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Dear Readers,

The steel prices have started sliding in last few weeks and today the biggest question is that till what level the slide will continue?
The phenomenon has started from August end and has started all over the globe. 8th Asian Steel Conference, which was held on 19th - 20th September, debated short term as well as long term outlook for the industry. General perception of the participants was that the long term view of Asian and Indian industry remains bright but there will be price fluctuations in between. Also, the demand is moving faster than capacity creation which will hold the price at a comfortable level. Further, after end of monsoon, the construction activity will be in full swing which will give additional strength to the demand. All this indicates that the prices may not fall further but on the contrarily, may increase slightly.
As we all know, China now is the single biggest factor in determining the steel price trends on a global level. A lot depends on China's domestic demand and how much extra steel from China is available for exports. If this quantity is large, then it will surely soften the steel prices but this will be known after a month or two.
It was also felt that the brown field expansion plans of the existing companies may progress as per the schedule but the green field projects may face some difficulties and get delayed. This also means that the demand is expected to move faster than the speed at which capacity is being created and this scenario would see Indian imports increasing in next few years. Presently, the demand is growing at around 10 % per annum where as the domestic supply is growing at around 5 %. Another big hurdle in the green field projects is scarcity of engineering / plant building companies and availability of technically (or rather metallurgically) qualified manpower. Frankly, we do not have enough engineering colleges in the country teaching metallurgy.
The third hurdle is lack of proper infrastructure. It is well-known that to produce one ton of finished steel, we need movement of three tones of raw materials. Though all the traffic channels like railways, sea movement and road movement are being geared up, few believe that these efforts are enough to support the projected growth of iron & steel industry in the country.
All these issues were discussed and debated at length in 8th Asian Steel Conference. The presence of Indian Steel Minister Mr. Ram Vilas Paswan and Steel Secretary Mr. P. K. Rastogi not only inspired the participants but also helped them to understand the perception and the role of the government in the growth of iron & steel industry in the country.

 D.A.Chandekar
Editor & CEO

 

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Govt Seeks Iron Ore Supply Insurance for Steel Cos   

The government has asked iron-ore producers to ensure long-term supplies to steel manufacturers at a reasonable rate so that prices of final products come down, Steel Secretary P K Rastogi said. But the government is not in favour of fixing any price mechanism for steel products, he said. Rastogi said iron-ore producers have broadly agreed for a long-term agreement with steel manufacturers. The talks on the issue are still on, he added. Internationally, steel prices are softening and the domestic market has also witnessed a marginal decline. "There is a case for further downward revision of steel prices in the country," Mr Rastogi said. The annual steel production is about 55 million tonnes with the demand growing at 12 per cent, leaving a gap between demand and supply of about 6 per cent.

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NMDC to Spend Rs 1989 crore for Steel Unit

India's state-run National Mineral Development Corp will spend 198 billion rupees ($4.3 billion) by 2014 to boost its iron ore output and build the firm's first steel plant, Chairman Rana Som said. "Our (iron ore output) capacity will go up to 50 million tonnes from 30 million tonnes currently," he said. NMDC will invest 120 billion rupees to set up a 3 million tonnes per year integrated steel plant in central Chhatisgarh state. It will also develop iron ore deposits in the same state to provide raw material. Som said prices for long-term iron ore contracts were being negotiated with customers and a decision was expected shortly.

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SAIL to Invest Rs 600 cr to Set up Four Processing Units  

Steel Authority of India Limited (SAIL) will set up four steel processing units, one each in Uttar Pradesh, Jammu & Kashmir, Rajasthan and Bihar at an estimated investment of up to Rs 600 crore. "We will set up steel processing units in Amethi in UP, Kashmir, Jhunjhuna in Rajasthan and Gaya in Bihar. Investment for each plant will be Rs 100-150 crore. SAIL will invest the entire amount," Minister of Steel and Chemicals and Fertiliser Ram Vilas Paswan said. All these units would procure raw material like hot rolled (HR) coil from the integrated steel plants of SAIL. Amid rising input cost pressure, SAIL said that it is securing raw material for its units and has started developing its mining blocks. "The company is strengthening raw material security and has already started the process for development of its four million tonne per annum capacity coking coal block with captive washery at Tasra and development of Sitanala coking coal block," SAIL Chairman S K Roongta had said. To maintain steel prices and increase the availability of the alloy in the domestic market it is imperative to set up new production units in the country, he had said. Meanwhile, Paswan ruled out the possibility of an increase in steel prices any time soon, saying prices of the metal are softening in the global markets. The minister said the country has set up a steel production target of 124 million tonnes per annum by 2012 to bridge the gap between demand and supply. The domestic demand for the metal is rising at 13 per cent whereas production is increasing by 6 per cent a year, he added.

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Railways to Invest Rs 2,000 cr for New Coaches, Wagons 

Indian Railways plans to invest Rs 2,000 crore annually to increase its consumption of stainless steel to two lakhs tonnes a year and get new coaches and wagons made up of the alloy. "It was decided in a meeting few months ago that we will increase our consumption of stainless steel to two lakh tonnes per annum which will entail an investment of Rs 2,000 crore every year," Railway Ministry Additional Member (Mechanical) Pramod Kumar Gupta said. "We are also talking to companies transportation companies like Siemens and Bombardier to set up a joint venture manufacturing unit in the country to make stainless steel coaches and wagons. We are set to transform Indian Railways due to the advantage the alloy provides," he said while speaking on the sidelines of a session organised by the Indian Stainless Steel Development Association (ISSDA). Government will hold 26 per cent in the JV while the rest 74 per cent will be with the private entity. At present, the Indian Railways consumes around 5,000 tonnes of stainless steel, he said and added that carbon steel is used mostly by it which entails an expenditure of around Rs 800 crore annually. The Airports Authority of India, which is upgrading many domestic and international airports in the country, has felt the pinch of rising steel cost, Airports Authority of India Executive Director (Projects) SPS Bakshi said. "There rising steel cost has affected our modernisation plan. The prices have almost doubled in last months. Our building cost has gone up by almost 35 per cent," Bakshi said. AAI is also increasing its consumption of stainless steel as it has planned to modernise the airports predominantly using the alloy. "Stainless Steel is very advantageous. Its corrosion free, it's strong, it gives more space, it can be given any shape, and it can be easily modified and redone. The cost of acquisition might be more but its expedites the process of construction," he said. The authority would spend around 2,000 crore for Kolkata airport modernisation and about 1,500 crore in Chennai airport, he said. Bakshi also said that it expects the modernisation work on the two will start by this month and hopes to complete it in the targeted 30 months period, he said.

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Posco may Win Orissa Consent in September  

Posco, Asia's third-biggest steelmaker, may win a recommendation for iron-ore mining rights for its planned $12 billion mill in India as the Orissa state government sends its consent to the ministry this month. “We've completed all the necessary paperwork,” said Priyabrata Patnaik, a government official monitoring the project in the eastern Indian state. “We expect to submit all the necessary documents for the license recommendation this month.” Land disputes and delays in securing iron-ore mining rights have prevented the South Korean steelmaker from proceeding with potentially the biggest overseas investment in India. Posco has had expected to begin work on the venture in April 2007. The $20 billion of India projects announced by ArcelorMittal about three years ago have been held up because of delays in approvals. Posco may delay construction work until next year because it hasn't secured a mining permit and residents on the planned site haven't been relocated, citing Chief Executive Officer Lee Ku Taek. Officials at Posco's India unit declined to comment. The company received approval from India's highest court on Aug. 8 to acquire land. The court also allowed Posco to buy iron ore from the market, in addition to procuring the material from Orissa Mining Corp., which owns all the mines in the state. Posco and ArcelorMittal are seeking to expand in Asia, where steel consumption is growing faster than in Europe and the U.S. Posco faces opposition in Orissa as locals and political parties want the plant to move to fallow areas from farmlands. The steelmaker will initially build a 4 million tonnes mill and a 400-megawatt power plant. It needs 600 million tonnes of iron ore over three decades at full capacity of 12 million tonnes. ArcelorMittal has identified how many families would need to be rehabilitated in Orissa and has begun talking to villagers and non-governmental organizations about benefits of the venture. ArcelorMittal has proposed to set two mills in India -- one in Orissa and another in Jharkhand -- with a total capacity of 24 million tonnes. It signed an accord for the Jharkhand mill in mid- 2005, followed by the one in Orissa.

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Orissa to Expedite Approval Process for Steel Projects  

Orissa government said it would expedite approval process for speedy implementation of mega projects including the steel plant by ArcelorMittal. The state government's remarks came after ArcelorMittal chief L N Mittal said delay in approvals relating to setting up of the greenfield projects in Orissa and Jharkhand could push costs to the tune of USD 20 billion. "We will expedite the process of approval required for all mega projects including that of ArcelorMittal's," State Industries Minister B B Harichandan said. Though Mittal stated that both Orissa and Jharkhand governments were cooperative, the process associated with the approval of certain aspects was time consuming. ArcelorMittal, which signed an MoU with the Orissa government in December 2006 for setting up a 12 mtpa steel mill at Patana Tehsil area of Keonjhar district at an investment of Rs 40,000 crore has organised at least two 'gram sabhas' (a mandatory meeting with villagers from whom lands would be acquired). Besides 7,750 acre of land for the steel project, the world's largest steel maker had also sought 10 acre of land for setting up an ITI close to its proposed steel plant. Though the company had been allotted the 10 acre of land for the ITI, it is yet to complete the requisite gram sabhas. Of the total land, about 750 acre were forest land which required clearance from union environment and forest ministry, according to the company's greenfield chief Sanak Mishra. This apart, the company required state government's recommendation for raw material linkage. The state government is yet to begin the hearing of applications for iron ore reserve. "AcrelorMittal has to get approval for iron ore mines, forest land diversion proposal and environmental clearance for the steel plant," a senior official said.

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Maithan Alloy to Invest Rs 350 Cr for Expansion  

Country's largest manganese alloy producer Maithan Alloy Ltd said it would invest Rs 350 crore for setting up two greenfield manganese alloy plants to meet the growing demand from global steel firms. "We are installing a plant in Meghalaya and one in Andhra Pradesh. The total combined capacity of the two plants would be 1.38 lakh tonnes per annum," Maithan Alloy Managing Director S C Agarwalla said. The Meghalaya plant would cost Rs 80 crore and would be operational by the last quarter of fiscal 2009, while the 1.2 lakh tonne per annum Andhra Pradesh unit would cost Rs 275 crore. "We are already the largest manganese alloy producer and will become 2.5 times bigger than the nearest competitor by 2011. The entire investment will be from internal accruals and debt," Agarwalla said. The company has also bought a manganese ore block in Orissa from a private owner and has applied for environmental clearances. The mine would help feed about 20 per cent of the ore requirement for the next 20 years. The company is also planning to set up another mine in Madhya Pradesh. The company has a 94,000 tonnes per annum capacity manganese alloy plant in Kalyaneswari in Burdwan district. "We are eyeing a turnover of Rs 940 crore in the current fiscal with a current market share of 10 per cent and a Rs 2,000 crore turnover by 2011," Maithan Alloy President Sudhanshu Agarwalla said. Maithan Alloy Ltd is promoted by Maithan Group and BMA Group.

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Global Steel Market to Grow at 3-5pc Per Annum: LN Mittal  

The global steel market will continue to grow at three to five per cent per annum and the demand from China will help meet the slack in growth in the US, Europe and Japan, steel tycoon Lakshmi Mittal, chairman and CEO, Arcelor Mittal said.
Accepting the Malcolm S Forbes Lifetime Achievement Award in Singapore, Lakshmi Mittal, said" China makes up one third of the world demand. There will be 221 cities, by 2005 and they will need 40,000 to 50,000 skyscrapers. All these will be made of steel." He said he was confident for steel would grow but not at double digits and that demand from India would come from the small and medium industries.
“I can not image my life without steel and the journey is far from over even though this is a lifetime award. After 35 years I am still very much motivated" he added. He noted that steel companies had changed over the years on how they operated now and were interested in profits and not volumes and attributed the changes to consolidation and globalisation.

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Posco to Expand Steel Processing Centres in India

South Korea based Posco announced its expansion plan in India. The company through its subsidiary at Talegaon in Pune, Posco-India Pune Processing Centre is setting up one more processing centre at Talegaon with an investment of USD 20 million. The plant will have an annual capacity of 120,000 tonnes and be operational by the end of this year.Posco with its domestic consumer electronics peer LG Electronics had in 2006 set up a subsidiary at Talegaon in Pune, Posco-India Pune Processing Centre (Posco-IPPC) for processing the alloy.The joint venture company, in which Posco-IPPC has majority 51% stake, imports steel plates from various steel manufacturing sources of Posco located abroad and process the same for utilisation by various industries located in India.
It is aimed at reducing the cost of logistics, improving transportation of raw material and shortening the delivery time supply of product to the customer, Posco-IPPC managing director Gil Ho Bang said.The facility has an investment of USD 20 million with an annual steel processing capacity of 170,000 tons. Commenting on the expansion plan Bang said, ``We are thinking of putting up the third plant. It has not yet been decided. It may come next year. We are trying to find out the land.``In addition, Posco had also tied up with Samsung Electronics for startings steel processing centre at Gurgaon. However, three years after a Memorandum of Understanding (MoU) with government of Orissa, the proposed steel plant of Posco worth Rs 510 billion at Paradip is still waiting to the see the light of the day.

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UAE Ports See Boom in 2008  

UAE ports are expecting record performance in 2008 as imports for construction materials, foodstuffs and cars flood in on the back of the region's economic boom.Across the UAE, port operators are racing to upgrade equipment and facilities and keep ahead of the frantic pace of growth in the region. The surging demand has at times hampered operations with container ships subjected to heavy delays outside of DP World's Jebel Ali terminals the last month.According to the operator of Abu Dhabi Terminals, in one sign of the unprecedented growth, commodity imports surged 69% at Mina Zayed Port in Abu Dhabi from January to July. Mina Zayed is nearing full capacity as the emirate enjoys a construction boom following the opening of the property sector to foreign ownership. In the first 7 months of the year, steel and iron imports to Abu Dhabi have surged 76% to 1.2 million tonnes while imports of plywood for construction surged 351% to 43,500 metric tonnes. The number of container moves at Mina Zayed reached 200,000 in the same period.
At Jebel Ali the largest container terminal in the Gulf container volumes increased 22% in the H1 of the year. Faced with the strong growth, DP World increased its annual container handling capacity by 1 million moves in the span of 10 days last month by installing new gantry cranes and other equipment.At Sharjah Container Terminal, shipping lines have begun servicing the port with larger ships holding as many as 4,000 containers at a time. The increased demand has led Gulftainer and the Sharjah Ports Authority to deepen the draft by 1 meter to 12.5 meters and also buttress the quay wall.

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Al-Ittefaq Steel Plans IPO in Q4         

One of Saudi Arabia's three largest steel producers Al-Ittefaq Steel Products Company plans to sell 30% stake in an initial public offering in the fourth quarter of 2008.Mr Shabir Rafiqi, CFO , Al-Ittefaq Steel Products Company told that “We will float 30% stake. We will decide after the valuations whether to go for a capital increase or sell only existing shares. The IPO could take place in the fourth quarter subject to approval of the regulator, the Capital Market Authority.”He added that “We want to use proceeds of the IPO to help fund projects in the pipeline and our expansion plan in the years to end-2012. We have identified expansion projects worth approximately USD 2 billion.”
He said, “The projects consist mainly of melt shops, direct reduction plants and flat products plants. We are also looking at iron ore mining in India and possibly Brazil and Australia. We want to have a complete integration and become a global player in steel industry.”Al-Ittefaq has mandated Gulf International Bank as lead manager and financial adviser for the IPO. The bank holds a 2.3% stake in the company.Al-Tuwairqi family is the company's majority shareholder with a near 77% stake held through a holding company.Al-Ittefaq The company had a turnover of SAR 2.9 billion in 2007 and its net margin stood at about 8% to 9%. It expects to start this year a rolling mill in the Red Sea city of Jeddah with an annual capacity of 1.2 million tonnes to increase its production from existing 2 million tonnes to 3 million tonnes. It also hopes to start next year a 1.5 million tonnes direct reduction iron plant in Karachi.

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Iran to Impose 30% Export Duty on Semi Finished & Scrap       

Iranian government has imposed a 30% export duty on all semi finished steel made from local iron ore, ferrous scrap and other scrap metals in order to satisfy domestic demand.
Iran's privately owned rolling mills are suffering shortage of semi-finished material; as a result, most domestic mills are using 30% of their capacity.A shortage of ferrous scrap also has impact on steelmakers in both the public and private sectors, even though large volumes have been exported over the past few years.

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Turkish HR Price Remains Low         

It is reported that Turkish steel importers are reluctant to purchase any steel overseas without any good price bargain in view of slow local demands and further price drop.
Thus, steel price might keep low for a while under this circumstance. However, some forecasted that buyers will come back soon and price might rebound at the end of September thereby.It's said that current price of HR coil from China is between USD 950 per tonne CFR in local market. Meanwhile, Ukraine is offering HRC at USD 1,000 per tonne.

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GCC Outsourced FM Sector to Hit USD 10 Billion by 2012   

The outsourced facilities management sector in the GCC region is poised to touch USD 10 billion by 2012.As per report, the region's booming construction market has spawned the need for top end benchmarks to ensure the sustainability of these buildings, thus incurring the development of maintenance programs which has in turn created a huge demand for professionals in the FM industry.According to Macdonald & Company, the region has experienced a steady expansion within the FM consultancy sector and due to the rapid completion of buildings service providers have been awarded multimillion dirham contracts for service provision.
The company said that therefore, there is a high demand for senior level practitioners, who will be able to strategically manage the FM services within some of Dubai's iconic towers and developments. The company aims to provide transparent statistics and insights on the latest market trends in the GCC construction and property market, through the 'Middle East Real Estate Salary Survey' for 2008.Mr Danielle Le Faucheur associate of Macdonald & Company said that “FM practitioners in the region are beginning to take a more significant role, as developers become more aware of the relevance of employing highly competent FM professionals in the early stages of their processes. He added that amidst the resounding calls for sustainability in the real estate sector, FM professionals are needed to ensure the efficiency and longer lifecycle of the project, from the design and conception stage to its completion.

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CPC Plans Industrial Complex in Dammam          

Construction Products Holding Company is set to build another industrial complex to meet growing demand from an unprecedented construction boom in the region.Construction Products Holding Company new investment is in the Dammam Industrial Zone where a 600,000 square meter area will be developed into an integrated complex consisting of an electric cables factory, a construction steel factory, float glass factory, ready mix concrete plant, precast concrete plant, transportation company, warehouses and housing & offices facilities.Mr Faysal Alaquil, Director of Business Development and CPC official spokesperson said that when completed, it will be CPC's fourth industrial complex and the third largest. Mr Alaquil said that “It will have the most advanced equipment and machinery so as to meet the great demand of construction projects in the eastern region.”
According to Mr Alaquil, the CPC presently has industrial complexes in Jeddah, Bahra and Riyadh. He said that “Our Dammam industrial complex is the fourth for CPC and the third in terms of size and it is in line with our development plan to extend our reach across Saudi Arabia with one stop shops offering building and construction materials straight from our factories.”Mr Alaquil said that CPC's mission statement is to give construction companies and contractors convenient access to its various products of the highest quality standards. He further added that “Success in this regard has motivated us to build more industrial complexes, especially in view of the unprecedented upswing in construction of giant projects in various areas of the Kingdom.

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Blue Scope Sees Slab and Plate groeth in 2009

 Australia's BlueScope Steel produced 5.17m tonnes of steel in fiscal 2008 with slab and hot rolled coil staying at record levels. But 2009 production is likely to be impacted by the 105-day reline of its 2.5m tonnes/year No. 5 blast furnace at Port Kembla, the company said. Overall steelmaking production was lower than the 5.23 mt BlueScope achieved in 2007 because of 'planned and unplanned' blast furnace interruptions. Increased rolling rates saw HRC production reach 2.89 mt compared with 2.82 mt the year before. Plate production increased from 0.414 mt in 2007 to 0.427mt, while slab dropped slightly to 5.29mt from 5.30mt last year.
The Melbourne-headquartered company posted a net profit of A$596m (US$520.5m) for 2008, down 13% from A$686m in 2007, due principally to impairment charges booked against its coating facilities in China and Vietnam. Revenues increased A$1.6bn to a record level of A$10.5bn, BlueScope said. Managing director Paul O'Malley said fiscal 2009 had begun strongly, though he noted softening steel prices in Asia. “We think the overall supply-demand balance is likely to remain tight, supported by the relatively low levels of global inventory with tight supply conditions especially in the slab and plate markets,” he said.
BlueScope will reline the No.5 blast furnace between March and June 2009, as Steel Business Briefing has reported. O'Malley said the company could also approve a A$1bn cogeneration project within the next couple of years.

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One Steed to Lift Whyalla Exports by 50pc Over 2 yrs 

 OneSteel plans to increase its iron ore exports from Whyalla by 50 per cent over the next two years. In its full year results announcement, the company said it planned to increase hematite exports from Whyalla by two million tonnes to 6 million tonnes per year by 2010.The company exceeded its own export target in the past financial year, shipping 4.4 million tonnes of iron ore and 500,000 tonnes of ore by-products, compared with the 4 million tonne target. The expansion has been dubbed Project Magnet Phase II, and follows the successful changeover from hematite to magnetite feed at the company's Whyalla blast furnace. This freed up about 40 mt of the more lucrative hematite product for export over 10 years, while the magnetite is processed into steel at OneSteel's Whyalla plant. The company loads the hematite on to barges, which ferry it about 8km into Spencer Gulf to a transhipment barge, which then loads it on to ships for export. The first phase of Project Magnet was completed in February, at a cost of $402 million.
The phase II will also include extending existing mines in the Middleback Ranges, optimising the existing mine plans and exploring new hematite targets on the company's leases near Whyalla.
OneSteel said the initial mine planning reviews had increased its hematite reserves by 13 million tonnes and the exploration work was initially scheduled to run over two years. Premier Mike Rann said OneSteel's announcement was a vote of confidence in the State, and its Project Magnet investment had so far increased the company's local workforce by 550 to 1850.
“Many of the new jobs created in Whyalla involve apprenticeships and cadetships that will train South Australians with the skills required to take full advantage of the mining boom,'' Mr Rann said.

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POSCO Seeks Daewoo Bid Partners, Doosan Drops Out 

Doosan Group pulled out of the bidding for Daewoo Shipbuilding , hitting shares of the world's No.3 shipyard, while steel firm POSCO said it was seeking partners to make a bid. POSCO, the world's No.4 steelmaker and a strong candidate for the Daewoo deal, wants to partner with a financial firm and South Korea's National Pension Service (NPS) to bid for Daewoo Shipbuilding, said a source close to the situation. The developments reflect expectations that a hefty premium for Daewoo Shipbuilding could double the value of a deal to 8-10 trillion won ($7.8-$9.6 billion) and that tight credit market conditions are squeezing potential buyers. “The (POSCO) move is a strategic option to drive out competition as grouping with banks and the pension fund will squeeze other potential bidders who may be financially stretched,” the source said.
At least four bidders have expressed interest in Daewoo, including construction-focused GS group, energy-focused Hanwha group and shipping-oriented STX group, which said earlier it more than doubled its stake in Europe's top ship maker Aker Yards to 88.4 percent through a $635.5 million tender offer. Global steel plate is in short supply due to booming demand for oil carriers and dry bulk carriers, but could go into oversupply after 2011 as steelmakers boost capacity and the shipbuilding sector slows. South Korea wants to complete the Daewoo deal, which will be the country's biggest M&A event this year, in the second half, as it prepares to sell off firms such as Korea Development Bank, Incheon International Airport and Hyundai Engineering .The majority of Daewoo Shipbuilding was taken over by creditors in 2000 after its parent Daewoo Group collapsed under a mountain of debt.

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Perwaja to be Largest Upstream Steel Miller   

Perwaja Holdings Bhd is poised to upstage Lion Group's reign as the largest integrated upstream steel miller in Malaysia by mid-2009.En-route for listing on the main board of Bursa Malaysia next month, the restoration of Perwaja's steel plants in Kemaman, Terengganu, within the next 12 months would result in 4.4 million tonnes annual production vis-a-vis Lion Group's 4.37 mt. Perwaja is engaged in the upper-upstream operation for the production of direct reduction iron (DRI) as well as the lower-upstream operation for steel billets, beam blanks and blooms. Despite the Government delaying some mega projects, analysts expect the local steel sector to be supported by strong overseas demand. According to RHB Research, Perwaja has at least three structural advantages over its competitors –integrated upstream set-up, low capital cost and strategic location of one of its plants near the Kemaman port. Currently, the plant locations of local competitors like Ann Joo Resources Bhd in Prai and Lion Group in Banting are about 5km and 26km respectively from the nearest seaport .
The upside to RHB Research's earnings forecasts include a wider product range targeting the oil and gas as well as shipbuilding sectors in 2009, new semi-finished flat steel products such as slabs and plates in 2010, and the doubling of annual production of lower upstream products to 2.6 mt in 2009.Currently, there are three operating DRI and hot briquetted (HBI) iron plants in Malaysia with Perwaja producing 1.5 mt annually and the other two plants under the Lion Group's Antara Steel Mill Sdn Bhd at 900,000 tonnes and Lion Diversified Sdn Bhd at 1.54 million tonnes per year. Perwaja commands about 40% of Malaysia's overall DRI and HBI production. It is also important to note that Lion's DRI production is mainly for its internal consumption. According to the research unit, Perwaja is expected to receive RM175mil in the proceeds of its listing which in turn would be used to repay borrowings and finance the listing expenses. It said the upgrading of the DRI plant could increase production to 1.8 mt by year-end from 1.5 million tonnes currently. HwangDBS Vickers Research said the local steel industry saw an increase in the consumption of DRI and HBI, which reached record levels of 1.3 to 1.4 mt between 2004 and 2006.According to the Malaysian Iron and Steel Industry Federation, apparent steel consumption nationwide will increase to 9.9 million tonnes in 2010 from 8.2 million tonnes in 2007.

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Scale Critical in Global Battle Says Sahaviriya  

 Thailand's biggest steelmaker, Sahaviriya Steel Group of Companies (SVG), is looking for ways to better integrate its operations in a bid to strengthen negotiating power with global steel giants who are hunting smaller firms to acquire. “We are aiming at investing in ore mining, pushing our 500-billion-baht smelting project to start as soon as possible, and a steel production plant overseas also is in our sights,'' said group president Win Viriyapraphaikit. “In doing so we could achieve a goal of being the region's largest integrated steel producer. I have to admit that it is very difficult for us to keep a majority holding in the assets we founded,'' he said, adding that integration among its own businesses from raw materials to downstream products would ensure supplies of raw materials and lower its costs at a time of intensifying competition. The world's largest steel company, ArcelorMittal, has set the tone for a global wave of consolidation in the industry, and has annual output of 120 million tonnes. Mr Win said the market leader's success had pushed other big contenders such as JFE, Nippon Steel and Posco to pursue similar strategies. Surging demand for steel products over the past five years, coupled with capacity utilisation constraints, have been key catalysts. As a result, says Mr Win, a handful of gigantic players can wield huge influence on prices.
“With ArcelorMittal's output bigger than the combined capacity of all its peers, it can announce production cuts when steel market prices soften.'' he said. Not only have steel producers been consolidating, but also more than 75% of the iron ore in the world is controlled by three operators that can basically dictate the prices of raw materials. The company is now conducting an environmental impact assessment and once the report is approved, it will resubmit its application for investment privileges with the Board of Investment.
Mr Win also called for support from the government in the form of a master plan for the steel sector, similar to plans prepared by rival countries. Among them are Vietnam, China and Pakistan, which view steel as a national strategic industry.

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Panzhihua Checks Quake Damage  

PZH Steel, a listed unit of the Panzhihua steel group, one of western China's top steel makers, said that has incurred some damage from a major earthquake but is still checking on the extent of its losses.PZH Steel said in a statement to the Shenzhen stock exchange that further investigation was required to assess the extent of damage from the quake. The earthquake about 30 kilometers southeast of Panzhihua city, near Sichuan province's border with Yunnan, killed 27 people, damaged or destroyed more than 180,000 homes and affected at least 800,000 residents. The US Geological Survey put the magnitude of the quake at 5.7, while China's official Xinhua news agency said it measured 6.1.

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China Power Investment to Invest in Wind Power Plant    

China Power Investment Corporation, one of the country's five power giants was investing CNY 2.8 billion in building a wind power plant, the largest of its kind in the northeastern Liaoning Province. According to a statement by the wind power developer, upon completion, the plant will have an installed capacity of 300,000 KW generating more than 700 million KWH of power annually. China Power Investment Corporation said the planned Tuoshan Wind Power Plant started first-phase. With an investment of CNY 530 million, the project will install 33 power generation units totaling 49,500 kilowatts. It is expected to generate power in December next year. Liaoning ranks third in installed capacity of wind power in China. Inner Mongolia Autonomous Region, the top producer, has an installed capacity of 1.56 million KW.

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Chinese Inflation to Continue Easing in August      

China's consumer price index a key measure of inflation was expected to show a rise of about 5 per cent in August from a year earlier. Mr Jiang Chao, an analyst with Guotai Junan Securities said that "The August food price figure proved our estimation. The CPI rise will slow to about five percent in August. He said that the August CPI would probably be the lowest so far in 2008, approaching the 4.8% full year target set by the central bank at the beginning of this year.”Mr Sun Mingchun, economist at Lehman Brothers said that the government would probably ease price controls in September.Lehman Brothers said in a report recently that China's CPI rise would drop to a 14 month low of 5.2% in August.Mr Fan Jianping chief economist of the State Information Center said the CPI growth rate might sink below 6% in August.

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Nanjing Steel Cuts Production by 10% on Higher Cost      

China Knowledge cited Mr Yang Siming, general manager of the Jiangsu based company at the 2008 3rd China Iron and Steel Crude Fuel Market Summit as saying that Nanjing Iron & Steel Co Ltd has reduced its steel and iron production by 10% from August. He said that prices of the company's steel products have seen significant fall last month and losses could be as much as CNY 800 per tonne, adding that the company needs to cut its output by 30% in order to make profit. According to the company's interim financial statement released earlier, its operating revenue fell 6.66% to CNY 669.29 million because of a weaker market demand and higher raw-material cost. In spite of a 10.28% rise in net profit, which hit CNY 528.25 million during the January to June period the company's gross profit ratio dropped 3.43% to 6.28%.

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China to Crackdown on Ports Charging Higher Fees     

China's Ministry of Transportation will crack down on ports that charge high docking fees for ships transporting thermal coal, in an effort to cut coal prices. Mr Li Chaolin a coal analyst with the China Coal Transportation and Sale Society said that the government seeks to limit practices that push up the price of coal. Thermal coal prices are not just influenced by production costs and supply and demand, but also transportation costs, including port fees. Mr Li said that this task is somewhat difficult however, as some ports are controlled by private companies. He said that "Ports in China are not all state owned. Some are controlled by private companies, which can decide for themselves how much to charge companies that transport thermal coal, adding that there is no national standard for port fees”. The MoT also asked that local transportation authorities charged with overseeing ports improve their supervision activities, so as to prevent unreasonable fees.

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Baosteel Rated Level ‘A’ for Operation Performance      

At present, the State-owned Assets Supervision and Commission of the State Council has officially issued the operation performance assessment result of large state owned enterprises in 2007, Baosteel Group, together with other 39 large state owned enterprises, was rated Level A, which is Bao's consecutive three years to win this rate. Since 2004, the operation performance assessment system combined by annual assessment system and tenure assessment system. The implementation of this system is of significant orientation, encouragement and restraint effect for large state-owned enterprises to conduct the scientific outlook on development, deepen the reforming, strengthen the management, intensify the core competitiveness and coordinate the sustainable development on an all-rounded basis.
It is said that 152 large state-owned enterprises took part in performance assessment and testing evaluation held by the State-owned Assets Supervision and Commission of the State Council. Through the comprehensive assessment on such key indices as gross profit, average net asset profit ratio, average gross asset returning ratio, gross asset, average debt-to-asset ratio, etc, 40 enterprises were rated Level A, 82 enterprises were rated Level B, 28 enterprises were rated Level C. Among Level A enterprises, 4 are from metallurgical sector. Since 2004, when pilot works were held on the board of director of Baosteel by the State-owned Assets Supervision and Commission of the State Council, substantial improvement has been made on operation management, technology R & D, reforming innovation, etc. In particular, with the hiking of raw material and freight price, surplus of domestic steel capacity and intensified international market competition, Baosteel still persists in the road of scientific development, continuously optimize the managerial procedure, adjust the product mix, give full play to cost reduction and refurbish the operation performance. Baosteel has been rated Level A for the consecutive three years by the State-owned Assets Supervision and Commission of the State Council.

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Bagang Plans to Increase its Market Share      

Baosteel's Xinjiang Bayi Iron & Steel is adding another 10,000 tonnes per year at its subsidiary Bagang Shaanxi Leaf Spring Company in northern China's Shaanxi province to further expand its market share. After the expansion the unit's capacity will be lifted to 34,000 tonnes per year.A company source said “With easier access to end users, we are increasing sales to our customers with optimized service. But we still have room to further enlarge our business. He said that that Beiqi Foton Motor, a leading maker of tractors, dump trucks, platform trucks and special-purpose vehicles, alone requires about 80,000 tonnes per year of leaf springs. But Bagang's total capacity is only about 50,000 tonnes per year.The Shaanxi leaf spring plant, which began operations in 2007, was established to reduce delivery times to its customers including Shaanxi Heavy Duty Automobile Co, Chengdu Wangpai Automobile Co and Beiqi Foton Motor Co.

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China Precision Steel Export Boost Help Full Year Earning      

Shanghai based China Precision Steel export opportunities and increased sales of its high carbon, cold rolled products offset rising raw material costs to help improve its full year results. As per report, gross earnings for fiscal 2008 ended June 30th totaled USD 22.5 million up by 49% YoY as compared to USD 15 million in 2007. The steel processor's preliminary report indicates revenue increased by 63% from USD 54 million to USD 88 million. While a second cold rolling mill continues to ramp up full capacity and is currently operating at a 55% to 60% utilization rate.

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Rio Tinto Favours Spot Market Sales 

Miner Rio Tinto will not agree any more traditional iron ore contracts on a benchmark basis and plans a significant increase in spot market sales next year, a senior executive said. Under the traditional benchmark system, steelmakers and big iron ore miners agree on an annual price rise. However, due to the price swings in the spot market and volatile freight rates, the system has lost its grip on the market. "We're not planning to place more tonnes on the traditional long-term contract basis," Sam Walsh, chief executive of Rio Tinto Iron Ore, said. Under the hybrid system, the contracts have long time periods but the prices are renegotiated at more frequent intervals compared to the annual traditional contracts. "Clearly, I would expect our spot volume will increase next year," Walsh said. He declined to give an exact amount for the increase but said it would be significant. Rio has already sold 5 million tonnes of iron ore on the spot market last year and has said it plans another 15 million tonnes this year. "The spot market is around 450 million tonnes a year. Up to 15 million tonnes is relatively modest. I believe that the market could absorb a greater quantity from us," he said. Walsh said the move to spot and hybrid contracts will be gradual as the company still has a number of existing long-term traditional contracts. Walsh said although the construction sector in China has slowed down and some steel mills shut down to avoid pollution during the Olympics, demand for iron ore remained robust. "The fundamentals driving steel production like urbanisation are still continuing," he said, adding he expected a pick-up in activity in October.

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Gerdau to Spend $524 mn to Raise Output in Argentina 

Gerdau SA, Latin America's biggest steelmaker, said its Argentine unit will invest $524 million to increase capacity to supply the domestic market. The investment will allow Sipar Gerdau to start producing crude steel and increase rolled-steel products capacity by almost fourfold, Porto Alegre, Brazil-based Gerdau said. The company will set up a new production lines in Perez, in Santa Fe province, 5 km from its existing plant in Rosario. The first phase of the expansion, which will cost $310 million, will be completed by 2011 and increase capacity to 650,000 metric tons of crude steel and 710,000 tons of rolled products a year, Gerdau said. The second phase, involving a $214 million investment, will be finished by 2016, increasing annual crude-steel and rolled- products capacity to 1.1 million tons each, Gerdau said.

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Norddeutsche to Buy Stake in Salzgitter    

Norddeutsche Affinerie AG, an Europe's largest copper refiner, may buy a stake in its biggest investor Salzgitter AG to increase cooperation, citing Chief Executive Officer Bernd Drouven. Salzgitter, Germany's second-largest steelmaker, may also raise its Norddeutsche holding from 10.8 percent, Drouven was quoted as saying by the newswire. Norddeutsche hasn't decided yet on a purchase. Norddeutsche shareholder HSH Nordbank is expected to sell its about 5 percent stake in the copper refiner, the newswire said, citing an unidentified person close to the company.

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Severstal Gets Fund Arrangement  

Russia's largest steel maker, Severstal, has appointed eight banks to rise $1.5 billion, a five-year syndicated loan, a banking source said. The mandated lead arrangers are Bank of Tokyo-Mitubishi-UFJ, Barclays, BNP Paribas, Citi, Commerzbank, Deutsche Bank, Royal Bank of Scotland and Societe Generale. The deal pays a margin of 185 basis points over LIBOR, the source added. Proceeds of the pre-export financing will be used for the borrower's North American operations. Severstal agreed a $900 million bridge loan in June that was underwritten by ABN AMRO, BNP Paribas and Citibank. Proceeds backed the borrower's acquisition of U.S. steel company Esmark Inc, which completed in August.

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Metalloinvest Wins Bid for Siberien Field 

Metalloinvest, the Russian iron and steel company, said on it had won a bid to develop the huge Siberian Udokan copper field. The Russian Subsoil Agency Rosnedra, the organiser of the tender and part of the Natural Resources Ministry, was not immediately available for comment. "We have been declared the winner but we do not have (the tender commission's) protocol yet," a Metalloinvest spokeswoman said. Earlier, Russian news agencies quoted Rosnedra head Anatoly Ledovskikh as saying that the tender commission voted unanimously in support of the project feasibility study provided by Metalloinvest's unit Mikhailovsky GOK. Udokan is one of the world's largest untapped copper fields and has the potential to produce 187,000 tonnes annually, or about 15 percent of Russia's current output of the metal. The Natural Resources Ministry has set the starting price at 4.5 billion roubles ($175.9 million) and said about $1.6 billion would be required to bring the deposit into production. Metalloinvest had previously said it may be joined by state firm Russian Technologies if it wins the tender.
Russian Technologies has said it might also invite Russian metals giant Norilsk Nickel to participate in the consortium. Russian Technologies were not available for comment. Norilsk declined to comment. The other bidder at the tender was the Russkaya Med consortium comprising state-owned Russian Railways and Urals Mining and Metals Co, Russia's second-largest copper producer after Norilsk. Both Russian Railways and UMMC declined to comment. Another bidder, Basic Element, an investment vehicle of Russian billionaire Oleg Deripaska, said on Tuesday it had withdrawn from the tender.

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Magnesita Aims to Cut Cost by 25 mn Euros 

Magnesita Refratarios SA, a Latin America's largest producer of specialty tiles used in steel blast furnaces, plans to cut annual costs by 25 million euros ($35.3 million) after acquiring LWB Refractories GMBH & Co. New management models, raw-material-supply economies and a possible `redistribution of production at Magnesita and LWB's production units will lead to the drop in expenses starting next year, Magnesita CFO Mauricio Lustosa said. Magnesita, based in Brazil's Minas Gerais state, agreed to buy LWB of Germany for 108 million euros in cash and 169 million euros in new shares. The purchase will almost double Magnesita's annual sales to about 900 million euros, making it the world's third-largest refractory-tile maker, according to CEO Ronaldo Iabrudi. “We're going to study every one of our plants, which we now have in Brazil, Argentina, Germany, France, the U.S. and China, to see what's the best production model,” Iabrudi said. “We may be able to make productivity gains of up to 15 percent.” Magnesita's planned 260 million-real ($148 million) expansion of its main Brumado mine in Bahia state in northeast Brazil, which produces magnesite sinter for the manufacture of refractories, will be put on hold pending the review, Iabrudi said. LWB's refractories production unit in China, which is in the start-up phase and has a capacity of 90,000 metric tons a year, suffers from operational problems as it sources its dolomitic raw material from a mine more than 1,000 kilometers (625 miles) away, Iabrudi said. The company's capacity to produce refractories has leapt to about 1.1 million tons a year from the previous 410,000 tons with the LWB purchase. Increased consolidation may allow Magnesita to achieve significant price increases for its products by the start of next year, following an increase of 32 percent for some products in 2008, Iabrudi said.

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Voestalpine Signs Accord with Bulgaria on Black Sea Steel Plant 

Voestalpine AG, Austria's biggest steelmaker, agreed with Bulgaria to study the possibility of building a steel plant on the Black Sea coast. The memorandum of understanding was signed in Sofia. Voestalpine Chief Financial Officer Alfred Dusing told that the plant will cost 5 billion euros ($7.1 billion). The company is also considering Ukraine and Romania as locations for the plant.

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Corus Introduces Energy Surcharge  

Corus, the U.K. unit of India's Tata Steel Ltd., is introducing an energy surcharge on its engineering steel products from Oct. 1. The charge relates to dramatic increases in energy costs during the past year, the London-based company said.

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