|From the CEO's Desk|
After setting up two units in Bihar's East Champaran and Vaishali districts, the Steel Authority of India Ltd plans to construct a steel processing unit in naxalite-affected Gaya district. SAIL is prepared to invest in a big way in Bihar and it has sought the state government's cooperation in setting up a steel plant in Gaya district, Steel Minister Ramvilas Paswan told reporters in Patna. Referring to closed pyrites and phosphate industry in Rohtas district, Paswan said that the ministry is at advanced stage of striking a deal with a private company to make the closed unit operational. He said Jharkhand has abundant iron ore reserves and the ministry is in constant touch with the Madhu Koda government to set up steel plants in the state which would provide the sites for setting up mineral prospecting and allied industries.
Domestic steel and power company Monnet Ispat Energy Ltd has registered a 34 per cent increase in net profit at Rs 57.20 crore in the quarter ended March against Rs 42.79 crore in the corresponding period of 2006-07. The company achieved a 104 per cent jump in net sales to Rs 380.64 crore from Rs 186.45 crore in fiscal 2006-07. "In the coming years, the company will be focused more on the energy business rather than steel. In the future, 55 per cent of the revenues will come from the energy business and rest from steel," its executive vice-chairman and managing director Sandeep Jajodia Jajodia said in a statement. The company has increased its captive power generation capacity to 150 MW. The company's board of directors has declared interim dividend of 25 per cent (Rs 2.50 per share of Rs 10 each). It has completed the projects to set up 0.50 million tonne sponge iron plant and 90 MW power plant at Raigarh, becoming the second largest coal-based sponge iron producer in the country.
With less than two years to go before Delhi hosts the 2010 Commonwealth Games, at least four infrastructure projects worth Rs 300 crore have not found any contractors due to the steep rise in prices of steel, cement and other raw materials. The Central Public Works Department (CPWD), responsible for awarding these projects, which include construction of stadiums, a media centre and a hostel, among others, has failed to get contractors for these projects due to the government's inability to address their concerns over the unprecedented rise in prices of key raw materials. The projects include a Rs 100-crore wrestling stadium, a Rs 25-crore hostel, a media centre at Indira Gandhi Stadium, a space planning project costing Rs 100 crore at Jawaharlal Nehru Stadium and a Rs 70-crore project to refurbish Karni Singh Stadium in Tughlakabad. The last day for submitting the tender for these projects was April 24, which has been postponed to May 6. This is the sixth postponement due to lack of bidders. Besides, seven-eight projects being implemented at Indira Gandhi Stadium, Jawaharlal Nehru Stadium and Dr.Shyam Prasad Mukherjee Stadium are progressing at a slow pace due to delay in the procurement of key raw materials. Builders say steel and cement, which together constitute around 60 per cent of the total input cost of any stadium project, have become substantially more expensive. It will be difficult to go ahead with these projects without a suitable compensation mechanism, they say. Arun Sahay, chairman, Builders Association of India, Delhi unit, and CEO of Ahluwalia Contractors, which is constructing a swimming pool complex at the Talkatora stadium, said, "Builders have decided to boycott all future projects related to the Commonwealth Games on the ground that existing cost escalation norms, linked to the Wholesale Price Index, are not commensurate with the actual increase in prices of raw materials. So we have demanded that the CPWD and the Ministry of Urban Development rework the cost escalation norms and link them to the base prices of commodities published every month by the CPWD, which we think are more realistic". An official of the CPWD said the Directorate of CPWD studied the matter and recommended a change in the central contract conditions to address these issues raised by the builders.
Mining firm Sesa Goa announced a consolidated net profit of Rs 811.58 crore for the quarter ended March 31, 2008, an over three-fold growth over the corresponding period a year-ago. The group had a net profit of Rs 263.34 crore in the fourth quarter of the fiscal ended March 31, 2007, Sesa Goa said. The consolidated total income rose to Rs 1,732.34 crore in the latest quarter, from Rs 832.16 crore in the year-ago period. The firm posted a stand-alone net profit of Rs 798.3 crore for the fourth quarter of the financial year ended March 31, an over three-fold growth over the corresponding period a year-ago. The firm had a net profit of Rs 252.33 crore in the fourth quarter last financial year. The total income rose to Rs 1,669.97 crore in the latest quarter, from Rs 772.38 crore in the year-ago period. The board of the directors has approved the issue of a bonus share, of Re 1 each, for every equity share held in the company, the filing said. For the financial year ended March 31, the group announced a consolidated net profit of Rs 1,541.58 crore, an over two-fold growth over the corresponding period a year-ago. The group had a net profit of Rs 646.12 crore for the financial year ended March 31, 2007. The total income of the group rose to Rs 3,897.06 crore in the fiscal ended March 31, from Rs 2,263.03 crore in the year-ago period.
PTI reported that Indian pig iron maker TATA Metaliks is planning to
invest around INR 1,000 crore to build a 0.8 million tonne plant for
manufacturing long products in Karnataka and has begun scouting for around
500 acres of land in the state The report cited a company official as
saying that "On an invitation from the Karnataka Udyog Mitra, TATA
Metaliks is seeking to establish a 0.8 million tonne plant in the state at
an estimated investment of about INR 1,000 crore. The state government has
indicated to us that it will take care of our raw material needs and we
Mr RS Gujral director general of foreign
trade said that there is no clarity on whether steel supplied by domestic
units to special economic zones will be subject to export duty.
PTI reported that
Indian pig iron maker TATA Metaliks is planning to invest around INR 1,000
crore to build a 0.8 million tonne plant for manufacturing long products
in Karnataka and has begun scouting for around 500 acres of land in the
state The report cited a company official as saying that "On an invitation
from the Karnataka Udyog Mitra, TATA Metaliks is seeking to establish a
0.8 million tonne plant in the state at an estimated investment of about
INR 1,000 crore. The state government has indicated to us that it will
take care of our raw material needs and we feel encouraged.”
ACC Cement said that it is freezing the rates for next 2 to 3 months, mirroring steps taken by steelmakers to complement government's efforts to fight inflation.A senior official of ACC Cement said that "We have frozen the price for next 2 to 3 months. We have taken the decision in response to government concern about the cement price situation. We are the leading cement company of India and therefore we have assured that we will hold the cement prices at existing rate." He added that it would like to have duologue with government as it is concerned about higher input costs which affect the margins.The decision to reduce prices by steelmakers and now ACC Cement is expected to soothe the government's concerns on inflation that is at 42 month high of 7.57%.
Steel Authority of
India Limited has signed a MoU with Bangalore based Bharat Earth Movers
Limited for supply of crucial equipment required for the company's present
operations as well as for its ongoing modernization & expansion program.Mr
VK Gulhati director (technical) of SAIL and Mr M Poongavanam director
(mining & construction) of BEML signed the MoU in the presence of Mr VS
Natrajan CMD of BEML.
The Nation reported
that TATA would not go for any investments in steel without guarantee from
the Bangladesh government on uninterrupted gas supply. It made it clear as
the Bangladeshi government reopened formal negotiations with it on its
record USD 3 billion investment plan. Mr Allan Rosling executive director
of TATA Sons said that "It is as simple as that, if gas is not supplied on
a secured basis then we would not go for steel in Bangladesh. There are a
lot of other countries who have gas. Bangladesh's current gas situation is
not as we wished it to be."He, however, did not dismiss other investment
opportunities. But he said that "The new coal policy, once published,
would open up new avenues for further discussions. At this stage, the
meeting was useful and effective."It may be noted that senior TATA
officials led by Mr Alan Rosling met Mr Kamaluddin Ahmed executive
chairman of Board of Investment nearly two years after the conglomerate
postponed what would be the biggest single foreign investment in
Bangladesh.Meanwhile, Bangladesh government is yet to reply positive or
negatively, as TATA said that if the government was unable to provide gas
then it would not invest in steel in Bangladesh.
It is reported that
Bhavnagar Energy Company Limited has initiated steps to set up a 500 MW to
600 MW lignite based pithead power project, based on circulating fluidized
bed technology at Padva in Gujarat.Mr Mehul Danait finance director of
Bhavnagar Energy said that the project would entail an investment of INR
2,000 to INR 2,200 crore depending on the final picture emerging from the
bid process. He added that "It is in the process of seeking bids for
general civil and structural works.
Turkish steel major Erdemir Steel has announced to increase its hot rolled coil price by USD 150 per tonne to USD 1200 per tonne and its cold rolled coil price by USD 120 per tonne to USD 1235 per tonne respectively.
It is reported that German pipe manufacturer
Erndtebrücker Eisenwerk and Outokumpu have joined forces to supply 18
kilometer of LNG pipe for a dock loading facility Qatar Gas Berth 6 in
Qatar Gas project. The delivery of the Qatar Gas Berth 6 pipes is
scheduled for completion by mid summer of 2008.Berth 6 is a new docking
facility at Ras Laffan. To do its share of loading the Port's projected
1,120,000 cubic meters of LNG per year, Berth 6 needs 18 kilometers of
pipe running in several parallel lines between the storage tanks and
Kuwaiti news agency Kuna reported that
Kuwait National Petroleum Company is planning to upgrade its Mina Abdullah
and Mina Al Ahmadi refineries with up to KWD 5 billion.Mr Saad Al Saad
deputy chairman of KNPC said that the tender would be launched in August
2008 after winning approval from Kuwaiti authorities. He added that KNPC
wanted to upgrade the capacity of its Mina Abdullah and Al Ahmadi
refineries to 800,000 barrels per day from 600,000 barrels per day by
adding new units or improving existing ones. The project's cost would
range between KWD 4 billion and KWD 5 billion, up from an initial estimate
of KWD 1 billion in 2003.
Pakobserver.net reported that the prices
of construction material have hit an all time high in Pakistan leaving the
contractors in a fix whether to continue with their on going projects. As
per report, the worst hit province is Punjab where housing and other
development projects worth PKR 250 billion are lying incomplete.
Gippsland Limited said that the recent rise in tin prices has added about USD 15 million a year to expected revenues from its Abu Dabbab tantalum tin project in Egypt.The mine is expected to produce 1,530 tonnes of tin in concentrate a year over a 20 year mine life. Two German banks are currently completing due diligence work on financing arrangements for the USD 125 million project, which has a resource of 40 million tones of ore grading 243 g/t Ta2O5 and 0.09% Sn.Gippsland also has a 40% stake in the Zeehan tin project in Tasmania, the majority share in which was recently purchased by Stellar Resources.
It is reported that China has expressed
its keenness again to participate in the USD 7.5 billion Iran Pakistan
India gas pipeline project. Mr Yong Jiechi Chinese foreign minister said
that "We are seriously studying Pakistans proposal to participate in the
IPI gas pipeline project."Mr Yong Jiechi said Pakistan had the right to
peaceful use of nuclear energy and China would continue to explore
possibilities of cooperation in the peaceful use of nuclear energy. He
added that Beijing would provide Pakistan CNY 70 million as technical and
economic assistance and CNY 500,000 for equipment for the foreign office.
It is reported that MEED has
launched an in depth report on Middle East Steel 2008 which forecasts
dramatic growth for the industry in the region.The report investigates the
activities and plans of the region's leading raw steel producers and their
place in the global market, as well as looking at price and demand
trends.MEED's Middle East Steel 2008 report reveals that, despite only
accounting for 2% of the global steel trade, the Middle East steel
industry is undergoing rapid expansion to meet the needs of the fast
expanding construction sector. It said that Middle East produced 21.1
million tonnes of raw steel in 2006 and consumed 41.6 million tonnes of
finished goods and is forecast to rise to 35 million tonnes of production
and 60 million tonnes of finished goods by 2010.
It is reported that Oman is undertaking a
massive expansion of the country's port facilities as part of a larger
program aimed at boosting its transport infrastructure to support trade
and tourism. On April 27th 2008, the Omani government invited bids from
engineering consultants for a feasibility study on the planned development
of the Port of Shinas in the Batinah region.Though preliminary work has
already been carried out at Shinas, with a dredging project in 2002
deepening the harbor's basin to 4 meters, existing infrastructure
precluded the loading and unloading of larger ships, thus limiting the
port's usefulness. The contract for the provision of consultancy services,
which is being overseen by the ministry of transport & communication, is
ultimately linked to the design and construction of a new port, with the
aim of developing Shinas as a trade gateway for the north of the country,
as well as serving to encourage investment in the region.
Khaleej Times reported that Saudi Arabia
is planning to build a third major dockyard in the Kingdom at a cost of
USD 426 million at the Jeddah Islamic Port.Dr Jabara Al Seraisry Saudi
minister of transport said that the dockyard will be built on a build,
operate and transfer basis under a Saudi Malaysian pact. The construction
work is expected to begin soon and the dockyard will have capacity to
store 2 million containers. He added that it would be larger than the
others and would have better loading and unloading facilities.
RIO Tinto's effort to
regain momentum in its battle to fend off BHP Billiton's $160 billion
takeover bid has received a boost courtesy of British brokerage Liberum
Capital, refloating the prospect of BHP adding a cash sweetener to its
offer. The theory from Liberum is that BHP could “bump” up its offer ahead
of submitting its competition application at the end of this month to the
European Union. The idea is that BHP is hoping a higher bid would win over
Rio's board, and allow it to present a united front to the
regulators.However, despite gaining on its predator, Rio shares remained
at a slight discount to BHP's 3.4-for-1 share offer, with its close at
$138.30 equivalent to 3.3 BHP shares.
Privatization of the
state-owned steel maker PT Krakatau Steel (KS) scheduled later this year
will be through initial public offering (IPO) rather than strategic sales,
an official said. Sales of 30% worth around Rp1 trillion (US$111 million)
of the country's largest steel maker were originally
The world’s largest
steelmaker Arcelor Mittal plans to team up with state-owned PT Aneka
Tambang (Antam) and PT Krakatau Steel to develop mines and a steel plant
at a total investment of at least US$3 billion. The plan was announced by
the Investment Coordinating Board (BKPM) following a visit by CEO Lakshmi
Mittal to the State Palace to discuss the investment plan with President
Susilo Bambang Yudhoyono. Mittal, called by Forbes magazine in March the
world’s fourth-richest person with an estimated wealth of $45 billion up
one place from a year ago owns 44 percent shares in Arcelor Mittal. After
the meeting, Lutfi said, BKPM would facilitate cooperation between the
company and Antam for securingthe supply of minerals, particularly iron
ore, nickel and manganese, and with Krakatau Steel for a feasibility study
for establishing a steel plant. Among locations considered appropriate for
the steel plant, he said, was Kalimantan considering the proximity to
China to become the world’s largest steel exporter in February. Japan
reclaimed the top spot for the first time since losing it to China in
April 2006. Data from the London-based Iron & Steel Statistics Bureau show
that Japan’s exports in February were 3.44m tonnes, against China’s 2.85m
t. China’s exports that
POSCO is considering buying a stake in a Chinese steel maker to expand its presence in the world largest but most fragmented steel market. The report cited POSCO as saying that “We are closely monitoring progress in China's steel industry shakeout and possible changes in the Chinese government's policy on foreign investment with a view to buy a stake in a Chinese steel company.” POSCO, the world's fourth largest steel maker by output, already operates BX Steel POSCO Cold Rolled Sheet in China a joint venture set up with Benxi Iron and Steel in 2003 and said in January it would spend USD 2.5 million to form a car parts plant in China.
Nippon Steel Corp. and ArcelorMittal said Wednesday that they have reached a final agreement to strengthen their ties by constructing an automotive steelworks in the U.S. state of Indiana. This new facility will be built on the premises of their 50-50 joint venture, I/N Kote LP, doubling output capacity to about 1 million tons a year in 2010. The investment is estimated to total US$240 million, or about 24 billion yen. Nippon Steel will pay half of this. Although I/N Kote's capital base will be increased, Nippon Steel's and ArcelorMittal's relative stakes will remain the same.
Korea's crude steel capacity will climb by 4.5% or 2.59m tonnes/year in 2008 as several producers invest in additional capacity, Steel Business Briefing learns. According to a survey by The Korea Iron & Steel Association (Kosa), installed capacity will reach a record 59.82m t this year, up from 57.23m t in 2007. Kosa had earlier predicted that the country's crude steel output would grow by over 6% in 2008 to reach 54.6m t, as previously reported. The remodelling of a converter will lift Posco's capacity by 610,000 t/y to 31.5m t this year, and EAF producers Hyundai Steel, Korea Shape Steel and Daehan Steel also intend to either restart idled EAF capacity or commission new units Kosa says. For example, Daehan Steel's new 80t EAF at its Noksan plant is scheduled to commission by the middle of May, lifting the mini-mill's capacity by 700,000t/y; Korea Shape's 100t EAF will start in November at its new Chilsuh works, adding 800,000 t/y; and SeAH Besteel will rationalise its Gunsan works to help lift capacity by 200,000t/y. At the same time, Kosa says rebar maker Korea Iron & Steel (Kisco) will add a 70t EAF but scrap a 20t unit to give a net increase of 280,000 t/y.
Malaysia's Lion Group, which has recently announced its RM4.2 billion investments in its steel operations in the country, is now planning to build a USD 7 billion (RM 22.26 billion) steel mill in Vietnam. The Project, which is pending the Vietnamese Government's approval which could take a year, would be developed in four phases over a 12-year period, according to Lion Group Chief Executive Officer and Chairman, Tan Sri William Cheng, during an interview in Hong Kong. The plant, with an initial planned production of 3.5 million tonnes of steel products a year, could be expanded to 14 million tonnes a year, Tan Sri said. Tan Sri Cheng expects demand for steel products to rise to nine million tonnes this year from one million tonnes a decade ago due to Vietnam's booming construction sector and the increased production of appliances and machinery. Currently, Vietnam produces only two million tonnes of steel a year.
It is reported that China is looking to expand wind power
generating capacity to 100,000 megawatts by 2020 or fivefold the previous
target.Mr Shi Pengfei vice president of Chinese Wind Energy Association
said referring to the National Development and Reform Commission China's
top industry planning body that "The NDRC has just recently completed an
internal meeting to discuss the possibility of increasing wind power
capacity to 100,000MW. It's not 20,000MW or 30,000MW as previously
It is reported that Swedish
based Sandvik group one of the world's largest engineering equipment
producers plans to expand its manufacturing production bases on the
Chinese mainland this year to tap the nation's mining and construction
boom.Sandvik group said the factories will start construction in October.
In addition it also plans to expand its production lines for mining
equipment crushers in Jiading of Shanghai this year. The three factories,
operated by the company's three business sectors and Sandvik Mining &
Construction, Walter, and Sandvik Hard Materials will respectively produce
Cemented carbide tools for mining equipment, Design and produce cutting
tools and special tools, Produce cemented carbide wear parts.
WISCO recently have received the final judgment from Indonesian
anti dumping Committee, under which WISCO gets the zero tax rate for hot
rolled coil exporting to Indonesian.
It is reported that Wuhan Steel's output will gain at least 20% in 2008 on account of the Beijing Olympics. The growth is expected to top domestic steel industry.Statistics show that total output of the three major steelmakers, Baosteel, Wuhan Steel and Anshan Steel, is likely to increase 11.79% in 2008. Wuhan Steel takes the lead by a possible growth of 21.87% with Anshan Steel following by 14.1%. Analysts believe that steel industry will growth minimum 30% in 2008 against the backdrop of increased outputs and climbed prices. Wuhan Steel's growth is expected to exceed the average figure.
Hot rolled steel coil
prices will continue to move up on in China and the increase is expected
to maintain for at least 4 weeks.On Shanghai market, commercial 4.75 to
11.5mm1500mm HRC is being offered at CNY 5650 to CNY 5680 per tonne,
1800mm wide material at CNY 5900 per tonne. Low alloyed 7.5mm HRC goes at
CNY 5750 per tonne, while 11.5mm thick HRC has jumped to CNY 6000 per
It is reported that Baosteel has completed steel supply for
fourth and fifth liquefied natural gas vessels in China. This is the first
time for Baosteel to provide whole vessel of cargoes to LNG with a total
volume of 530,000 tonnes, reflecting that Baosteel has broken the
monopolization of overseas SBQplate in the field. Following the bulk
supply fir the Antarctic scientific expedition ship Xue Long, Baosteel
succeed in offering steel products for the manufacture of whole ships of
large scale and great difficulties such as 300,000 tonnes FPSO, which was
the first one of such kind boat in China and the fourth one in the world
and the instrumentation ocean-going vessel of Yuan Wang 5.
Interfax reported that the rights to the Malo-Elginskoye section
of the Elga coal deposit in Yakutia have been auctioned for RUB 6.44
billion ways above the starting price of RUB 40 million to the Sakha-Ugol
Holding Company.Mr Gennady Naumov head of local subsurface resources
agency Yakutnedra told Interfax that the auction lasted four hours and
ended after the price was raised 1,600 times. He said there were three
other bidders: Yakutugol Holding Company, OJSC Tula Inkom and CJSC Kolmar
It is reported that Huaneng
Changchun Biomass Power Plant, Huaneng's first biomass power plant,
settled at Changchun in Jilin province on April 26th 2008.The first power
plant is expected to be operational by August 2009 the plant has an
installed capacity of 50,000 KW and has received a total investment of CNY
300 million. It is designed to generate as much as 180 million KWH of
electricity annually after its completion.
Sky-high production costs, strong demand and tight supplies have pushed global steel prices to new highs so far this year, but a correction may be on the way towards the end of this year, analysts say. Global steel prices have risen by 40 percent so far in 2008 as an export tax in China has halted supplies out of the country, squeezing the world market. Production costs have more than doubled, with the price of key steel making ingredients such as coking coal and iron ore ore having risen by 300 percent and at least 65 percent respectively. Major steel producers have managed to pass on their rising costs to their customers. ArcelorMittal for example has raised its prices several times in the last four months. Analysts say there's still room for prices to climb higher, but then a bumpy rise might be at the door. "At the moment most indicators we track are suggesting tight fundamentals and possibly higher prices," said Neil Buxton, analyst at industry consultants GFMS. Buxton explained the reasons for higher prices as "cost pressures, lower exports for some products from China as well as surprisingly strong demand conditions". Citi has recently raised its 2008 average hot rolled coil (HRC) and rebar benchmark price estimates both by more than 14 percent to reflect the cost increases of iron ore, coking coal and scrap prices. "Underlying steel demand is expected to remain solid for at least H1 2008," the Bank said. "However, we believe current steel demand is partly driven by inventory re-stocking, as distributors and other consumers anticipate higher prices related to raw material cost increases." Despite the short-term upbeat outlook, analysts say the honeymoon could soon be over.
A tax on steel billet exports has driven Chinese producers away from the market and has so far discouraged them from signing up for London's steel futures, the London Metal Exchange (LME) has said. But LME commercial director Liz Milan says Chinese interest will revive if the tax is reduced or abolished. "We don't have any Chinese brands listed because there are no Chinese (billet) exports and the producers are not in the market effectively," she said. "China has a record of putting on taxes and taking them off. So there's a likelihood that at some point in the future that tax is going to be removed ... I'm sure as the contract develops we'll get more interest from the Chinese producers." China, the world's biggest producer and consumer of steel, has raised its export tax for steel billets to 25 percent since the start of the year and exports have virtually ground to a halt. "Consumers looking for billet have had to go to further afield to try to source their requirements. The trade flows have somewhat shifted since we originally looked at the regions," she said. "But nevertheless they are still valid because the consumption is still in the areas that we've identified." Traders and merchants say due to the shift in trade flows and lack of exports there has been very little Chinese participation in the LME's billet contracts, which started open outcry trading on the floor of the Exchange on Monday. Milan says interest is coming from elsewhere in Asia. "Just because the Chinese have imposed a tax does not mean the trade in the Far East has stopped," she said. Interest from the rest of Far East, including Taiwan, Malaysia and Korea has been strong and half a dozen producers have already registered as approved brands, she said. "The fact that Chinese are not exporting does not mean the consumption and the end use has gone away in the region. In fact it is still extremely strong," she said. Steel demand from Asia and Oceania is expected to rise 8.6 percent this year, accounting for more than half world demand, according to industry body International Iron and Steel Institute (IISI). Chinese consumption alone, is forecast to grow by 11.5 percent in 2008, accounting for 35 percent of the global demand.
London was the venue of choice for Russia's top four steel makers when attracting billions of dollars in investment through initial public share offerings. But as the London Metal Exchange (LME) launched floor trading in steel futures on Monday, the owners of Soviet-era mills were more focused on booming demand in their domestic market, driven by economic growth in excess of 7 percent a year. Russian mills directly supply every second tonne of steel in the world's fourth-largest producing country. Like many of their counterparts worldwide, they do not want to surrender pricing power by committing to a futures market in steel. "It's difficult to say that steel is a commodity. That's why it doesn't make sense to treat it as one," a trader who exports steel from a Russian mill said on condition of anonymity. "It's not reliable. It can crash. We can do the trading ourselves." The LME's regional billet contracts aim to provide a hedging tool and possibly a benchmark price for the $800 billion steel industry. Billets are semi-finished products accounting for about half of world steel production. Billets are re-rolled into bars and other products used in construction -- a sector that is booming in Russia as the government and private companies prepare to spend $1 trillion overhauling ageing infrastructure. Vladimir Lisin, Russia's fourth-richest man and owner of Novolipetsk Steel, forecasts steel use will rise by between 60 percent and 65 percent by 2015. "Demand in the domestic market rose 14 percent last year. This trend will continue," Serafim Afonin, president of the Russian Union of Metal Exporters, said. "There's no price volatility in the domestic market. Prices are rising," said Afonin, whose union represents almost all Russia's steel makers. The LME began open outcry trading in steel billet futures recently. Trading on its telephone market and electronic platform had begun on Feb. 25, since when volumes have been light.
Brazilian firm to supply iron ore and pellets to its plants. ArcelorMittal said the contracts were the largest ever signed between a steel company and an iron ore supplier. Vale will supply about 480 million tons of iron ore and pellets to ArcelorMittal plants over the next 10 years. "This is an important agreement for ArcelorMittal as it ensures that we have the required levels of iron ore to operate our steel plants fully in line with current global demand," Davinder Chugh of the group's management board said in a statement. ArcelorMittal has 45 percent iron ore self-sufficiency and plans to increase that to 75 percent.
Australia's Midwest Corp Ltd said it was recommending a revised offer of A$6.38 a share from Chinese steel trader Sinosteel, conditional on a minimum 50.1 percent acceptance level. Midwest, which is proposing to dig iron ore mines in Australia, said the offer provided its shareholders with certainty amid market volatility.
China strongly rejects including any freight premium in iron ore price talks with Australian miners, Luo Bingsheng, vice president of the China Iron and Steel Association (CISA), said. Chinese steel mills' negotiations with the miners on annual term-contracted iron ore supplies have stalled in a disagreement over pricing, including the possible inclusion of a freight premium sought by the miners.
Steel futures began open outcry trading on the floor of the London Metal Exchange (LME) on April 28, taking the conservative $800 billion industry into what many traders hope will be a new era. Trading in steel billets started almost as soon as LME Commercial Director Liz Milan rang the bell to start the session on Europe's last open outcry trading floor. The Mediterranean steel contract saw trades at $995 and $1,005 a tonne and was last at $990/1,000, while the Far East contract was last traded at $995. "It is a big day," said Martin Abbott, the Chief Executive of the LME. The first trades took place between AMT and Natexis. Other ring dealers including Barclays, Metdist and Sucden also took part in the trading. The regional contracts, covering the Far East and the Mediterranean regions, have been trading electronically and by telephone since Feb. 25 and almost 500 lots -- equivalent to 32,500 tonnes -- of trade has gone through. But several big producers, who have been enjoying pricing power amid sky-high global steel prices have repeatedly dismissed the idea of a futures market for steel. Still, many dealers say the industry needs steel futures and that the contract should thrive over time. Several market participants draw similarities with aluminium futures, which were dismissed when they were first launched 30 years ago.
China's Baoshan Iron and Steel Co reported a 16 percent rise in first-quarter earnings, beating analysts' forecasts, after rising steel prices offset a surge in raw material costs. Baosteel, which competes with Japan's Nippon Steel Corp and South Korea's POSCO to supply China's market, posted a net profit of 4.26 billion yuan ($609 million), against 3.68 billion yuan a year earlier. Five analysts from brokerages and fund management firms polled by Reuters had given a median forecast of 3.68 billion yuan. Profits rebounded sharply from the October-December quarter, when earnings shrank to about 2.17 billion yuan because of weakness in the stainless steel market following a plunge in nickel prices. Baosteel raised its major steel product prices as much as 8 percent for the first quarter of 2008, and then lifted second-quarter prices a further 17 to 20 percent.
Franz Haniel & Cie. GmbH, the closely held majority owner of Europe's biggest drug wholesaler Celesio AG, said 2007 profit rose 6.1 percent on demand from the stainless steel industry and higher sales at other units. Net income rose to 922 million euros ($1.45 billion) from 869 million euros, the company, based in Duisburg, Germany, said in a statement. Sales climbed 5 percent to 29.2 billion euros. Haniel plans to focus on retail and services in future, the company said. Headed by former Daimler AG board member Eckhard Cordes, Haniel last year bought joint control of Metro AG, Germany's largest retailer, with the Schmidt-Ruthenbeck family and installed Cordes as chief executive officer. Haniel is owned by about 550 members of the Haniel family. Sales at the ELG division, which recycles and sells metals for the stainless steel industry, jumped 17 percent to 3.76 billion euros. The pretax profit of the unit added 47 percent to 266 million euros. Sales at Celesio, the largest in the Haniel group, rose 4 percent to 22.4 billion euros, helped by the acquisition of DocMorris, Europe's largest mail-order pharmacy. “Theoretically it would be possible to start DocMorris retail activities through Metro's retail chains,'' Cordes said in an interview. “But it is up to DocMorris to decide what is best for them.” The CEO declined to give a precise forecast on Haniel's revenue and profit growth this year. The company forecast a ``further positive business development in the coming years,'' according to the statement.
Tangshan Iron & Steel Co., the publicly traded unit of China's second-biggest steelmaker, said first-quarter profit rose 57 percent on higher prices. Net income climbed to 729.8 million yuan ($104 million), or 0.32 yuan a share, for the three months ended March 31, from 464.7 million yuan, or 0.21 yuan, a year earlier, the Hebei province-based company said in a statement to the Shenzhen stock exchange. Sales rose to 13.8 billion yuan from 9.6 billion yuan. Tangshan's new plant, making as much as 1.5 million tons of plates used in ships and pipes, is helping it sell higher-priced products and cover rising material costs. Demand from shipyards in China and South Korea will result in a shortage of steel plates until 2010, Mirae Asset Securities Co. said in February. The announcement came after the market closed. Tangshan Steel fell 1.1 percent to close at 17.68 yuan, compared with a 1.9 percent decline in the benchmark CSI 300 Index. The company plans to produce 550,000 metric tons of ship plates in 2008, up from 128,500 tons last year, it said.
UBS AG raised its price forecasts for European and U.S. steel for 2008 and 2009 as producers pass on higher costs for raw materials to customers. Benchmark prices for European Union steel exports in 2008 will be 43 percent higher than previously forecast and 32 percent higher for 2009, analysts including Andrew Snowdowne, based in London, wrote in a research note. EU steel exports will reach $952 a metric ton by the fourth quarter of 2008 before declining to $790 a year later. U.S. domestic steel prices will be 31 percent higher than previously forecast for 2008 and 24 percent higher for 2009, UBS said. Prices will reach $992 a ton in the fourth quarter of 2008 and $840 a ton in the final quarter of 2009. UBS also raised its share price estimate for ArcelorMittal, the world's biggest steelmaker, to 67 euros from 60 euros, and for U.S. Steel Corp. to $172 from $160.
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