve is only 30 billion tonne, non-coking coal reserve stands at 174 billion tonne in India. Using the non-coking coal abundantly available in Orissa, there can be a good conservation of scarce non-coking coal and lesser import for steel making process, Jha added. The coal gasification technology is a clean and environment friendly method which allows all carbon content and volatile matter present in coal to gasify to produce a synthetic gas, the ash content of the coal is converted to small granules that can be used to back fill coalmines and road construction. Besides, this technology removes the Sulphur contents from non-coking coal in the gasification system. The synthetic gas injection into the blast furnace reduces the flux requirement and ferro-manganese addition. JSPL has sourced this technology from a joint venture company between Germany and South Africa. The technology is a proven one as it is used for commercial operation in South Africa for the last 20 years. Coal gasification technology provides not only the coal gas but a host of chemicals which gets a potential to generate a lot more secondary industries for the sustainable growth of the economy in India at large.

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SAIL Plans to buy Steel Companies Abroad : Steel Minister

India's public sector major Steel Authority of India Ltd - plans to buy steel companies abroad as well as in the country, apart from increasing its production capacity, said Steel Minister Ram Vilas Paswan. 'SAIL is exploring the possibilities of buying steel companies and going in for joint ventures abroad. This will start a new innings for SAIL,' Paswan told reporters recently. He said his ministry had initiated moves to help SAIL go in for foreign bids. Paswan admitted that the existing rules did put certain limitations on SAIL. 'But we plan to amend the rules and obtain cabinet approval to enable SAIL to do so,' said Paswan, who had recently attended a SAIL dealers' conference. Paswan hinted that a SAIL team might go abroad to study the potential of buying steel companies. He, however, refused to disclose the name of the company and country concerned.

Asked if Laxmi Mittal, CEO of Arcelor-Mittal, had evinced interest in purchasing SAIL, the minister said that selling SAIL to a private company was out of question. 'SAIL is a huge public sector company and its assets are unmatched. It is making profit ... how can we sell it?' Paswan said the public sector firm was eyeing expansion within the country as well. It has decided to take over sick public sector units like the Indian Iron and Steel Co -, Bharat Refractories Ltd - and Neelachal Ispat Nigam Ltd. He said SAIL would invest a massive Rs.1 trillion for expanding its capacity to 40 million tonnes by 2020. It currently has a production capacity of 14.6 million tonnes.

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Essar Plans $527 Mn Steel Unit in Vietnam

The country's fourth-largest steelmaker, Essar Steel, announced recently that it would partner two state-run Vietnamese companies to build a $527 million plant in that country. The facility will have an annual capacity of 2 million tonne of hot-rolled coils, sheets and skin passed coils. The project, to be located in Phu My Industrial Zone, Baria Vung Tau province, in south Vietnam, is expected to be completed in 30 months. Essar Steel Vietnam Holdings (ESVHL) today forged a joint venture with Vietnam Steel Corporation (VSC) and Vietnam General Rubber Corporation (GERUCO).

The JV has been christened Essar Vietnam Steel Corporation. While ESVHL will own 65 per cent equity in Essar Vietnam Steel Corp, VSC will hold 20 per cent and GERUCO 15 per cent. ESVHL is a subsidiary of Essar Steel Holdings (ESHL), which is a part of Essar Global with interests in steel, energy, power, communications, shipping and logistics and projects. Baria Vung Tau province is well connected by road and is in proximity to the proposed port. Vietnam consumes six million tonne of steel, of which hot-rolled coils account for two million tonne. The steel consumption is expected to go up to 10 million tonnes by 2012. In the absence of a flat steel plant, Vietnam imports its entire requirement of hot-rolled coils. The project is expected to substitute imports of hot-rolled coils into the country, saving valuable foreign exchange.

VSC, which is a fully-owned unit of the Vietnam government, has several steel plants, both in north and south of Vietnam. The two recent plants commissioned by VSC are a 0.4 million tonne a year cold rolling plant and a 0.5 million tonne per year Mini Mill - both located in Phu My Industrial Zone, Baria Vung Tau province in southern Vietnam. Another partner in the joint venture GERUCO is the largest rubber company in Vietnam and is a global supplier of natural rubber & latex. Vietnam would be the second location outside India, where Essar would have a presence. The company has a 0.4 million tonne production facility in Indonesia, apart from the 4.6 million tonne plant in India. Meanwhile, Essar Steel recently informed the stock exchanges that the company would be seeking shareholders approval for delisting shares through postal ballot.

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JSW Steel Posts 25% Growth in Crude Steel Production

JSW Steel Limited, one of India's leading steel producers, has announced a robust growth in its steel production in January 2007. The Crude steel production at 2.58 lakh tonnes was higher by 25% over January 2006. The HR Plate production (0.17 lakh tonnes) showed a growth of 144% and the HR Coil production (2.33 lakh tonnes) jumped by 20%. This strong growth in production is attributable to capacity enhancement carried out by the company during the FY 2006-07. The production in Pellet plant and Galvanising facilities in January 2007 was lower compared to January 2006.

The JSW group, part of the US $ 4 billion O P Jindal Group, is one of the low cost steel producers in the world. The group has diversified interests in mining, carbon steel, power, industrial gases and port facilities. JSW Steel Limited is engaged primarily in manufacture of flat products viz. HR Coils, CR Coils, Galvanised products and auto grade / white goods grade CRCA Steel. Incorporated in 1994, it has grown to US $ 1.6 billion in little over a decade. JSW Steel Limited also has the largest galvanizing production capacity in the country and is the largest exporter of galvanized products with presence in over 74 countries across five continents.

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Rourkela Steel Sets Production Records

Rourkela Steel Plant has surpassed the previous best annual production figures during the first ten months of the currents fiscal. This has come on the top of the company surpassing the record two million ton production mark during the calendar year 2006. The plant produced 2.6 million tones of sinter, 1.8 million tones of hot metal, 1.68 million tones of crude steel, 1.64 million tones of the total saleable steel and recorded 1.62 million tones of steel despatches. These figures are not only the best ever for any April-January but also represent impressive Year on Year (YoY) growth rates of around 27 per cent, 27.2 per cent, 26.6 percent, 29.7 per cent and 31.6 per cent respectively. Incidentally, the previous best annual performance in these areas had been to the tune of 2.56 million tonnes of sinter, 1.78 million tonnes of hot metal, 1.66 million tonnes of crude steel and 1.62 million tonnes of saleable steel besides 1.59 million tonnes of steel despatches. In the Finishing Mills too, plate mill plates, hot rolled plates and CRNO steel registered the best ever April-January performance. It may be noted that throughout the current financial year major areas like production of sinter, hot metal, crude steel, saleable steel, HR coils, HR plates, plate mill plates, silicon steel and saleable steel have maintained a capacity utilisation of 100 per cent or more. This has helped RSP in bringing down cost of production by 3.6 per cent even though input prices went up by 8 per cent. In January 2007 RSP produced 2,69,910 tonnes of sinter, 1,81,289 tonnes of hot metal, 1,70,510 tonnes of crude steel and 1,77,132 tonnes of total saleable steel, achieving more than 100 per cent fulfilment of the Annual Performance Plan. One important aspect of this performance is that, the steel plant has been able to maintain the production tempo in spite of the shut down of the Coke Oven Battery No. 4.

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Arcelor Mittal & Bin Jarallah Announce JV for 500.000 tpy Seamless Tube Mill

Arcelor Mittal has signed a joint venture agreement with the Bin Jarallah Group of companies for the design and construction of a seamless tube mill in Saudi Arabia. This state of the art facility will be located in Jubail Industrial City, north of Al Jubail on the Persian Gulf. The mill will have a capacity of 500,000 tons per year. About two thirds of its capacity will be used for OCTG tubes used in the oil industry ("oil country tubular goods"), and the remainder for line pipe, in sizes ranging from 4" to 14". Semi-products for the mill will be sourced from Arcelor Mittal steel plants. Construction is planned to commence at the end of the first quarter of 2008 and to be completed by the last quarter of 2009. Once it is up and running, the mill is expected to employ 420 people. The agreement with the Bin Jarallah Group was signed on February 14, 2007.

Arcelor Mittal will hold a 51% share in the company established for this project, with the Bin Jarallah Group holding the remaining 49%. Arcelor Mittal will have management and operation rights. The mill will partially be funded by the Saudi Investment Development Fund. Arcelor Mittal will apply for an investment license under the Foreign Investment Regulations of The Kingdom of Saudi Arabia. Sudhir Maheshwari, Executive VP, Finance and M&A and member of Arcelor Mittal's Group Executive Committee, commented: "This project gives us a strategic opportunity to enter the Middle East, and in particular Saudi Arabia's, thriving markets. Its location provides access to international sea lanes through the Persian Gulf as well as proximity to energy sources. The Al Jubail project will allow us to strengthen our relationship with Saudi Aramco, who will be one of the key customers of the mill. It will position Arcelor Mittal's pipes and tubes business, which already has facilities in Eastern Europe, North America, Africa and Kazakhstan, to best supply the world's largest markets".

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Gulf Steel Production to Rise by 11mln Tons as Demand Increases

Steel production in the GCC will grow by 11 million tonnes in the next few years when about 15 ongoing projects are completed, according to industry sources. Demand for steel has been rising in the Gulf because of a construction boom and a flurry of industrial and infrastructure projects. The GCC states invested $6.5 billion on manufacturing of iron and steel products in 2005, according to the Qatar-based Gulf Organisation for Industrial Consulting (GOIC). A GOIC official said production of steel in the Middle East grew 41.5 per cent between 2000 and 2005. Production rose from 10.78 million tonnes in 2000 to 15.25 million tonnes in 2005, senior analyst Anil Singh said in a presentation at a conference at Expo Centre Sharjah. The GCC demand for iron and steel products for the year stood at 15 million tonnes. Imports of iron and steel products totalled 14.3 million tonnes in 2005.

GOIC estimated the demand for steel in the UAE at 3.5 million tonnes in 2006."Steel production in developed countries is stagnating and main growth is coming from developing countries," he said. China's steel output grew at the strongest rate during the 2000-2005 period from 127 million tonnes to 355 million tonnes.Worldwide steel production in 2006 was estimated at 1.2 billion tonnes. In the GCC, several projects are under way that will add 11 million tonnes to the existing steel production in the next few years."

More than four million tonnes of extra capacity is being planned in Saudi Arabia, the number one Gulf steel producer. The projects in the UAE will provide more than 2.5 million tonnes of steel, while significant capacity expansions are also planned in Kuwait and Oman. "There are no signs of any let up in the construction spending. This is a positive trend for the Middle East steel industry's growth," Sharjah Chamber of Commerce and Industry chairman said Ahmad Mohammad Al Midfa at the SteelFab exhibition. "Despite the fact that demand for fabricated steel in the region is at an all time high due to massive industrial and infrastructure development, SteelFab continues to be the only trade platform for manufacturers and distributors of machine tools and other items related to the steel working business," he added.

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Al Ghurair Steel Plant to begin Production in September

Work on the Al Ghurair Iron and Steel plant in Abu Dhabi's Musaffah industrial area is on schedule and production is expected to begin in September, the company's chief executive said. The plant is being built by Tradeline LLC in which the UAE's Saif Al Ghurair group has a 51 per cent stake and the rest is held by an Indian company. The company is spending Dh300 million in the first phase. About Dh220 million will be spent on expansion in phase two, which is scheduled for completion in 2009. The entire complex covers 100,000 square metres. "In the first phase we will produce 350,000 tonnes of steel products, of which 200,000 tonnes will be galvanised material," Tradeline chief executive officer Raman Madhok told Gulf News. In capacity terms, the plant would be able to satisfy 50 per cent of the UAE's current demand for galvanised steel, he said.Madhok said the plant is the first of its kind in the country and will meet growing demand for steel in the construction sector.

"We plan to take the capacity to half million tonnes in the second phase. Then we will have 200,000 tonnes of galvanised steel and 200,000 tonnes of aluzinc as finished products," he added.Sixty per cent of the plant's output will be consumed locally, while the remainder is targeted for exports. "That is our target, but we will be able to sell more in the local market if we get a better price," Madhok said. Potential customers are from the construction sector, fabrication units and the energy sector. The company is in talks with a number of suppliers in Japan, India, China and Iran to supply raw material. Apart from dealing in steel, Tradeline is involved in commodity trading, shipping and chartering operations in the region.

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Attieh Steel to Open a New Stockyard for Steel & Related Products in Pakistan

Attieh Steel has informed in a recent statement revealing that it has plans to open up a new stockyard for steel & related products in Pakistan. While the location of the new facility is not yet decided, it is understood that Attieh Steel could choose either of the three big cities i.e. Karachi, Islamabad, Lahore. Mr. K.M. Zulfiqar, Marketing Consultant for U.A.E., Oman, Pakistan for Attieh Steel stated that Mr. Rashid Al Khawaja, General Manager (for Oman, Iran, UAE & Pakitan markets) and Mr. K.M. Zulfiqar will be visiting Karachi, Islamabad and Lahore to do a 10-day market survey and feasibility study. The company has already set the groundwork to meet all the steel traders and stockists, fabricators & manufacturers to understand the steel demand in the real-time market.

The company plans to keep stock of cold-rolled, hot-rolled, galvanized, electro-galvanized steel coils, prepainted steel coils, structural steel and stainless steel coils. Initially, the company plans only steel trading business and at later stage might consider to set up a steel service centre. When asked about the stocking capacity of the yard, Mr. Zulfiqar said, "the stock would be sufficient to feed the domestic market." Mr. Zulfiqar said, "this is the right time to grab the opportunity and grow as the construction sector is hot, while meeting the demand of the local steel market, most of which is met by importing means, and subject to trade barriers with neighboring countries." The new facility will be opened in the "near future", he said.

With 27 outlets / warehousing facilities in the Kingdom of Saudi Arabia and the G.C.C area and Sudan and a wide range of steel and metal items (5000 line items); Attieh Steel Ltd. caters to steel traders and stockists, fabricators & manufacturers in Saudi, neighboring G.C.C. countries, Yemen, Sudan and some parts of East Africa. Attieh Steel Ltd. has a yearly turn over of 400,000 Tons of industrial steel and metals in all shapes, sizes and forms.

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Mitsubishi Pays $127m to Raise Stake in Posco

Japanese trading house Mitsubishi Corp has increased its stake in Posco by about 0.5 percent in order to strengthen ties between the two companies. Mitsubishi said it had paid about 15 billion yen ($124 million) to raise stake in the South Korean steelmaker to 1.4 percent from 0.9 percent. The move came in response to a request from Posco, which is seeking to raise the proportion of its shares that are held by 'stable' shareholders, Japan's Nikkei News reported earlier recently. Foreign shareholders own a large amount of Posco's shares, and the company has many small shareholders which it fears could make it vulnerable to a future hostile takeover bid. Mitsubishi is the second large Japanese firm to increase its holdings in Posco in recent months, after Nippon Steel raised its stake by about 2 percent to about 5.5 percent last year.

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Posco Plans to Invest W5.9 Trillion

POSCO, the world's third largest steel maker, raked in 20 trillion won in sales last year, down from 21.7 trillion won in 2005. However, its CEO Lee Ku-taek was happy to say that the firm has been in the 20-trillion-won club for two consecutive years, despite steel price weakness and the rising costs of natural resources and raw materials. “Although our total production declined to 30.1 million metric tons last year from 30.5 million tons a year before, our sales volume of strategic products reached 14.7 million tons, up from 12.4 million tons, said Lee at an investor relations forum held in the Korea Exchange in Yoido, Seoul recently. Its strategic products are automotive, electronic and stainless steels. Its operating profits stood at 3.9 trillion won, while its net profit at 3.2 trillion won, thanks to the firm's cost-cutting efforts.

Last year, POSCO cut operating costs by 1.1 trillion won, more than its initial target of 889 billion won. The chief executive also said that sales of POSCO and its 69 affiliates hit an-all time high of 25.7 trillion won last year, up about 8 percent from the year before. Lee added that despite the paradigm shift in the global steel market where mergers and acquisitions are taking place actively between major players, POSCO will expand its global project this year without fail. “We have gained rights from India to explore its iron ore reserves starting this March,” said Lee. “The land for an integrated mill will be set up by September and in October, we will break ground to construct the plant that will be able to produce in its first phase - 4 million tons of steel by 2010.”

Overall, POSCO is set to complete the construction of the mill with an annual production capacity of 12 million tons by 2020. Also in this year's list is POSCO's next generation eco friendly blast furnace, FINEX, which, Lee said, it set to be fully operational in April. Lee said that POSCO will invest a total of 5.9 trillion won this year to boost the production and sales of its strategic products, as well as to upgrade its facilities around the world and develop new growth models.

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Walsin Lihwa buys Natsteel’s Last Steel Mill

Taiwan's Walsin Lihwa Corp has bought the last remaining steel producer of Singapore's Natsteel Ltd., Changzhou Wujin NSL Co, in China's eastern Jiangsu province. Walsin will pay $39.4 million for all the shares of Natsteel's NSL China Investments, which is an immediate holding company of Wujin, according to a recent filing from Natsteel to the Singapore Stock Exchange. The transaction is expected to be completed by June 5 and is still subject to approval by Taiwan's Ministry of Economic Affairs. Wujin has a billet steel production capacity of 200,000-250,000 tpy, according to a Walsin spokeswoman. The company used to product wire rod, but these facilities have been shut, she said.

Walsin plants to upgrade Wujin's existing facilities to produce carbon, stainless and alloy steel billet for supply to Walsin's wire rod and pipe plants in China and for external use, she said. Walsin operates two steel plants in China, one in Changshou, Jiangsu province and the other in Baihe near Shanghai, producing stainless hot rolled bars and seamless tubes respectively. In 2004 India's Tata Iron & Steel bought the steel and related business of Natsteel, leaving Natsteel with its non-core businesses in construction, chemicals and engineering. Wujin was to have been divested as well, but its sale was aborted following delays in getting the necessary approvals from the Chinese authorities. Before the acquisition Natsteel had a capacity in rebar, wire rod and pre-stressed concrete wire and strand of 2 million tpy, of which its assets in Singapore accounted for 800,000 tpy.

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Glowing Prospects for Vietnamese Steel Demand

Vietnam's steel consumption in 2007 could exceed 2006's estimated growth of 11%, according to the Vietnam Steel Association (VSA). “We expect a bright future for 2007,” an official with the VSA explained. However, he warns that “an invasion of Chinese steel products” could be a potential threat. The Vietnamese National Assembly has targeted a GDP growth of 8.5%. Foreign direct investment has hit record levels, and this-together with a high level of official development assistance to the country-are among the reasons for this optimism.

The official also stated that there are more trade prospects for Vietnam as the country officially joined the WTO as a full member on January 1 this year. It also has permanent normal trade relations with the USA, he added. Vietnam has been able to attract new investments in its steel sector, the official noted. This includes Posco's recent announcement for about $1.13bn in investment in hot and cold rolling mills in the country. Vietnamese steel consumption in 2005 grew by 10.5% to 6.46m tonnes over 2004. The comprised 3.506m tonnes of long products, and 2.958m tonnes of flat products, according to the latest figures.

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Chinese Steel Exports Surge 109% in 2006

Chinese steel exports in the calendar year 2006 amounted to 43.01 million tonne, a growth of 109.6 per cent on a y-o-y basis, according to data gathered from foreign brokerage houses and the official Xinhua news agency. The sharp growth in exports has come despite numerous steps taken by the Chinese government to curtail growth. Meanwhile, Chinese steel imports fell 28.3 per cent y-o-y to 18.5 million tonne in CY06. Despite rising Chinese steel exports, domestic player Tata Steel's net realisation improved by an estimated 8.4 per cent y-o-y to Rs 36,211 a tonne in the December 2006 quarter, while SAIL's net realisation grew 15.2 per cent y-o-y to Rs 28,456 a tonne. Analysts pointed out to strong domestic demand for improved realisation. Buoyant steel prices this year compared with depressed prices last year had also helped domestic steel companies to better realisation on a y-o-y basis, they added.

The growth in Chinese exports has come at a time when its steel production rose by 17.7 per cent y-o-y to 418.8 million tonne in CY06, according to the Brussels-based industry body, the International Iron and Steel Institute (IISI). Chinese steel production alone accounted for 33.7 per cent of the total global production during the period. The Chinese government has, over the last few months, taken several steps to control its steel exports, including imposition of tariffs on exports of stainless steel ingots and preliminary processed tungsten from January 1, 2007. In addition, the Chinese government has tightened the eligibility requirements for steelmakers to import iron ore from overseas suppliers. It has also ordered the demolition of outdated steel-smelting ovens of 26 firms in 2007.

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World Steel Production to Exceed 1.3b Tones in 2007

Global crude steel production is expected to exceed 1.31 billion tonnes in 2007, up 5.4% from 1.24 billion in 2006, with China accounting for more than one-third, according to MEPS (International) Ltd. The global consultancy company said on Jan 29 that world crude steel production was expected to increase by nearly 10% in 2006 year-on-year and a further 5.4% growth in 2007. “The past seven years of this millennium have been the most productive in the history of the steel industry - rising by more than 450 million tonnes over the period. This equates to 57% growth in output over the figure recorded in 1999,” it said.

MEPS forecast the oxygen/blast furnace process will continue to lift its share of manufacturing, rising by 11% in 2006 and almost 7% in 2007 to 873 million tonnes and 932.5 million tonnes, respectively. “We predict substantial growth in the supply of direct reduced iron in 2007 as demand continues to expand,” said the company, which provides comprehensive analysis of steel market prices in the world and covers 20 countries on four continents In 2006, most steel producing nations benefitted from the surge in consumption. Those in Asia accounted for 75% of the increase and this figure was expected to rise to around 90% in 2007.

MEPS said Asian crude steel output in 2006 was expected to reach nearly 667 million tonnes, up 14.3% or almost 84 million tonnes on-year. It said Chinese steelmakers were the main contributors and it estimated Chinese crude steel production to account for 422.5 million tonnes in 2006 and rising to 475 million tonnes this year. Other countries in Asia were expected to record 128.6 million tonnes in 2006 and 136.3 million tonnes this year. The European Union countries were expected to record a slight decline in 2007 to 194.5 million tonnes this year from 197.6 million tonnes last year. The North American Free Trade Agreement (Nafta) was expected to produce 132.7 million tonnes in 2006 and decline to 130.5 million tonnes this year. The former USSR countries were expected to record 119.4 million tonnes last year (2007: 123.7 million tonnes. Japan production estimate was 116.2 million tonnes in 2006 (2007: 116 million tonnes).

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Russia to became a Steel Importer by 2010

Russia is likely to become a net importer of steel scrap by 2010-2012 as domestic supply fails to keep pace with expansion in the steel industry, an official from the country's leading scrap metal processor said. MAIR Industrial Group Vice-President Denis Ilatovsky said Russia would need to construct port terminals to accommodate scrap imports or face a shortage of the raw material. "An additional 10-15 million tonnes of electric furnace capacity can easily be imagined. We're exporting 9 million tonnes of scrap -- all of this will be absorbed in the domestic market," Ilatovsky said.

“Nobody is taking this for real. We've no infrastructure to import scrap by deep-sea cargo," he said on the sidelines of a metals conference MAIR, whose 250 yards across Russia make it the world's largest scrap metal network, plans to invest $150 million boosting capacity at its Sulin Steel Plant in southern Russia to 1.5 million tonnes by 2010 or 2011. The Rostov region plant produces 200,000 tonnes of steel billet today, using scrap as its raw material.

The first stage of expansion would be completed in two years at a cost of $30-40 million, raising capacity to 500,000 tonnes, Ilatovsky said. He said MAIR was also looking to acquire more scrap yards in Poland, where it already owns six yards, and Ukraine, where it has 80. "We will invest more in Poland and in Ukraine. In Russia we have enough capacity," he said. MAIR Group is owned by its president, Viktor Makushin. It also owns the Verkhnesinyachinsky Metallurgical Plant in the Urals region of Sverdlovsk, which produces 200,000 tonnes a year of pig iron.

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CVRD Looks for Partners in Russia

Brazil's CVRD, the world's largest iron ore miner, is studying partnerships with steel makers in Russia but does not view the country as key to its expansion, a senior company executive said. Peter Poppinga, senior managing director of CVRD International S.A., told a recent conference that Russian steel mills were meeting a large part of the country's growing consumption by reducing their own exports. "There are some opportunities in terms of acquisitions and going upstream, but we don't have a specific strategy to be a big player in the CIS," he said. "If we were to be approached by CIS steel companies wanting partnerships, we are ready to study them -- and we are studying one or two of them." But he added: "We don't see any need to look to the CIS as though it would be a new China for us". CVRD, or Companhia Vale do Rio Doce, plans to invest $6.3 billion this year expanding its iron ore and metals businesses worldwide.

The company last year entered the nickel business by acquiring Canadian miner Inco Ltd. Russia is the world's fourth-largest steel producer. Three of the country's top four steel makers, Evraz Group, Severstal and NLMK, supply most of their own iron ore. MMK imports most from Kazakhstan. Poppinga, quoting data from the Iron and Steel Statistics Bureau, said Russia exported 32.1 million tonnes of steel last year. Output in 2006 was 70.6 million tonnes. "If Russia previously exported about 70 percent of output, now exports are in the range of 50 percent," Poppinga told the conference, which was organised by the Adam Smith Institute. "The percentage of steel exports is decreasing due to growing domestic steel consumption. The main drivers are construction and the automotive sector. We see a shift by some European car makers towards the east.

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