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Finally, Mittal-Arcelor negotiations have concluded and both the companies decided to merge and form a new entity, 'Arcelor-Mittal Steel'. There are many views on whether the deal is in favour of Arcelor or Mittal but the fact remains that now, Mr. L. N. Mittal controls around 130 mtpa capacity of steel production which is well over 10 % of the total world steel production. We had said through this column earlier that it will be the shareholders who will decide the fate of this proposed merger and so it happened. Arcelor shareholders selected Mittal as their partner and rejected the offer of Seversthal, a Russian steel company. An Indian becoming the biggest steelmaker of the world is a great moment for Indians and is sure to act as a big moral boost for Indian steel business community.

As everybody knows, consolidation in general helps any industry. It imparts the industry with that critical bargaining power with its suppliers as well as the customer industry. In case of Arcelor-Mittal, it will surely have an edge while negotiating with mining and other input supplying industries. Also it can have a larger impact in freezing the finished steel prices. This should indirectly benifit other steel companies in terms of their input costs and also selling prices. In totality, though marginally, it should improve the bottomline of the industry.

Mr.Mittal has announced that his focus in coming years would be China and India. As regards India, he has already signed a MoU with Jharkhand state to build a 10 mtpy steel plant. In his recent visit to India, he has expressed unhappiness about the progress of the project. He also discussed about the possibility of moving the project to neighbouring Orissa state with Mr.Naveen Patniak, the CM of the state. Are these pressure tactics ? Is the mining lease the most important consideration ? Many domestic steel companies have also signed MoUs with states like Jharkhand, Orissa, Chattisgarh and have requested for mining leases. What would happen to these requests ?

I strongly think that the time has come for Govt of India, especially Ministry of Mines and Ministry of Steel, should jointly lay down some clearcut and long term policy. The Hoda Committee report is already available with them. I hope the new policy would offer enough opportunities to Indian as well as overseas entrepreneurs and at the same time, protect the vital national interests.

D.A.Chandekar
Editor & CEO

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Pact with Arcelor intact : Tata Steel

Tata Steel will have a tenuous attachment with Mittal Steel through its technical agreement with Arcelor. T Mukherjee, deputy managing director Tata Steel, said, the agreement with Arcelor stands. The agreement pertains to coated sheets for automobiles. "The technological agreement with Arcelor, to the best of our understanding, will be transferred to the new merged entity," he said. The pact with Arcelor will last another five years. The contours of the arrangement extends to marketing of extragal, a special quality automotive steel, with Arcelor proprietary technology in markets where Arcelor has a stronghold. Tata Steel exports around 30,000 tonne extragal to Europe. Mukherjee further said all commitments made by Arcelor would be honoured. Tata Steel can produce around 3,00,000 tonne of extragal. However, the extragal market in India is yet to pick up. The auto sector is important to Tata Steel since the company is reorienting its product mix to move up the value chain. The company's cold rolled (auto) market share increased from 35 per cent in 2005 to 37 per cent in 2006 while supplies to the auto sector increased from 6,15,000 tonne to 6,64,000 tonne. The agreement with Arcelor was signed in 2002. The automotive steel technology co-operation agreement was signed between Nippon Steel Corporation of Japan, Arcelor and Tata Steel. As per the agreement, the companies work jointly on technical developments, to meet the needs of the Indian automotive steel market and was aimed at providing the Indian automotive industry with effective total steel solutions. The subjects covered in the agreement include joint activities required for a wider acceptance of high tensile and galvanised steel sheets amongst the automotive customers in India keeping the requirements of safety, environment, and car weight. The tripartite agreement happened at a time when strategic alliances were taking place in the steel industry at global level. The companies felt that there were increasing consolidation and alliances happening in the global automotive industry and in order to serve the needs of the industry, it was necessary that steel companies also come together in strategic alliances. It was for the first time an Indian company had entered into a strategic alliance with two of the leading producers of automotive steel in the world.

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Munda to call on Mittal for steel project

Jharkhand Chief Minister Arjun Munda will be stopping over at London to meet steel tycoon L N Mittal while returning from his nine-day trip to the United States. According to a top official in the chief minister's office (CMO), Mittal's office in London had already approached to get an appointment. The proposed meeting assumes significance in the backdrop of Mittal's statement that he was disappointed at the slow progress of work and procedural delays relating to his proposed steel project in Jharkhand. Munda, according to the CMO source, would reach London on July 23 or 24 to meet Mittal. Munda would discuss with Mittal how the bottlenecks that stood in the way of the proposed steel project could be sorted out. The CMO source said the chief minister believed Mittal Steel would not withdraw from the Jharkhand project as the state government had assured the steel major full cooperation and availability of land and iron ore. In his forthcoming meeting with Mittal, Munda would reassure him about the Jharkhand government's commitment. Mittal's swing towards Orissa, ironically a neighbouring state also ruled by the NDA coalition, had upset Munda and he had issued stern directions to bureaucrats to take immediate follow-up steps on the long-pending mine lease applications. The CMO source could not give the exact number of mine applications pending before the state government. Other types of commitments had also been made by the state government in its agreements with various investors. Acting upon the chief minister's instruction, chief secretary M K Mandal recently reviewed the progress of land acquisition. It was decided at the meeting that the Jharkhand Industrial Development Corporation (JIDCO) would act as a single window agency to remove the hurdles related to selectuion and allotment of land and mines. The state's industry department pointed out at the meeting that the absence of a state rehabilitation policy and problems in procurement of forest land had led to delay in land acquisition process. Mittal had expressed concern about lack of progress on his proposal to put up a proposed 12 million tonne greenfield steel project in Jharkhand. The mines and geology secretary of Jharkhand state, S K Satpathi, told the chief secretary that a letter of comfort had been sent to Mittal Steel 15 days before L N Mittal visited Bhubaneswar, assuring him that required iron ore mines for the Mittal Group for the proposed steel plant would be allotted soon. Sources in the state mines and geology department said that litigation had ruled out the immediate allotment of blocks of the Chiria iron ore deposits to Mittal Group.

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Tatas Orissa project takes off

In addition to its Bangladesh project, Tata Steel's Kalinganagar project also appears to be taking off. The company has applied for iron ore prospecting and mining licences in Orissa and is expected to place equipment orders by August. Speaking on the sidelines of Tinplate Company of India's annual general meeting, Tata Steel MD B Muthuraman said the mines had been identified and the company had placed orders sinter plant and coke oven. Muthuraman added the mines would not be allocated as long as the company does not place order for 20 per cent of the plant's equipment. This was in line with the terms and conditions of the memorandum of understanding (MoU). Tata Steel signed an MoU with the Orissa government for setting up a 6 million tonne per annum (tpa) plant in two phases in November 2004. Muthuraman said, the land acquisition process was complete. Though there were a lot hiccups in the Kalinganagar project, which went to the extent of a tribal clash but it appears that this would be the first project to take off, among the company's other greenfield expansion programmes in the country. On the Jharkhand project, Muthuraman said, it would take time. The company had not yet applied for iron ore mining licence in the state since equipment orders had not been placed. Here too, the MoU clause of allotting mines after the 20 per cent of equipment orders were placed, prevailed. Muthuraman said, that the Jharkhand government was in the process of finalising the rehabilitation policy first and would then take up other issues. When asked when the company planned to place orders, Muthuraman said it would at least take another year. Tata Steel is planning a 12-million tonne greenfield plant in Jharkhand in two phases. The first phase of 6 million tpa was likely to be set up within 36 months to 54 months from the date of obtaining all statutory clearances. The project also includes development of iron ore mines and other raw materials sources including coal and logistic linkages for the plant. The Orissa and Jharkhand projects are part of the 23 million tonne greenfield facilities planned by the company in the country.

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Vizag Steel to set up SEZ

The Visakhapatnam Steel Plant (VSP) is proposing to set up a special economic zone for steel at Visakhapatnam, according to Y Siva Sagar Rao, chairman and managing director. Delivering the keynote address at a seminar on 'Business excellence-VSP perspective', organised by the CII, Vizag zone, here on recenlty, he said the proposed special economic zone would come up in 250 acres. Rao said VSP's production capacity would increase to 6.4 million tonnes from the existing 3.2 million tonnes once the ongoing Rs 8,600-crore expansion project was completed. “By 2020, the company plans to enhance the production capacity to 16 million tonnes at an investment of about Rs 25,000 crore.” According to Rao, customer satisfaction, the best management skills and quality techniques adopted in running the plant and administration as well as production and high-level of motivation among the employees were the key factors for VSP becoming a mini ratna company after it was referred to the Board for Industrial and Financial Reconstruction (BIFR). Siva Sagar Rao stressed the need for further improvement in infrastructure for the development of industries in and around Visakhapatnam. Addressing the seminar, district collector Anil Kumar Singhal said that the night landing facility at the Vizag airport would be ready by February 2007. Elico Ltd managing director Ramesh Datla, who is a member of CII national committee and former chairman of CII, Andhra Pradesh, said that the state had the growth potential in the manufacturing sector in the days to come. He also highlighted the CII initiatives for SME cluster development through sharing of best practices, leveraging CII institutes of excellence to enhance competitiveness. CII Vizag zonal council chairman H S Chhatwal gave an overview of the CII activities in Vizag.

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Steel firms` growth in jeopardy  

The Hoda Committee recommendations, if implemented, may thwart future expansion of steel companies domestic as well as foreign in India. The committee has recommended that steel plants already in existence on July 1, 2006, which do not have captive mines, should be given preferential allocation of iron ore mines, without the need for going through auction procedures. This, the committee hopes, will create a level-playing field between them and the steel plants that have captive mines. The clause implies that all fresh steel capacities will have to go through the auction procedures, which could lead to a serious escalation in their costs. For steel companies that are allocated mines, the only cost involved is a cess of Rs 27 per tonne. However, the cost could reach any level if they go through the bidding process. But, if a state government wants, it can waive the bidding process for a project. The committee has said states should be permitted to waive auction procedures in case a company proposed to invest in industry based on the mineral within the state. The timing of the recommendations coincides with big-ticket investments announced by foreign steel gaints like Posco and Mittal Steel. While Korean chaebol Posco had made public its intention to set up a 10-million-tonne-per-year (mtpa) capacity plant in Orissa sometime back, Mittal Steel announced a 12 mtpa unit last week. Most domestic companies too have lined up ambitious expansion plans. Thus, the total steel capacity is expected to go up to 110 mtpa in 2020 from the existing 40 mtpa.

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SAIL wakes up over Chiria mines

With Mittal Steel Chairman L N Mittal slated to arrive in New Delhi tomorrow for his meeting with Union ministers, the state-owned Steel Authority of India Ltd (SAIL) today announced a Rs 1,800-crore plan to mine up to 7 million tonnes of iron ore from the Chiria mines in Jharkhand. The Chiria mines, 180 km from Jamshedpur, the nearest urban centre, have been in the spotlight for their proven ore deposits of 1.8 billion tonnes, with its iron content a robust 63 per cent. That makes them Asia's largest iron ore belt, and the world's second largest deposits of high-grade iron ore after those in the Urals. Mittal, who last year signed a memorandum of understanding with the Jharkhand government to set up a 12-million-tonne steel plant in the state, is seeking 600 million tonnes of ore, mostly from Chiria, over 30 years. At present under litigation, the Chiria mines are among the few known deposits of iron ore in Jharkhand, making them critical for Mittal's project. Tata Steel and Essar Steel are also eyeing these mines. Fortunately for the suitors, the mines are largely unexploited, and contributed a mere 0.5 million tonnes to India's total output of 150 million tonnes last year. Executives in SAIL's raw material division said the public sector undertaking had already completed an environment impact assessment study for the mines, and applied to the Jharkhand State Pollution Control Board for a no-objection certificate. The company had asked Mecon to draw up a detailed project report, which was expected to be ready this month. However, the Jharkhand government is said to be upset over the fact that the mines were not developed by SAIL all these years. Sources said SAIL was looking to tap Chiria to feed its Bokaro and Burnpur plants, which were fed by the depleting reserves of Kiriburu and Keghatuburu at present. SAIL, which planned to increase its capacity to 22.5 million tonnes a year by 2011-12, compared with the present 13, would need about 37 million tonnes of iron ore at that time. Its mines in Kirirburu, Barsua, Meghtaburu, and Bolani would together supply only 30 million tonnes.

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The railways have registered a significant increase in steel and cement loading in the first quarter of the current fiscal. While steel loading has gone up by around 25 per cent, handling of cement by the railways has increased by about 30 per cent in the last three months in comparison with the same period last year. In April this year, the railways loaded 1.46 million tonnes of steel against 1.15 million tonnes last year an increase of 26.96 per cent. Similarly, the railways had loaded 5.01 million tonnes of cement last April. The figure has increased to 6.20 million tonnes. Railway officials are satisfied with this performance as production of finished steel and cement grew by around 8.81 per cent and 11.68 per cent only for the same period.

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Prakash Industries Ltd. is moving towards backward and forward integration of its plants in Chhattisgarh. The company is currently operating a steel plant at Champa in Chhattisgarh with manufacturing facilities for production of sponge iron, steel billets/blooms/ingots, power generation and ferro alloys. In a planned move towards the self reliance and ensuring the uninterrupted supply of consistent quality of raw materials for its manufacturing facilities, company has taken important steps towards backward integration. The company has been allotted two captive coal blocks (Chotia and Madanpur) by the central Govt in Chhattisgarh which are expected to start operating by next year. The company has also been allotted iron ore mines by the state Govt. (Nergaon and Metabodali mines in Chhattisgarh and Sirkagutu mines in Orissa). Consistent efforts are being put to start the mines with state of the art technology equipments with highest automation levels including coal washery and crushing plant.
To get consistent availability of crushed Iron Ore for the DRI Kilns, company has a crushing and screening plant at Koira, Dist- Sundargarh in Orissa which will be further expended for its operating capacities after start of mining operations.With respect to forward integration of the operations, company has already setup Rolling Mill facilities at Raipur in the state of Chhattisgarh to manufacture heavy steel structural. Understanding the importance of value addition in making the operations viable and profitable , company has taken further steps towards setting up a Wire Rod Mill project to manufacture wire rods and HB wire at Raipur. A 2nd heavy structural mill to produce heavier sections is also part of the company's expansion program.

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China shows keen interest for Gara Djebilet iron ore mines

The Chinese companies have shown an important interest concerning the exploitation, by modalities which will be defined later, of the iron ore of Gara Djebilet situated between Tindouf and Bechar, which is considered as the most important iron ore of Algeria. It is expected that Chinese delegations carry visits in Algeria in order to guarantee the pursuit of negotiations relating to the deepening of cooperation and partnership in the field of energy and mines and especially files submitted during negotiations of Chakib Khalil in China on the participation of Chinese companies in petrochemical projects and the exploitation of uranium mines and the mine of Gara Djebilet. The interest of the Chinese companies in first the mine of Gara Djebilet and second in the mine of Mechri Abdelaziz close to it, considering the reserves provided and the possibility to export a part towards Europe or other countries, in addition to the possibility to exploit it to support the Chinese industry later. The Algerian delegation headed by the Energy and Mines minister, Chakib Khalil, in a visit which has lasted one week, has noticed the big interest to the project especially that Algerian authorities have announced a tender concerning the exploitation of two mines situated in the East South of Tindouf. The region possesses a reserve which exceeds 3 billions of tonnes of ore of which 1.7 billions of tonnes of Gara Djebilet with 700 millions of tonnes consisting of 52.4pct of ore. The Chinese interest intervenes after the announcement of Brazilian companies, in the end of 2005, of the sent of experts of the company “Campania Val De Rio Dotsi” to examine the mines of Gara Djebilet and Mechri Abdelaziz, the experts have visited the sites accompanied with representatives of the group “Vervos”.

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Steel pipe business shifts to ME from EU

Steel pipe maker to tap Middle East pipe market after losing EU business following huge antidumping duties. Ukraine's major steel pipe producer on Monday pledged to tap markets in the Middle East to compensate the loss of business in the European Union following anti-dumping investigation and duties imposed. Nyzhniodniprovsky Pipe Rolling Works, a division of the Interpipe group, is considering shipping pipes to markets in the Middle East if its exports to the European Union decrease.

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Steel price strengthens by 65pct in six months

Steel price jumped by up to 65 per cent in six months from January this year, hovering around $585 to $615 per tonne on July 1, compared with $370 to $400 in January, market sources said. The high price for steel and other raw materials continues to hit the manufacturing and construction industries, sending real estate prices creeping upwards. Prices for steel, the most essential building ingredient, increased each month this year. Hot rolled coil, a commonly followed steel commodity, reached a range of $585 (Dh2,152) to $615 (Dh2,262) a tonne on July 1, according to MeSteel.com, a website tracking the Middle East steel market, compared with $370 (Dh1,361) to $400 (Dh1,471) a tonne in January. "It's like the commodities market all over world. If you look at zinc, aluminium, oil, everything has gone up over the past year. Steel is just following the trend," said Karel Costenoble, general manager of MeSteel.com. Adel Lootah, executive director of Dubai Property Group, a non-profit real estate association, said high prices of raw materials have distributed profit margins more evenly through the industry. "The developer knows it can't sell higher than X amount, and the construction company knows it can change more than X amount, too," he said. Most contractors in the UAE build projects on a fixed-priced contract basis. A surge in material cost hurts their bottom line badly, as the profit margin on real estate projects average between 3 to 5 per cent. "The days of lush profit margins are history," said Rakesh Chandola, general manager of Memon Real Estate. This has forced construction companies to become more efficient with equipment and personnel? while some might also cut corners by using lesser grade materials, he said. High demand in Asia, Europe and North America continues to be the main driver in the price escalation, with Middle East demand having a negligible effect, said Costenoble.

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DMCC to introduce steel DCRs

Dr David Rutledge, Chief Executive Officer, Dubai Multi Commodities Centre (DMCC) announced that the DMCC planned to introduce more commodity-specific Dubai Commodity Receipts (DCRs) as the next step in its move to facilitate financing for the commodities industry. He shared DMCC's future plans while presenting Dubai's innovative DCR system at the Global Warehouse Receipt Financing Conference in Amsterdam being held on July 11 and 12, 2006. The proposed commodity-specific DCRs are to cover 'Fuel Oil' and 'Steel Rebars' and are designed to facilitate financing and the undertaking of physical delivery under the proposed Futures contracts for such products being launched during the third quarter of 2006. DMCC had initially introduced the DCR system in 2004, involving the 'field' warehousing of a broad range of commodities and to be used as a risk mitigation tool by banks to facilitate trade and commodity financing. It then extended the system last year to include the Dubai Gold Receipt (DGR), designed specifically for the gold industry and reinforcing Dubai's role as a global leader in gold trade. Speaking at the Amsterdam conference Dr Rutledge said, "DMCC is probably the first to offer an electronic warehouse receipt the DCR in the Middle East. Regulated and administered by DMCC, the DCR is governed by a transparent legal framework." Operating on a web-based platform that eliminates paper work and provides instant global access, it can cover any commodity stored in a 'field' warehouse, he said. It offers flexibility and can be either pledged by way of security or endorsed by way of transfer. The DGR launched last year, is being used also for physical deliveries under the futures contracts for gold and silver, added Dr Rutledge.

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Gasco to evaluate pipeline bid

Evaluation of commercial bids is under way at Abu Dhabi Gas Industries Company (Gasco) for package 3 on the offshore associated gas (OAG) project in the emirate. Five companies submitted bids in mid-June for the engineering, procurement and construction (EPC) contract. They were: Athens-based Consolidated Contractors International Company (CCC); Paris-based Technip, with Pakistan's Descon Engineering; India's Larsen & Toubro; Abu Dhabi-based National Petroleum Construction Company (NPCC); and the local Dodsal. The estimated $350 million-400 million contract covers the supply and installation of a 30-inch-diameter, 98-kilometre-long land pipeline from Ras al-Qila to Habshan for the processing of associated gas. The scheme is targeted for completion by the second quarter of 2008. The UK office of the US' Fluor Corporation has carried out the front-end engineering and design (FEED). Australia's WorleyParsons is the project management consultant .

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Foreign consortium invest 80 mn Euros in Iran Steel

A consortium of foreign banks and companies has invested 80 million Euros in Iran's Mobarake Steel Co. This investment is related to a 6 year ago 300 million Euros investment made by a consortium including Italian and German companies, an Iranian company issued in Italy and a Swiss bank. "In this contract it was noted that if both sides had reached agreement 25 percent of the gained profit would be allocated to a new venture," said Iran's Mobarake Steel directing manager. "Therefore it was agreed that 80 million Euros were allocated to the company's environmental, quality and energy consumption factors," he added. "This matter which has received the required licenses from the related organs will be carried out through the next two or three months," said Mohammad Rajaie, Mobarakeh General Manager.

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Sphere places further $1.3m shares with Saudis Hadeed

The Directors of Sphere Investments Limited have today agreed to place a further 1,125,000 shares to Saudi Iron & Steel Company (Hadeed) at a price of $1.15 per share, raising $1,293,750. This is in addition to the placement of 10,300,000 shares to Hadeed announced on the 8th of March 2006 and follows the recent placement to Qatar Steel Company (QASCO) of 11,425,000 shares at $1.15 per share announced on the 25th of May this year. In accordance with the terms of the agreement at the time of the previous placement, Hadeed has maintained its shareholding at the same level (in percentage terms) held prior to the transaction with QASCO and at the same price as the placement to QASCO. Hadeed and QASCO, the two largest steel producers in the Gulf region that each have significant capacity expansions under construction, are supporting the development of the 7Mt/a Guelb el Aouj DR pellet project in Mauritania as an alternative and reliable source of DR pellets. Hadeed and QASCO now each hold 11,425,000 shares, representing a combined total of 18% of the Company. Sphere and its JV partner SNIM, the Mauritanian iron ore company, are working with Hadeed and QASCO as strategic industry partners in developing the Guelb el Aouj Project.

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Anglo sells Highveld Steel stake to Russian Evraz

Anglo American PLC said as part of its strategy of refocusing on mining it sold most of its 79% stake in South African steelmaker Highveld Steel & Vanadiam Group (HSVLY) for $678 million to Russia's steel company Evraz Group SA. Under the deal, Anglo will initially sell a 24.9% stake to Evraz and another 24.9% stake to Swiss banking group Credit Suisse Group (CSR). After receiving regulatory clearance, Evraz could exercise an option to buy the Credit Suisse stake and Anglo's remaining 29.2% stake, Anglo said in a statement. If Evraz does increase its interest beyond 35%, Anglo said that the Russian company will be obliged to make an offer to all shareholders of Highveld. "This represents another important step in the execution of the Group's strategy as announced in October last year," said Tony Trahar, Anglo's CEO. "This substantial foreign direct investment by Evraz and Credit Suisse in South Africa is a strong vote of confidence in the country's prospects." Analysts approved of Anglo's strategy of shedding non-mining businesses, but questioned the price of the sale. Anglo said the price represented a 13% premium to the 30-day period proceeding its announcement last October that it intended to shed its Highveld stake. But the ZAR62.4 rand price being paid by Evraz was ZAR11.8 rand lower than the ZAR74 at which Highveld was trading Friday. Highveld's share price plunged after the announcement and at 1125 GMT, it was trading down 13.7% to ZAR63.90 rand. At the same time, Anglo was trading down only 0.29% at ZAR288. This is "wonderful from a strategic point of view" for Anglo because it gets company "back to its core mining business," said Johannesburg-based Andisa Securities analyst Johan Pretorius. But he is still studying the price. Anglo may provide "compensation in an interim dividend" so he is still crunching the numbers, said Pretorius, who has a buy rating on Anglo, but declined to divulge his target price.

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Ukraine's Jan-June steel scrap exports down 56.2% on year

Ukraine's steel scrap exports in the first six months of the year fell by 56.2% compared with the corresponding period last year, to 338,400 metric tons, the national scrap dealers association UAVtormet said. Ukraine's scrap collection fell in January-June by 11.8% on the year to 3.41 million tons. Supplies to domestic buyers in January-June totaled 3.072 million tons, 0.8% less than a year ago. UAVtormet said one of the main reasons for falling scrap collection was that domestic steel smelters weren't paying dealers on time for the delivered scrap, with payment arrears totaling $22.896 million on July 10.

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Steelmakers want US to take action on china subsidies

Steel industry representatives are asking US trade officials to take action against China for continuing to subsidize its steel manufacturers. A study prepared for industry groups says China's forgiveness of steel-company debt, preferential loan practices, targeted infrastructure development and currency manipulation give Chinese producers a huge advantage over companies that operate under free market rules. "The U.S. needs to act aggressively to require China to live up to its WTO obligations," Nucor Corp. (NUE) Chief Executive Daniel DiMicco said after the study was released recently. The American Iron & Steel Institute, the Steel Manufacturers Association, the Specialty Steel Industry of North America, and the Committee on Pipe and Tube Imports supported the study, which was prepared by a Washington-based law firm. The groups said on a conference call Thursday that they provided the study to US trade officials. Alan Price, an attorney with Wiley Rein & Fielding LLP, who was co-author of the study, said the groups will urge the federal government to take complaints against China to the World Trade Organization for steel as well as other industries, and U.S. trade officials will be armed with the study in meetings with Chinese officials scheduled for later this month. According to the study - called "The China Syndrome: How Subsidies and Government Intervention Created the World's Largest Steel Industry" - Chinese steel production grew to 349.4 million metric tons in 2005, from 67.2 million metric tons in 1990, far outpacing the U.S. That growth is a direct result of improper Chinese government intervention, the study says. China is providing export subsidies to steelmakers that are prohibited under WTO rules and need to be halted, Price said.

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China Jun steel products exports 4.43M MT, record High

China's exports of steel products more than doubled on year in June to 4.43 million metric tons, sources said, citing preliminary data from the customs department. Total exports surpassed the previous record high in May of 3.49 million tons. Exports in the first half of this year reached 17.10 million tons, up 48% on year. Imports in June fell 33% on year to 1.67 million tons, while imports in the January to June period totaled 9.41 million tons, down 29% on year. Although the customs report didn't provide any reasons for the changes, analysts said concern that China's government will cut the export tax rebate for steel products triggered more exports last month. Meanwhile, steel billet exports in June were up 82% on year at 1.04 million tons, while imports were down 67% on year at 40,000 tons. Exports of steel billets in the January to June period fell 36% on year to 3.1 million tons, while imports during the period totaled 210,000 tons, down 73% on year.

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S Korea Posco 2Q net likely down 45% on weak steel prices

South Korea's Posco is expected to report that its net profit in the second quarter fell 45% on year as lower steel prices and an increase in the price of iron ore, a key material in steel making. But the outlook for the second half is brighter for the world's fifth-largest steel maker by output, backed by a steel price hike in the domestic market and stabilizing global steel prices. During the April-June quarter, Posco likely earned KRW697.7 billion ($741 million) in net profit, down 45% from KRW1.26 trillion it posted a year ago. The forecast earnings, however, are 2% higher than the KRW681.4 billion that the company earned in the first quarter. Posco's average selling price in the second quarter was estimated at KRW685,000 per ton, up about 4.7% from the first quarter's KRW654,000 although it's 13% lower than the KRW785,000 a year ago. Choi said mild rises in some stainless steel products contributed to the rise in the average selling price in the second quarter from the previous quarter. The steel maker's effort to cut costs such as using cheaper material and tightening administrative expenses also helped partially offset higher iron ore costs.

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Japan Steel Cos eye price hikes for car, ship clients

Nippon Steel Corp. and other major Japanese steelmakers plan to formally ask major automakers and shipbuilders this week for price hikes of up to 10% on steel sheet and plate from the autumn. This would mark a fourth straight year of price hikes since fiscal 2003, for a roughly 50% rise over that period. The move is aimed at passing on rising prices of iron ore, as well as zinc, which is used as an anti-corrosive. High crude oil prices are also putting pressure on steelmakers' bottom lines by boosting transportation costs. Industrywide, higher prices for these materials are forecast to push up costs by around Y300 billion in fiscal 2006. Since such a steep rise cannot be absorbed by cost-cutting efforts alone, steelmakers are planning to ask for a 5%-10% hike in prices of steel used in automobiles and shipbuilding, which costs more to produce because of the use of zinc. Price hikes on steel used by consumer electronics makers are also being considered. Long, tough negotiations are expected since automakers and others will likely put up strong resistance. But with demand remaining strong, particularly for automobile steel and other high-quality products, steelmakers are confident about their prospects of winning price hikes. Prices of automobile steel now range between Y50,000 and Y100,000 per ton.

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Baosteel speeds up expansion in South China

Shanghai Baosteel Group Corp. is accelerating its expansion plans in China, by incorporating a steel mill in southern Guangdong province into one of its joint ventures. Baosteel Group reached an agreement with Shaoguan Iron & Steel Group Co. to inject the "prime assets" of the latter into a joint venture set up by the two groups in May. The prime assets refer to Shaoguan city, Guangdong province-based SGIS Songshan Co., the listed unit of Shaoguan Iron & Steel Group, the report said, citing "authoritative" sources. The joint venture, in which Baosteel holds a controlling stake, is also building a steel plant that will have an annual capacity of 10 million metric tons when completed, with a total investment probably exceeding CNY80 billion. The mill is located in Zhanjiang city, Guangdong province. The report didn't provide further details about the joint venture. China's central government has been encouraging restructuring in the steel sector in the hope of eliminating outdated production capacity.

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Russia's largest steel smelter Magnitogorsk Iron & Steel Works produced in January-June 5.922 million metric tons of steel, an increase of 8% compared with the corresponding period last year. Magnitogorsk increased its steel roll output during the period by 9.5% to 5.48 million tons. Iron output increased by 6% to 4.920 million tons. Magnitogorsk also increased its agglomerated ore output by 4.7% to 5.453 million tons, while coke output increased by 2.1% to 2.78 million tons. Magnitogorsk exported in January-June 48.5% of its total output, compared with 51.8% in January-June 2005, which signifies increased domestic sales. Magnitogorsk is carrying out a $1 billion upgrading program which is aimed at increasing steel output to 13.5 million tons a year by 2013 from 11.385 million tons in 2005.

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