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| SEPTEMBER 2005 | |
| From the CEO's Desk | |
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Hello everybody !! 'Steelworld' is participating in 'Wire-Tube Singapore' and I am writing this feature from there itself. As everybody knows, SE Asian countries were on fast growth track till late nintees. This was the time when they faced serious economic problems and the currencies of most of the countries in the region depreciated considerably. This phase was very bad for the region and particularly for the steel industry. All the new construction and infrastructure developmental work came to a stand still and the steel consumption of the region fell sharply. But now I see that most of the countries have successfully come out of this and have brought their economies back on the fast growth track. Today, infrastructure developmental activity is going on all over SE Asia in full swing and this has surely given a big boost to the steel consumption of the region. If you put all the countries in the region together, their consumption is in the same range as that of the Indian consumption. Further, as on today the steel making capacity of the region is lagging behind and the region has to import substantial quantity of finished as well as semi finished steel from outside. It is for taping this growing market that Indian companies are looking for tie ups, aquisitions here. The main suppliers to this region remain China, Korea, Japan etc. and India as on today is not a major supplier here. If we look at the logistics, there is every reason to believe that Indian companies should try agressively to penetrate this market. Further, a lot of brownfield and greenfield expansion is going on in Indian steel industry. It is expected that Indian production would cross fifty million mark before 2010. SE Asia can provide a growing and also a stable market for Indian steel products !! D.A.Chandekar
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Jain Carbides & Chemicals Ltd.
ELECON Engineering Company Ltd. |
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Mittal Steel agrees not to export iron ore from India Mittal Steel Co. NV (MT) has reportedly agreed not to export iron ore from Jharkhand, clearing the way for setting up a 12 million metric ton a year steel plant in the eastern state. “We have decided to withdraw the ore export clause to respect local sentiments and the national aspiration of protecting ore for local companies,” Mittal Steel Corporate Treasurer Sudhir Mittal said. The move will help Mittal Steel ink a memorandum of understanding with the state government for the steel plant very soon. |
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National Steel to raise Rs 411.6 cr from loans National Steel and Agro Industries Ltd will raise Rs 411.6 crore by mortagaging its immovable properties from a consortium of banks led by State Bank of Indore. The shareholders, in the AGM, have authorised the board to mortgage and create charge in the favour of SBI Indore and other consortium bankers of their enhanced working capital facilities aggregating to Rs 386.6 crore, the steel company sources said. Besides this, the company will raise Rs 15 crore through a rupee loan from United Bank of India and Rs 10 crore from HDFC Ltd, it said. The consortium bankers include — State Bank of India, State Bank of Saurashtra, State Bank of Travancore, Bank of Maharashtra, United Bank of India, Andhra Bank, Societe Generale and Oriental Bank of Commerce. |
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Sail plans JV with BCCL to develop ‘coking coal mine To
ensure supply of coking coal for its plants, Steel Authority of India
Ltd (SAIL) has initiated dialogue with Bharat Coking Coal Ltd (BCCL),
a Coal India subsidiary, for setting up a joint venture company for developing
coking coal mines. “We have initiated talks with BCCL for exploring the
possibility of forming a jv for mining of coking coal in Jharia Coalfield,”
Sail sources said. Asked about the size of the project, the sources said
the company would be interested in mining at least one million tonne of
coking coal annually from it. But it was still in a nascent stage. To
another question, the sources said no decision regarding the size of investment
has yet been taken. The sources said that Sail was keen to have the joint
venture to ensure supply of iron ore since the steel major has undertaken
a big expansion plan to increase its capacity of producing 20 million
tonne of steel by 2011-12. |
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Essar Steel shows good results The Essar Steel Limited’s thrust on total integration, backed by technology and focus has yeilded excellent results, its Chairman Shashi Ruia said. In his speech delivered at the 29th Annual General Meeting at Hazira recently, he said revenues for the year at Rs 6,121 crore were up by 65 per cent over last year and profit after tax was close to Rs 600 crore. He said the company has completed two major acquisitions — HyGrade Pellets and Steel Corporation of Gujarat — which were the final steps towards becoming a fully integrated steel producer. “The acquisitions have been financed without increasing the debt and this will have a positive impact on the company’s bottomline in the coming year and make us the largest integrated steel producer in western India. With our expansion plans we will become the largest producer of flat steel products in the country”, he added. He said Essar Steel’s current capacity of three million tonnes per annum will go to 4.6 million tonnes by the end of this fiscal year. q |
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In order to take advantage of China’s expanding economy and industrial base, leading Canadian manufacturer Magnum Iintegrated Technologies Inc. through its sister company Viceroy Capital Inc., has formed a US $150 million joint venture with Anhui Tongdu Copper Company, one of the largest copper producers in ChinaUS $150 Million Joint Venture Agreement for Copper Strip in China. Phase I of this new joint venture was signed by the Chairman of the Anhui Tongdu Copper Company and the President and CEO of Magnum. The new company was established in Tong Ling, Anhui Province, and will produce and market copper, copper alloy strip and related products. The project objective is to meet the large market demand for technologically-advanced electronic, communications and automotive components which call for high-quality precision copper strips. The Joint Venture will utilize the latest and most modern equipment, making it the largest, highest-quality producer of copper strip in China. This copper-processing facility will also be the first copper strip plant in China to meet and exceed international standards for high-quality copper strip. |
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Shyam Steel to expand capacity Kolkata-based Shyam Steel Industries has drawn up a Rs 550-crore expansion programme which includes setting up new facilities in Jharkhand and Chhattisgarh as well as upgrading its fully-integrated unit at Durgapur. The company has earmarked Rs 450 crore for the new ventures and set aside Rs 100 crore for upgrading the Durgapur facility. The company, which manufactures TMT bars and structurals, is looking for suitable lands in Jharkhand and Chhattisgarh. Preliminary talks with Jharkhand and Chhattisgarh governments have been held. Chairman Shyam Sunder Beriwala said that the company would approach the respective governments for mining leases. A memorandum of understanding is likely to be signed this fiscal. It is also setting up a sponge-iron unit and a captive power plant at its Durgapur facility. |
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Rourkela Steel Plant (RSP) of Steel Authority of India Ltd has recommissioned its blast furnace-4. The furnace was rebuilt at a cost of Rs 118 crore and would enable RSP achieve annual capacity of 2 mt of hot metal for the first time, according to a company release. The hot metal output from this furnace alone is expected to go beyond 2000 tonnes per day and the daily hot metal production from all the four blast furnace shops is expected to be 6000 tonnes. Higher hot metal production would increase the availability of adequate feedstock for the downstream units, which produce high value items such as silicon steel, electrolytic tin plates, hot-rolled plates and plate mill plates, thus enhancing the profitability of the steel plant. The blast furnace-4, which is the largest among all the blast furnaces of RSP, had been taken down in April, with a view to introducing various technological upgradations to enhance its performance. |
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Govt asks VSP to raise debt amount for expansion he Ministry of Steel, Government of India, has suggested to the Visakhapatnam Steel Plant (VSP) to increase the debt amount to Rs 4100 crore from the earlier option of Rs 2000-2500 crore for taking up its expansion project. VSP had submitted a Rs 8250-crore proposal to the central government some six months back to increase the production capacity from the existing 3 mt to 6.8 mt. It is expecting the Cabinet’s nod within two-three weeks. Initially, VSP decided to mobilise loans of about Rs 2500 crore from financial institutions and the remaining through internal accruals. VSP has cash reserves of about Rs 3000 crore in various banks. It recently called for global tenders for the purpose. About 45 nationalised and private banks in the country, including nearly nine international banks, came forward to finance our expansion project. VSP is expecting this loan amount at an interest rate of 6 to 8 per cent. As the Ministry of Steel has suggested that the company must increase the debt equity ratio to 1:1, it is working out to get loans up to Rs 4100 crore from financial institutions. The company is expecting the loan amount to come with an interest of about 6-8 per cent. Due to increase in several raw material costs by 40-70 per cent and payment of corporate tax, VSP is anticipating its net profit to drop marginally this year as compared to last fiscal. |
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China Baosteel aims to raise steelmaking capacity Shanghai Baosteel Group aims to boost its steel production capacity in the next few years despite worries of overcapacity in the sector, an executive at the group’s listed unit said. China’s largest steelmaker plans to increase its steelmaking capacity to 30 million tonnes from 22 million tonnes in the next few of years, said Zhou Shichun, assistant to the president of Baoshan Iron & Steel Co. Zhou said Baosteel isn’t concerned about overcapacity affecting its business because it produces high-end products such as steel sheets for autos. He said demand for this product is “very strong.” Steel prices have fallen to a “reasonable” level from earlier this year, and prices “will stay at this level for some time,” Zhou said. Asked if his projection applied to Baosteel’s products or the steel industry as a whole, he said: “My forecast can also be applied to the international market.” The global steel industry has enjoyed a boom in demand from China over the last couple of years. However, the country’s fast-growing domestic steel output and expanding exports have recently been pushing prices down worldwide. China produced 194 million tonnes of crude steel in the first seven months of 2005, up 28% from the same period in 2004, data from the China Iron & Steel Association shows. |
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Japan August crude steel output down 1.7% on year Japan’s production of crude steel fell 1.7% in August from a year earlier to 9.23 million metric tonnes, marking the second straight month of decrease, the Japan Iron and Steel Federation said. That figure also reflects a 2.1% drop from July, the industry group said. In July, crude steel output was down 1.2% from a year earlier. Of the total, production by converters rose 0.4% on year to 7.12 million tonnes but that by electric furnaces declined 8.4% to 2.11 million tonnes, the group said. Production of ordinary steel fell 3.7% on year to 7.21 million tonnes, while specialty steel output grew 5.9% to 2.02 million tonnes, the group said. |
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Taiwan Co To Build $650M Steel Factory In Vietnam -Report The Vietnamese government has approved a plan by Qianding Samoa Co., a unit of Taiwan’s Chien Shing Stainless Steel Co., to invest $650 million to build a steel factory in Ba Ria Vung Tau province, state media said. The province is about 100 kilometers east of Ho Chi Minh City. First Deputy Prime Minister Nguyen Tan Dung recently approved the Taiwan company’s plan to build the stainless steel products factory. The factory is expected to have an annual production capacity of 720,000 metric tonnes, of which 80% will be exported. This will become the largest stainless steel project in the Asian region. The Ministry of Planning and Investment is expected to issue a license for Qianding Samoa to build and operate the factory in the fourth quarter of this year. |
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Brazil August crude steel output tumbles 8.5% Vs Aug’04 Brazilian crude steel production sank 8.5% in August from the same month a year ago as steelmakers’ output continued to reflect slack domestic demand and elevated stocks at distributors, according to data released recently. Brazil’s steelmakers produced 2.644 million metric tonnes of crude steel in August compared with 2.890 million metric tonnes in August 2004. For the first eight months of 2005, crude steel output was 21.070 million metric tonnes compared with 21.857 million tonnes in the same period a year ago. However, crude steel production increased 6.1% in August compared with output in both June and July, according to IBGE. That could be a sign that production may start to tick upward through the rest of the year, reflecting the recovery expected by steelmakers in the fourth quarter. “The signs of recovery in the civil construction sector and the sustained level of activity in the automotive sector reinforce the expectations of a recovery in the fourth quarter,” IBS said. The steel industry likely will get a boost from the decision recently by Brazil’s central bank to cut interest rates. The central bank cut the benchmark Selic interest rate by 25 basis points to 19.50% in an effort to stimulate the economy. Domestic sales of long steel products, primarily used in construction, fell 14.6% to 517,100 metric tonnes in August compared with the same month a year ago. Despite the year-on-year decline in domestic sales, August represented the best month for long steel products, with an increase of 7% compared to the average sales volume of the three previous months, IBS said. |
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Nisshin Steel to pass 30% of FY05 profit to holders Nisshin Steel Co. will pass on 30% of its consolidated net profit earned in the current fiscal year to shareholders through stock buybacks and dividend payments, reports said. During the fiscal first half, the company paid an interim dividend of Y3 and bought back Y1 billion in shares in April and Y2.5 billion worth in August. Nisshin Steel also plans to pay a Y3 dividend for the second-half, and will also likely buy back Y2 billion in stock. This should put its total share buybacks in fiscal 2005 at nearly 2% of outstanding stock. Until this fiscal year, Nisshin Steel’s only focused on constant dividends. But the company has decided to make returning profit to shareholders one of the major business management goals in its new medium-term business plan to be implemented starting in fiscal 2006. And it has set the 30% target a year ahead of the plan’s implementation. |
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Singapore NatSteel not to proceed with acquisitions Singapore’s NatSteel Ltd. has decided not to proceed with acquisitions it was evaluating and may return more cash to shareholders. In a statement to the Singapore Exchange, NatSteel’s board of directors said it has directed management to consider other growth opportunities for the company. NatSteel sold its core steel and related businesses in seven countries to India’s Tata Iron & Steel Co. for around US$285 million in August last year. The company planned to use the cash to expand its construction and chemicals businesses. |
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Mexican steel workers end strike at sicartsa plant An estimated 2,000 workers at Mexico’s biggest steel plant in central Michoacan state on Thursday agreed to a deal which ends a 46-day strike over different labor disputes, a mining union official said. “We have just received news that a deal has been reached to end the strike, the workers are happy with the new deal,” an official at the Mexican Mining and Metallurgical Workers Union said. She said the workers had agreed to a deal which provides for an 8% salary increase and a 34% hike in benefits such as health and productivity bonus, in addition to a one-time cash bonus of US$672 per worker. Officials at Monterrey-based Grupo Villacero, which operates the Sicartsa plant in the port of Lazaro Cardenas, could not immediately be reached for comments. The union official said workers will resume operations on Saturday at the Sicartsa plant, the biggest such steel plant in Latin America, which has been shut since Aug. 1 when the strike took effect. The agreement was reached Thursday morning at the Mexican Labor Ministry, which has been mediating talks between workers, union representatives and Grupo Villacero. |
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Mittal Steel to spend $1.5 bn in ’05 Mittal Steel, the world’s largest steelmaker, said it’s spending $1.5 billion this year on plant expansions and other projects designed to tap a surge in demand. The spending is part of 4.5 billion dollar earmarked by the Rotterdam-based company for 900 projects in 14 countries, it said. The company expects global demand for steel to grow between 3 and 4 per cent in coming years. “The basic fundamentals for our industry are more positive than they have been for many decades,’’ billionaire owner Lakshmi Mittal said in a newsletter on the Web site. Demand will grow “for the foreseeable future.’’ Mittal plans to raise production to an annual 100 million tonnes from 70 million tonnes in coming years partly through acquisitions. The industry is poised to narrow to three or four major global producers, with the top 10 accounting for at least 40 per cent of the market, Lakshmi Mittal said. Mittal and Luxembourg-based Arcelor, the second-biggest steel producer, currently own less than 15 per cent of steelmaking capacity worldwide. By comparison, the three biggest iron ore miners, Vale do Rio Doce, Rio Tinto and BHP Billiton produce more than 50 per cent of supply. |
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