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The Indian iron & steel industry is on upswing and there is an ongoing capacity expansion programme being carried out by many steel business houses. The industry sentiment is positive and accordingly, Ministry of Steel has also revised the steel consumption projections to around 175 mtpa by the year 2020. Many Indian steel houses are acquiring overseas plants and improving their position in the global iron & steel business.

While I don't deny all this, I can assure you that the journey will not be smooth. Still, there are quite a few bottle necks in the whole supply and process chain. For example, as on today there is no proven technology available for converting iron ore fines into pellets, especially for smaller capacity plants. Although we talk about vast reserves of coal and iron ore, due to outdated technology employment and lack of proper leasing policy and mechanism, we are not in a position to extract maximum benefit from this nature's gift. Coming to sponge and pig iron making, we have not yet solved the problem of availability of coking coal. Also sponge market remains highly fluctuating one and no one can predict the next month's price, not to talk about long term viability. All these things make finished steel a vulnerable commodity with unpredictable price and availability. How can we expect our user industries such as construction, auto, white goods to make their costing and come out with a long term buying policy and plan in such a dynamic situation ?

Unlike steel demand, these issues lie within our industry and have to be sorted out jointly. I hope 'Iron & Steel Summit' being organized at Raipur (many call this city as 'new steel capital of the country') will discuss and debate the issues sighted above and come out with useful suggestions and recommendations.

 D.A.Chandekar
Editor & CEO

 

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Posco not to budge on Orissa project

A day after three of its executives were detained and released by the anti-Posco brigade after 10 hours of captivity in the Dhinkia gram panchayat near Paradip in Orissa, Posco-India has made it clear that it has no intention to shift the site of its 12 million tonne steel project. “There is no question of shifting the site of the project”, said a company spokesman. Out of three gram panchayats in which the company intended to acquire land, there is sizeable support for the project in Gada Kujanga and Nuagaon panchayats while Dhinkia panchayat, the base of Posco Pratirodh Sangram Samiti (anti-Posco forum) is a problem area, according to the Posco official. “We will continue the process of dialogue with the local people for land acquisition in the other two gram panchayats, notwithstanding the incident, he added.”

The employees were released after hectic negotiations between the company officials and the captors. The hostages were forced to give personal undertakings about not entering the area again to plead for the Posco project and willing to face any punishment given by the villagers if caught again. When contacted, the president of Posco Pratirodh Sangram Samiti, Abhaya Sahu said, “We warn the government, Posco and the district administration not to venture into the area. If they enter, they will be held responsible for any possible consequence”. Stating that it is a “battle between the people and the government”, he cautioned the company against any direct negotiation with the people for land acquisition. The company required 4004 acres land, of which 3566 acres are government land and 438 acres private land. Meanwhile, the driver of the vehicle in which the Posco employees had entered the village, has lodged a FIR with Kujanga police on the incident. PK Meherda, the district collector of Jagatsinghpur, described the situation at the Posco plant site area a day after the incident as peaceful.

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Govt policies credits concerns Tata

A day after PM's strong remarks against Corporate India, a letter from Ratan Tata to PM suggested that the Govt has some serious answering to do. Ratan Tata as the head of the investment commission said that intervening government policies is causing investment delays. In response to the letter, the PM has sought clarification from all ministries to explain for the delay. Tata has even voiced concerns of archrivals like LN Mittal asking UPA to clarify its land acquisition policy. He also said that FDI cap increase in insurance has been long pending measure over which the Govt flip flop is far from over. As the investment commission turns two, even Indian top industrialists are getting frustrated with the Left overhang of the UPA Govt, which is now questioning the very basic tenets of India's growth story.

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Railways to waive 10% levy for steel

The railways have decided to waive the 10 per cent surcharge levied on multiple-point unloading of steel. Currently, companies ferrying commodities like steel, normally unload at several points en route their final destination; each time they unload, the companies have to pay 10 per cent surcharge at to the railway ministry. Apart from this, the ministry has also decided to extend the 30 per cent discount on incremental loading, offered to the industry, till 2010. Considering that steel is amongst the major freight customers of Indian Railways, comprising 30 and 35 per cent of total freight traffic respectively, the ministry has taken these step, in order to lure them away from taking their goods by road. In fact the surcharge issue had been a major grouse with steel industry and therefore the ministry today called a meeting of the industry coordination committee, to resolve these issues. The railway ministry had asked their freight customers to unload their goods only at their final destination. However companies were of the view that since they find potential customers for their goods en route to their original destination, they be allowed to unload at multiple points. The ministry agreed but levied surcharge on each of the unloading point from them. The 30 per cent discount on incremental loading is being given annually since 2005 by the ministry to those players, who have carried extra freight than what they carried the previous year, on their fixed routes. The discount is given to them on the extra freight carried by them. This sop has now been extended till 2010. Apart from this, the ministry has also offered steel companies to enter into long term contracts with them. Ranging from five to 30 years, railway minister Lalu Yadav said that as the steel industry is their biggest customer, therefore on entering into long term contracts with them, rakes would be made available to them much faster than what the entire process of hiring takes at present. Currently companies wanting to hire rakes have to approch the zonal railway authorities for this, a process which takes months on end. Now the ministry has offered that the companies seeking rakes can approach the Railway Board directly with their requests and rakes would be made available to them within two months, even during busy seasons. The railway minister also requested the steel customers to take advantage of the ministry's plan for development and modernization of loading terminals and sidings. Under this the ministry is willing to bear 50 per cent of the expenditure.

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Tata Steel in race for Vietnam plant

Tata Steel, Baosteel of China and Evraz of Russia are in the race to pick up a majority stake in an integrated steel plant in Vietnam. The project, which could attract Rs 14,000 crore investment, will have local enterprises as minority partners. The Vietnam government is expected to announce the winning bidder for the project next month. Tata Steel, if it wins the bid, will have to shell out over Rs 7,000 crore for the project. The expression of interest by three companies followed invitation from the Vietnam government for setting up a steel unit with annual production capacity of nearly 5 million tonne. The local enterprises such as the state-owned Vietnam Steel Corporation and Ha Tinh Mineral & Trade Co will acquire minority stake in the project, to be set up in central Vietnam's Ha Tinh province. Details of the Tata Steel proposal for the project could not be ascertained. A Tata Steel spokesperson said: “Tata Steel is looking at various locations and countries to expand its operations. At this point in time, none of them are at the finalisation stage.” If it bags the deal, It will be second largest investment by Tata Steel. Tata Steel had recently acquired Corus for $12.9 billion (Rs 52,500 crore) in the largest overseas acquisition by any Indian company. This acquisition catapulted Tata Steel to the world's sixth largest steel company, from its previous ranking of 52. Three years ago, Tata Steel acquired Natsteel for Rs 1,300 crore in 2004. Tata Steel and Evraz had come face to face in another acquisition last year. Tata Steel lost the race for South Africa's Highveld & Vandium to the Russia's largest steel company. Evraz is a vertically-integrated steel and mining company with operations mainly in Russia. In 2006, Evraz Group produced 16.1 million tonnes of crude steel. Vietnam Steel Corporation had done a pre-feasibility study which indicated that the proposed steel complex will be located near the Thach Khe iron ore deposit. Thach Khe's reserves are estimated at 544 million tonne averaging 61-62 per cent ferrous content. However, only 30 per cent equity holding in the mine, which will feed the steel project, is up for sale to the foreign companies. In November, Essar, another Indian conglomerate, announced plans to set up 2 million tonne a year hot strip rolling mill in Vietnam in association with Vietnam Steel Corporation. The project will be located in southern province of Ba Ria-Vung Tau. It is expected to go on stream in 2009. Essar will control 65 per cent stake while Vietnam Steel Corporation will keep the remaining equity interest.

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No plan to direct steel cos on pricing policy, says govt

The government is currently not considering to issue any directives to steel companies to maintain prices of their products at current levels. Steel Secretary R S Pandey informs. “The steel price monitoring committee is studying the prices and will continue to do so in future, but there is presently no plan to issue any specific directives to steelmakers on prices.” The inflation rate, based on the Wholesale Price Index, fell to 5.77 per cent for the week to April 21 from 6.09 per cent a week earlier. The government had asked steel companies in March to roll back the hike in product prices to help control inflation. Subsequently, steelmakers had rolled back the price hike but raised product prices earlier this month in line with international prices. Starting April, prices of key inputs for steelmaking such as iron ore went up, prompting steel companies to hike product prices. “In any case, domestic steelmakers only tend to maintain a parity with the import prices,” Pandey said. On the issue of iron ore trade, Pandey tempered his earlier stance and said the steel ministry was not proposing a total ban on exports, but said, “we want to ensure there is enough iron ore to meet growing domestic capacities.

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Bhilai Steel Plant : Modernisation & expansion plan

As an integral part of SAIL's growth plan that envisages capacity Augmentation to around 23 MT of crude steel by the year 2010, the Board of SAIL has given approval to a proposal for modernisation and capacity expansion of Bhilai Steel Plant to 7.5 million tonnes (MT) of Hot Metal and 7 MT of crude steel per annum at Rs. 11,262 crore. Bhilai's Composite Project Feasibility Report for modernisation & expansion has been prepared by MECON.

The modernisation & expansion plan includes, Installation of a new blast furnace that will be among the biggest in the country. A new 7-metre tall coke oven battery and a new sinter machine. Under modernisation, the ingot route will be phased out and BSP will become a 100% continuous casting plant with addition of a brand new steel melting shop of 4 MT capacity. The plan envisages installation of a universal beam mill of 1 MT capacity to produce beams up to 1.1-metre depth, which will be the only one of its kind in India. A new bar & rod mill of 0.9 MT capacity will also be added. A new universal rail mill of 1.2 MT capacities with state-of-art technology will be installed. BSP also has unique strength in production of wider plates, and its dominance in this product category, will be maintained by capacity expansion of its Plate Mill to 1.42 MT under the plan. The projects will be executed on global & turnkey, global & semi-turnkey, indigenous & turnkey and non-turnkey basis. Tendering for these packages will be done by Bhilai Steel Plant. The Plant ended 2006-07 on high note initiating several technological modernisation and up-gradation projects for enhancing production volume, improving quality of products and operational efficiency. The Plant recorded its highest-ever value-added steel production with a growth of 7% over previous fiscal.

So far the projects completed by them were the technological up gradation of Blast Furnace 7 including GCP and Stock House Modification. First metal tapping was done. Hot metal production steadily increased crossing 4,000 T. The Furnace achieved its rated capacity of 4428 T. Three major projects, viz. Replacement/Revamping of “B” Strand in WRM, 15 MW Turbo-Generator at Power & Blowing Station AND HAGC & PVR in Plate Mill were inaugurated by Minister for Steel, Chemical & Fertiliser, Shri Ram Vilas Paswan recently.

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Sri P. K. Bishnoi assumes charge as CMDAT Rashtriya Ispat Nigam Limited

Sri P. K. Bishnoi assumed the charge as Chairman - Cum Managing Director at Rashtriya Ispat Nigam Limited (RINL), the holding company of Visakhapatnam Steel Plant today. A graduate Engineer from Indian School of Mines ( an IIT), Dhanbad, Sri Bishnoi obtained MBA from the prestigious IIM, Ahmedabad. Prior to joining RINL, as Director (Finance) on 1st April, 2004, Sri Bishnoi had worked with Larsen & Toubro-Bombay, Planning Commission- New Delhi and Balmer Lawrie & Co. Ltd. in various functions like Marketing, Exports, Works, Finance etc., before assuming general management responsibilities and Directorship of the PSU. Sri Bishnoi was also associated with several non- PSU Joint ventures with MNCs including companies in Dubai & London. Sri Bishnoi has widely traveled all over the World.

At Vizag Steel, Sri Bishnoi is credited with path-breaking initiatives in the areas of Agro-forestry, Foreign-exchange Management, Cost reduction in Financial services, Insurance, in-house Communication and Knowledge enhancement, ISO 9000 for finance function and RINADS, the in-house advt. agency, to name a few.

Sri Bishnoi has also been spearheading VSP's efforts in implementing ERP and several Joint Venture (JV) initiatives for SMS grade Limestone, Coking Coal, Ferro Manganese etc., Sri Bishnoi was Chairman of the Ministry of Steel appointed Committee to study and recommend assured supplies of Coking Coal to SAIL and RINL and his recommendation for formation of Special Purpose Vehicle (SPV) amongst RINL, SAIL, Coal India, NTPC and NMDC to acquire Coking coal assets overseas by investing Rs. 10,000 crores initially and going upto Rs. 25,000 crores was well accepted and the proposal for formation of the said SPV is under consideration of the Government. Sri Bishnoi is also a member of the Bagchi Committee, set up by the Ministry of Steel for restructuring BIRD group of Companies.

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Chhattisgarh inks Rs 19,200cr MoUs

Bhushan Power and Steel Limited (BPSL) will set up an integrated steel plant in Chhattisgarh while the Jindal Steel and Power Limited (JSPL) will expand its existing facility in the state to take up the production of steel to 6 million tonnes per annum (mtpa). Both BPSL and JSPL and five other companies inked Memorandums of Understanding (MoUs) with the Chhattisgarh government on May 4. In all, seven MoUs were signed for an investment of Rs 19,200 crore. On behalf of the Chhattisgarh government, additional chief secretary P Joy Oommen signed the MoUs. The BPSL, which revived the proposal it had abandoned some four years ago to set up a steel plant in Chhattisgarh, inked the deal to set up a 1.2 mtpa integrated steel plant with an investment of Rs 5500 crore in Raigarh District. The company plans to put up a captive power plant with a capacity of 300 Mw. The JSPL will invest Rs 8000 crore in its existing facility at Raigarh District for producing additional 3.2 mtpa steel. This will increase the capacity of JSPL to 6 mtpa.“The expansion project of Jindal is as good as setting up a new plant,” Oommen said. In the other MoUs, Monnet Ispat plans to invest Rs 2087 crore to increase production in its Raigarh-based steel plant by 1.5 mtpa besides setting up a 170 Mw captive power unit. The Topworth Steels Private Limited will invest Rs 1200 crore for the expansion of its Borai-based steel plant in Durg District while Kolkata-based MST Steel and Power will invest Rs 850 crore for the expansion of its existing plant. Two state-based industrial houses also signed the MoUs. The Vandana Ispat will bring up a steel plant with a capacity of 8.3 lakh tonne per annum, investing Rs 1310 crore besides setting up a 120 Mw captive power plant. The Salasaar Sponge and Power Limited, another Raipur-based industry, will invest Rs 230 crore for expanding production in its existing facility in the state.

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Sinosteel plans $4 bn steel plant in India

Sinosteel, a Chinese mineral trading company, plans to spend $4 billion to build a steel plant in India, joining global steelmakers in tapping the world's fifth-biggest iron ore deposits. Sinosteel will initially invest $500 million in the planned 5 million tonne plant in Jharkhand, the company's India Managing Director Hong Sen Wang said from New Delhi. The total investment, the biggest in India by a Chinese company, will be made over eight years, he said. Delays in allocating land and mining permits have held up construction work on $21 billion projects announced in India by Arcelor Mittal and South Korea's Posco. Sinosteel is betting its 16-year-old relationship with the South Asian nation may help it secure approvals faster than rivals. “We are confident that there will be enough iron ore to support our plant,” Wang said. “We have very good relations with many sellers in India for many years.'' Sinosteel has been buying Indian ore since at least 1991. Arcelor Mittal Chief Executive Officer Lakshmi Mittal said on March 25 progress was slow in the company's proposed Indian mills. Mittal in December agreed to build a $9 billion plant in Orissa, after initially announcing a $9 billion, 12 million-tonne-a year plant in Jharkhand state in October 2005. Posco, the world's fourth-biggest steelmaker, is yet to get all the land required for a $12 billion plant in Orissa because of opposition from some political parties and farmers' groups. Construction work on the project, talks for which began in August 2004, was to begin last month. Meanwhile, steelmakers are not deterred by such delays as demand in Asia is growing faster than in Europe and North America. Steel usage in India is forecast to rise 7.7 per cent a year from 2010 to 2015, almost twice the 4.2 per cent global rate in the same period, according to the International Iron & Steel Institute. “Foreign companies investing in India are willing to put up with some delays as long term benefits of such investments will far outweigh such irritants,'' said Dipak Acharya, who manages about $19 million at BOB Asset Management in Mumbai. Sinosteel may next month sign an accord for the project with the Jharkhand state government, Wang said. It expects to get rights to mine 300 million tonne of ore for 30 years.

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Steel may firm up on tight supply, high prices

Only a handful of domestic steel producers have announced their results for 2006-07, but the indications are that they will report stellar performances this financial year. Net profits of companies such as JSW Steel, Bhushan Steel & Strips, Uttam Galva Steels and Monnet Ispat ranged between 50 per cent and 103 per cent on the back of better realisations during the previous financial year. If a similar performance could be repeated for another six months, going by the current signals, the prospects for the current year look better than those in the previous year. Steel prices increased two to three times till June last year, after which they started softening. From August, the international prices started weakening, which reflected in the domestic prices and the first cut in the prices came in September. The market was flat till February, when the first increase took place. The new financial year has begun on a strong note and is expected to continue for the coming few quarters. World Steel Dynamics, one of the leading information services, has issued an early warning of steel shortage and if that happens, the hot-rolled price band may breach $700 a tonne. The forecast in February said the price band would be in the range of $600 and $725 a tonne. The export price, currently, is $620 a tonne. There are a host of factors that go a long way to indicate that the forecast may hold water. The global finished steel consumption is expected to touch 1.178 billion tonnes in 2007, a growth of 5.8 per cent. Moreover, the policy initiatives announced by China to discourage exports imply that there will be less steel in circulation in the world market. It is estimated by certain steel analysts that the net steel exports from China in 2007 will decline to 10 million tonnes compared with 25 million tonnes in 2006. Industry sources said the domestic steel prices would follow the international trend, unless, of course, they are kept artificially low, as it is currently done, to help the government rein in inflation. It will therefore make sense to focus on what international steelmakers are saying. Arcelor Mittal, the world's largest steelmaker, has said 2007 would be better than 2006. Nippon Steel, which ranks second, expects robust demand from automakers and shipbuilders. Nippon feels there will be a tight supply of medium-high grade steel, with the growing market demand from automotive, shipbuilding and energy sectors.

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Paswan asks NMDC to expedite steel venture

The Centre on recently asked National Minerals Development Corporation (NMDC) to expedite the process of setting up a greenfield steel plant and offered to talk to the concerned state governments to remove bottlenecks. Reviewing the public sector unit's performance at a meeting here today, Steel Minister Ram Vilas Paswan increased the PSU's iron ore production target for the current fiscal by 17 per cent to 31 million tonnes from 27 million tonnes last year, an official release said. Paswan said the company should execute its joint venture with Steel Authority of India (SAIL) and Rashtriya Ispat Nigam Ltd (RINL) to set up a greenfield steel plant of two to three million tonnes capacity at the earliest. "The government is prepared to talk to the concerned state governments if there are any bottlenecks in any specific mine and also hold tripartite meetings with steel producers on improving off take from mines," Steel Secretary R S Pandey said in the statement. During 2006-07, NMDC increased its iron ore output by 18 per cent to 27 million tonnes. The company reported a net profit of Rs 2,300 crore, up 25.8 per cent year-on-year.

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Bhushan Steel to invest Rs 8,800 cr for steel

  Steel manufacturer Bhushan Steel Ltd (BSL) has lined up an outlay of Rs 8,800 crore to set up an integrated steel plant, a 1,000 MW captive power unit and a cold rolled and galvanising plant in West Bengal. An agreement to this effect was signed by BSL with the state government here in the presence of Chief Minister Buddhadeb Bhattacharjee and Industry Minister Nirupam Sen. Industry Secretary Sabyasachi Sen and Bhushan Steel Managing Director Neeraj Singal signed the agreement. Briefing the reporters about the project, Nirupam said that the integrated steel plant with two million tonne capacity and the captive power plant would come up at Salanpur in Burdwan district. It would cost Rs 8,000 crore. The cold rolled mill with a capacity of 0.5 million tonne and galvanising unit would be set up in North 24 Paragans district for Rs 800 crore. However, the exact location has not yet been identified. The integrated steel plant and power unit would require 2,500 acres, while the cold rolled and galvanising unit would need another 90 acres, Sen said.

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Jindal Stainless to set up Rs 5,600-cr Orissa plant

In a major expansion drive, Jindal Stainless (JSL) plans to spend Rs 5,600 crore to set up a 0.8 million tonne (mt) per annum stainless steel plant at the Kalinga Nagar Industrial Complex, Orissa. The investment is part of the second-phase expansion of the integrated stainless steel project. The company intends to reach a final capacity of 1.6 mt by 2012. “We are moving ahead on our greenfield project in Orissa at a fast pace. The first phase entailing an investment of Rs 2,250 crore would be completed by year end. Work on the second phase would start simultaneously so that we commission the 0.8 mt plant by December, 2009,” Jindal Stainless managing director and CEO VS Jain said. He said that technical detailing and agreement for all major machinery and equipment for the new plant have been concluded. JSL has signed the contract for steel melt shop with SMS Demag, Germany and for hot strip mill with Siemens-VAI, Austria. Once complete, Jindal hopes to become one of the cheapest producers of stainless steel since all the input linkages for the plant have already been assured.

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Rs 1500cr remains unspent with steel PSUs

The state-run steel utilities were unable to spend nearly Rs 1500 crore of their budgetary resources during the last fiscal primarily due to inflated estimates, which is bound to adversely affect their performance, a Parliamentary panel has said. "As compared to Budgetary Estimates (BE) of Rs 3172.30 crore steel PSUs have been able to utilise Rs 1702.44 crore, which is barely 53.66 per cent of the allocated IEBR during 2005-06," the Parliamentary Standing Committee on Coal and Steel observed in its report. It said ironically for the current fiscal again the steel PSUs prepared inflated estimates which were subsequently reduced by the Planning Commission, it said. The Plan panel scaled down the Steel Ministry's outlay in the 10th Plan from Rs 11044 crore to Rs 8476.88 crore based on trend of expenditure and progress of schemes. "The steel PSUs have failed to utilise even the reduced allocation, which is bound to have an adverse impact on their performance. Non-utilisation of the Internal and External Budgetary Resources (IEBR) indicates to the fact that PSUs have been unable to generate enough internal resources they were expected to raise," the committee observed. Expressing serious concern on the spillover of schemes earmarked in the 9th and 10th Plans on the 11th Plan, it said, "the Committee is unhappy to note the casual approach of the Steel Ministry and the PSUs in completion of the schemes, as no progress has been made in this regard." It asked the Ministry to facilitate PSUs in identifying the constraints and formulate the strategy for implementation of schemes and ensure better utilisation of funds.

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Mukand profit up 30% as revenues cross Rs 2,000 cr

Specialty steelmaker Mukand is investing Rs 300 crore to expand its capacity by 80% to 550,000 tonne by October this year. The company, which produces specialty steel like alloy steel used in the automobile and auto component industry, intends to capitalize on the high demand for these products in the national and international markets.

Mukand recently, also announced its financial results, reporting its “highest-ever” revenues at Rs 2,078 crore with an increase of 15%. “This is the first time that we have crossed the 'Rs 2,000-crore' mark. The profit before exceptional items was at Rs 113 crore, a growth of 31%,” said its managing director Niraj Bajaj.

Mukand now produces 300,000 tonne of alloy steel and stainless steel per year, heavy machinery and is involved in the construction of highways. “With the kind of growth in orders we are witnessing right now, the company will easily absorb the added capacity,” says Mr. Bajaj.

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Steely Success

 Tata Steel has overcome rising raw material costs and lower realizations during most of 2007 to post a good set of results. Sales grew by 25% while the aforesaid factors slowed down profit growth to 12% on a consolidated basis. The company's operating profit has dropped by one percentage point to 30%. Analyzed by segments, it is evident that 'Ferro alloys and others' segment has seen the largest drop in margins. Higher raw material and power costs are the prime culprits. Towards the end of the year, the situation seems to be coming under control, as raw material costs were lower in the last quarter compared to the same period last year. The past quarter has seen an upswing in realizations, too. Its steel realizations have jumped 37% to Rs 39,510/tonne in Q4 Fy07 compared to the corresponding previous period. The steel cycle has turned and prices are on the upswing, a fact that is likely to help the company improve its margins. It is interesting to note that even at current levels, the margins stand at more than double Arcelor-Mittal's, the largest steel player globally. Yet, Tata Steel trades at valuations significantly lower than the steel giant. This paradox points to lower expectations from Tata Steel. With the ambitious acquisition of Corus and steel prices headed north, Tata Steel could well turn out to be the dark horse in the steel stable.

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DGCX to launch Steel Rebar Futures Contract on June 27

The Dubai Gold and Commodities Exchange (DGCX) will open on June 27 its proposed Steel Rebar Futures Contract, the first of four futures contracts targeted for the steel supply chain, that would help the industry to lessen the negative impact of price volatility of 15 per cent to 20 per cent in the UAE and the Middle East region. John Short, executive-director for Steel & Base Metals at DGCX, announced this yesterday as he tackled before investors and the steel community the profitability of hedging in the industry, whose annual global production amounts to 1.2 billion metric tonnes of steel, through the DGCX Steel Rebar Futures Contract.

He said the DGCX futures contract would be the first internationally accessible exchange-traded instrument covering physical steel, an alloy produced after reducing carbon in iron. While India and China have exchanges offering steel futures, he added, the prices are confined to the respective national markets of these two most populous nations in the world, and that trading is limited only to domestic firms. "Whilst the prices discovered on DGCX are also domestic, they are reflective of rebar pricing throughout the RSAGS (Red Sea Arabian Gulf Shore) countries," Short said, adding that international companies are allowed to trade in DGCX rebar futures contract.

He stressed the importance that Dubai plays in the steel industry, particularly on rebar, a steel product whose price behaves like that of a commodity, saying that the range of prices in the city is being watched by RSAGS countries. Short said the DGCX Steel Rebar Futures Contract would have a soft-launch based on monthly contracts for four to six months, and have a subsequent weekly launch of one to 13 weeks. Short said the Dubai rebar price is important to the Asian and European markets for long steel products because the world's two dominant long product trade flows converge in Dubai. "Therefore, DGCX contract is relevant regionally and internationally for steel price discovery and hedging purposes," he added.

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Qatar Steel designs winning stand

Qatar Steel, the first integrated steel manufacturer in the Gulf region was awarded the 'Best Stand Design' award at Gulf BID 2007 - an international building and interiors exhibition held recently in Bahrain. The award was presented to Mr. Abdulrahman Al Muftah, marketing manager, Qatar Steel, at a ceremony held by Hilal Conferences and Exhibitions. “Gulf BID 2007 was a great success and it is an added bonus to receive the "Best Stand Design" award this year. It is rewarding to be recognised for our efforts in light of our recent re-branding. We look forward to a bigger, better, Gulf BID 2008," said Mohammed Al- Saadi, marketing manager, Qatar Steel.

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New brand image for Qatar Steel

Qatar Steel, formerly known as QASCO, launched its new brand image at gulfBID 2007. The company, founded in 1974, is the first integrated steel manufacturer in the Gulf, with facilities in Doha and Dubai. "GulfBID is one of the region's foremost construction exhibitions and offers Qatar Steel the opportunity to build key, long-term relationships with partners, end-users and suppliers alike," said marketing manager Mohammed Al Saadi. "GulfBID provides us with the platform to highlight our leading role in the region's booming construction industry." The boom in the GCC region's construction industry has fuelled a surge in demand for construction material and expertise. Demand in the industry is expected to grow b y $9.2 billion this year alone. Both the Qatari and Dubai facilities will operate under the umbrella name of Qatar Steel, while Qasco Dubai Steel will be known as the Qatar Steel Company.

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Kobe Steel Receives Order to Build Iron Ore and pellet plant in Bahrain.

Kobe Steel, Ltd. announces that it has been awarded an approximately 56-billion-yen contract to supply an iron ore pellet plant to Gulf Industrial Investment Co. (E.C.) (or GIIC) in Bahrain. A signing ceremony was held recently in Bahrain. Under the full turnkey project, Kobe Steel will be responsible for the design, construction and start-up of the facility in Hidd, Bahrain. The pellet plant t Plant in Bahrain will have a production capacity of 6 million metric tons per year. In addition to the processing plant, the order includes construction of a jetty extension and ore yards and installation of material handling equipment. Plans call for production to commence in July 2009. Iron ore pellets are used to make direct reduced iron, a raw material for electric steelmaking. Most of GIIC's pellets are supplied to direct reduction plants in the Middle East, including Qatar Steel. In 2005 approximately 58% of the output was consumed in the Middle East, while 24% went to India and 18% was shipped to Southeast Asia.

Steel demand is forecast to increase considerably in the Middle East. In 2006, demand for finished steel was 36.8 million metric tons. In 2007, it is forecast to grow to 40.2 million metric tons and in 2008, 43.6 million metric tons, according to the International Iron and Steel Institute. However, the region only produced 15.4 million metric tons of crude steel in 2006. To meet the growing need for steel in the region, GIIC plans to increase its production capacity of iron ore pellets. The current pellet plant has a capacity of 4 million metric tons per year, which GIIC will increase to 5 million metrics tons by the end of 2007. The second pellet plant, when completed, will take GIIC's total production capacity to 11 million metric tons per year. This will be Kobe Steel's second order from GIIC for a pellet plant. The first plant was completed in 1985. With over two decades of operation, GIIC gave high marks to the stable operation of the first plant. In addition to Japan, Kobe Steel has supplied iron ore pellet plants to Chile and Venezuela. GIIC's second pellet plant will be the biggest one that Kobe Steel has ever built.

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Essar plans $590-million steel plant in Egypt

Essar Global is considering building a steel plant in Egypt at an investment of $590 million. Steel demand in the Middle East is forecast to grow by 9.1 per cent this year and a further 8.4 per cent in 2008, bringing the region's overall demand in 2008 to 43.6 million tonnes. Egypt is the Arab world's most populous country. From an importer of 2 million tonnes of steel per year less than a decade ago, Egyptian government data showed last year that the country produced 4.3 million tonnes and exported 900,000 tonnes.

Even Tata Steel Ltd, the largest Indian steel maker, is examining the possibility of building a steel plant in Egypt at an estimated cost of up to $900 million. Tata Steel's proposed plant would be its second venture in Africa after its ferrochrome unit in South Africa, currently under construction. The International Iron & Steel Institute (IISI) said Egypt's crude steel output stood at 6 million tonnes in 2006 and that The Essar Group had also announced plans to set up three steel plants in the Middle East, including a joint venture to build a 1.5-million tonnes a year plant in Iran.

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$570m Steel Deal

Bahrain is set to become the main supplier to the Gulf steel industry. This follows the signing yesterday of an agreement to expand Gulf Industrial Investment Company's (GIIC) iron ore production facilities in Hidd. Estimated at more than $570 million, the project will be one of the biggest industrial schemes undertaken in the Gulf. Bahrain-based firms GIIC and Arab Banking Corporation attended the signing ceremony. The project is sponsored by Gulf Investment Corporation (GIC), which is also the largest shareholder. ABC is the sole underwriter and mandated lead arranger of the debt financing facility, one of the largest ever undertaken in Bahrain.

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Mittal Arcelor in talks to work with Posco

Mittal Arcelor , the world's biggest steelmaker, is talking to Posco of South Korea about collaboration over sharing technology in steel processing that could help the Luxembourg based company achieve its goals of expanding its presence in Asia. Posco is the world's fourth biggest steel producer, and has strong trading and technical links with other steelmakers and customers for steel, particularly in the motor industry, in China and Japan. Lakshmi Mittal, chief executive and main owner of Arcelor Mittal, told a Brussels press briefing yesterday that his company had “general discussions” with Posco over technology and research and development initiatives, and was hopeful of reaching a conclusion, but gave no further details. He said the talks did not go further than this, and said Arcelor Mittal was not pursuing any ideas of a merger with Posco.

Talk about potential combinations in the steel industry has been rife in recent months, sparked by a series of big deals, including the Euros 26.9bn takeover of Arcelor last June by Mittal Steel to create Arcelor Mittal. If a technical alliance with Posco came off, Posco could use some of Arcelor Mittal's special “recipes” for creating novel types of flat coated steel for use for instance in the vehicle industry when making steel for customers in China. In return, the Luxembourg company would receive a fee, but more importantly such initiatives could help it to gain influence in China and also other parts of Asia where the company is relatively weak in contrast to its dominant market position in the US and Europe.

Mr. Mittal recently told the Financial Times of his confidence of expanding operations in China. Posco has two modern and efficient plants in Korea, but has struggled in recent years to expand outside its domestic market and other parts of east Asia to which the company exports, and could use a link with Mittal Arcelor to extend its presence in Europe and the US. A technical link between the two companies could also lead to them co-operating in India where both companies have plans to build new multi billion dollar steel plants. Mittal Arcelor already has a similar agreement on technology exchanges with Nippon Steel of Japan.

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Nippon Steel, Tata mull joint India output

Nippon Steel Corp. said recently it is in talks with India's leading steelmaker, Tata Steel Ltd., about starting joint production of automotive use sheet metal in India. Japan's top steel producer said the details have yet to be decided. But sources said the plant entails the two companies supplying steel to Japanese automakers in India, including Toyoto Motor Corp. an Suzuki Motor Corp. Nippon Steel and Tata Steel have had a technical alliance in the field of sheet steel for vehicles since 2002. The two companies also cooperate on building the Indian company's steel mills.

Other details, including the location of the plant and the production volume, will be decided in the near future, the sources said. Nippon Steel produces sheet steel for automobiles in the United States, China and Brazil. The Tata deal would add another major market to that list. Tata formed a technical alliance on automotive use sheet metal in 2002 with Arcelor SA of Luxembourg, under the umbrella of Mittal Steel Co. of the Netherlands. Nippon Steel is also expected to hold talks with Mittal on the envisioned deal with Tata, the sources said. In January, Tata announced it has agreed to acquire the Anglo Dutch steel giant Corus Group. Tata and Corus produced a combined 24 million tons of crude steel in 2006.

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BNI reviews Krakatau Steel's proposal on new steel plant

PT Bank Negara Indonesia Tbk (BNI) and Krakatau Steel are negotiating a US$60 million loan for financing a new steel plant in South Kalimantan. BNI's President Director Sigit Pramono said that the proposal submitted by Krakatau is being reviewed by the management. “I confirm having received the proposal and I can say that looking at the project value that we can support the project,” he added. PT Krakatau Steel's Chairman Amir Sambodo said that the funds are needed to initiate the new steel plant project which is designed to have 300,000 tons per year capacity. This year Krakatau is aiming to increase domestic sales to Rupiah 11.57 trillions (USD 1.27 billion) compared to Rupiah 9.66 trillions last year. Amir also explained that the company is finalizing a plan to enter the capital market.

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Nippon Steel, Mittal, Shanghai Bao to expand joint steel production

Nippon Steel Corp. has agreed with Arcelor Mittal of Luxembourg and Shanghai Baosteel Group of China to expand their joint production of automotive steel products in China, Nippon Steel Officials said recently. The agreement, reached at a meeting in China earlier this month of the top leaders of the companies, is intended to take advantage of the rapid growth in automobile production in China. The three companies aim to work out details such as the scale of the production increase and the investment amount by the end of this year.

The companies operate a joint venture in China, which is owned 50 pct by Shanghai Baosteel, 38 pct by Nippon Steel and 12 pct by Arcelor Mittal. At the top leader's meeting, Arcelor Mittal proposed to increase its stake in the joint company, but the companies eventually agreed not to change the existing ownership ratios. Nippon Steel is the world's second biggest steelmaker, while Arcelor Mittal is the biggest.

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Chinese strip maker looks to Ferronickel in the Philippines

Rockcheck Steel Group (also known as Rongcheng), a strip producer located in northern China's Tianjin Municipality is planning to build a ferronickel plant in the Philippines, Steel Business Briefing learns from a company official. The official tells SBB that the company has signed an agreement with a Filipino company to set up a joint venture with Rockcheck holding a controlling stake. The company's initial investment in the project will be about $200m.

However full details are not yet available. The company is very optimistic about the ferronickel market in view of China's steel capacity expansions, SBB understands. “We believe the ferronickel market will remain strong for a few years,” he says. Rockcheck also has plans to branch out into the production of stainless strip and wires, as SBB previously reported. Unconfirmed sources suggest that the new plant will be built in Eastern Samar Province of the Philippines. The construction of the plant is supposed to start in the third quarter of this year. The company currently has an iron making capacity of 3.2m tonnes / year, a crude steel capacity of 3m t/y and a finished steel capacity of 2.2m t/y. It produced about 2.08m t/y of medium heavy wide strip in 2006.

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Vietnam on target to exceed 10% growth this year

 Vietnam is on target to consume 3.8 4.0m tonnes of finished long products this year. Its imports of billets reached 508,000 tonnes for the period 1 January 15 March this year compared to 1.82 mt for the whole of 2006. “We expect billet imports to reach around 2mt this year,” a senior spokesman of the Vietnam Steel Association (VSA) tells steel Business Briefing. This will supplement Vietnamese domestic production of around 1.8 mt of billet of this year. “Steel demand is rising. Vietnam is expected to maintain last year's demand growth of 10-11% for this year,” the spokesman tell SBB.

Vietnam's steel growth is being supported by a robust increase of foreign direct investment in the country. Last year, the country achieved FDI of $10.2bn, and this year it is expected to meet or even surpass this figure. For the period of 1 January - 15 March this year, the country imported 1.99m tonnes of steel and steel related products. This includes 184,000 tonnes of ferrous scrap, 115 tonnes of pig iron, 5,000 tonnes of ferro-alloys 160,000 tonnes of long products and 840,000 tonnes of flat products, according to statistics obtained from the VSA.

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Nippon Steel, Mittal negotiate details of alliance 

Nippon Steel is still in talks with Arcelor Mittal over details of their alliance pact, which would allow the world's largest steelmaker to use Nippon's automotive sheet technology. Japanese public broadcaster NHK reported this week that Nippon Steel president Akio Mimura and Arcelor Mittal chairman Lakshmi Mittal are in tough talks over conditions for using the sheet technology, one of Nippon's strongest competitive points. Mittal, who is pushing into the high-end, automotive sheet steel market in Brazil, wants to use the technology globally, while Nippon Steel wants to impose regional restrictions, NHK said. Nippon Steel, the biggest beneficiary of strong worldwide sales of Japanese cars, last July reluctantly agreed to extend its technology-sharing agreement with Arcelor Mittal, after its ally Arcelor was bought by Mittal in a hostile bid. “We have been in talks with Arcelor Mittal on how to cooperate, including what to do with our joint ventures in China and the United States, since last July,” a Nippon Steel spokesman said. He declined to comment on details of the talks or on the NHK report. Nippon Steel and Arcelor Mittal operate joint ventures for car sheet steel production in the United States and China. They are considering boosting output at the two ventures to cope with surging demand from Toyota Motor and other Japanese carmakers with plants in the region. The Chinese venture is owned 50% by the country's top steel maker, Baosteel Group, a unit of Baoshan Iron & Steel Co. Thanks to strong demand from carmakers and the ability to produce light, strong and rust-resistant steel sheet, Nippon Steel is expected to post a record profit for a fourth consecutive year to March 2008.

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China industry sees 2007 steel exports flat

A senior industry official expects China's steel exports this year to be around the same as last year, the Xinhua agency reported, in an apparent upward revision of an earlier forecast. Luo Bingsheng, vice chairman of the China Iron and Steel Association, said that weaker global demand and lower export rebates would temper growth in shipments abroad, which climbed around a third to 14.13 million tonnes in the first quarter alone. He predicted that exports of steel products would end the year level with 2006 or perhaps drop slightly, Xinhua said. Association Chairman Qi Xiangdong had said in early April that the cut in rebates could reduce total net exports of steel billet and products by 10 million tonnes this year. China announced in April that it would remove value-added tax rebates on most steel products exports, and reduce to 5 percent the rebate on some higher value-added products. Beijing has been scaling down rebates for exporters in order to trim a massive trade surplus and discourage investment in resource intensive industries like steel. But the International Iron and Steel Institute (IISI) expects global steel demand to grow 5.9 percent this year, citing strong demand in Africa, Asia and South America.

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Mittal Steel moving toward completing Arcelor takeover

Mittal Steel Company NV, which acquired Luxembourg's Arcelor SA for 38.3 billion dollars last year, recently said it would complete the transaction in a two-step merger this year. According to a merger agreement signed. Mittal Steel would merge into an ad hoc subsidiary - Arcelor Mittal -- subject to approval of shareholders. The share swap ratio for the exercise has been fixed at 1:1. The two companies will soon submit documents related to the merger to the relevant securities regulatory authorities, Arcelor Mittal said in a statement. In the second step, Arcelor Mittal will be merged into Arcelor and the new entity would be known as Arcelor Mittal. "The exchange ratio of Arcelor Mittal shares for Arcelor shares has not yet been determined. It will be announced once approved by the boards of directors of the two companies. "The companies are actively working to implement the two mergers as promptly as possible in the course of 2007," the statement said.

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CSN spent $50 mn, gained $200 mn

Brazil's CSN, which had countered Indian giant Tata Steel's takeover of Corus Group, spent over $50 million on its failed bid but gained more than four times that amount after pulling out. CSN on recently reported its biggest ever quarterly profit in five years at 763 million Brazilian reais (about $380 milllion) for the January-March 2007 quarter, which more than doubled from 340 million reais a year ago. This included a gain of over $200 million from its participation in the Corus bidding process, more than half of its first quarter profits. The gains included 182 million reais from its sale of 3.8 per cent stake in Corus and a break-up fee of 235 million reais from the UK-based firm for once accepting its bid before finally being acquired by Tatas. Even after excluding taxes and expenses incurred, the gains related to Corus totalled 255 million reais (over $125 million), which was over 33 per cent of the company's net income for the just ended quarter.

CSN acknowledged in its quarterly results statement that besides higher steel prices and increased sales volumes, its higher bottom-line figures were also driven by sale of Corus stake and the break-up fee received for its takeover bid. The company's sale of 3.8 per cent stake for 182 million reais resulted in after-tax gains of 133 million reais. Besides, as part of an agreement with Corus in December when the UK-based firm's board had accepted CSN's bid, the company booked a break-up fee corresponding to one per cent of final offer for Corus, resulting in net gain of 122 million reais after deducting the acquisition expenses. Consolidated expenses incurred during the acquisition process stood at 113 million reais, the company said.

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Chinese steel makers form joint venture to explore overseas resources

Four large Chinese steel mills have formed a joint investment company to explore overseas resources and escape what local experts termed foreign "manipulation" of iron ore prices. Baosteel, China's biggest steel maker, will own 20 percent of the joint venture, with Wuhan Iron and Steel Group Corp, based in the central province of Hubei, holding 50 percent. The remaining 30 percent will be divided equally between Anshan Iron and Steel Group Corp and Shougang Group.The new investment company is expected to increase China's bargaining power in setting global iron ore prices. In recent years Chinese steel enterprises have suffered a lot from manipulation by foreign iron ore suppliers. Upstream iron ore supplies have long been controlled by others.

The formation of the company highlights China's efforts to secure overseas resources of raw materials to feed an economy that has grown by double digits for four consecutive years. The new company's first overseas project will be investment in an iron ore mine in Cambodia, with a reserve estimated to be 200 million tonnes, according to a report in the China Securities Journal. It added that there are only 580 million tonnes of overseas iron ore resources directly under the control of Chinese enterprises, equivalent to just 17.8 percent of China's iron ore imports last year. Iron ore prices have been under pressure from soaring Chinese demand, with the main producers Australia, Brazil and India able to get large price increases as a result.

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Arcelor Mittal finalises on Sicartsa

The world's largest steel manufacturer, Arcelor Mittal, has received approval from the US and Mexican competition authorities to acquire Sicartsa from Grupo Villacero for an enterprise value of $ 1.43 billion (about Rs 6,006 crore). "The acquisition of the Mexican integrated steel producer was finalised following all required approvals of the transaction including sanctions by the US and Mexican Competition Authorities," Arcelor Mittal said.

Arcelor Mittal had initially announced the transaction on December 20, 2006. Sicartsa is a fully integrated producer of long steel, with an annual production capacity of about 2.7 million tonnes and estimated iron ore reserves of 160 million tonnes. The acquisition includes Sicartsa's manufacturing facility at Lazaro Cardenas, two mini mills and two rolling mills, it added. Arcelor Mittal has also entered into a 50-50 commercial joint venture with Grupo Villacero to utilise the latter's network for distribution and trading of its own products in Mexico and in the Southwest of United States.

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