JULY  2009

 Steelworld Home

From the CEO's Desk

Dear Readers,


Infrastructure sector has been the biggest consumer of steel and will continue to impact the fortune of steel industry on a long term basis. In second half of 2008, it gave the biggest setback to this industry when housing sector balloon burst and many infrastructure projects were put on hold. Clearly, infrastructure spending is the key to boost up demand for steel and this was clearly demonstrated in the proposals of the Indian union budget for 2009-10. It promises huge spending in infrastructure and naturally steel community has welcomed it.
Obviously, this was not all that our industry expected from the budget. It had demanded hike in import duty for steel, increasing the export tax for iron ore etc. but were not fulfilled in this budget. In my opinion, though these demands are genuine, their impact would not be much and we should be looking at the reason to be happy for greater spending on infrastructure.
Further, though the whole world has gone through a very bad phase for the last few months, it should be noted that the production of major Indian steel companies has not fallen. In fact, in few cases, it has slightly increased and this is really remarkable. It only shows that India's domestic demand is good enough to take care of our present steel making capacity. Now, in the changed global scenario, countries like India, which have sizable domestic demand, are moving from 'Globalisation' to 'Localisation'. It is logical that these countries should take full advantage of their robust economy and concentrate more on domestic business rather than exports.
How will steel demand move in next few months? I think the demand will be slightly weak till September and will start picking up from October onwards. This is no great prediction. Every year, the construction activity is low in monsoons and hence the steel demand. I think this year also the demand curve will follow a similar cycle. The banking and financial sector is also expected to be normal by that time and hopefully, our economy will be back on track by end of this year.

 D.A.Chandekar
Editor & CEO

Headlines

NEWS - VIEWS

Tata Steel to become 10-mn ton company by March 2011

Govt rules out lowering steel expansion target of 124 MT

India's May iron-ore exports increase on higher China demand

SAIL to continue investment on expansion

India to clear Posco's mining lease proposal soon

Essar Steel to acquire Ajmera Realty

RINL to start production ahead of schedule

Corus cuts another 366 jobs

ArcelorMittal put on hold Orissa project

Essar Steel to set up its 5th service centre in Bhuj

Indian steel demand in Q1 rises on infrastructure spending

Orissa claims to have major share in Indian steel sector

RIL inks gas sale purchase agreements with Essar Steel, Ispat

Tata Power, Tata Steel to build power plant

CIL short-lists Rio, ArcelorMittal, 8 others for developing abandoned mines

Jindal Steel & Power Ltd wins SAIL-IIM (A) award for excellence in HR management

SAIL to borrow Rs 5000-cr to fund expansion plans


GULF DIARY

Tight credit may further slash Dubai steel imports

Gulf steel imports to drop 20% in '09

Saudi, UAE steel imports to drop in 09

Saudi resumes steel exports

Turkey iron and steel exports in June down by 62.1%



 
SOUTH EAST ASIAN DIARY

Nippon Steel to restart mill, sees demand pick-up

Japan July-Sept steel output seen up 14% q/q

POSCO predicts modest gain in H2 steel prices

Ann Joo Resources' Q2 export surges

Thailand to impose anti-dumping duty on Indian steel products

Thailand’s steel imports surge




CHINA CALLING


Baosteel may hike Aug steel prices by 5 %

China faces higher iron ore prices as contract talks stall

China June steel output at 45.39 mln T

EU to end duties on Chinese steel pipes

Chinese steel imports from US in May up by 34.9% MoM

China produces 267 mln T of crude steel in the H1

New iron ore deposit targets 5 mln T output

 



EUROPE-AMERICA NEWS

Russia threatens to cease Mittal's two coal mines

Global demand for steel drops

BlueScope may post loss

ThyssenKrupp looks for ally

Mechel's Q1 loss declines

OMK increases investments in the Mill-5000 project

TMK finds opportunity in Africa



 



 

 

Tata Steel to become 10-mn ton company by March 2011

Tata Steel is set to become a 10-million-ton steel company by the end of March 2011 as the expansion of its production facility at Jamshedpur is in full swing. Meanwhile, the company has set a target of saving nearly Rs 2,000 crore in the current financial year by cutting cost in its Indian operations through adopting efficient working practices, increasing output and doing aggressive sales and marketing.
Steel giant Tata Steel is working to enhance production capacity to 10 million tons per annum (MTPA) at Jamshedpur at an estimated investment of Rs 12,000 crore by January-March 2010-11. At present, the plant has a capacity to produce 6.8 million tons of steel annually. In addition to the existing plant, the company has also proposed setting up mega steel plants in Jharkhand, Orissa and Chhattisgarh. The company says it wants the site condition to improve and iron ore blocks allocated quickly. It also wants to operationalise the Orissa and Chhattisgarh projects quickly. While in Jharkhand it proposes to invest about Rs 42,000 crore in a 12 million-ton-per-annum (MTPA) steel plant, in Orissa it intends to pump in nearly Rs 22,000 crore for a six MTPA unit. The steel major also plans to invest Rs 18,000 crore in setting up a five-million-ton-per-annum steel plant in Chhattisgarh. For all the proposed projects, the company is in the process of acquiring land and mineral linkages. Hit hard by the slump in demand amid the global economic downturn, the steel baron is targeting to save about Rs 2,000 crore by the end of the current fiscal in its India operations through cost cutting. The company has measures in place at its European unit Corus to stay competitive amid the downturn, a company official said.

Top

Govt rules out lowering steel expansion target of 124 MT

India will not lower its target for increasing steel manufacturing capacity from 55 million tons to 124 million tons per annum in this recessionary period, noting that the downturn is an opportunity to expand.
Steel Minister Virbhadra Singh said, "Actually the target is sustainable and our goal to achieve a production of 124 MT of steel (by 2011-12) is not too ambitious. It is practical, it is feasible, and it is desirable."
On whether the proposed expansion would lead to glut in the market affecting bottom line of the steel firms, the Minister said: "...I am hopeful that in another two to three years time the world situation will definitely improve and demand will revive in the domestic market also".
Steel firms both in India and abroad are going slow on their expansion plans in view of the prevailing demand slump and liquidity crunch, a scenario which could hit the projected capacity.
Singh, however, said that recession should be taken as an opportunity, as the country could procure the services of global leaders in engineering and construction activities, that too cheaply, to set up the targeted production capacity in time.
"The recession worldwide may even help us in a way. People (engineering and construction firms) who are otherwise busy in expansion they will be available (as) expansion programmes are not taking place abroad due to recession," he said, adding that such firms would make domestic expansion projects "quick and cost effective."
Even as private counterparts find it difficult to finance their projects in the prevailing atmosphere, the minister said that the government-owned firms are comfortable to carry out the over Rs 70,000-crore expansion programme.
He said the funds would be made available through a mix of internal resources and market borrowings.
Steps would also be taken to cut the expansion cost by procuring cheaper equipment and engineering goods required in the augmentation process, he added.
He, however, made it clear that lowest bidder through tendering process would be given the contract. "We have also given a very strict instruction that single tender will not be entertained under normal circumstances."
Steel behemoth SAIL is spending about Rs 55,000 crore to almost double its capacity to 26 million tonnes from present 14 million tonnes by 2011-12. RINL would augment its production capacity to 6.2 million tonnes from present 3.2 million tonnes, while NMDC is in process of setting up a 3-MTPA plant in Chhattisgarh.
Among private players, Tata Steel will take its capacity to 10-MTPA from current 6.8-MTPA by 2011-12, while JSW Steel aims to achieve the same production capacity from 7.8 million tonnes at present. Essar Steel and JSPL are also working to expand their capacities.
Global steel majors like ArcelorMittal and Posco have also lined up multi-billion dollar investment to set up steel mills in India, however, they are awaiting regulatory approvals and their projects would not go on stream by 2011-12.

Top

 

 

India's May iron-ore exports increase on higher China demand   

India's iron ore exports surged in May after falling for two moths as China increased purchases.
According to the Federation of Indian Mineral Industries, a group of iron ore mining companies, overseas shipments rose to 10.6 million tons from 8.99 million tons a year earlier. Sales in April fell 20.6 percent, it said.
China's demand for iron ore has boosted the Baltic Dry Index, a measure of shipping costs for commodities, as much as fivefold this year and led to record queues of ships waiting to discharge consignments of the raw material.
Iron-ore usage in China will boost demand for shipping as imports will remain cheaper than domestic output, Morgan Stanley said in a note.

Top

 

 

SAIL to continue investment on expansion  

The public sector steel major Steel Authority of India Ltd (SAIL) will be spending more than Rs 10,000 crore mainly on expansion in the current financial year.
According to the Budget statement, all the steel PSUs together will spend over Rs 13,730 crore this fiscal, with SAIL contributing 75 percent of the allocation. The steel major will not get any support from the Budget and the entire fund will have to be generated from internal and extra budgetary resource (IEBR), the Union Budget said. The steel PSUs are undertaking Rs 70,000-crore project for capacity expansion by 2011-12. After the expansion, production capacity at SAIL will increase from 14 million tons to 26 million tons, while at RINL the capacity will double at 6.2 million tons. The country's largest iron ore producer NMDC also plans to set up a plant in Chhattisgarh with a capacity of 3 million tons annually. The Budget has also made provisions for Rs 7 crore to Hindustan Steel Works Construction and Rs 1 crore to the Bird Group of Companies for this fiscal.

Top

 

 

India to clear Posco's mining lease proposal soon


The government is considering speeding up the process of granting Posco an iron-ore mining license, seeking to end a four-year wait by the steelmaker to secure resources for its planned $12 billion venture in the country.
According to the steel minister Virbhadra Singh, the matter will be cleared very soon. The steel ministry is pushing the proposal on priority basis to the mining ministry, the minister said. Land disputes and the delay in getting a mining license prevented South Korea-based Posco from proceeding with one of India's biggest foreign investment. Asia's fifth-biggest steelmaker has yet to start building the 12 million metric ton plant in the eastern state of Orissa. Work on the project, announced in June 2005, was scheduled to start in April 2007. Jharkhand, Orissa and Chhattisgarh account for 70 percent of India's coal reserves and 55 percent of its iron ore, according to McKinsey & Co. Posco faced opposition in Orissa as locals and political parties want the plant to be moved to non-arable areas from farmlands. Initially, Posco will build a 4 million metric ton plant and set up a 400-megawatt power plant.
The company has sought 600 million tonnes of iron ore for the steel mill. Posco joins ArcelorMittal in seeking to expand in Asia, where steel demand is growing faster than in Europe and the U.S. In October 2005, ArcelorMittal said it would set up a factory with a final capacity of 12 million tons in Jharkhand and announced another plant of the same size in neighboring Orissa the following year. Meanwhile, demand for steel declined the most since World War II, the World Steel Association said in April, and output is set to tumble 15 percent this year. Luxembourg-based ArcelorMittal said in April it would delay a $20 billion plan to build two factories in India. The world's biggest steelmaker has slashed production by as much as 50 percent and shed jobs.

Top

 

 

Essar Steel to acquire Ajmera Realty

Essar Steel Ltd is close to acquiring a major stake in Ajmera Realty Infra, formerly Shree Precoated Steels. The deal, which would give Essar Steel control over Ajmera's steel business making it the biggest cold-rolled maker in India, is seen at Rs 7-8 billion. Ajmera has been trying to exit its steel business for the past two years now and has been in talks with major steel firms including JSW Steel and Tata Steel. While a source in Essar Steel said preliminary discussions were on with Ajmera, its spokesman declined to comment.

Top

 

 

RINL to start production ahead of schedule  

The public sector Rashtriya Ispat Nigam Ltd will complete its Rs 12,000-crore expansion project ahead of schedule and start commercial production from the augmented capacity by October 2010.
The state-run steel company earlier had said the 6.3 million tons per annum (MTPA) expansion project would be completed only by 2011-12. “Expansion is going on well. We will be starting our commissioning-cum-stabilisation next year from end-March to end-September. Commercial production will start from October 2010,” RINL Chairman and Managing Director P K Bishnoi said.
RINL at present produces about 3.2 MTPA long- steel items, mainly consumed by the construction firms. The mini-ratna unit is working to modernise its plants to make them energy-efficient. RINL has also furnished data to the government seeking the navaratna status. “This will enhance autonomy and delegation of financial powers, including that of investment and joint venture abroad for its raw material security,” the company said. RINL is said to be in scarcity of the raw materials as it does not have captive mining blocks. However, Bishnoi said, “Raw material security is there. We have iron ore contracts with NMDC and a long-term coking coal contract with CIL.

Top

 

 

Corus cuts another 366 jobs

The world's sixth largest steel producer Tata Steel is set to slash another 366 jobs at its Corus unit's Scunthorpe plant in northeast England were at risk as part of a plan to align employment costs with expected steel demand.
In June, Corus had announced plans to cut about 2,000 jobs in Britain and Netherlands, including 500 white-collar jobs at Scunthorpe. The group had announced 3,500 job cuts worldwide in January. Tata said it is in talks with employees at the plant and would see voluntary redundancies wherever possible.
The plant is part of its long products division that makes sections, wire rods and plates, used mostly in construction.
Corus, which contributes most of Tata Steel's output, kept 40 percent of its 20 million tonnes capacity idle in the first six months of 2009, resulting in a 60 percent drop in the group's net profit for the fiscal year ended March.
Global steel production has tumbled this year, as demand in key steel consuming sectors such as construction and automotive has shrank, and the World Steel Association has forecast demand would tumble 15 percent in 2009, the steepest fall since World War II.

Top

 

 

ArcelorMittal put on hold Orissa project

The world's largest steel producer ArcelorMittal has put on hold its proposed Rs 40,000 crore steel plant, located at Keonjhar, Orissa, for at least two years, as the steel demand is stagnating.
However, the company will go ahead with its plans in Jharkhand and has bagged iron ore mines and coal linkage to the project. According to a report, the company said that it is not expecting its projects in India to start before 2014.
“We have paused our growth projects at present for obvious reasons. The projects in India are Greenfield ones that have considerable lead time, as they involve land acquisition, environmental concerns, etc. But we remain committed to our investment in India." said the company.
The projects were announced in 2005 end, a time when global economy was sound and demand for steel was bright. ArcelorMittal was planning to start construction of the Orissa and Jharkhand projects, each with a proposed yearly capacity of 12 million tons, by the end of this year, with a commissioning deadline of 2014.

Top

 

 

Essar Steel to set up its 5th service centre in Bhuj

Indian steel major Essar Steel will set up its 5th service centre in Bhuj, which will the second such centre in Gujarat.
The company's another service centre already operational at Hazira in the state; however it has other three centres at Bahadurgarh, Chennai and Pune.
The Bhuj Service Centre will be the first centre of its kind to be set up by any steel company in a town that is a fast growing steel consumer with current consumption levels at 1.5 million ton per annum. The service centre will have an annual capacity of 200,000 ton.
Slated for commissioning by March 2010, it will primarily cater to the requirements of clients in the auto and general engineering sectors. It will also service the Essar Hypermarts located in northern Gujarat. This Centre is backed by Essar's 4.6 million ton per annum Hazira Steel Plant, thus ensuring steady supplies and world class quality.
Setting up of this service centre is in line with the company's stated objective of being closer to the customer. This service centre will enable company to offer customized products and small lots to users. The new facility will take the total aggregated capacity of the 5 centers to 2.7 million ton per annum and help Essar retain its number one status in this segment.

Top

 

 

Indian steel demand in Q1 rises on infrastructure spending

India's steel demand increased 5 percent last quarter, aided by government investment in infrastructure, Steel Secretary P. K. Rastogi said.
Demand rose to 12.8 million metric tons in the three months ended June 30 from 12.2 million tons a year earlier, he said.
According to a report, Prime Minister Manmohan Singh had said that the government is spending more on public works projects and expanding a rural jobs program, helping lift demand in villages and towns. India should aim for an economic growth of between 8 percent and 9 percent in the “medium term” as the targeted 7 percent expansion this year isn't sufficient.
Steel Authority of India Ltd.'s sales in June increased 5 percent, compared with a year earlier, Chairman S.K. Roongta said, without giving specific numbers. The company, the nation's second-biggest producer, expects infrastructure spending to boost demand as much as 8 percent this financial year, Roongta said.
The government has allocated 1.79 trillion rupees in the year ending March 31 to build networks of roads, telephones, electricity and irrigation, according to the budget.
As demand grows, Indian steelmakers are expected to double their combined capacity in the next three years, Steel Secretary Rastogi said last month. Capacity is expected to increase to as much as 124 million metric tons by 2012 or at least 100 million tons in the “worst-case scenario,” he said.
Imports, which had surged 21 percent to 528,000 tons in May, fell 23 percent last month, Rastogi said. India proposed no change in import taxes on steel in the budget.

Top

 

 

Orissa claims to have major share in Indian steel sector

Orissa will play a major role in achieving the national target of raising the steel production to 250 million tons per annum by 2020.
Ajit Kumar Tripathy, Chief Secretary of Orissa, said, "As India aims at raising steel production to 250 million ton per annum by 2020 from the current level of 65 million ton per annum. Orissa will be a major contributor envisaging an output of 90 million ton per annum."
Tripathy, who is also chairman of the organizing committee of the international convention on clean, green and sustainable technologies in iron and steel making said that “Out of the total 65 million ton of steel produced by India now, the state contributes a significant 10 million ton.
He said "As far as Orissa is concerned, the state has been transforming from an agriculture economy to an industrial economy. Raising steel production has become a major challenge before the state. It requires adequate infrastructure and other facilities for investors."
Orissa has signed 49 MoUs to set up steel industries, out o.

Top

 

 

RIL inks gas sale purchase agreements with Essar Steel, Ispat

Reliance Industries is set to supply natural gas to Indian steelmakers - Essar Steel and Ispat Industries. Reliance Industries signed gas sale agreements with the steelmakers for supplying 3.75 mmcmd of natural gas from its offshore Krishna Godavari-D6 basin.
This move will increase profitability of the steel companies who had been buying expensive gas or naphtha to meet feedstock shortage at their plants. The agreement will be reviewed at the end of five years, a senior official said.
The Ministry of Petroleum and Natural Gas had asked the reliance to sell natural gas to steel companies like Essar, Ispat and Vikram Ispat to help the nation's most prolific gas field to produce at optimum level.
As per the Gas Sales and Purchase Agreements (GSPA), Essar will get 2.86 million standard cubic meters per day (mmcmd) of gas, Ispat 0.53 mmcmd and Vikram Ispat the remaining 0.36 mmcmd at government-approved rate of $4.20 per mmBtu.
"We had identified sectors that would consume the initial 40 mmcmd output from KG-D6. But some of them like CNG supply projects in cities are unable to take their entire allocation and that is now being reallocated to steel firms," a senior official said. Reliance is currently restricting output from KG-D6 to 28 mmcmd as not all of the power and fertilizer customers identified by the Government are taking their full quota of allocation.
The official said after power and fertiliser, 5 mmcmd gas from KG-D6 was allocated for city gas projects but only 1.1 mmcmd can immediately be taken. The rest is now being distributed among steel firms.
The official said the allocation has been made in accordance with the Empowered Group of Ministers' decision on April 9 to give any unutilised KG-D6 gas to steel plants, which are currently not being supplied their full share of administered price fuel.
Currently, Reliance can produce close to 40 mmcmd but is restricting output to 28 mmcmd in absence of offtakers. Out of the 14.97 mmcmd allocated to fertilizer sector, only 13 mmcmd is being drawn because of shutdown at some urea making plants.

Top

 

 

Tata Power, Tata Steel to build power plant

Tata Power has singed memorandum of understanding (MoU) with the world's six largest steelmaker Tata Steel to set up 525 megawatt power plant in Netherlands.
The plant will be ready in 2013 and partly replace the existing power supply agreement with other utility, said the company in a statement.

Top

 

 

CIL short-lists Rio, ArcelorMittal, 8 others for developing abandoned mines

State-owned Coal India Limited (CIL) short-listed ArcelorMittal, Rio Tinto group and eight other companies to develop its abandoned mines to help ease shortage of coal used in power plants in India.
Citing Partha S. Bhattacharyya, Chairman of CIL, a report said that this move will increase CIL's production by 29 percent within three years and allow the nation to avoid costly imports. India aims to add 13,000 megawatts of new power capacity every year, President Pratibha Patil told parliament.
“We are amongst the companies considering,” the mines, Ian Head, a spokesman for Rio Tinto, said. According to another media report, Rio Tinto, JSW Steel Ltd., GVK Power and Infrastructure Ltd and Essar Mineral Resources Ltd were short-listed.
Steel demand growth may almost double the pace previously estimated with the government planning to spend $8.95 billion to build networks of roads, telephones, electricity and irrigation.
"Coal India aims to complete the bidding process by the end of year-end. The company invited separate bids for the mines, owned by three of its units, Bhattacharyya said.
“Our portion of the equity will largely be the mines,” Bhattacharyya said. “The partners can have 50 percent of the coal provided they have customers in the country.”
According to the company's website, Coal India produced 403.7 million tons in the year that ended March. The company signed a 20-year agreement to supply the fuel to the coal-fired of NTPC Ltd.
India's coal shortage will be about 228 million tons by the year ending March 2012, J. Goel, chief general manager of sales and marketing at Coal India, said. Demand may reach 731 million tons a year by then, government estimates show.

Top

 

 

Jindal Steel & Power Ltd wins SAIL-IIM (A) award for excellence in HR management

In a first-of-its-kind event, Steel Authority of India Limited (SAIL), in collaboration with the Indian Institute of Management, Ahmedabad (IIM-A) awarded 'SAIL HR Excellence Award' to Jindal Steel & Power Ltd (JSPL) for excellence in human resource management.
Union Minister for Steel, Mr Virbhadra Singh gave away the award. Instituted this year in collaboration with the Indian Institute of Management, Ahmadabad (IIM-A), the award commemorates 50 years of SAIL in the steel business and awards companies that celebrate their people with innovative, caring and inspirational HR processes.
Management gurus at IIM-A and veteran practitioners in the steel industry at SAIL, chose Jindal Steel for the prize to honour its “commitment to creating a culture of performance and growth among its employees.”
The award salutes the company's practice of mentoring its people, recognizing its workers and executives, listening to their needs and fulfilling them with schools, colleges and hospitals and finally its resolve to protect and rejuvenate the environment. The award on behalf of Jindal Steel and Power Limited was received by Dr. Sanjeev Sahni, Head – Strategic HR, JSPL and Mr. C D Mathew, GM –HR, JSPL.

Top

 

 

 

 

SAIL to borrow Rs 5000-cr to fund expansion plans

SAIL would borrow about Rs 5,000 crore in the current fiscal to part finance its expansion plans even as the cost to double its production capacity has come down steeply.
SK Roongta chairman of SAIL said, "We have a CAPEX of more than Rs 10,000 crore this year. We will borrow at least 50 percent of the CAPEX. It could be through long term debt."
Roongta when asked that if the company is considering follow on public issue or qualified Institutional Placement of shares to raise funds said , “The country's largest steel producer is enhancing its production capacity to 26 million ton from present 14 million ton. The expansion project is estimated to attract an investment of Rs 78,000 crore. However, the cost of the expansion program has come down. The expansion cost has come down from the highs of the last year, without giving any figures.”According to report, the cost to augment the production capacity of SAIL's steel plants touched the peak of about Rs 90,000 crore early last year as equipment manufacturers revised their rates upwards. However, a slump in overall demand in the economy on account of the global economic slowdown pushed down the cost of expansion and also the steel prices.

Top

 

 

Tight credit may further slash Dubai steel imports         

Dubai's steel imports could drop further as the tightness in credit availability is threatening ongoing construction projects, the managing director of Abu Dhabi Metal Pipes & Profiles Industries Complex said.
Ali Hosseini of ADPICO, one of the top steel pipe producers in the United Arab Emirates, said that bank lending has become even scarcer since late last year as the housing demand in Dubai has slumped after the global recession.
"The major problem is oversupply. The occupancy rates for the properties finished are at about 25 to 30 percent. The crisis has caused a lot of people to leave the city," Hosseini said. "Financing issues can cause projects underway to come to a halt," he said.
According to Hosseini, Dubai's rebar imports dropped to around 250,000-300,000 tons from 550,000 at its peak last year, when the price of rebar and billet, key raw materials for construction, have rallied to record highs.
Since then, several mills and traders have been stuck with high cost inventories, turning to financial institutions for financing of those material.
"Banks had been hit badly by the stock liquidation and now they are very hesitant to finance stocks. If they do, they are looking for very high margins," he said.
The low demand has forced ADPICO to reduce output, Hosseini said, adding the Dubai operation was running with a 60 percent capacity utilisation.
"The main test will be August and Ramadan," he said, referring to the Muslims' holy month, where the economic activity tends to slow down dramatically in the Middle East. 

Top

 

 

Gulf steel imports to drop 20% in '09         

Steel imports to the UAE have dropped by almost 75 per cent compared to last year, according to an industry source.
"About 800,000 tons of steel were imported [every month] into the UAE during the peak months of July and August last year," said Shyam Bhatia of Alam Steel. "The numbers today stands at about 200,000 tonnes. The reduction is a result of a massive pile up of stocks combined with a drop in demand," he added.
Industry sources have said that import prices for rebar have crossed the $500 mark.
Meanwhile, according to a senior official of Balli Steel, one of the largest privately owned independent commodity traders, Dubai used to import almost 450,000 tons of steel every month when the construction was at its peak until the middle of last year.
"Today the imports have reduced to about 50,000 to 70,000 tons per month. There are still existing stocks, although some traders have started importing and stockists are buying unavailable sizes," said Ghassan Soudah, a Senior Manager at Balli Steel, UAE. "We cannot call it a normal consumption and surge in demand," he added.
According to estimates, steel imports in the Gulf were expected to fall 20 percent this year due to a slowdown in the oil-driven boom. Billions of dollars of construction projects are put on hold or delayed.
The demand for steel in the Gulf Co-operation Council (GCC) surged to 20 million metric tonnes in 2007. According to reports, while the global steel consumption during 2000-2006 witnessed a growth of six per cent, consumption in the GCC grew at an eight per cent on account of rising use of steel in various forms.
The growth in the UAE steel industry was led by soaring imports that rose from around four million tons in 2004 to six million tons in 2006. The UAE also imported nine million tonnes of steel in 2007, a 36 per cent increase year-on-year over 2006. Figures are not yet available for 2008.

Top

 

 

Saudi, UAE steel imports to drop in 09          

Steel imports to Saudi Arabia and the United Arab Emirates are expected to drop dramatically this year as the two Arab countries' local industries come closer to meeting demand.
A decline in demand for steel as a construction boom in the Gulf came to a halt was also expected to hit imports of the metal as the global financial crisis continued to weigh on the property sector, said the traders.
"In a few years Saudi will not have to import any steel," said Khaled Suleiman, an undersecretary at Saudi Arabia's Ministry of Trade and Industry.
Last year the kingdom imported just under 1 million tons of steel while demand for steel is expected to drop to 5.1 million tons from 7.2 million in 2008, traders said.
There are no official bodies in the Gulf region that publish monthly statistics on steel supply and demand levels, and the majority of data is collected from traders in the sector.
In the UAE, steel imports in June stood at 100,000 tons, or a quarter of their level in the corresponding period in 2008, steel traders in the Gulf.
"This was the plan all along, to become self sufficient and this is a good time to do this because this year demand is about 30 percent lower than last year due to the economic crisis," said a UAE steel trader.
Increased production mainly from state-run Emirates Steel Industries and other manufacturers in the northern region of the UAE were behind the drop in imports, one trader said. Emirates Steel said last month its output had risen to two million tons per year from 650,000 tons in 2008.
The company plans to spend 6 billion dirhams ($1.63 billion) for the second phase of an expansion plan that would take its capacity to three million tons per year. Ras al-Khaimah Steel, which came on line with a capacity of 500,000 tons per year in January, is among several plants that started production this year.
Saudi Arabia, the largest Arab economy, granted a number of steel producers export licences after lifting a ban imposed on exports last year when a construction boom sent demand and prices soaring.
"Lifting the ban is an indication that Saudi is starting to meet the demand of the local market and therefore is now in a position to export the excess supply," said a Saudi based steel trader. "For the first time in many years local supply has caught up with demand."
Overall Gulf imports are expected to fall to 18 million tonnes this year from 22.5 million tons in 2008, according to a report from the Iron and Steel Statistics Bureau (ISSB).

Top

 

 

Saudi resumes steel exports    

Saudi steel companies resumed exports after a one-year ban. The export is allowed on terms that take into account the needs of the local market, the report said, citing people close to the industry.
Last year, Saudi Arabia imposed a ban on steel exports to protect local market as domestic prices of the metal almost doubled. The kingdom, the largest steel producer in the Gulf, has a manufacturing capacity of 8.4 million tons per year, according to industry association Arab Steel.

Top

 

Turkey iron and steel exports in June down by 62.1%            

Turkey's exports dropped 32.78 percent to USD 8.1 billion in June 2009 when compared to same month of 2008.
Mehmet Buyukeksi chairman of the Assembly of Turkish Exporters said that Turkey's exports reached USD 43.8 billion in the H1 of 2009. He said that Turkey's annual exports as of June 2009 decreased by 15.5 percent to USD 104.4 billion.
According to the data provided by TIM, exports of the Turkish industry sector, which equaled to 85.6 percent of the country's exports in total in June 2009, dropped 35.3 percent to USD 6.9 billion.
TIM said that the greatest decline took place with a 62.1 percent decrease in iron & steel industry, while Turkish automotive sector had the highest annual export figures in June 2009. It also listed the top 3 countries to which Turkey exported goods the most as Germany, France and Italy.
The top 10 countries importing from Turkey in June were Germany, France, Italy, Britain, Iraq, the US, Spain, Russia, Egypt and Saudi Arabia. The best customer, Germany, accounted for 9.65% of all Turkish exports. France took in 6.66 percent while the Italians imported 6.46 percent of all of Turkey's sales abroad. In terms of companies, the list was topped by the Turkish Petroleum Refineries Corporation, Ford Otomotiv, Oyak-Renault Otomotiv, TOFAŞ, Toyota, GİSAD Foreign Trade, Vestel, HABAS, İÇDAŞ Steel, Energy and Shipyard and Yücel Boru.

Top

 

 

Nippon Steel to restart mill, sees demand pick-up

The world's second largest steel maker Nippon Steel Corp will resume operations at the world's biggest blast furnace as it increases production as there is a gradual recovery in demand.
The company's furnace at its Oita plant in southern Japan would be operational on August 2. Group output of crude steel would likely jump 40 percent in July-September from the previous quarter to over 6.5 million tonnes as carmakers and other manufacturers have started to replenish stocks.
This move would help the company to recover about 80 percent of its output level of a year ago.
Steelmakers worldwide have taken a beating this year as demand slumped due to the global economic downturn, operating at severely reduce capacity usage rates, shelving investment plans and laying off workers to weather the industry's biggest downturn since World War Two.
Nippon Steel said its inventory overhangs will also be wound down by the end of September, while rising demand in export markets was a good sign, the company said.
But the restart surprised market watchers and rivals, who said demand was still weak and had thought mills currently not on stream would be kept shut until after the turn of the year.
"I don't know why they are restarting the mill at this time," said an analyst at Daiwa Institute of Research. "It would be more efficient to boost run rates at other plants now in operation."
"The schedule of the restart was much faster than we had anticipated," said an official of a rival company, who asked not to be identified. However, JFE Holdings Inc said it had not yet decided when it would restart two mills it had mothballed.
Nippon Steel said that, while demand has yet to fully recover and the longer-time outlook is still unclear, restarting a mill would boost the group's production efficiency.
"It's difficult to cope with a gradual rise in demand in a flexible manner when only seven blast furnaces are up and running," a Nippon Steel spokesman said.
The Oita furnace has an average annual output of 3.6 million tonnes, accounting for some 13 percent of Nippon Steel's production from its nine blast furnaces, all of which are in Japan. Oita has been shut since February after a plunge in demand forced the company to cut output by 40-45 percent in the January-March quarter from a year earlier.
Nippon Steel is expected to tumble to a huge loss in April-June, hurt by lower output and a large paper loss related to inventory valuations.

Top

 

 

Japan July-Sept steel output seen up 14% q/q    

Japan's crude steel production will mark its biggest quarter-to-quarter jump on record in the July-September quarter due to public spending and a rundown in stocks, but the longer term outlook is still cloudy, the government said.
The Ministry of Economy and International Trade said that the country's crude steel production in July-September is expected to increase 14.3 percent from the preceding three months to 21.77 million tons, however, it would be down 28.5 percent from a year earlier.
"We assume car production will jump nearly 20 percent in the next quarter from the current quarter, while government public spending will prop up demand from the construction and engineering industry," METI director Masaki Ishikawa said.
Demand for exports could rise 20 percent thanks to progress in inventory adjustments at steel users in China, Thailand and other Asian countries, he said.
But he added strong growth in output may not be repeated in October-December because stock adjustments will likely be completed by the end of the next quarter.
"It is still very difficult to foresee the trend in real demand after October," he said.
METI forecast July-September demand for steel from Japanese industry at 17.57 million tonnes, up 10.2 percent from April-June but down 20.4 percent from a year earlier.

Top

 

 

POSCO predicts modest gain in H2 steel prices  

The world's 6th largest steelmaker POSCO predicted that global prices would increase in the second half after bottoming out in the second quarter, as carmakers increase production and Chinese demand improves.
"We see the Chinese steel demand increase accelerating in the second half, driven by economic recovery," South Korea's POSCO said in a statement.

Top

 

 

Ann Joo Resources' Q2 export surges  

Malaysia's third-largest steel producer by output Ann Joo Resources' export sales increased in the second quarter after a price slump late last year led to a global supply shortage. The company sold a record 150,000 tons of steel products in April-June to overseas customers as steel mills globally scramble to meet rising demand, said managing director Lim Hong Thye.
Steel makers cut production in the first quarter and run down their inventories after a sharp drop in steel prices late last year. The industry's inventory level is way below the normal level to sustain demand, so whenever there is a slight pick up in demand, immediately it will create a shortage, an industry executive said.
Ann Joo is in preliminary discussions with several local and foreign steel mills for acquisitions. “The financial crisis may have given us a better chance, because it forces people to realise that this industry is very challenging,” he said. Demand for steel products may slow down a bit in coming months due to summer holidays in the northern hemisphere and the Muslim holy fasting month of Ramadan in August. But demand should stay strong after a mild correction as governments are expected to roll out more infrastructure projects to pump-prime their economies.
Exports will be the key driver for Ann Joo's fiscal 2009 earnings because local demand may not recover strongly until early next year. The country has launched two stimulus plans worth a combined $18.89 billion since last November as the trade-dependent Southeast Asian country battles its first recession in more than a decade. Several multi-billion dollars projects have been identified such as a low-cost carrier terminal and an expansion of the light rail transit systems in the central Selangor state. Seven months after its first stimulus plan was announced, the government has not awarded any big infrastructure projects yet apart from an inter-state raw water transfer project.

Top

 

 

 

Thailand to impose anti-dumping duty on Indian steel products  

Thailand is to impose 32 percent of anti-dumping duty on major steel products imported from India. The flat products from Steel Authority of India (SAIL), Tata, JSW Steel and Essar Steel are all listed in the range of collection.
The steel import volume from India increased 350 percent during the first five months of 2009, to which Thailand committee on anti-dumping and subsidiary provided objections. This committee suggests that Tata's anti-dumping rate is 31.92 percent, while the rate of SAIL, JSW and Essar Steel is 26.81 percent.
Meanwhile, to impose duties on imported steel from China, Ukraine and etc. is still pending. Indian steel manufacturers advised Indian government to levy 25 percent protective tariff from Dec. last year, but the government has not given clear response. Indian steel enterprises also advocate adjusting up import duty to 20 percent from 5 perceent, thereinto, steel import tariff is 10 percent-15 percent. It is understood that Indian steel import volume increased 6 percent m-o-m in April and May, thereinto, HRC is up 28 percent m-o-m, reached 350,000tons.

Top

 

 

Thailand’s steel imports surge 

Thailand's import of steel had surged to more than 70 billion baht during the first five months of this year, the Iron and Steel Institute of Thailand reported. The country imported 315,000 tons of steel at a cost of 12.74 billion baht in May. Board of Investment of Thailand (BOT) secretary-general Atchaka Sibunruang Brimble said the board was ready to consider more investments in upstream steel production by the private sector to lower steel imports. Japan's Nippon Steel and JFE Steel corporations had proposed environmental and community management plans to the BOI for consideration, she said. "If they are allowed to invest in upstream steel production in the country, they would bring in the latest environmentally friendly technology that is being used in Japan,".

 

Top

 

Baosteel may hike Aug steel prices by 5 %

Baoshan Iron & Steel Co Ltd, China's leading steel producer, may hike August prices for its hot-rolled and cold-rolled steel products by about 5 percent versus the July pries.
According trade sources close to the company, China's largest steelmaker is expected to increase the prices by 200 yuan per ton, following recovering sales and export volumes, as well as pressure from raw material costs.
A Baosteel investor relations official said the company had raised the August price of medium plate, a relatively low-volume product, but had not yet decided on the August prices of hot-rolled and cold-rolled steel coil, its key products.
The sources said the medium plate price increase averaged 200 yuan a ton.

Top

 

China faces higher iron ore prices as contract talks stall    

China, the world's largest iron ore buyer, will have to pay higher cash prices for iron ore as annual contract negotiations stall with producers.
Ore for immediate delivery rose to a four-month high of $82.50 a metric ton in the week ended July 3. The China Iron & Steel Association has rejected Rio Tinto's offer of a 33 percent cut in annual prices, accepted by Japanese and South Korean mills.
China's mills had signaled they may agree to cut their prices demands after import rose, driving a 32 percent gain in cash prices from an April low. A wrong-way bet on prices could stifle a nascent profit recovery for Baosteel Group Corp. and rivals, forcing them into bidding wars for ore supplies.
“If spot prices move for a sustainable period of time to levels higher than the contract prices for 2009-2010 set with South Korea and Japan, the willingness to hold out for a better outcome by the Chinese steel mills will lessen significantly,” said Tim Schroeders, who helps manage the equivalent of $1 billion at Pengana Capital Ltd. in Melbourne.
Supplies will tighten and cash prices gain, should other markets, such as Europe and Japan, recover this half, said an analyst at Merrill Lynch & Co. in Sydney. “Then China will probably start to panic because Rio, BHP and Vale will probably start switching their tons to the contract levels they've secured with Japan, Korea and with Europe.”
According to a report, China's mills, who had demanded a cut of as much as 45 percent, are ready to discuss a reduction of between 33 and 40 percent. They're aiming for an agreement by the end of this month and want Rio to consider contracts that run for less than a year, Tian Zhiping, vice president of Hebei Iron & Steel Group, said.
“A compromise could be struck in which Chinese mills agree to the same terms as Japan, if miners concede quarterly or semi- annual price revisions,” Peter Richardson, Melbourne-based chief metals economist at Morgan Stanley, said in a July 2 report. “Failing this, Chinese mills would have to risk the spot market price.”

Top

 

China June steel output at 45.39 mln T      

China's crude steel production stood at 45.39 million tons, a report said, citing data obtained from the China Iron and Steel Association.
The report said daily production in June was 1.513 million tons, however, on a monthly basis, the world's largest steelmaker country's production was down 2.3 percent from an 11-month high of 46.46 million tons in May.
The rate of production is equivalent to a annual production of 522.2 million tons, more than 10 percent above 2008 of 500 million tons.
Chinese steel producers are maintaining high production as the China Iron and Steel Association said the industry to be profitable in May after being in the slowdown period.

Top

 

EU to end duties on Chinese steel pipes        

The European Union plans to terminate anti-dumping duties on imports of Chinese steel pipes and iron tubes, which account for around 50 percent of the EU market.
A report said that according to the commission document, The European Commission, which oversees trade policy for the 27-nation bloc, will make the proposal at a meeting of national trade official on July 28.
The tariffs, which are "provisional" duties lasting six months, range from 15 to 25 percent.
The decision by the Commission will go some way towards easing increased tensions between the EU and China over Beijing's trade policies, which have led to a raft of measures by Brussels on the grounds of protecting European industry.
Brussels imposed the duties on imports of "certain seamless pipes and tubes of iron or steel", mainly used in construction, in April following a complaint from the EU steel industry.
European producers accuse China of giving its own steel companies an unfair advantage by restricting exports of raw materials and driving down their domestic costs, and subsidising Chinese manufacturers.
Trade disputes between Brussels and Beijing are on the rise since the EU's trade deficit with China has ballooned. The EU has imposed a number of anti-dumping tariffs on imports of Chinese goods ranging from shoes to steel products.
EU exports to China rose to 78 billion euros ($109 billion) in 2008 from 26 billion euros in 2000, while imports from China rose to 248 billion euros from 75 billion euros over the same period. The EU and the United States launched action last month at the World Trade Organisation over Chinese export restrictions on around 10 industrial raw materials.

Top

 

Chinese steel imports from US in May up by 34.9% MoM

America's steel products exports totaled 627,935 net tons in this May down by 46 percent YoY or up by 1.7 percent MoM, said AIIS. Meanwhile, the accumulated exports through this May went at 3.2 million tons a fall of 38.7 percent YoY from 5.3 million tons in the same period of last year.
As per the statistics, the top 3 importers of US steel products in this May are Canada, India and China. Among others, US exported 18,998 tons resources to China in May jumping by 34.9 percent MoM or down by 34.1 percent YoY.

Top

 

China produces 267 mln T of crude steel in the H1 

China has produced 258.8 million tons of pig iron, up 5.6 percent YoY, and 266.58 million tons of crude steel, up 1.2 percent YoY, However, the country's steel products output stood at 316.48 million tons, increase of 5.7 percent YoY, in the H1 of this year.
In June alone, the productions of these products aforementioned are 48.9253 million tons, 49.3891 million tons and 62.1399 million tons hitting monthly record high.
Average daily production of crude steel, in particular, posts a record high of 1.6463 million tons in June compared with 1.5648 million tons the same period of last year.

Top

 

 

New iron ore deposit targets 5 mln T output       

Newly discovered iron ore deposit in China's Liaoning province, with reserves estimated at 3 billion tons, could be producing up to 5 million tons by 2015.
A report said that the deposit will need $366 million of investment and will be 20 percent owned by Benxi Iron & Steel Group.
The deposit lies close to the base of Benxi's local rival Anshan Iron & Steel Group.
An official said the deposit could potentially be as big as 7.6 billion tons, making it the world's biggest iron ore mine.

 

Top

 

 

 

Russia threatens to cease Mittal's two coal mines 

Russia's Kemerovo region has notified ArcelorMittal that it will seize two of the world's largest steel maker's coal mines if production levels do not increase.
A telegram sent to the multinational's chief executive, Lakshmi Mittal said that if the company was unable to stabilize production at these facilities, then the government would propose to handover them without any compensation. ArcelorMittal acquired three Siberian coal mines from Russia's Severstal in 2008, becoming one of the few foreign companies to enter the market. The company is in talks with local officials over the Anzherskaya mine, but it did not comment on Pervomayskaya, the second mine mentioned in the telegram. Due to the exceptional economic environment, ArcelorMittal is in discussion with potential investors and the local government over the future of the Anzherskaya mine only. The discussions are ongoing. Russian coking coal producers have cut back output sharply in response to weak demand from the crisis-hit steel sector. ArcelorMittal is running at about half capacity due to the downturn, which has hit key customers such as automakers and construction firms. In March, ArcelorMittal said it might temporarily close the Anzherskaya and Pervomayskaya mines if a cost-cutting programme did not have a satisfactory effect. It also introduced a voluntary retirement programme at the two facilities.

Top

 

 

 

Global demand for steel drops     

Demand for steel is expected to fall by 15 percent in 2009, the biggest drop for the industry since the Second World War. But experts from the World Steel Association predict the industry may stabilise later in 2009.
The slump follows the credit crunch and the economic slowdown that has brought construction sites to a standstill and forced car manufacturers to put their plants on short-time working. The leading chief executives of steel companies said earlier this year that Europe's demand for steel would drop by more than a quarter and demand in the US would decline by 36.6 percent. Even China, which has been going through a long-running industrialisation process, is expected to experience a 5% fall in demand – the first in 14 years.
In recent tmies steelmakers have been pushing up some prices, but they say this has only been possible because so much capacity had been mothballed and argue that talk of recovery is premature.
"Improvement in steel consumption for the second half of 2009 will depend on the effects of government stimulation packages, the continued stabilisation of financial systems and a return of consumer confidence," said a spokesman for the World Steel Association.

Top

 

 

 

Blue Scope may post loss    

Australia's largest steelmaker BlueScope Steel Ltd will face loss in this financial year because of a decline in demand for steel. The company will report a small loss after tax in the year ended June 30, according to a statement to the Australian stock exchange. The loss in the second half will offset the profit it made in the first half, it said. The Melbourne- based company reported a profit of $325 million in the fiscal first-half ended Dec. 30.
BlueScope will also restart its No. 5 blast furnace at Port Kembla Steelworks in Australia's New South Wales State because of a recent improvement in the Australian and global steel markets, the statement said. The company reported net income of A$596.2 million in the last financial year.

Top

 

 

 

ThyssenKrupp looks for ally   

ThyssenKrupp, Europe's largest stainless steel maker, will have to find creative ways to dodge anti-trust bullets as it seeks an ally to cut stainless steel overcapacity in the region.
ThyssenKrupp and rivals Outokumpu, ArcelorMittal and Acerinox have all racked up eye-popping losses in their stainless operations amidst a worldwide economic slump. Recession-driven consolidation is a must in Europe, but with Thyssen taking the steepest margin fall among the lots; it seems the most keen to find a way out through a major overhaul of all its steel-related and technology businesses.
The company is a key consolidation driver because its nearly 3 million tons of annual stainless steel output and 40 percent market share make it Europe's biggest player. But this commanding position is likely to cause cartel problems if it combines with another big player.
The company is studying various options on its stainless business, such as a merger or joint venture. Thyssen, which also makes ships, cement plants and elevators - swung to a first-half to March pretax loss of 215 million euros from a profit of 1.388 billion, dragged by a 622 million loss in stainless division. ThyssenKrupp Chief Executive Ekkhard Schulz had earlier said that the top four European stainless steel makers must look at what they can achieve to adjust capacity but it is not in concrete talks with any one.
A company source said the group has held informal bilateral talks with potential partners but nothing concrete has emerged so far. A merger with the stainless steel unit of ArcelorMittal, the world's top steelmaker, could be a solution but would come with its own challenges, both on the cartel and cultural front. The search for a solution for stainless steel comes at a time when ThyssenKrupp, formed from the merger of two German groups in 1999, wants to cut its divisions to two from five. Any delay in the stainless steel solution will hold up the whole group revamp.

Top

 

 

 

Mechel's Q1 loss declines 

Russian steel and coking coal producer Mechel slipped to a first-quarter loss of $691 million on forex losses and weak demand for its coking coal. Mechel, controlled by billionaire Igor Zyzin and which made a $500 million profit in the 2008 period, also said that its first-quarter loss before interest, depreciation, taxation and amortisation reached $474 million, compared to a year-earlier EBITDA of $853 million. Sales fell 49 percent to $1.18 billion. The company did not provide any financial guidance for the rest of 2009 and did not provide an update on talks to refinance a $1.5 billion bridge loan and a $2.0 billion loan used to acquire the Yakutugol coal mine in 2007.

Top

 

 

 

OMK increases investments in the Mill-5000 project 

OMK has increased investments by 21 percent in the Mill-5000 project has being realized in Vyksunsky Steel Works.
Vladimir Kochetkov MD of VMZ said OMK has corrected its investments program for carrying out the “Mill-5000” project to RUB 57 billion.
The investments plan before was RUB 47 billion.

Top

TMK finds opportunity in Africa

Africa’s need for pipes to construct new energy links will almost double, Russia’s largest maker of steel pipes for the sector, TMK, said.
The increase will be two times more pipelines would be constructed in this region. However, the main leader in this increase would be Algeria. About 7,756 km of steel pipes will be used in 2009 - 2010 from 3,446 km in 2007-2008. Oil majors and independent companies are targeting Africa, where proven oil and gas reserves have increased significantly as countries other than long-standing producers such as Nigeria and Libya report new finds. The Africa market for TMK is a very interesting regional market and is very promising for the future. TMK is eager to increase its footprint in Africa, which only captured 7 percent -- the least of any other region -- of the 676 pipeline projects TMK was involved around the world. But this was bound to change. Tullow Oil, developing new fields in Uganda estimated to have approximately 600 million barrels of oil, has said it may have to build a pipeline to the Indian Ocean for exports. Russia’s Gazprom is one of its clients. Gazprom in June signed a $2.5 billion with Nigeria to build refineries, pipelines and gas power stations in Africa’s most populous country. Nigeria, Algeria and Niger in July have also signed an agreement for a multi-billion dollar gas pipeline across the Sahara that could send up to 30 billion cubic metres a year of supplies to Europe. TMK was also investigating the feasibility of setting up a large pipe mill in Africa, possibly in Nigeria, Algeria or South Africa.

Top

This is a compilation of news from various dailies, magazines, trade publications and Press Releases.
To unsubscribe send mail to office@steelworld.com.
Type Unsubscribe <your email address> in the subject line.