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Dear Readers,

The Indian finance budget for 2008-09 did not specifically address itself to iron & steel sector except completely removing duty on scrap imports and reduction in excise duties. We all know that steel & metal scrap is today in short supply and the gap between the demand and supply is increasing year by year. Availability of metallics will play a vital role in steel production and abolishing the import duty on this commodity (which was any way only 5 %) is a welcome move for the manufacturing industry.
As we all know, infrastructure development is the key driver for steel & metals sector. Apart from private projects, government spending in this important area ensures strong demand for steel. The next decade's agenda for the whole Asian region is infrastructure development and steel industry has to gear up for catering to their ever increasing needs. This justifies the Greenfield as well as brownfield expansion presently being carried out by most of the manufacturers.
Reduction in excise duties for the finished metal products will give a small cushion to the buyers who can not avail modvat credit but the real boost is expected to come from auto sector where excise duty on cars has been reduced. This will surely have a positive effect on the sale figures and thus will push the steel demand upward. At the same time one must not forget that presently, the prices are on the higher side and the complete effect of reduction in excise duty can be felt only after this price swelling subsides. Today, the finished steel prices have crossed US$1000 mark and still the curve is pointed upwards. This is certainly not a healthy situation for sustainable growth of the industry. Unless the prices are within an affordable zone, the demand will fail to create forward pull for the consumption.
In my opinion, our industry does not need any direct soaps from government as long as govt. ensures continuous growth in infrastructure and helps the steel user industry to grow.

 D.A.Chandekar
Editor & CEO

 

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Steelcast to make forays into shipbuilding  

Many companies seeking diversification have docked at the ports of Gujarat as attracted by the investment opportunities lying along the 1,600-km coastline. The latest to jump onto the bandwagon is Bhavnagar-based Steelcast Ltd. The company plans to enter in shipbuilding near Bhavnagar and has already acquired land from the government. Briefing about the development, Chetan Tamboli, the managing director of Steelcast, said that they had earmarked Rs 100 crore for the Greenfield project. “We have acquired about 1,30,000 sq m of land in the creeks of Bhavnagar,” he said. Under a new company that is yet to be formed, Steelcast aims to raise funds needed for the project by a mix of equity, debt and private placements.
The company has a turnover of Rs 18 crore and aims to touch Rs 34 crore next year, said Tamboli. In the past, many companies like engineering player Elecon, Jaypee group, DLF, Hira Exports and Nirma, keen on getting into the ports business, had approached the Gujarat Maritime Board (GMB) for developing one of the many Greenfield port sites in the state. By the end of the Eleventh Five-Year Plan, about Rs 40,000 crore would be realized by way of investments in the state's port sector. The local industry is expected to expand to $20 billion by 2020 from close to $5 billion now, according to a report by maritime consultants i-Maritime Consultancy Pvt Ltd. Engineering firm Larsen & Toubro already has a shipbuilding yard in Gujarat and plans to invest about Rs 1,500 crore for shipbuilding and a repair yard. Gujarat-based Adani group had also set its sights on a shipbuilding and repair yard at Mundra. ABG Shipyard is building a new shipbuilding facility at Dahej at an estimated investment of Rs 400 crore. While Pipavav Shipyard Limited, a major shipbuilding and offshore fabrication company, has an outstanding order book worth close to $1.1 billion for 26 new 74,5000 deadweight (dwt) Panamax Bulk Carriers.

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Shankara Pipes to enter Mysore

Shankara Pipes India Ltd, a steel tube manufacturing and distribution company in Bangalore, has drawn up plans to foray into Tier II cities and open retail stores in Mysore, Hubli, Belgaum and Bellary. As Mysore is witnessing a booming realty market, it is planning 2-3 stores during 2008-09. The Rs 600 crore ISO 9001 company has 19 branches across the country and most of them are in Karnataka. It sells 12,000 MT of steel tubes every month and serves about 10,000 customers. It has an inhouse laboratory and tube drawing and cutting facility as well. With a fleet of 20 trucks and 400 strong workforce, it has built a 3-lakh sq ft warehousing facility. Apart from foraying into the retail market under the brand, 'Shankara Steel World', it has also drawn plans to enter the services sector. Claiming that these two plans were maiden efforts by any steel tube company, Shankara Pipes Managing Director Sukumar Srinivas told Business Standard the company intends to open around 50 retail stores by 2008-09 and double that number by 2010-11 for an investment of around Rs 100 crore. “Over a period of five years, we intend to come out with three groups of stores — regular (1000-1500 sq ft), express (5,000 sq ft) and super stores (10,000 sq ft). After Bangalore and 10 other major cities, we will focus on the Tier II cities,” he said. Srinivas sees a tremendous potential in the steel tube retail segment. The steel industry is witnessing a boom. User industries like construction, auto and infrastructure projects are fuelling the boom. For instance, the industry is growing in the South and West India at 15 per cent compared to the all India average of 10 per cent. This accounts for 1.20 million tonnes out of the estimated all India 2.50 million tonnes of the steel tube sector, he says. “The future looks very positive as infrastructure seems to be a key area of the Government spending. Textile industry is in the beginning of run away growth. Auto and construction industry continue to look very positive, as also machine building and light engineering. This explains the market potential,” says Srinivas.

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Tata Steel is back in race for Liberian iron ore

Tata Steel, the world's sixth largest steelmaker, is back in the fray for the Western Cluster Iron Ore deposit project in Liberia, which was widely expected to go to South Africa's Delta Mining Consolidated. Arun D Baijal, group director, global minerals, Tata Steel, said while Delta Mining Consolidated was ranked first among the bidders shortlisted, a committee evaluating the bids had decided that the due diligence would be conducted for all companies shortlisted, and these included Tata Steel and China's Sinosteel. “We are still in the fray for the project,” Baijal said. The project is under the supervision of an inter-ministerial mineral technical committee that is chaired by the representative of the ministry of land, mines and energy and includes representatives of the ministries of justice, planning and economic affairs, labour, justice, national investment commission and the central bank. The provisional decision to award the project was announced by the Liberian president in January on the basis of recommendations of the committee. Besides mining areas, the project includes a pelletisation plant, road, rail, power, water and upgraded port facilities. Delta Mining is being linked to Global Steel Holding Limited, which is owned by the brother of Lakshmi Mittal, the principal shareholder of Mittal Steel. The Western Cluster Iron Ore has several deposits over an area of nearly 210 sq km and the investment package is estimated in the region of $1.6 billion (about Rs 6,400 crore). These deposits include the Mano River Iron Ore, the Western Position of Bomi Hills Iron Ore and the Mountain Iron Ore. Tata Steel is also exploring the possibility of deposits in the Millennium Iron Ore Range, one of the largest known undeveloped magnetite iron deposits owned by the Canadian publicly traded mining company, New Millennium Capital Corp (NML).

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TRF launches India's first mobile crusher

TRF, an associate company of Tata Steel, has flagged off India's first mobile stone crusher and screening plant. Designed, engineered and manufactured by TRF. “The mobile crusher and screening plant is the first among six such sets that the company has to supply to its customer” said the Directorate General of Border Roads, India. The plant can handle 20 tons of stones per hour and is mobile, which implies that once the purpose of the stone crusher is over the builder can move it to another site. Sudhir Deoras, managing director, TRF said that the company encouraged their employees to be innovative and make suggestions without being encumbered by the fear of failure. R C Nandrajog, executive director, TRF said “ The mobile crushing and screening plant is just a beginning and we hope that in the days to come TRF would be able to delight a larger number of customers with this machine”.

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Jagatsinghpur Administration files Survey report of Posco 

The Jagatsinghpur district administration has compiled detailed socio-economic survey report for the Posco steel project. The report will be presented to the state government and the company for the valuation of rehabilitation package for displaced families of the affected villages. Official sources said that the survey covered 1930 house holds and 2315 betel vines including 1085 in Gobindpur village, 11 in Bhuyianpal, 300 in Polang, 15 in Noliashai and 904 in Nuagaon village.
Earlier 282 families were identified for displacement. This included 70 families in Gobindpur, four in Bhiyanpal, 13 in Polang, 187 in Noliashai, and eight in Nuagaon village. However, following the detail survey report mentions that 329 original families and 265 extended families were required to be displaced. Out of 329 families, 140 families stay in private land while the rest are encroachers of government land. During the survey of the Posco site, 1323 betel vines and 185 dilapidated betel vines have been identified. Special land acquisition officer, Nrusingh Swain informed that after the scrutiny, survey teams have found 1.05 lakh trees including 71. 357 cashew trees, 4.087 coconut trees, 4.382 mango trees, 2, 374 jackfruit trees, 418 'chakhunda trees in project site. Survey teams have completed survey work in 437. 66 acres private land and 3566 acres of government land excluding 900 acres of land in Dhinkia village. Besides, 32 tube wells and 41 ponds have been identified in private land. Total 26 prawn bheris occupying 267.22 acres of land including 97 fishing houses are enumerated in the survey report. The socio-economic survey included seven villages of Nuagaon, Dhinkia, Gadakujang panchayat and was completed by 12 survey teams including 80 revenue officials under police protection. Posco officials led by its director G W Sung and executive director U B Pattnaik and others reviewed survey with the district administration at Paradip. They discussed about the valuation of private land, trees and other assets of displaced families. They hinted that Posco has decided to shell out Rs 3 lakh per one acre of private land while district officials suggested the valuation rate at Rs 10 to 15 lakh per acre. Later they also convinced the displaced families about Posco package and rehabilitation colony by showing proposed colony map. Kujang tahsildar Debasish Singh said that the compilation of survey work has been completed and same report has been submitted to district collector and the administration will present the same report to the state government and Posco company later.

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Consolidation in steel industry only to stabilize margins 

Aditya Mittal, chief financial officer, ArcelorMittal, and son of its chairman Laxmi N Mittal informed that the volatility in business of the ArcelorMittal Steel has come down to 5 per cent post-merger, from plus or minus 30 per cent both the players used to experience due to cyclical effects earlier. Mittal Junior was addressing a session organised by the Confederation of Indian Industry (CII) on the theme 'Creating Global Champions'. He added that greater consolidation in the steel industry was basically aimed at stabilising the margins and not to increase the same. “We want to change the steel industry. That is why ArcelorMittal was created. Because you have to be profitable forever,” he told the audience while explaining how the Mittal's strategy of acquiring loss- making or bankrupt steel companies world over shaped up on the back of already existing overcapacity in the industry. He said that the corporate social responsibility initiatives helped win over the communities wherever they set foot, while keeping the employees passionate about their work in the company by taking good care of them. Mittal said that Indian companies had the twin advantages of low-cost model and being successful even in the absence of good infrastructure. These attributes can help the Indian companies grow globally especially in Africa and erstwhile Soviet Republics. “The company hoped to perform ground breaking for the two proposed steel projects in India very soon,” he said.

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Ministry of Steel concerned over rising shortages   

Steel Minister Ram Vilas Paswan will be meeting major producers of the alloy to assess their capacity expansion plans and discuss the impediments to investments envisaged around Rs 3,00,000 crore by 2011-12. The government is concerned about the rising shortages and hence the minister has given a call. “The minister will meet leading steel producers tomorrow to discuss the reasons behind the increasing demand-supply gap in the sector and take stock of their mega expansion plans. He is also likely to discuss the bottlenecks impeding fructification of major investments in the country as we are envisaging an investment of Rs 2,80,000 crore by 2011-12,” a top steel ministry official said. The meeting assumes importance as the ministry has also asked the secretaries of mineral-rich states of Orissa, Jharkhand, Chhattisgarh, Karnataka, Madhya Pradesh and West Bengal to be present to apprise themselves of the issues raised by the steel manufacturers and share their views on achieving the envisaged investments. This meeting is besides the Inter-Ministerial Group (IMG) set up by the government and being headed by Steel Secretary Raghav Sharan Pandey to extensively delve into investment-related issues. “The minister is particularly concerned that the demand-supply gap has caused 67 per cent rise in steel imports,” the official said. Steel consumption in India is growing at nearly 12 per cent and in view of the anticipated growth in infrastructure and manufacturing sectors, the demand is further likely to grow by 14-16 per cent during the next few years. During April-December 2007, domestic steel demand grew at 12.2 per cent over the same period of previous year. “However, production has grown at 6.6 per cent in April-December of current financial year. This demand-supply gap has caused a 67 per cent rise in imports,” the steel ministry official said. The official pointed out that for the first time, India became net importer of steel in 2006-07, which has caused some concern, and the government is making all-out efforts to facilitate supply growth by way of faster commissioning of envisaged steel projects — both brown-field and greenfield. The companies invited to participate in the meeting include Rashtriya Ispat Nigam Ltd, Steel Authority of India Ltd, JSW, Essar, Tata Steel, Ispat, Posco, ArcelorMittal, Bhushan Steel and Power Ltd among others. The steel producers are facing problems in executing capacity-expansion plans, which relate to securing captive raw-material linkage and land acquisition.

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X-Cast stainless-steel slab caster for Salem Steel Plant 

Salem Steel Plant, a company of the S.A.I.L. group (Steel Authority of India) has awarded a contract for the supply of a single-strand continuous casting machine to SMS Demag, a company of the SMS group, Germany. The company plans to produce slabs of stainless steel grades. The X-Cast slab caster is rated for the production of 140 to 200 mm thick and 600 to 1,300 mm wide slabs at a maximum attainable casting speed of 1.5 m/min. The unit is designed to produce 300,000 t of slabs per year.
The scope of supply comprises the detail engineering, mechanical equipment, hydraulic system, as well as the complete X-Pact electrical equipment and automation package including process models. Commissioning is scheduled for the beginning of 2010. Salem Steel Plant can offer a wide range of hot- and cold-rolled as well as surface-treated stainless steel strip. The new slab caster will in the future cover the continuous demand for slabs.
SMS group is, under the roof of the holding SMS GmbH, a group of companies internationally active in plant construction and mechanical engineering for the steel and nonferrous metals industry. It consists of the two Business Areas SMS Demag and SMS Meer, which jointly form SMS metallurgy. In 2006, some 9,000 employees worldwide generated a turnover of about EUR 2.8 bn. X-Cast is an SMS Demag trademark from the Continuous Casting Division. It is the brand name for plants and technologies that set standards for the economical production of high-quality slabs.

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Steel Partners Issue a Statement on Changes to KT&G Board of Directors 

In response to media inquiries, Steel Partners II today issued the a statement to the media regarding changes to the Board of Directors of the KT&G Corporation (Korea Stock Exchange saying that the Steel Partners welcomed the addition of four highly qualified independent directors to the Board of Directors of KT&G Corporation. They especially applauded KT&G's backing of Mr. Jin Moo Lee, CEO & President of S.C. Johnson Korea and Mr. Jin Ho Chang, Associate Professor, Yonsei University's School of Business.
Steel Partners believed that their nominations, along with the other significant improvements to the operations and corporate governance of KT&G since Warren Lichtenstein, Managing Partner of Steel Partners joined the Board in March 2006, marks a turning point in the company's history that will not go unnoticed by shareholders.
Mr. Lichtenstein will step down as an outside director of KT&G, coinciding with the election of Mr. Lee and Mr. Chang.

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Strike may sell Peru iron ore projects  

Junior explorer Strike Resources Ltd said that it was in discussions for the possible sale of its iron ore interests in Peru, and in talks with steelmakers for potential supply.
Strike revealed the discussions after the Australian Securities Exchange queried a sharp rise in the company's share price, when it jumped from $1.495 on February 25, to close at $2.30 on the back of no news.
The company said it had been in discussions over the "past several months" with certain parties regarding the part, or entire sale, of its iron ore interests in Peru, or a potential investment in the projects.
The junior explorer said that the size or quantum of such a transaction is significant and, if finalised, would value the company's interest in these iron ore projects at an amount substantially greater than the company's current fully diluted market capitalisation of $254 million.
Strike said it was also conducting "preliminary" discussions with steel mills in China and Japan in relation to the potential supply of iron ore.The company holds the Apurimac and Cuzco projects north-east of San Juan in Peru and has flagged plans to produce up to 20 million tonnes of iron ore per annum by 2011.First production from the Cuzco project is slated for 2009.

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Morgan Stanley M&A executive for Europe to retire 

Michael Zaoui, one of the top rainmakers in the European merger-and-acquisitions game, is retiring from Morgan Stanley, people familiar with the situation tell the Wall Street Journal's Deal Journal.
Morgan Stanley confirmed that Zaouin is retiring; he was most recently the vice chairman of institutional securities at Morgan Stanley. Before that post, he was the chairman of mergers and acquisitions.
He is known as much for his deal-making prowess and outspokenness as for his family connections: his brother, Yoel, is head of European investment banking at Goldman Sachs Group, where he recently became a member of the management committee.
Michael Zaoui, 50-years-old, was born in Morocco and educated in Rome, in France and at the Harvard Business School. He joined Morgan Stanley's mergers department in 1986, then moved to London in 1990 as co-head of mergers and acquisitions, where he turned Morgan Stanley into a player on the European deal-making scene.
He has been a tactician on some of the biggest deals of the past 15 years, and his bonus was reportedly around £10m in 2006 (roughly $20.2m in today's dollars).
He advised Arcelor on its takeover by Mittal Steel (brother Yoel helped advise Mittal's board); advised Aventis (on the same side as Yoel that time) on its merger with Sanofi; helped stop BNP's hostile bid for Societe Generale; and played a key role in attracting Francois-Henri Pinault's then-Pinault-Printemps-Redoute to save Gucci Group from LVMH's Bernard Arnault.
In an interview with Bloomberg News in December, Zaoui predicted that 2008 would be a strong year for mergers and acquisitions.
Zaoui also plays a prominent role in the arts in London. He is on the board of the ultra-chic contemporary-art-focused Serpentine Gallery.
Last year, Morgan Stanley moved John Mack loyalist Walid Chammah to London in a vote of confidence for the European business.

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RAK Steel all set to commence production

RAK Steel, spearheaded by Ras Al Khaimah Investment Authority, will be commencing commercial production for a range of rebars for the construction industry at the end of last month, following completion of trial production.The new energy efficient and environment friendly, 500,000 tonnes per year deformed steel reinforcement bar manufacturing mill has been set up with an investment of USD 50 million and will be the second largest producer of rebar in the UAE. Dr Khater Massaad, chairman RAK Steel and CEO of Rakia said that RAK Steel will produce rebar from 8 mm to 40 mm diameter in variable lengths of 6 meters to 18 meters to both British and American standards.

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Scrap prices continue to soar in Turkey   

Due to the strong demand for rebar and flat bars in Turkey's domestic market, prices have soared from the middle of February 2008. Affected by the soaring prices, most of Turkish steel mills have been rapidly purchasing materials.
The mixed scrap price climbed to USD 460 per tonne and the predicted price will reach USD 480 per tonne due to the influence of exchange rates in the European market. Besides, the price of A3 Black Sea scrap is soaring to USD 470 per tonne, with the price set to hit USD 500 per tonne in the near future.

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DEWA delays USD 19 billion debt issue  

The Dubai Water & Electricity Authority will have to wait until the second half of 2008 to return to the debt market after delaying a 2007 bond sale.DEWA will need to invest USD 19.1 billion during the next 4 years, raising most of that through loans and bonds. In 2007, it shelved a plan to sell bonds after the US mortgage crisis made investors more reluctant to lend. Mr Saeed Mohamed Ahmed Al Tayer CEO of DEWA said that for Islamic bonds they are waiting for the market to recover and would only go into the market after June 2008.
Mr Al Tayer said that "Long term loans would have a maturity of 10 to 15 years. Sukuk forbid the receipt of interest and now, we are only looking for short or medium term loans."DEWA is seeking to increase capacity by 150% by 2012 from 5,000 MW of electricity and 255 million gallons per day of water as demand surges in the Gulf Arab emirate. It forecasted that the demand for power and water will grow as much as 20% per year in Dubai.

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UAE construction sector facing RMC crisis   

The real estate boom in the UAE is set to hit a major roadblock that could seriously affect the completion of projects across the Emirates. The problem lies with companies that supply ready mix concrete.Representatives of these suppliers told that they are struggling with a huge backlog of orders due to a massive shortage in the supply of cement and that they have issued their clients notices that they are not in a position to supply more than 45% of the ready mix orders. Some RMC companies have even ceased production.
In order to cope with the huge demand for concrete, some ready-mix companies are looking to cement imports as a viable option, regardless of the high cost. A RMC company said that they were ready to import cement at whatever cost because it is a necessity. If the situation persists, the company thinks that this will be the only available option to them. The shortage has been triggered by the high cost and lack of cement, according to ready mix producers. Cement prices in the country have gone up by 25% with factories arguing that it is a direct result of increasing oil prices in the region having a knock on effect.
Contractors are worried that the shortage might cause another hike in cement prices in the country. The shortage of cement and the subsequent lack of concrete also risks causing a delay in the delivery of some projects if the situation persists.

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Turkey may shut all shipyards on worker safety issues   

Turkish labor minister, Mr Faruk Celik said that all the shipyards in Istanbul's Tuzla district will be closed down if they do not implement regulations to prevent further worker deaths.Mr Celik said that the success of shipyards should be with respect to human lives, otherwise, regardless of the success it means that one earns money from deaths. 25 deaths had resulted from work related accidents recently, but did not specify a time frame. “A campaign that will harm the shipyard sector will not be correct” he said. There were 37 shipyards in Turkey until 2002 and now there are 76, with this number expected to increase gradually due to the numerous new orders.
The sector is involved in a serious amount of exports and this leads to exchange inflows to the country.Mr Celik said that Tuzla's shipyards were among the first issues that he looked into on the first day he took up his ministerial duties. "I knew that it is a risky sector. I went to Tuzla the week I became minister and inspected two shipyards. We are not working impulsively on shipyards because of public reaction. We are trying to enhance peace at work", he added.
Meanwhile, the Confederation of Revolutionary Workers' Union and Limter İş met with the Turkish Shipbuilders Association last week to discuss possible safety measures to prevent work related deaths. The three organizations are expected to meet once more this week. According to data from the Port, Shipyard, Ship Construction & Repair Workers Trade Union 18 workers have died in the last eight months. There are some cases where the cause of death has not been established, but those were included on the list of work related death.

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Al Tuwairqi commissions largest bar mill    

Saudi Arabia based Al Tuwairqi Group announced that it has commissioned a new bar mill. By commissioning this plant of 1.35 million tonnes per year, the total capacity of ISPC Makkah will be 1.85 million tonnes per year in addition to its parent company ISPC Dammam, which has already been upgraded to produces 1.5 million tonnes per year.The plant, originally designed to produce 600,000 tonnes per year of alloy steels was upgraded to produce 1.35 million tonnes per year by the EPC team of Al Tuwairqi Group. Reverse engineering, erection & commissioning of the equipments was done in house by Al Ittefaq Steel Products Co. Reputed equipment suppliers of the world like Danieli, MWE of Germany, Sund Brista of Sweden, NCO of Italy, Sicmemotori of Italy, Abus of Germany & MNS of Turkey participated in the equipment supplies and to upgrade the plant capacity.
This rolling mill is redesigned to produce 1.35 million tonnes per year of reinforced steel bars, round bars, flats, special & high quality steels. In the covered area of 42,000 million, the plant consists of 2 reheating furnaces, endless welding rolling machine, 20 H/V stands, 120 meter long cooling bed and 2 bundling stations to handle finished bars up-to 18 meter long. Total weight of the installed equipment is more than 10,000 tonnes. Mr Sudarshan Singh, technical director of Al Tuwairqi said that during the 1st quarter of 2005, an intensive study was carried out to purchase SKET make rolling mill available in Kladno in Czech Republic. Based on the study, a recommendation to purchase the plant was put forward to the board of Al Tuwairqi Group. The same was subsequently approved. In July 2006, construction activities started and within 20 months only the commercial production started.

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Madar Holding launches high corrosion resistance rebar    

Alfozan Group subsidiary Madar Holding announced the launch of a so called super steel, claiming to be five times more resistant to corrosion and is twice as strong as the standard reinforcement steel. The new steel will be first made available in the UAE and will then be introduced throughout the Middle East.
The product is launched through an exclusive partnership with MMFX Technologies Corporation, a US based technology development company.
The strength of the new MMFX steel enables designers and contractors to use up to 40% less steel in any building. This eventually leads to lesser use of energy in steel manufacturing and helps meet the UAE goal of building greener and environmentally sustainable structures. MMFX steel also gives structures up to 100 years of longevity said Mr Sameh Hassan, CEO of Madar. “Innovation and sustainability are the two goals we have set for our growth in the region. We have partnered with MMFX Technologies to introduce this groundbreaking construction innovation to the Middle East region. This followed MMFX's proven success model in the United States where over 20 governmental authorities have approved the use of MMFX steel in their building codes and major projects” he said.
He added that In addition to the remarkable easing of the rebar congestion issue, especially in the foundation phase of any structure, MMFX steel offered significantly higher levels of corrosion resistance and strength versus conventional steel.
“Here in the GCC, especially in the UAE, such factors are of paramount importance to deliver buildings that cope better with the environment at target speed and cost of construction”, he said. The construction industry demands this level of better constructability with low maintenance, which makes the new steel technology cost-effective and we believe that this product will set new construction standards in the region, he added.
MMFX Technologies Corporation, headquartered at Irvine in California, is a materials science company that continues to invent and patent world changing breakthroughs in materials sciences. MMFX Technologies Corporation has invested over USD 62 million in research and development of this product. Madar Holding is a subsidiary of Al Fozan Group. The group is a leader in its field with over 40 years experience in the building materials trade.

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BHP to expand iron ore output

BHP Billiton is supposed to invest the first $1.1 billion in its Rapid Growth Project 5 (RGP5) expansion plan that will expand its iron ore production in the Pilbara region of Western Australia to more than 200 million tpy during 2011.
BHP said that the investment will be used to fund infrastructure development, including the duplication of the railway track between its Yandi mine and its iron ore port at Port Hedland. It will also be used to begin the expansion of the inner harbour at Port Hedland, which is expected to start in May subject to government approvals, and to allow early procurement of long-lead items and detailed engineering studies to expand capacity at its Yandi and Area C mines.
BHP Billiton and Rio Tinto have been trying to surpass each other in iron ore expansion projects since BHP announced plans to take over its rival last year.
Ian Ashby, the president of BHP Billiton Iron Ore, said that the track duplication project will create the rail capacity to support the company's planned expansion to more than 300 million tpy. Combined with the port expansion, the project will complete major infrastructure requirements to support an operation of more than 350 million tpy, he added.

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Nippon Steel lowers estimates for steel consumption 

Nippon Steel has reduced its forecast for Japanese ordinary steel consumption during October-March half by 2.03 million tonnes from the estimates it tabled last October, largely because of concerns about construction steel demand. Consumption during the present half would now reach 30.88m t, Nippon Steel said.
The downward adjustment reflects the continuing impact of last year's changes to Japan's building standards law. Nippon Steel says the situation is becoming serious and has cut its forecast for construction steel consumption to 11.6 mt, a drop of about 2.2m t from the 13.8m t it predicted last October. The revised total if realised would be 18% lower year-on-year.
Nippon Steel bases its prediction on construction starts for the whole of the present fiscal year of 62.86 m square metres, a decrease of 12.8% year-on-year. Against the weak building steel market however, the company noted that the widely publicised concerns among steelmakers of rising raw materials prices in future have encouraged speculative buying, which could also result in market volatility.
Nippon Steel has been cutting production of construction steel items like H-beams but across Japan as a whole, construction steel output is still higher than actual demand,” a Nippon Steel spokesperson told. “Both the producers and distributors need to watch actual demand carefully and decide our output and the order volume we will accept”, he added.
On the other hand, Nippon Steel made a slight 100,000t increase in its forecast for ordinary steel consumption among manufacturing, autos, shipbuilding and industrial machinery compared with its October estimate, lifting this to 19.22m t - a 2.7% increase year on year.

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Indonesia lifts import tariff on HRC 

Indonesian Industries Minister has recently announced the government decision to cancel the import tax on hot rolled coil from 5 percent to zero percent to help the processing center to grow and improve the competition globally.
Indonesia's largest HRC steelmaker PT Krakatau Steel has not got enough capacity to satisfy the demand from local processing center. The country is still dependent on imported HRC. Therefore, terminating the import tariff will encourage the global competition power.
Indonesia has boosted its HRC demand to 6 million tpy for past 4 years, and the import output has also increased every year to 1.5 million tpy.

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POSCO plans a huge steel mill   

The Government approved in principle a plan by South Korean group POSCO to build a US$11.5 billion steel plant with a local partner, said Chairman of Khanh Hoa provincial People's Committee, Vo Lam Phi.
Phi said that the committee had received a Government dispatch saying that the Government approved construction of the steel mill at the Van Phong international container port. The mill will be in line with a detailed plan approved by the Ministry of Transport. POSCO's hot-roll steel mill, a joint venture with VietNam's top shipbuilder Vinashin, is due to be completed by 2010. The project had previously raised concerns in Khanh Hoa Province as it is set to be built near Van Phong Bay, close to the resort city of Nha Trang.

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Lion invests in iron-making plant 

Lion Diversified Holdings Bhd will be investing US$500 million to build an iron-making facility, which is expected to increase the company's revenue by 60% by end-2009.
The company, through subsidiary Apex Gem Sdn Bhd, signed an engineering, procurement, construction and commissioning (EPCC) contract with Wisdri Engineering & Research Inc Ltd of China to undertake an integrated blast furnace project in Banting, Selangor.
Lion group chairman and chief executive officer Tan Sri William Cheng said that the EPCC contract was valued at US$165 million for the supply of plant and machinery for the blast furnace, with a production capacity of 2.5 million tonnes a year.
“The blast furnace would produce liquid hot metal to be used as feedstock for Lion's steel making plants,” he said.
He said the hot metal would help replace imported scrap as raw material and reduce the reliance on scrap metal as the international scrap price had soared to a record high of US$500 per tonne.
“By using hot metal from iron ore fines, our steel making operations will be able to produce high quality and higher grade steel at a substantially lower cost,” he said.
Cheng said he expected at least a 12% decrease in production cost, but it would be dependent on the prices of scrap, iron ore and coal as well.
“Using the hot metal from the blast furnace will help improve our productivity and increase our steel making capacity at the Banting complex from 3.2 million to five million tonnes,” he said, adding that currently the group exported 30% of its steel overseas.
Walsin Lihwa Corp., Taiwan's leading manufacturer of electric wire and cable, said it would vie for the business opportunities from the reconstruction work in the wake of the blizzard catastrophe. The company said it would closely watch if the electric transmission systems erected in the blizzard-impact areas are destroyed.

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Cement, steel prices rising on reconstruction demand in the wake of blizzard 

Because of the reconstruction demand in the wake of the biggest blizzard damage in mainland China in half a century, the prices for such raw material as coal have skyrocketed, leading to the price hikes in cement and steel products. The reconstruction demand will also bring in mass opportunities for the industries of petrochemical, rubber and plastics, food processing, and electric wire and cable.
An executive of the China Steel Corporation (CSC), Taiwan's largest integrated producer of steel products, predicted that the steel prices in the Asian market will sharply rise because of the huge demand for reconstruction in the wake of the blizzard. Recently the world's three-largest producers of iron ore have threatened to hike the prices for their products by 70%.
Foreign investment company, JP Morgan predicted the beginning from 1st April, the contract prices for coal for smelting will be raised to US$140 from present US$120 per metric ton.
Taiwan's two leading cement producers, including Taiwan Cement Corporation and Asia Cement Corporation, noted they would upward adjust product prices sometime in March. The quoting price for cement in the southern China market is expected to be settled after the Chinese
Lantern Festival, which falls on Feb. 21.
A domestic producer of plastic products said the most desired products for reconstruction would go to PE (polyethylene), PP (polypropylene) and PVC (polyvinylchloride). The increasing demand for these plastic products will benefit such relevant producers as Formosa Plastics
Corp., Formosa Chemical & Fibre Corp., Taiwan Polypropylene Co., USI Far East Corporation, Asia Polymer Corp., Nan Ya Plastics Corp., China General Plastics Corp., and Ocean Plastics Corp.

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Taiwan steel mills boost capacity in Vietnam 

Taiwan's leading steel producers, including CSC (China Steel Corporation) and E United Group, have recently been approved by the Vietnamese government to invest a total of US$2.8 billion to expand production capacities.
E United said it is working with Tycoons Group Enterprise Co. to set up Guanglian Co. for building a huge steel mill, which began construction last year. With first-stage investment reaching US$1.65 billion, the Guanglian steel mill was originally designed to have an annual production capacity of 1.5 million up to two million metric tons. With the approval from the Vietnam government, the steel mill will expand its annual capacity to five million metric tons.
I.S. Lin, chairman of E United Group, noted that the Vietnam government has green-flagged Guanglian to build a pier nearby its large-sized steel mill.
Guanglian is designed to meet Vietnam government's development strategy in the period of 2007 and 2025. In the near future, the steel mill will set up a world-class blast furnace combined with the investment of automated production equipment, allowing it to extend product lines to include hot- and cold-rolled steel. In particular, the deepwater harbor nearby the steel mill will allow the entry of 150,000-metric-ton ships.
On another front, CSC will speed up the construction of a plant for cold-rolled galvanized steel with total investment of US$1.15 billion, whereby such steel mill is established in cooperation with Japan-based Sumitomo Metal Industries Corp.
CSC said the steel mill would begin mass production in 2011 with annual output amounting to 1.7 million metric tons of steel products.

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Vietnam's 2008 steel demand to expand beyond 15% 

The Vietnamese steel industry expects that Vietnam's steel demand will grow at least 15% this year. A forecast made by the Vietnam Steel Association (VSA) whose members accounts for 80-85% of Vietnamese production of construction long products, 80% of galvanized and colour coated steel and 75% of local pipe production.
Last year, the country's apparent steel consumption grew by a sharp 42.7% to 10.2m tonnes. This was because of the massive growth in construction and infrastructure activities in the country that resulted from a large inflow of foreign direct investment, combined with strong economic growth. This demand has caused steel users to depend heavily on imports because domestic production can only meet 40% of Vietnam's steel requirements.
This has also led the country to be exposed to rising international steel prices. “Steel prices in Vietnam have to adjust in accordance to world markets,” a senior VSA official said. The Vietnamese authorities have not intervened in domestic steel pricing – despite steel prices rising to record highs – because they want Vietnam to develop a market economy.
State-owned steel producer, Vietnam Steel Corp, recently forecast that the country's steel consumption will rise by14-20% in 2008 compared to demand during calendar 2007.

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ASEAN faces competition from China  

The ASEAN Iron and Steel Industry Federation will be meeting shortly to discuss ways to redress the difficulties the steel industry may face when the ASEAN-China comprehensive economic co-operation agreement takes effect on July 1.
Foundation deputy chairman Pham Chi Cuong said the steel industry in the foundation's member countries has had high growth, but steel ingots for rolling plants were in short supply, requiring substantial steel imports every year.
No federation member state has a complex to refine steel on a large production scale and with high technology, Cuong said.
As implementation of the ASEAN-China agreement approaches, China's steel industry has seen a decade of high growth, and China has become the world's largest steel manufacturer with 30% of world market share.
In the context when China exports steel to ASEAN, the ASEAN-China comprehensive economic co-operation could bring competitive difficulties to ASEAN steel producers, Cuong said.
Vietnam steel companies faced particular difficulties, including high debt loads and high inventories due to only seasonal demands from the construction industry. Some steel makers have such large inventories that they have been forced to decrease production, making loan repayments problematic.
"Steel makers must maintain at least 70% of their production capacity if they are to avoid losses due to the high production costs of the industry," said Do Duy Thai, general director of Viet Steel.
According to Vietnam Steel Association statistics, however, Vietnam has a capacity to make 6 million tons of rolled steel per year, while this year's demand on the domestic market was expected to reach only 3.8 million tons.
On the other hand, the country's capacity for refining steel ingots was estimated to reach only 875,000 ton, requiring the importation of 2.5-2.6 million tons of steel ingots this year.
The government's steel industry strategy up until 2010 required an acceleration of steel ingot production to reduce this dependence on imports.

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Chinese plate export to reach a new high 

Export offers for steel plate have witnessed another jump and it has set record high price again. Current price level is believed to have reflected the domestic market price increase.Quotations for commercial HR plate have risen to USD 930 per tonne FOB and the highest is USD 955 per tonne FOB for April shipment. The increase is almost across the board and some traders are surprised at such a swift rise.
A Shanghai based trader told that the steel makers have raised price again to achieve better profit than that from domestic market. There would be little sentiment for exports if prices are under USD 900 per tonne FOB. Plate producers indicated that current export quotations are for May and June shipments and most of them are upbeat on the outlook. However, export volume has been on the decrease for months, taking into account higher and higher purchasing cost for overseas buyers. It is noticeable whether tonnage will drop further following this price lift.

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Anshan and Benxi steel to merge in 2008 

Mr Yu Tianchen, president of Benxi said that the long awaited merger of Anshan Iron & Steel Group Co and Benxi Steel Group is expected to begin this year. He said that the merger proposal is now subject to regulatory approval that is expected to be granted within the year. In fact, the two steel makers were merged in 2005, but still kept operating independently, due to some historical and structural reasons.
Anshan Iron & Steel Group is China's second largest steel producer. After the incorporation was completed, the combined production capacity of the new entity will press on towards Baosteel Group, the largest steel company in China.

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NDRC and CISA meet to prepare steel demand forecast 

The National Development & Reform Commission (NDRC) and China Iron & Steel Association (CSIA) have jointly hosted a symposium to do spade work for steel demand forecast. As a fundamental industry of the national economy, steel sector has met demand from various other industries over the years. Its rapid development, presented by largest steel production for 12 straight years in the world also boosts anticipation of all regions that project to invest in steel expansion. Thus it makes a good demand forecast to give guidance to its growth is of great significance to sustainable and healthy development of the steel industry.On the symposium, industries division of NDRC analyzed the current economic situation and stressed the importance of making steel demand forecast better. The CISA introduced steel industry status while the major industry associations made detailed account of their development, demand for and consumption of steels as well as the trends.The symposium attendees said that with rapid growth of the national economy, steel consuming sectors such as construction, machinery, light industry and automobile, kept fast headway these years. Processing with specific condition of each sector, the associations offered significant data about steel demand and the calculation methods of each of the downstream industries.
In the meantime, they put up requests in terms of variety and quality of the steel products. In specific, the railway department hoped to raise output of 100 million cut length steel rail with improved quality; the real estate industry wanted to make more 500 million per annum high strengthen corrosion resistant rebar; and the machinery sector called for localization of they needed special steel varieties.The industries department and CISA shall proceed with steel demand forecast based on data offered by each secto.

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Acerinox and Nisshin to build SS plant in Malaysia 

Acerinox SA and Nisshin Steel, after a feasibility study and considering several alternatives, have decided to construct a manufacturing plant for Stainless Steel in Malaysia. The plant will be built with high efficiency criteria similar to the plant of North American Stainless in Ghent owned by Acerinox. It will be located in Johor Bahru in Malaysia in 350 acres are with direct access to the sea. For this project, Malaysia will constitute a new company, which Acerinox will have a majority shareholding. The new plant will be built in phases and in its final stage will be a comprehensive manufacturing plant stainless steel with 1 million tonnes per year of steelmaking capacity to 600,000 tonnes per year of cold rolling capacity. Estimated total investment amounts to 1,500 million USD. The construction begins with immediate effect once the legal formalities are completed. The launch is scheduled for 2011.
The first phase with an investment of USD 320 million has already been approved. It will consist of a workshop cold rolling with a rolling mill Sendzimir of 1,500 mm wide, an annealing and pickling line combination, a train and a workshop for skin pass finishes. Its production capacity will reach 240,000 tones per year out of which 182,000 tonnes per year will be cold rolled. For Acerinox Group this factory in Malaysia, once completed, will join the other three factories in Spain, the United States and South Africa and expand the installed capacity of the group to 4.5 million tonnes.

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WISCO invests CNY 260 million in Xinwen Mining 

WISCO and Shandong Xinwen Mining Company have signed a share transfer agreement on March 5th 2008 under which WISCO would invest CNY 260 million to purchase 5% stock of Shandong new dragon Energy Company. Xinwen Mining group is the only supply enterprise for WISCO coking coal, the two sides have cooperated for more than 30 years. Xinwen Mining company provides more than 1 million tonnes coal to WISCO every year. The production capacity of the key project invested by Shandong New Dragon Energy Company is estimated to reach 6 million tonnes every year. Mr Shun Wendong of WISCO expressed that this move can satisfy WISCO 100% supply to produce rich coal, if the coal prices rise or the coal resources is shortage, WISCO will not be afraid.

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Tangshan Steel 2008 output to rise by 10% YoY 

China's Tangshan Iron and Steel Group plans to raise its 2008 output by 10%.Mr Wang Yifang, president of the group, while speaking on the sidelines of an annual parliamentary gathering said that China's third largest steel maker expects to produce 25 million tonnes in 2008.

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China tops in FDI influx in 2007 

China retained its ranking as the top destination for foreign direct investment last year attracting USD 90.4 billion, while India followed with the United States in FDI influx. Consultants OCO Global said in an annual report that overall, global cross border FDI grew by 5.1% in 2007 to USD 946.8 billion. The group said China also topped the list for number of FDI projects with 1,171. The amount of money it attracted, however, fell from USD 116 billion a year earlier.
China was also number one in attracting jobs clinching 366,111 of the estimated 1.2 million new posts created in the Asia-Pacific region. India stood second in attracting FDI around USD 52.5 billion. It was third in number of projects with 676 that created 246,361 jobs.The United States was third in the OCO Global list in terms of FDI inward flows bringing in USD 46.8 billion to create 107,141 jobs. It was second in projects with 783. Within Western Europe, Germany attracted the most money with USD 22.8 billion followed by Britain with USD 18.7 billion. Britain also has the most projects for Europe with 622.

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Minmetals to expand its logistics arm 

Mr Zhou Zhongshu, president of Minmetals Corp said that China's state owned Minmetals Corp plans to consolidate its logistics business into an independent subsidiary and boost the unit's annual capacity.
Mr Zhou also proposed that China set up a national mining development fund for domestic and overseas projects, under the initiative of the country's sovereign wealth fund which manages USD 200 billion. "We suggest that the China Investment Corp take the lead, in cooperation with major domestic metals and minerals enterprises to develop domestic and overseas mineral resources” Zhou said . He said that Minmetals, parent of Hong Kong listed Minmetals Resources Ltd and the Shanghai listed Minmetals Development were studying the plans for a listing of the whole group, although he furnished no details about a timeframe or potential size of the offering.
Mr Zhou said that the company aimed to acquire domestic city commercial banks and trust companies, although he mentioned no specific targets. He also expected that the company's Indian iron ore pellet project would start production next year. Minmetals Corp and pipe manufacturer Xinxing Ductile Iron Pipes Group formed an iron and steel making venture in India late last month with a total investment of USD 72 million for the initial phase making the first major Chinese investment in Indian steel industry.

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Panzhihua Steel investing in technical reforms 

Panzhihua Steel has confirmed a plan to invest CNY 6 billion to complete technical reforms on vanadium and titanium steel projects in 2008.The mill completed fixed assets investment of CNY 4.07 billion in 2007, involving 100 meter rail surplus heat quenching production line at New Steel Vanadium's rail plant, a new RH vacuum treatment unit at steel making plant, a new 150,000 tonnes per year OCTG production line at Panchenggang, relocation and upgradation of heat extending pipe machines and 159 continuous rolling pipe machines, a new cleaning line for pipe billet and tailings treatment system at titanium concentrate plant.
In 2008, the mill will focus on technical reform on expanding vanadium products and building new lines, carry out expansion and reform on titanium concentrate and establish key projects like rutile titanium dioxide, sponge titanium and titanium products production lines. As far as steel is concerned, the mill will strengthen structural adjustment, implement reform on sintering system at New Steel Vanadium and relocations of No 3 and 4 coking ovens as well as build premium steel bases.

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HDG Export Prices Rise Substantially 

The price level of Hot dipped galvanized coil export has improved remarkably last week after steel makers raised ex-works prices. Transactions have been heard at the updated levels and export tonnages are expected to increase in the next months.
Export offers for 1.0mm HDG are prevailing at US$860/ton fob and contract prices are said to be at the similar level. The strong rebound of market price in the EU and U.S.A are bolstering more imports of Chinese steel products.
Traders have informed that HDG price and volume to the EU have picked up again following the sharp decrease in stock level, which is due partly to the anti-dumping investigation on Chinese origin HDG.
"Importers seem to be replenishing inventory after the substantial drop in imports. In face of such a swift rise in price, they start to increase the purchasing from China. The result of anti-dumping result is expected to come out in the latter half of 2008" said a Shanghai based trader.
At the same time, some international traders who have offices or sub-branches in the United States have already taken positions at lower levels before Chinese New Year. Currently, most of their contracts are arranged for May shipments. In the domestic market, HDG prices are quite close to key price level, which could decide whether there is another round of rise or not.
On Shanghai market, 1.0mm HDG by Anshan Steel is being quoted at RMB6300-6350/ton, 0.5mm by private producers at RMB6650/ton. Boxing market in Shang dong Province sees a level of RMB6480-650/ton for 0.5mm material.
Taken the Shanghai price for 1.0 HDG by Anshan as benchmark, if it could exceed the level of RMB6400/ton which if forecasted, the next target will be RMB6800/ton or even RMB7000/ton.

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Steel Exports via Guangxi Curbed Effectively  

Guangxi Province has optimized export product mix, promoted trade balance and shifted trade method to curb exports of energy-intensive, resources-intensive and high polluting products under the guide of the country's macro policies. Exports in 2007 indicate that the policies have taken effect.
Exports of steel products fluctuated notably according to national policies and dropped dramatically in the second half of last year. Total export volume recorded 732,000 tons, up 110% year on year; export volume in the latter six months reached 402,000 tons, a growth of 54.1% from 270% in the previous six months.
In the meanwhile, export volume of semi-steel gained 11.4 times to 75,000 tons. Exports decreased 85.5% to 26,000 tons in the second half from that in the first six months.
Export volume of ferroalloy hit 170,000 tons in the whole year, up 18.2%. The volume fell 0.5% to 99,000 tons in the second half.

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Salzgitter targets handsome profits 

Germany's second-largest steelmaker, Salzgitter, is expecting that the underlying pretax profit will be in the high hundreds of millions of euros this year. Pre-tax profit in 2007 was 1.314 billion euros ($2 billion), just above the average forecast of 1.28 billion in a Reuters poll of analysts. "We are striving to attain a notable growth of the group, of which more than 50 percent will result from the first-time full-year inclusion of the companies of the Kloeckner Group in our new Technology Division", said the company. The company is well know for its extremely conservative forecasts at the beginning of the year, which it then revises higher over the course of the year, usually when publishing quarterly results. Meanwhile the company's four-quarter profit rose 92 percent as increased demand and prices boosted sales at Germany's second-largest steelmaker. Net income for the three months ended Dec. 31 climbed to 310.1 million euros ($474.4 million) from 162 million euros a year earlier. Fourth-quarter figures were calculated by subtracting nine-month earnings from full-year results published today. The company was estimated to report profit of 193 million euros, according to the median of four analysts surveyed. Fourth-quarter sales rose 20 percent to 2.69 billion euros. Quarterly sales were estimated to be 2.65 billion euros.

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China Steel to hike prices by 19% 

China Steel, Taiwan's top steel maker, said that it would raise its domestic steel prices by 19 percent in the second quarter, so as to pass on the higher iron ore prices and freight costs to the customers. The move, topping market expectations for a 15 to 16 percent increase, comes after bigger rivals including China's Baoshan Iron and Steel hiked their product prices. Baoshan recently raised its second-quarter price by 17-20 percent. Shares in China Steel closed at a four-month high on Thursday before the official announcement was released. "The prices of iron ore and coal have been jumping at a scary pace. We could have raised the product prices more this time, but we have to take our downstream clients' competitiveness into account," said L.M. Chung, executive vice president, China Steel.
"We'll be cautiously watching the directions of raw material prices to help determine if we'll raise product prices further." Steelmakers worldwide are hiking their prices to reflect stronger demand, but higher raw material prices are eating into their profits. Nippon Steel, the world's second-largest steelmaker has cut its full-year profit outlook due to higher-than-expected freight and other costs, joining three Japanese counterparts in lowering annual earnings estimates. Brazilian mining giant Vale said in February it secured an iron ore price rise for 2008 ranging from 65 to 71 percent with China Steel. China Steel, which has an annual capacity of 11 million tonnes, will raise its prices, including those of steel plates, by T$4,500 ($146) per tonne, with an average rise of 19 percent across its range of products.

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Nippon Steel cautions against lower profits on upbeat raw materials   

Nippon Steel Corp has warned of soaring costs that will cut profits for the year to March and the next six months would also be tough as the industry faces high freight rates and tight coal supplies. It will be first dip in six years in full-year profit for the world's second-biggest steelmaker, who joined three Japanese counterparts in trimming earnings estimates. However some investors said Japanese steel was relatively cheap and makers should raise prices -- suggesting the pain might be passed to customers such as automakers and ship builders. Nippon Steel said it expected recurring profit, before tax and exceptional items, of 560 billion yen ($5.4 billion) for the year to March 31, down 6.3 percent. The company had previously expected profit to rise 0.4 percent to 600 billion yen, which would have been a record for a fourth consecutive year. Costs for the Japanese steel industry are expected to go up by more than 2 trillion yen ($19.3 billion) in the coming year to March 2009, double the rise seen this year, executive vice president Kiichiroh Masuda said. He added that coal supplies were expected to be extremely tight in April and May. But some investors said that Japan's steel makers should not face any hurdles in boosting prices to reflect the higher costs. "Japanese steel is relatively cheap compared to the international standards and it'll make sense to raise prices accordingly," said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments. Rival JFE Holdings Inc, the world's third-biggest steelmaker, last month cut its full-year recurring pretax profit forecast by 7 percent to 500 billion yen, citing high costs and the impact of a stronger yen. Sumitomo Metal Industries Ltd and Kobe Steel Ltd also trimmed their profit or sales expectations. Freight costs hit a record in November, weighing on January-March earnings, while high steel scrap prices are also squeezing profits.

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Rising Nickel costs forces Posco to raise stainless steel prices 

  Posco, Asia's largest steelmill, will raise the price of its 300-series stainless steel by 7 per cent because of the rising costs of nickel used to make the alloy. Posco, which gets 20 per cent of sales from stainless products, will raise the price of its hot-rolled steel by 250,000 won (264 us dollar) a metric ton to 3.65 million won, said Ko Min Jin, a spokeswoman for Pohang, a South Korea-based company. Posco and rivals are pushing price gains to customers including automakers and builders to revive growth after rising raw materials costs reduced earnings in the December quarter. Nickel prices surged 25 per cent this year on expectation of rising demand and as workers at a Colombia mine strike. Nickel inventories in warehouses monitored by the London Metal Exchange have dropped 282 tons to 47,592 tons recently. The Korean steelmaker last month also raised prices of its 400-series stainless steel by as much as 11 per cent to cover the higher costs of chrome, another raw material.

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Steel must reach $850 to lure imports: Goldman

Goldman Sachs Group Inc.said that the US steel prices, which reached a three-year high last month, must rise another 25 percent to attract the imports necessary to make up for a domestic production shortfall. Hot-rolled coil must rise to about $850 a ton, from about $679 at present, to draw shipments currently directed to regions with higher prices, Goldman Sachs reported. The U.S. relies on imports for about 23 percent of its steel needs. “The U.S., capacity-short of steel and with very low inventories, needs more imports,'' Goldman said. Higher prices should lead to ``upside earnings surprises'' for steel companies. Industry executives including Dan DiMicco, chief executive officer of Nucor Corp., predict that steel prices and earnings this year may withstand slowing U.S. economic growth. Steel inventories fell 25 percent in December to 12.2 million tons, and lower supply is forcing consumers to accept higher prices. The U.S. imports steel because domestic producers make only about 100 million tons a year while the nation uses about 130 million tons. Prices for hot-rolled coil, the benchmark product used in automobiles and household appliances, rose to the highest in more than three years in February.
Steel producers are passing on higher costs for raw materials including iron ore and energy. Cia. Vale do Rio Doce, the world's largest exporter of iron ore, is charging Asian steelmakers about 65 percent more for the key ingredient as global suppliers struggle to match rising demand. Falling inventories and imports will keep U.S. steel prices from being harmed by a ``mild'' recession this year, said Lou Schorsch, the head of ArcelorMittal's flat-rolled business in the America. According to Goldman the Hot-rolled coil for delivery in April may already cost $720 per ton. Prices globally are also rising as suppliers struggle to keep pace with demand for steel used in infrastructure projects such as those in Dubai, Goldman said. Supplies from Brazil, Russia and China are slowing and exporting to the U.S. has become less attractive for manufacturers as the dollar weakened, reducing the value of U.S. sales converted to currencies including Brazil's real. Freight costs have also jumped. Prices for iron ore and scrap are rising, prompting companies such as Nucor and Steel Dynamics Inc. to seek acquisitions that will boost raw material supplies. Nucor bought scrap metal producer David J. Joseph Corp. for $1.44 billion last month, and Steel Dynamics bought scrap-metal producer OmniSource Corp. for $885 million in October.
Mittal's Schorsch, responsible for $21 billion of ArcelorMittal's business in the Americas, expects U.S. producers to benefit from an increase in demand of as much as 10 million tons of steel this year after inventories declined by about 3 million tons last year and imports fell by more than 6 million tons.

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Enel, Iberdrola among six companies to build Romania reactors 

Nuclearelectrica SA, Romania's atomic energy administrator, said that they reached agreement with Italy's Enel SpA, Iberdrola SA of Spain and four other companies to build two nuclear power plants. Utility companies Electrabel SA of Belgium, CEZ AS of the Czech Republic and Germany's RWE AG, as well as steelmaker ArcelorMittal, will also take part in the 2.2 billion-euro ($3.3 billion) project, Nuclearelectrica said.

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Hard-coking coal price to rise to record in 2008  

The price of hard-coking coal is set to rise to a record in 2008 after two years of declines, adding to pressure on steelmakers' raw-material costs, analysts said. The contract price may double or triple in annual negotiations this month between steelmakers and producers such as BHP Billiton Ltd., Anglo American Plc and Rio Tinto Ltd., according to four analysts surveyed. China banned exports of coking coal in January to meet local demand, while flooding and port congestion trimmed shipments from Australia, reducing global supplies by at least 8 million tons, according to Sage Consultoria Tecnica Ltda., a Rio-de-Janeiro- based consulting company. Asian and European steelmakers last month agreed to pay 65 percent more for contract iron ore, setting a global benchmark. ``Steelmaking levels are growing and the price agreements being negotiated this month should take hard-coking coal to its highest-ever level,'' said Andrew Jones, an analyst at Resource- Net, a Belgium-based research group. The price of coking coal fell in the past two years from a 2005 peak of $125 a ton on a free-on-board basis, Jones said. The price fell to $114 in 2006 and $98 in 2007, he said. Global seaborne trade of the coal was 202 million tons in 2007, according to a Resource-Net market survey. Australia produced 127 million tons of the trade. Roger Downey, director, equity research with Credit Suisse in Sao Paulo, said he expects the contract price to triple, while Brazilian analysts Bernardo Lobao of ARX Capital Management and Max Bueno of broker Spinelli SA each forecast prices to at least double. “Higher coking coal prices will further pressure flat-steel product prices in Brazil, which imports all its hard-coking coal,” Bueno added.

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Handan Steel targets threefold gain in production  

Handan Iron & Steel Group plans to boost steel production more than threefold by 2015 through acquisitions, making it as big as China's largest steelmill now. The company wants to produce 30 million metric tons of crude steel by 2015, Chairman Liu Rujun said. The Handan, Hebei province-based company produced 8.33 million tons last year. China wants its state-owned steelmakers to merge to compete with overseas rivals and boost their bargaining ability with raw materials suppliers. Steel demand may rise 9 percent this year in China, the China Iron & Steel Association forecasted in January. Handan Steel would like to obtain stakes in Shijiangzhuang Iron & Steel Co. and Xingtai Iron & Steel Co., both of which are based in Hebei, Liu said. Local governments own a 20 percent and 26 percent stake in those companies respectively, and Handan would like to get those holdings, he said.
The company is planning to boost its production to 10 million tons this year, and reach 15 million tons by 2010, Liu said. Production costs will rise by 500 yuan ($70) a ton this year because of the higher iron ore and coal costs, he said. Baosteel Group Corp., China's largest steelmaker, agreed to pay 71 percent more for premium iron ore sold by Brazil's Cia. Vale do Rio Doce since April. Baosteel represents Chinese steelmakers in contract price talks with iron ore producers, and talks are ongoing with Australian mining companies. Australian iron ores aren't as high quality as Vale's products and shouldn't command the same price increase, Handan's Liu said. Vale's ore contains as much as 71 percent of iron, while premium ore from Australia only has as much as 65 percent, he said. Rio Tinto Group, the world's second-largest iron ore exporter, has been arguing it should get a 71 percent increase for its ore from Australia.

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