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All of us know that India adopted the open market economic model in 1992. Shortly after the event, a few new generation steel mills such as Essar, Jindal, Ispat and Lloyds emerged. Unfortunately, soon after the inception, all of them faced trouble as the steel demand failed to rise as per the projections of industry analysts and the government. Now, many experts are of the opinion that we failed to pay adequate attention to infrastructure development at that time. Instead, we encouraged the growth of populist segments like consumer durables, automobiles, etc. much to the detriment of basic industries. We can say that we brought in the latest international car models even as India lacked proper roads and no plan to build the same was in place.
Some may argue that the automobile industry also needs plenty of steel but the fact is the volumes absorbed by the auto industry are negligent when compared to that required to build roads, ports and dams. Further, the sophisticated steel required for car bodies was imported at that juncture. I think this was realized somewhere around the turn of the century and infrastructure development assumed centre stage in our economic planning thereafter. It was the Chinese model of rapid development that led to our acknowledging the acute need to concentrate on infrastructure. This emphasis on infrastructure was extremely positive for the steel industry as the demand for the steel catapulted to hitherto unknown heights leading to growth of the industry.
Today, the government has revised the steel projections upward to a figure of around 175 MT by the year 2020. All the domestic steel mills are going ahead with expansion plans. Many overseas companies are eyeing India for not only mining rights but they also look to tap one of the fastest growing steel markets in the world. Our star states like Chattisgarh, Orissa, Jharkhand are flooded with MoUs and work in many has already commenced.
This phenomenal growth has been made possible because we adopted ‘Infrastructure Development’ as our foremost agenda. Many a times I have wondered that had we emphasized infrastructure earlier we would have surpassed many nations and economies that today are ahead of us. Had we only pursued the infrastructure agenda immediately after liberalization in 1992…!!.

 D.A.Chandekar
Editor & CEO

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Tata Steel bankers slash price of Corus loan

Indian companies are beginning to feel the impact of the sub-prime loan crisis in the US markets. Among the first to be impacted is Tata Steel, after bankers underwriting a loan to acquire Anglo-Dutch steelmaker Corus cut the price of one tranche of debt to be floated in the market to 99.25 per cent of face value from 100 per cent. The steel-maker will now have to pay 50 basis points more on this tranche of $1 billion with seven-year tenure. Tata Steel is mopping up $7.3 billion to fund its $13 billion-acquisition of Corus. The loan’s underwriters are ABN Amro, Citigroup and Standard Chartered. Koushik Chatterjee, Tata Steel’s Vice-President (Finance), however, said the company’s overall cost of borrowings would not go up. “We are re-tranching the entire loan, which will maintain the effective spread at around the original level,” he said. Tata Steel will also raise an additional $1 billion of six-year loans at an interest margin of 237 basis points and another $1 billion of five-year debt at 200 basis points above the London interbank offered rate (Libor).
Bankers and finance executives suggest other Indian companies may also now have to pay more on their overseas borrowings. Brijesh Mehra, corporate and investment bank head of ABN Amro Bank, said the sub-prime loan crisis could raise borrowing costs for Indian companies. However, bigger companies were unlikely to face any problems in mobilising money overseas, he said. Ravi Nedungadi, President and Group CFO of UB Group, also said companies raising money between now and October might have to pay a little more for their borrowings. The UB group recently raised $1.2 billion in two tranches at 250-275 basis points over Libor. Chanda Kochhar, ICICI Bank’s Deputy Managing Director, said that ‘the spread had widened a little but there was enough liquidity in the market and enough appetite for Indian paper.’ According to Tata Steel’s Chatterjee, the company has managed to scrape through the turmoil in the US credit market because nearly half the funding has come from Tata Steel and its subsidiaries and half from Corus’s balance sheet.

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Fresh funds to further steel sector

Riding on the buoyant steel production trend in the country, the Centre would launch a new fund for domestic producers. Called the “Steel Development Research Mission,” the fund will have the government as the nodal agency. “It is a move to streamline the research and development part of the steel industry, to produce quality steel in the most cost-effective way,” said R S. Pandey, Secretary, Ministry of Steel, Government of India. The estimated cost of the mission would be around Rs 60-65 crore, and all the major producers in the country would be contributing to the fund, he added. He, however, said that the government would only act as the facilitator, without participating in the financial aspect of the project. “We would utilise the existing institutions to improve research and development, in a bid to increase the pool of skilled workers in the country, so that we can achieve our goal of becoming the second-largest producer of steel in the world by 2020,” he added.
Pandey, who was addressing a seminar organised by the Confederation of Indian Industry, called for more public private partnership to enrich the existing research and development facilities in the country. Meanwhile, speaking on the sidelines of the seminar, S K Roongta, Chairman, Steel Authority of India Limited (SAIL), sounded optimistic about reaching a solution to the Gua mines issue. The mines were being blockaded by casual workers who demanded full-time jobs. He said that SAIL would absorb the casual labourers in phases. Negotiations were on with the contract workers’ union led by Rajesh Koda, the younger brother of Jharkhand Chief Minister Madhu Koda.

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Essar Steel net ascends 462 per cent

Essar Steel net profit grew 462 % to Rs 231 cr for the quarter ended June 30 compared with Rs 41 crore in the corresponding period last year. The company has made provisions for-finance cost (net) of Rs 93 cr (Rs 181 cr) with an exchange gain of Rs 114 crore, depreciation of Rs 187 cr (Rs 149 cr) and provision for deferred tax, MAT and FBT of Rs 130 cr (Rs 22 cr). Total income was at Rs 2,827 cr (Rs 1,904 cr) for quarter ended June 30, up 48 per cent. EBIDTA recorded a growth of 62 % for the quarter at Rs 642 cr (Rs 396 cr).

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India 5th in global output

India has moved up two places in the global ranking and is now the fifth largest producer of crude steel in the world, with the revised figures for production in 2006 ahead of South Korea and Germany. An expert committee set up by the Union ministry of steel, which went into the issue of under-reporting of capacity and production data, has revised the production figures for crude steel in the calendar year 2006 to 49.45 million tonnes as against 44 million tonnes, which puts India in the seventh position among global steel producers. The revised figures for crude steel production in 2006-07 is pegged at 50.71 million tonnes and those of finished steel at 51.90 million tonnes.
According to the figures released in January by the International Iron and Steel Institute (IISI) for 2006, South Korea ranked fifth with a crude steel capacity of 48.4 million tonnes and Germany sixth with 47.2 million tonnes. With the revised figures, India has surpassed both South Korea and Germany. Lower estimates of induction furnace and re-rolling sectors accounted for most of the under-reporting of crude steel data, which in turn affected semi-finished and re-rolling (long product) figures. Consumption figures for India have also been revised. The revised data show that in 2006-07, domestic steel consumption was 46.14 million tonnes compared with 41.43 million tonnes in 2005-06.

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Tata Steel buys stake in African coal mine

Tata Steel Limited and Riversdale Mining Limited, a company listed in Australian Stock Exchange announced that they have entered into a MoU, whereby Tata Steel will become a strategic investor in Riversdale’s Mozambique Coal Project by acquiring a 35% stake in it for a sum of $100 million. The Mozambique Coal Project includes the coal tenements of premium hard coking coal in Benga and Tete, located in the Tete province in Mozambique, which are fully owned by Riversdale through its subsidiary. The Benga and Tete tenements together cover an area of 24,960 hectares. The Riversdale management expects that the potential mineralisation of the area will be substantially high.
The MOU contemplates the relationship between Riversdale and Tata Steel to develop the project. Riversdale is presently conducting a scoping study which is likely to be completed in Aug 07. The Definitive Agreements are expected to be finalised and executed by Nov 30. The hard coking coal derived from this project will be supplied to the Corus facilities in the UK and Europe and also to the Company’s enhanced requirement in India in the future. Mr. B Muthuraman, Managing Director, Tata Steel said, “The Memorandum of Understanding with Riversdale is in the Tata Steel’s stated strategy of progressing towards raw material security for its global business. This partnership gives Tata Steel an opportunity to jointly explore part of a large coal basin which could prove to be a potential source to meet part of the raw material requirement and enhance the long term competitiveness of the global operations. Mr. Michael O’Keeffe, The CEO and Chairman of Riversdale said, “The Memorandum of Understanding with Tata Steel is a decisive corporate event for Riversdale and is a definitive recognition of the Moatize Coal Basin as a significant new source of supply of hard coking coal products for the global steel industry. The MOU culminates a lengthy and thorough search for a strong strategic investor.
Tata Steel is one of the most dynamic steel companies in the world. Throughout their long history, they have demonstrated consistent ability to thrive across many market cycles. They are an ideal strategic partner for Riversdale, and offer our shareholders the most efficient way to realize value from the development of Riversdale’s world class projects.” The completion of the transactions contemplated by the MOU is subject to completion of due diligence, definitive agreements, and Board approval of both companies and regulatory approvals.

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TATA Steel, Essar bid for Egypt project

TATA Steel and the Essar Steel Holdings have been short listed by the Egyptian government to build a proposed USD 3 billion steel plant project in Egypt. As per reports, 7 firms have made it to the final list from the initial 24 bidders and short listed bidders include Egyptian steel makers Ezz Steel, Suez Group and Egyptian Iron & Steel Company. As per report, the winner of the bid will be announced by October 2007. The project includes 2 steel plants each with a capacity of 2 million tonnes and 2 billet plants with a capacity of 1 million tonne each.

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Centre grants green nod to Posco plan

The government has granted environmental clearance to South Korean steel giant Posco’s integrated steel project in Orissa, removing a major hurdle in the way of the Rs 52,000-crore plant. “The Ministry of Environment and Forests has given clearance for Posco’s mega steel project at Kujang near Paradip in Jagatsinghpur district of Orissa,” an official close to the development said. The Korean steel giant had signed a memorandum of understanding with the Orissa government in June 2005. “The project authorities shall utilise the Rs 1,525 crore earmarked for environmental pollution control measures judiciously to implement the conditions stipulated by the ministry as well as the state government. The funds so provided shall not be diverted for any other purpose,” a source quoted the ministry as saying while granting clearance. The clearance has been given on the condition that Posco will install furnaces using only the FINEX technology and gaseous emissions from its units will conform to the load/mass standards notified by the government.
“The government has made it clear that the Korean steel giant must implement its relief and rehabilitation plan in a time-bound manner and report compliance to the state government,” a source said. A total of 471 families will have to be relocated by the company. The ministry has also made it clear that the company’s water requirement should not exceed 10 MGD and it must develop water harvesting structures.

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Steel projects in Andhra to get sops

The Andhra Pradesh Cabinet recently approved a recent order making integrated steel plants or alloy steel units using blast furnace technology or direct reduction technology eligible for incentives offered under the Industrial Investment Promotion Policy 2005-10. Mini-steel plants, steel ingots/ billets and alloy steel and ferro alloys manufacturing activities had been put on the ineligible list of the state industrial policy since 1989 as they were viewed as power-intensive industry with a low employment potential.
The government's decision to include steel manufacturing comes in the wake of a large integrated steel project in Kadapa district by Bramhani Industries Limited, which is promoted by Karnataka legislator G Janardhan Reddy. Incentives have already been extended to a couple of other projects apart from Bramhani. “Blast furnace-based steel plants generally have their own captive power plants, They require very little power as compared with electrical induction furnace. Hence, the State Investment Promotion Board has agreed to remove these units using blast furnace technology or direct reduction technology from the ineligible list of industries,” the government stated.
The Cabinet also approved the two large township projects near Hyderabad, one at Srinagar for which the developer is yet to be identified and the other at Tellapur, which is being developed by a consortium of Tishman Speyer, ICICI and Nagarjuna Construction Company. The 550 acre-Srinagar project is proposed to be developed through a joint venture between the land owners by the Hyderabad Urban Development Authority (Huda). In the case of 400-acre Tellapur project, the companies have bid the land at Rs 4.215 crore per acre besides agreeing to offer 5 per cent from the revenues for a five-year period to Huda. The Cabinet also approved the state support agreement for the two projects, which includes external infrastructure, waiver of stamp duty, and special building regulations.

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NO CURBS ON ORE EXPORT - GOVT

Amid repeated demands by steel industry to curb iron ore exports, the government held that the country has adequate iron ore reserves, estimated at 25.25 billion tonnes, and there is no move to curb its export.
“As per available information, India has sufficient resources of iron ore, estimated at 25.25 billion tonnes, which continues to increase,” Minister of State for Mines T Subbarami Reddy told the Lok Sabha. He said, ‘‘Export of minerals in India continues to be guided by government’s EXIM Policy, which regulates and promotes judicious use of iron ore for domestic purpose and export of surplus quantity.” Making it clear that there is no move to curb iron ore exports, Minister of State for Commerce and Industry, Jairam Ramesh, told the House that government had not taken any decision to reduce iron ore exports. “Government permits export of iron ore with iron content up to 64 per cent without canalisation,’’ he said.
According to figures revealed by Reddy, export of iron ore has been progressively increasing during the past three years. In 2004-05 it was 78.14 million tons, while it rose to 89.27 MT in 2005-06 and 93.11 MT in the last fiscal. He said that chief ministers of mineral-rich states have sought to retain the right of giving preference in granting mineral concession in the interest of developing the backward regions and the issue was being considered by the government.

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Steel Authority told to accelerate coal mine buys abroad

The government has asked public sector steel companies Steel Authority of India (SAIL) and Rashtriya Ispat Nigam (RINL) to intensify efforts to acquire coal mines in Australia and Canada, before the shortage of coking coal could jeopardise their capacity expansion plans. “We have asked these PSUs to intensify their efforts to acquire coal properties overseas either through insurance security of supplies or acquire controlling stake in the mines,” a top Steel Ministry official said. He said, following the recent tour of Steel Minister Ram Vilas Paswan to Australia, SAIL and RINL have gained confidence to acquire mines abroad and have formed their respective teams of handpicked officers to carry out negotiations.
Currently, SAIL and RINL are part of a special purpose vehicle (SPV) along with Coal India (CIL) to acquire coal properties abroad. The steel ministry has asked the companies to go on their own. SAIL is executing modernisation programmes at all its plants at an expenditure of over Rs 45,000 crore. Once this gets over, the expanded capacities would require nearly double the amount of coal they are consuming now, he said.
The situation is particularly alarming as almost all modernisation programmes are likely to be over by 2010, following which the new capacities would go on stream. “SAIL has a corpus of around Rs 1,000 crore to acquire mines while RINL has around Rs 500 crore to do so,” the official said and pointed out that the money was adequate to meet their purpose. The capacity expansion of IISCO Steel Plant is expected to be over by February 2010, while that of Salem Steel Plant by March, the same year. Similarly, expansion of the Bokaro Steel Plant would be over by August 2010 and that of the Bhilai Steel Plant by September same year, he said. “These PSUs have been asked to complete their modernisation programmes on time as a year’s delay will result in a loss of Rs 5,000 crore,” the official said.
The SPV between SAIL, RINL and CIL would jointly have authorised capital of Rs 10,000 crore and a paid-up equity of Rs 3,500 crore. SAIL and CIL would have to chip in with Rs 1,000 crore each. Earlier Coal India had mooted Coal Videsh on the lines of ONGC Videsh (OVL), but the Finance Ministry had shot down the proposal saying it was not viable.

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TATA Steel announces social initiatives

 It is reported that TATA Steel has pledged INR 100 crore to a social initiative program involving two projects, a comprehensive land and water management scheme and schools for tribal children, as a part of its centenary celebrations. Mr. B Muthuraman, MD of TATA Steel, announced the project at the Tata Steel Archives in Jamshedpur. He said “We always believe in giving back to society many times over than what we take.”
As per reports, the comprehensive land and water management scheme will run for five years and will be dedicated to the economically weaker sections of society in and around Jamshedpur and the states where TATA Steel operates. The project will create irrigation facilities for tribals, set up water user cooperatives, develop wastelands and promote horticulture and agro forestry.
The project will also encourage agricultural improvement through technological up gradation. TATA Steel will take on land and water management projects in Jharkhand, Chhattisgarh and Orissa and touch 40,000 tribal households. TATA Steel will depute the TATA Steel Rural Development Society, Jamshedpur as the nodal agency for implementing the project. The second project involves setting up all day schools for children from scheduled caste and scheduled tribe families in backward districts of Jharkhand, Chhattisgarh and Orissa. The schools will be able to take 1,000 children each.

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Finmin yes to PSU coal SPV Indian iron ore gets freight edge

The Finance Ministry has given its approval to set up a special purpose vehicle (SPV) promoted by five public sector companies to scout and acquire coal properties abroad. The five public sector units that would participate in the SPV are Steel Authority of India Limited, Rashtriya Ispat Nigam Limited, National Mineral Development Corporation, National Thermal Power Corporation Limited and Coal India Limited. The SPV would have an authorized capital of INR 10,000 crore and a paid up equity of INR 3,500 crore. While SAIL and CIL would chip in with INR 1,000 crore each, the other three would contribute INR 500 crore.
Mr. PK Bishnoi, CMD, RINL, recently said that, “All companies involved with the SPV would be signing the MoU. He added that the SPV would approximately cater to around 10% of the requirement of SAIL and RINL. The SPV would be looking at three routes for acquiring the stake - a buyout of an existing coalfield, a stake through the stock exchange or the prospecting route.

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Indian iron ore gets freight edge

Sanjiv Batra, CMD of MMTC, said recently that, “India's iron ore exports to China have recovered as a shortage of ships has pushed up freight rates, handing India a temporary advantage over Brazil. Chinese buyers are now snapping up Indian ore, which has gained a distinct price edge. He added, “That advantage has come to us. And buyers would like to buy from India.” Mr. Rahul Baldota, President of the Federation of Indian Mineral Industries, said that freight rates from India to China had risen to USD 30 to USD 35 per tonne from USD 20 in the last two months, but Brazilian exporters were facing about USD 65 per tonne. He added, “This advantage has come to us in the last two weeks. But this is a temporary phenomenon. I see the price levels sustaining for another 1 or 2 weeks. India's total iron ore exports should be 10% to 15% lower than last year.”
As per reports, India's ore exports between April and June 2007 have fallen by about 9% YoY to 22.03 million tonnes as compared to April and June 2006. However, losses due to lower sales are likely to be offset in August 2007 due to a jump in international spot iron ore prices for 63.5% grades to USD 100 per tonne from USD 52 per tonne.

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Indian Q1 iron ore export down by 9% YoY

India's iron ore exporters, who bank on Chinese buying mainly through spot sales, have started feeling the heat of exports duty levy. In the April to June 2007 quarter, traders saw the full fledged impact of the export duty, which was levied by Indian government in this year's budget. As per some reports, India's iron ore export has declined by 9.09% YoY to 22.03 million tonnes in the April to June 2007 quarter as against 24.23 million tonnes in the April to June 2006 quarter. During 2006-07, India's total iron ore export has grew up by 6.4% YoY to 93.12 million tonnes from 87.51 million tonnes in 2005-06.
Mr. RK Sharma, Secretary General of Federation of Indian Mineral Industries, said that, “No foreign buyers wish to engage Indian iron ore exporters in long term contracts because of anticipated harmful impact of steel lobby. The steel lobby in short is damaging the iron ore exports severely. Domestic steel producers neither want to use low grade iron ore fines nor do they want us to exports heavily.”
After levying INR 300 a tonne export duty on iron ore, Indian government cut the duty to INR 50 a tonne on low grade, while the same was retained for high grade. Industry sources said that the duty cut would partly offset traders' worry as the low grade iron ore forms only 25% of the total exports.

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Contrarian JSW looks at LBO for N American buy

At a time when instability in the US leveraged buyout (LBO) market is making world equities markets jittery, JSW Steel is planning a leveraged buyout of a North American steel company. JSW Steel Vice-Chairman and MD Sajjan Jindal told that the company would have “some equity contribution” for the acquisition of the target rolling mill, while most of the cost will be raised by leveraging the target company’s balance sheet. Jindal, who did not name the target company, said the due diligence for the proposed acquisition, which could cost JSW around $1.2 billion (Rs 4,800 crore), had begun and would be complete by the end of the month. He further said that he would ship slabs from his facilities in Vijayanagar and West Bengal, where he is setting up a 10 million-tonne capacity plant, to the target company for conversion into finished products.
Analysts said Jindal would probably contribute $200 million and raise $1 billion through the LBO route to fund the acquisition. Uncertainty in the US LBO space rocked world equities markets, including India, over the past week. The Sensex lost 7.4 per cent in two trading sessions. Many big-ticket mergers and acquisitions, including Cadbury Schweppes, were deferred. Investment bankers are divided over Jindal’s plans. A banker who had recently advised an Indian steel major in an overseas acquisition said there was no logic in this route when “the LBO market in the US is virtually dead”. Another banker who advised a domestic company on its leveraged purchase of a global major said the decision showed Jindal was banking on a revival of the LBO market in two months, when he would needs the funds. However, he added, Jindal might pay a higher interest rate in September than he would have if the deal had taken place a few months ago.

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China: India forecasts for ore demand too high

 During the recent iron ore marketing conference hosted by Federation of Indian Mineral Industries at Goa, India iron ore enterprises and the mining firms magnified China's demand, possibly in order to seek further price rise meanwhile.
It is also reported that, during the conference, the Indian speakers wrongly reported that China's domestic iron ore is mainly underground mined and thus is more expensive than imported iron ore and concluded with a higher forecast of China's demand for imported iron ore than the real situation. This may distort Indian spot market even further and lend negative impact on the forthcoming benchmark talks with global mining majors.
But on the other hand, the spot prices for Indian iron ore have literally hit the roof. As per the reports from China Chamber of Commerce of Metals Minerals and Chemicals Importers and Exporters, the average reference prices for import transactions of Fe 63.5% Indian iron ore concluded during the week ending on August 20th 2007, the price surged by USD 8 on FOB basis and by USD 13 on CNF basis to reach the highest ever levels of USD 100 to USD 103 and USD 135 to USD 138 per tonne on FOB India and CIF China basis respectively.

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Chhattisgarh is No. 3 mineral producer

 Chhattisgarh has become the 3rd largest producer of minerals in India just behind only Orissa and Jharkhand with record production worth INR 7000 crore during 2006-2007. Officials said that, Chhattisgarh has also earned revenues of INR 832 crore from minerals and in order to maintain this trend, the state government has decided to give priority to the mining of iron ore, coal, bauxite and lime stone in the current year's plan.
The officials added that besides, deposits of diamond have been found in Raipur, gold has been discovered in the Sonakhan area of the capital while Sitalpur Bhelwapani, Mitchgaon, Bhuski and Gardi in Kanker district also have precious metal deposits. Uranium has also been found in the Gotulmuta area in Durg district and the Indrawati river basin.

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Refractory makers get set to match steel expansion

 Indian Refractory Makers Association has urged the Union Ministry of Steel to consider the domestic refractory industry as a strategic partner in future development of steel industry in India. Mr. A K. Chattopadhyay, Chairman of Indian Refractory Makers Association, while addressing the association's annual general meeting, said that “Steel cannot be produced without proper refractory lining and in turn the refractories industry depends heavily on the steel industry for the bulk of its production.”
He added that steel is accepted as one of the sinews of economic development and it would be in the fitness of this that the strength and vitality of the domestic refractories industry should be built into the sinews. He further said that, “Instead of keeping us always at an arm's length just as one of the many suppliers it would be important for the steel industry to factor in the contribution of refractories to higher efficiency and productivity as it faces the changes in global market for steel. This is well within our limit of 2 million tonnes even allowing for the expansion of cement, aluminum and such other industries.”
According to reports, India will require 0.9 million tonnes of refractories based on a specific rate of consumption of 13 kilogram per tonne of crude steel produced if the target of 70 million tonnes of steel capacity by 2012 is to be met.
Mr. Drona Rath, CMD of Mecon, however pointed out that globally refractories capacity is 50 million tonnes compared to 1.5 million tonnes in India. He urged the industry to gear up to face the increase in steel capacity.

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WB clears 4 steel projects

West Bengal government has cleared several industrial projects across steel, cement and power sectors that involve an investment of INR 41,200 crore. Mr Amit Kiram Deb chief
secretary of West Bengal said that the four projects in Purulia and Burdwan districts would require 11,350 acres of land.
1. Jai Balaji group would set up a 5 million tonne steel plant and a 3 million tonne cement plant at Raghunathpur in Purulia district at a cost of INR 16,000 crore. Nearly 3,800 acres would be needed for these projects.
2. Bhusan Steel would set up an integrated steel and power plant with a capacity of 2 million tonne at Salanpur in Burdwan district besides a cold rolled unit at Bijpur in North 24 Parganas district. These two projects would involve an investment of INR 8,000 crore and would require 2,650 acre.
3. Another large project approved was the one by Abhijit Steel, which would install a 2 million tonne steel and power plant at an investment of INR 10,800 crore. Around 2,500 acres would be acquired at Jamuria and Barabani in Burdwan for the project.
4. Adhunik Steel would set up a steel plant with a capacity of 1.1 million tonne and a cement unit with 1 million tonne capacity at Raghunathpur in Purulia district at an investment of INR 6,400 crore. 2,400 acre would be needed for the projects.

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Leighton eying Middle East boom to fuel its growth plans

Australian engineering and construction major Leighton Holdings Ltd., will continue to aggressively target the Middle East for its ambitious growth plans. Mr. Wal King, CEO, Leighton, told that the Middle East is absolutely booming, with USD 1.4 trillion worth of projects planned in the region, USD 25 billion of which are in Abu Dhabi including museums and a performing arts center. Mr. King said, “Gulf is the biggest construction market in the world per capita. We would consider joint ventures and acquisitions and are holing discussions with the largest construction company in the Middle East. It is just staggering the amount of projects in Abu Dhabi.” He said that, Leighton is exploring alliances and acquisitions in the Middle East but did not elaborating. He also added that the high levels of mining were unlikely to decrease and wanted to secure mining deals in India, China and Canada and opportunities for major infrastructure contracts in Australia were expected to continue.
Mr. King said, “'Opportunities out there are big and large. We have a growing population and we have under invested. There are water shortages and traffic jams, which are driving along greater infrastructure opportunities.'” Leighton Holdings Ltd., has posted a 65% increase in second half profit as infrastructure and mining contracts swelled its order book to an all time high. Its net income in the six months ended June 30th 2007 rose to AUD 260 million from AUD 158 million a year earlier.

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Iran starts privatization of Khuzestan Steel

Iran government has recently started privatization of Khuzestan Steel Company by selling 4.6% of its shares in line with the Article 44 of the Constitution.
Mr Gholamreza Kord Zanganeh MD of Iranian Privatization Organization said that he provided the possibility of increase in every share price as a reason to privatize the company in stages. Mr. Zanganeh pointed to the positive steps the IPO has taken in attracting people's confidence as well as emphasizing public and state interests at the same time. He added that selling shares in reasonable prices is far away from a jump in prices.
He said that the remaining shares will be offered in the stock exchange soon on expectations the delivery ends up in two or three days. He added that Iran Power Plant Projects Management Company the third company eligible to privatization would be soon ceded to the private sector.

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Saudi Trans for 1.5 mt project in Egypt

It reported that Saudi Trans Kingdom Investment Co is proceeding with formalities for a sponge iron & steel billets project at North Suez Gulf Zone in Egypt with 1.5 million tonnes per annum design capacity. It is not stated when the project will be completed and how much it costs. Mr. Mohamed Sayyed Hanafi, Director of the metallic industry chamber at the Egyptian Industries Federation said that almost 50 % of the output is planned for export to Saudi Arabia.

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Turkey hopes for Ukraine investments

Mr. Alper S. Tokozlu, Commercial Counselor at the embassy of the Turkey in Ukraine, said that, investments from Turkey into Ukraine may total as much as USD 1 billion.
He added that in the first six months of 2007, total trade volume between Turkey and Ukraine has reached USD 2.7 billion as against USD 4.1 billion by the end of 2006. He further added that, Turkey is among the top 3 export destinations for Ukrainian goods and more than 60% of total Ukrainian exports to Turkey are iron and steel and scrap metals. The presence of Turkish companies and investments in Ukraine are growing however, Ukrainian investments to Turkish economy are still on unsubstantial levels.
Mr Tokozlu said that construction, telecommuni-cations and food industry are most significant business. In April 2007, the total Turkish investment in Ukraine is around USD 91 million and more than 400 Turkish companies operate in Ukraine. The volume of bilateral trade was about USD 1 billion in 2001 and reached USD 4.1 billion by the end of 2006.

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Kazakhstan to mine 130 mt coal by 2015

It is reported that Kazakhstan, which has the world's eighth biggest reserves of coal, has raised its production target for the fuel by one third as the country's booming economy fuels an increase in power consumption.
Energy Ministry of Kazakhstan ascertained that Kazakhstan, the biggest energy producer in the former Soviet Union after Russia plans to mine as much as 130 million tonnes of coal a year by 2015. The Kazakh government had earlier forecast output of 100 million tonnes.

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Saudi Arabia, Egypt and UAE to dominate Middle East steel markets

Saudi Arabia, Egypt and the UAE will dominate steel demand in the Middle East region. By the year 2010, Saudi Arabia will have an added capacity expansion of 5 million tonnes followed by Egypt with nearly 2 million tonnes and the UAE with 1.5 million tonnes.
The raw steel production is expected to reach 51.5 million tonnes and 62.9 million tonnes in 2007 and 2010 respectively and finished steel products capacity will increase by 46.7% from 22.9 million tonnes in 2006 to 33.6 million tonnes in 2010. Middle East, due to rising steel demand, which is growing at 9% rate, will become a net importer of semi finished steel, mainly billet, slab and HR coils. The large increase in consumption of semis and flat products has been partly met by imports, which have increased from 6.4 million tonnes in 1997 to around 25 million tonnes in 2005 and is expected to reach 30 million tonnes in 2007. The steel industry in the Middle East is heading for major expansion as crude steel production is projected to increase by nearly 70% from 15.4 million tonnes in 2006 to over 26 million tonnes by 2010. Steel demand in the Middle East is dominated by long products, most of which are used in construction. Long product output such as rebar will be the dominant form of steel production, although its share of output will be declining. Rebar output grew from 14.1 million tonnes in 1997 to 21.6 million tonnes in 2004 and is expected to reach 28.9 million tonnes in 2010.
Although the Middle East has been one of the world's active regions for steel plant suppliers in recent years, its steel plants are mostly starting from a lower steel making base especially in flat products. The total flat products production has increased from 9.9 million tonnes in 1997 to 18 million tonnes in 2004 driven mainly by Turkey and Iran and to a lesser extent Saudi Arabia and Egypt. In the Middle East, most current investments are driven by growth in domestic demand emanating from strong construction boom. Steel demand in the region is expected to increase from 70 million tonnes in 2007 to around 90 million tonnes in 2010. GCC steel demand will be in the range of 20-30 million tonnes during the same period.
Gulf Cooperation Council countries are net importers of products such as ingots, steel tubes, seamless, hot rolled rod in coil, welded tubes and cast iron pipes. However, net imports are likely to fall back to 5.4 million tonnes by 2010 with the expected increase in domestic demand. Arab countries have DRI and EAF plants with total capacity of 8.75 million tonnes. Qatar and Saudi Arabia started their production in 1978 and 1983, respectively, with production capacity at 0.72 million tonnes and 3.65 million tonnes each, then Egypt followed with 2.92 million tonnes in 1986 and Libya with 1.46 million tonnes in 1990. Middle East iron ore imports have increased from 14.5 million tonnes in 1997 to 22.2 million tonnes in 2004 and are expected to reach 42.5 million tonnes by 2010. The Middle East steel consumption has grown by 31.1% from 34.7 million tonnes in 2005 to 45.5 million tonnes in 2006 and is expected to reach 73.3 million tonnes by 2010. GCC countries are considered among the largest consumers of iron and steel products with per capita consumption estimated at 378 kilograms while world per capita consumption is barely 182 kilograms.
Total per capita consumption of finished steel in the Middle East in 2004 was 146 kilograms. For Arab countries, the UAE has the highest per capita consumption with 801 kilograms while Sudan the lowest with just 12 kilograms. This reflects the wide divergence among economies within the region. It is expected that by 2010, the population of the Middle East will grow to an estimated 412 million, and per capita consumption will rise to 182 kilograms. Per capita consumption of crude steel (378 kilograms) for Gulf Cooperation Council countries, on average, is relatively high compared to other regions such as Asia (138 kilograms), CIS (123 kilograms) and the global average but lower than Europe (399 kilograms).

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Egypt to grant 4 licenses to build steel mills

Egyptian government would sell four licenses to build steel mills to reduce the country's need for imported steel. Egyptian Ministry of Trade and Industry in a statement said that the government would sell two licenses for steel billet mills and two licences for DRI steel production mills with a total capacity of 7 million tonnes a year without giving more details.
The ministry added that Egypt, the Arab world's most populous country went from importing 2 million tonnes of steel a year less than 10 years ago to become an exporter of 900,000 tonnes in 2006. According to Egypt's government data it produced about 4.3 million tonnes of steel in the same year. However as per the International Iron & Steel Institute, Egypt's crude steel output stood at 6 million tonnes in 2006.

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POSCO to construct Mexico plant

The Mexican unit of South Korean steelmaker POSCO would start construction of a USD 250 million steel plate plant at the Altamira industrial park in Tamaulipas state on September 5, this year.
POSCO official said construction of the 400,000 tonnes per year plant is scheduled to be completed in June 2009. According to Mr Min Dong Kim, President, of POSCO México said, “We will be producing high quality steel for the automobile industry. Our final destination will be automobile companies in Mexico and the US.” He added that 60% of production would stay in Mexico and the rest would be exported to the US.
The plant is POSCO first investment in Latin America although it has a joint venture in the US, USS POSCO with Pittsburgh based US Steel.

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Japan, Indonesia sign FTA

It is reported that Japan and Indonesia have signed a trade agreement on August 20, 2007 to eliminate tariffs on more than 90% of the goods bought and sold between the two countries. Mr. Shinzo Abe prime minister of Japan and Mr. Susilo Bambang Yudhoyono, President, Indonesia, signed the comprehensive economy partnership agreement, which has been under negotiation since mid 2005.
The trade agreement is a modified free trade deal that sees Japan offer extra benefits to partners beyond simple tariff cuts. It was the eighth such accord signed by Japan and Indonesia's first. It is to go into effect in 2008 after the Jakarta government obtains parliamentary approval and establishes rules for the pact by the end of 2007. The agreement lifts tariffs on about 96% of Japan's exports to Indonesia and on 93% of Indonesian exports to Japan mostly coal and liquefied natural gas. Under the pact, Indonesia is to scrap a 15% tariff on Japanese steel used by its automotive, electronics and heavy machinery industries.
Japan is Indonesia' biggest trading partner and its largest purchaser of natural gas. Indonesia' exports to Japan were worth USD 21.7 billion in 2006 while imports from Japan stood at USD 5.5 billion in 2006. Around 1,000 Japanese companies operate in Indonesia.

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Nippon Steel for low quality iron ore

Nippon Steel Corp's Yahata steel works at Kitakyushu will use only low quality iron ore from around 2010 as it now has the technology to use the low quality ore to cut costs. The report added that Nippon Steel also plans to increase the proportion of low quality iron ore used at other plants to increase competitiveness.
For the process of solidifying iron ore before it is placed in a blast furnace, Nippon Steel has developed a new ingredient to replace calcium oxide to prevent low quality iron ore from breaking up, allowing the firm to cut costs by about 40%.
As from October 2004, Nippon Steel used the iron ore at the Yahata factory and has raised the proportion used to 50%. After ensuring the low quality material is not affecting the quality of the final steel products, Nippon Steel will increase the ratio of low quality iron ore used at Yahata to 100% by around 2010.
Low quality iron ore is difficult to use as a material, and steel makers have found it a challenge to find good uses for the ore, which accounts for 80% of iron ore reserves and only about 20% of iron ore reserves are high quality. With demand for steel growing due to the economic growth in rapidly developing countries including China, prices for a ton of high quality Australian iron core have surged in last 5 years.

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China firm plans $130 mn plant in N Vietnam

A Chinese firm aims to build a US$130 million steel processing plant in Vietnam as mega-firms
flock to tap the Southeast Asian market, the world's largest steel importer.
Shengli Investment and Development Limited Company has signed a memorandum of understanding to build the 20ha facility at a cost of $50 million for the first phase.
The plant would be designed to churn out one million tons of steel per year in the northern province of Thai Binh.
The company plans to pump $80 million more into expanding the facility on an additional 35ha, raising
its production capacity to two million tons annually. Project launch formalities are expected to be completed soon.

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Vietnam producers lower steel prices

It is reported that several Vietnam's steel producers have lowered their selling prices by VND 100,000 per tonne but they said that it was not because of the tax reduction.
According to the Vietnam Steel Association the prices of Vinausteel rolled steel and VPS bar steel decreased by VND 100,000 per tonne on August 8th 2007, the same day the decision on lowering the import tax rate on ingot steel from 5% to 2% went into effect. The steel producers said that they lowered the selling prices not because of the decreased tax but because of slow sales in the low season.
Vietnam Steel Association in July 2007 said that local steel mills sold 218,000 tonnes only lower than the average sales volume of 250,000 tonnes a month in 2006. Meanwhile, other steel mills said they would keep selling prices intact from now until the end of the year. The producers said that steel mills might increase prices in the time to come, since the ingot steel imported from China.
Mr Le Ngoc Son head of the International Cooperation Division under the Vietnam Italia Steel Corporation said that China sourced ingot steel had been increasing sharply in the last one month. Guang Dung suppliers offer ingot steel at CNY 500 per tonne (VND 1 million) higher. Mr Son added that in early July 2007, the ingot steel price stayed at CNY 3,050 per tonnes and unlike in 2006, when the price always declined in July and August, the price only declined at the end of July before bouncing back in early August.”

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Bumi expects low coal output in 2007

It is reported that Indonesia Company PT Bumi Resources expects output to be at the lower end of its range in 2007 because heavy rainfall is hampering production and transportation.
Mr Nalinkant Rathod a commissioner at Bumi said that it expects output at 58 million tonnes the lowest point in its 58 million tonnes to 60 million tonnes range. He added that “Every thing is not hunky dory it's a struggle, so instead of loading in 12 hours we may load in 15 hours. We only need one dry month to boost production to 60 million tonnes.”
Bumi, which said it would not renege on its contracts is offering incentives to its contractors including a unit of PT United Tractors, to produce more coal than planned at the mines run by PT Kaltim Prima and will hire companies to extract the energy from smaller mines.
Heavy rainfall has forced companies including Thailand's Banpu Pcl and Straits Asia Resources Ltd to miss contracted shipments from their mines in the southern part of Borneo island boosting prices of the thermal coal.

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CSC to cut production by 5%

Reports say that Taiwan's China Steel Corp and Chung Hung Corp. have begun to cut the production since the second quarter of 2007 due to week demand in order to stabilize the market price.
As per report, China Steel Corp is going to decrease its production by 10% of hot rolled supply for domestic tube producers due to the furnace maintenance on December 28th 2006. The furnace maintenance will last for half month and the estimated output reduction is nearly 150,000 tonnes.
It added that in order to balance the supply to downstream mills, China Steel Corp plans to divide the 10% production cut into 5% each in the fourth quarter of 2007 and in the first quarter 2008.
Currently, China Steel Corp's price is still lower than international market price and it is expected that the price for the last quarter of 2008 will be stabilized without change affected by Taiwan's coming several elections. However, the medium heavy plate price will be still at the high end due to tight material supply in Asia.

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Vietnam may cut steel import duties

It is reported that the Vietnamese government is likely to lower import duties on steel. Sources said that the import duty cut would probably be 2% to 3%. The report added that the cut would take place for certain products with effect from August 8th 2007. But currently no official announcement has been made. Followings are the list of tentative duty cut for certain products.
1. Billet import duty from 5% to 2%
2. Construction steel long product import duty - 10% to 8%
3. Metallic and color coated steel product import duty from 12% to 10%
4. Cold rolled coil import duty from 7% to 5%
Mr Nguyen Tan Dung prime minister of Vietnam at a weekend meeting of his new cabinet, instructed ministers to curb inflation after consumer prices rose 0.94% last month, taking the inflation rate so far this year to 6.19%. The Saigon Times reported that to reduce the rising costs of a range of products, Vietnam will this week cut import tariffs on many food and dairy products as well as on steel and building materials.

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Steel sector prospers in Vietnam

Vietnam is already home to several large steel projects, many of which are partnered with Korean and Indian steel groups. At the top of the list is a $3.5 billion steel complex by India's Tata Steel and the state-run Vietnam Steel Corp (VSC). Both sides singed a memorandum of understanding in May, agreeing raise the project in the central province of Ha Tinh, 340 km south of Hanoi, which will refine iron ore from the Thach Khe mine. The facility aims to produce 4.5 million tons of steel products per year. Essar Global Limited, another Indian steel marker, has joined forces with VSC and Vietnam Rubber Group to build a $527 million hot-rolled steel mill in Ba Ria-Vung Tau Province, a coastal area near Ho Chi Minh City. Vietnam's first hot-rolled steel plant, it will use billets imported from India to produce 2 million tons per year. Construction is expected to take around two years. Around half its output will be supplied to cold-rolled steel plants and zinc-coating factories, and the rest for manufacturing steel pipes and structures.
South Korea's POSCO Group, the world's third-largest steel maker, has recently begun work on a cold-rolled steel facility in its $1.13 billion complex in Ba Ria-Vung Tau. Posco is also looking to build a separate integrated steel mill in the country. Dongkuk Steel Mill Co., another leading South Korean steel firm, is also considering investing in the Vietnamese steel industry. The Korean firms view Vietnam as a gateway to the Southeast Asian market, the world's largest steel importer.
Vietnam forecasts import of over 2 million tons and production of 2.3 million tons of steel billets, and consumption of 4 million tons of construction steel this year. Steel makers in the country had a combined annual production capacity of some 6 million tons by late last year, according the Vietnam Steel Association. Vietnam's partial dependence on steel billet imports has made local-made steel products less competitive as compared to imported products.

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Investments up in Vietnam plant

It is reported that Thai company Tycoons Worldwide Steel Group is planning to increase its investment in a steel complex in Vietnam's Dung Quat Economic Zone. According to the government of Quang Ngai province the group has applied to local authorities to up the amount to USD 1.8 billion after initially deciding to invest USD 1.1 billion.
The report added that construction on the plant is expected to start next month and finish in 2009 when it will supply raw materials to Vietnamese steel manufacturers and a Tycoons factory in Thailand. The plant's capacity will be increased to 5 million tonnes in 2010.
The Vietnam Association of Steel makers said the technology to be used in the plant was somewhat outdated and no longer used in countries like Thailand and China. The Dung Quat zone authorities said that however that the technology was appropriate for Vietnam's practical needs and Tycoons' long term strategy here.

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Thailand's G Steel rating outlook negative

Moody's Thomson Financial reported that Moody's Investors Service has cut the outlook on G Steel Public Company Ltd Thailand's second-largest hot rolled coil steel maker, 'B2' corporate family rating and 'B2' senior unsecured bond rating to negative from stable.
Moody's said the cut in outlook was prompted by continued weakness in the company's operating performance at a time when its refinancing plans for a USD 120 million bridge loan due on September 13th 2007 are not yet finalized. It said it sees funds coming but will unlikely to be cheap further straining the company's financial profile.

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Shengli to build plant at Thai Binh

It is reported that Shengli Investment and Development Ltd Co plans to build a USD 130 million steel processing plant in northern Thai Binh province.
In the first phase, the company will invest USD 50 million over a 20 hectare area, with the plant expected to have the capacity to process 1 million tonnes of steel a year. The second phase, which will see the addition of processing facilities, will be built on a separate 35 hectare site at an estimated cost of USD 80 million and will raise the plant's capacity to 2 million tonnes.

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Indonesia yes to $ 1.67 billion project

It is reported that Indonesia government has licensed 10 local and foreign companies to enable them to invest a total of USD 1.67 billion in upstream steel industry with a total capacity of 8.72 million tonnes.
The prospective investors include 5 from China, 2 from India and 2 Singapore and 3 domestic investors, data at the Investment Coordinating Board showed. BKPM licensed the investors to produce iron ore, iron pellet, and sponge iron and they are to start implementing their projects in 2011.

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New iron ore drilling program under way on Eyre Peninsula

The first drilling program has commenced on Lincoln Minerals’ iron ore targets near Port Lincoln on southern Eyre Peninsula, South Australia. The maiden drill program involves 10,000m of air-core and slim-hole reverse circulation (RC) drilling of hematite iron ore targets identified after processing and interpretation of a low-level high-resolution airborne magnetic survey on Lincoln Minerals’ 100% owned Gum Flat Project. The hematite targets are believed to be relatively shallow beneath 20-30m of calcareous sand and sandstone but overlie deeper magnetite-rich banded iron formations that are secondary iron ore targets.
The inaugural drilling program follows the announcement earlier this month of Lincoln Minerals’ exploration and investment agreement with Indian metals and iron-ore mining group, Mineral Enterprises Ltd. Under the Heads of Agreement, subject to certain conditions, Mineral Enterprises Ltd will contribute up to $2.5 million in exploration expenditure, earning up to 40% of the Gum Flat Iron Ore Project, and take up 3,500,000 fully paid ordinary shares in Lincoln Minerals at 30 cents per share, raising $1,050,000. “The aim of this first round of drilling is to test and prioritise the hematite targets at the Gum Flat Project,” Lincoln Minerals’ MD, Dr. John Parker, said. “Subject to the success of this drilling, the agreement with Mineral Enterprises will enable Lincoln Minerals to fast-track follow-up RC and diamond drilling over the next 12-18 months and hence maximise iron ore potential of the Gum Flat Project for its investors,” he added.
Lincoln Minerals is a South Australian based iron ore, uranium and base metal exploration company with extensive tenement holdings on eastern Eyre Peninsula within the southern Gawler Craton. Eyre Peninsula is one of Australia’s oldest iron ore mining districts and hematite iron ore has been mined continuously there for over 100 years. In addition to the Gum Flat iron ore project, the company will also drill gold, uranium and base metal targets in its Mount Hill, Cockabidnie and Wilcherry projects on central and northern Eyre Peninsula.

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Baoshan Iron and Steel up for bid

China's Baoshan Iron and Steel Co. Ltd. is likely to bid for a majority stake in a steel mill that Baoshan's state-owned parent aims to sell for 601 million yuan ($79 million), an official of the listed company said. The parent, Shanghai Baosteel Group, said it was auctioning its 92.5 percent stake in a steel mill based in the eastern Chinese city of Nantong, near Shanghai, but subsidiaries of the Baosteel Group will be given priority in purchasing the stake. The mill has annual production capacity of 1 million tonnes.
A notice on the auction is posted on the Web site of Shanghai United Assets and Equity Exchange, and the initial price tag on the stake is set at 601.27 million yuan. "It is likely that we will bid for the steel mill as a way to consolidate steel assets," the company official, who spoke on condition of anonymity, said. China is the world's largest steel producer, as it feeds a booming economy, but Beijing has been urging the fragmented industry to consolidate and develop national champions on a par with global industry giants. The parent company, China's top steel maker, has chosen to sell the stake through a public auction rather than transfer it internally because it is not a 100 percent owner of the mill, the official said. The remaining 7.5 percent stake is held by a local asset management company in Nantong, the official added. Most of Baosteel Group's steel assets are under the direct ownership of Baoshan Iron and Steel, its flagship listed unit.

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Grange swaps stock for ore lease from Rio

Grange Resources Ltd., which wants to develop a $1.2 billion iron ore pellet project, agreed to buy an exploration lease in Western Australia from Rio Tinto Group with cash and stock. The company will pay $1million ($840,000) cash, 9 million shares and 17.5 million options for the lease, Perth-based Grange said in a statement. Rio will get a stake of almost 10 percent in Grange, Managing Director Geoff Wedlock viewed. Rio could take the stake to 19.9 percent if it converts the options, the statement said.
Rio, the world's second-largest iron ore exporter, is spending more than $5 billion expanding its mines in Australia. The transaction will allow Grange to include the expanded resource into its development plants for the project, Wedlock said in a statement. “Combining our two assets makes sound commercial sense and Rio Tinto is pleased to continue its interest in the resource through a substantial equity position in Grange,'' said Sam Walsh, head of Rio's iron ore unit.

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Finnish steel firm plans Rs 1103 crore plant

Finnish stainless steelmaker Outokumpu is likely to invest Rs 1,103 crore in setting up a cold rolling mill in India. The plant will have a capacity of 250,000 tonnes. Yatinder Suri, country manager, Outokumpu India, said the company was in the process of undertaking a feasibility study and a decision on the location would be taken early next year. “The board has made up its mind that India will be a major market for Outokumpu. By 2015, Outokumpu wants to be a preferred supplier of stainless steel in the world,” explained Suri. In 2006, Outokumpu recorded sales of Rs 33,110 crore, of which 95 per cent was generated outside Finland.
The location for the plant will be based on infrastructural support that the state governments will provide and port linkages. The plant will be set up in the western part of country. Suri said it would have to be closer to the port and the end-user market. “The west is the biggest market for stainless steel,” he said. The toss-up is likely to be between Gujarat and Maharashtra. The port linkage is critical for the venture since the hot rolled feedstock would be shipped from Finland. The cold rolling plant may use some of the equipment at its Sheffield cold rolling mill, which was closed in 2006. Outokumpu has also decided to set up a greenfield stainless steel service centre in the western part of the country. The service centre is likely to be operational in the first half of 2009 at an investment of Rs 165 crore. The service centre, with an annual capacity to stock and process 50,000 tonnes of stainless steel coils, is expected to complement the services that Outokumpu’s Indian sales office has been providing to Indian customers. Outokumpu India, a wholly owned subsidiary of Outokumpu Oyj, was set up last year to cater to the Indian market. The Indian arm has set up a number of sales and marketing offices in the country. “We will bring new grades of stainless steel to India, which will be used for critical applications,” said Suri. At present, stainless steel grades are used primarily for kitchen appliances and architectural requirements. Outokumpu joins the growing club of foreign steelmakers —Marcegaglia, Stemcor, Posco, Mittal Steel, Sinosteel, Nippon Steel Corporation and Kobe Steel — looking to tap the Indian market.

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KGHM Q2 consolidated profit falls on higher costs

KGHM Polska Miedz SA, the Polish company that mines more copper in Europe than any competitor, said second-quarter consolidated profit declined 4.1 percent after production costs advanced. Net income dropped to 1.03 billion zloty ($371 million), or 5.15 zloty a share, from 1.07 billion zloty, or 5.37 zloty a share, a year earlier, the Lubin, southwest Poland-based company said in a regulatory statement. Sales rose 1.9 percent to 3.54 billion zloty. KGHM, the world's sixth-largest copper producer, said that unconsolidated net income, which excludes fixed-line phone unit Telefonia Dialog SA, fell 34 percent to 930 million zloty.

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Consolidate steel industry: Fitch tells China

Fitch Ratings recently said that although mergers & acquisitions in China's huge, but highly fragmented steel sector, are increasing this year with big producers taking over the smaller ones, there is a need for much more in order to influence the dynamics of the industry worldwide and capitalize on the current steel price up cycle.
Fitch in a note said that “China's largest steel maker, Baosteel, accounted for only 5.3% of total domestic production in the first half of 2007 compared with 6.5% in 2005, while many small and medium sized steel producers continue expanding their production levels to avoid becoming acquisition targets. The output of steel producers with a capacity of less than 2 mt per year increased nearly 30% YoY in 2006. In contrast to the surging output of steel products, which increased by 18.9% YoY to 237.6 mt in the first half of 2007, the market shares of leading steel companies are shrinking.” It said the government's ban on foreign control over major state-owned steel makers provides an umbrella for Chinese steel makers from competition with global giants. Mr Danny Chen associate director, corporate team, said “The administrative influences in the steel sector consolidation process makes it less efficient and predictable. Furthermore, in a relatively benign operating environment, acquisitions become more difficult given the strong resistance from the local governments .

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ABN Amro predict hike in prices

ABN Amro hiked its 2008 and 2009 forecasts for carbon steel prices, saying producers were likely to offset cost gains with additional price rises to the end customer and added that it saw gains for ArcelorMittal and ThyssenKrupp. The brokerage raised its price target on its top pick, Arcelor Mittal, to 52.50 euros from 47.50 euros. It has a buy rating on the stock. In steels, ABN Amro said it expects long products to gain the most through 2009. It raised its price forecasts on longs by 11 percent to 30 percent on average, compared with a 4 percent to 14 percent raise in forecasts for sheets for the same period.

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Severstal to acquire 22% stake in Celtic

Russian steel maker Severstal has acquired a 22 percent in Celtic Resources Holdings Plc through subsidiary company Bluecone Limited, Severstal said in a statement. The shares were acquired from Aton International Ltd. "Severstal Resurs believes the purchase of a 22 percent stake in Celtic, with its attractive mining assets in Russia and Kazakhstan, to be an excellent investment," said Roman Deniskin, CEO of Severstal Resurs, which manages all of Severstal's mining operations.

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