| |
|
| OCTOBER 2005 | |
| From the CEO's Desk | |
|
5th Asian Steel Conference was held on 21-22 October in Mumbai and it clearly demonstrated the strong sentiment in Asian iron & steel sector. Almost everybody, the steel producers, raw material suppliers, equipment & technology providers, trading houses, consulting firms and even financial institutions were very positive about the prospects of iron & steel sector in Asian region. It was also felt that the present downturn in prices is a temporary phenomenon and the price curve will bounce back soon. Dr.S.K.Gupta, an internationally renowned steel technologist and a known positive thinker, took a clear stand of 'Nothing can now stop India. It is sure to follow the path of China as regards steel production and consumption. If the economy of any country grows at about 7 to 8 % annually for three consecutive years, it enters auto catalytic stage where nothing, even the political instability can stop its growth.' Mr.S.W.Wagh, Director, Steelmet Marketing and Mr.Amit Majumdar, Director, Minmet Resources also supported this viewpoint. Mr.Wei Li, Secretary General of South East Asian Iron & Steel Institute, expressed a positive feeling about the growth of iron & steel industry in that region. He argued that as the steel production in SE Asian region lags behind the consumption, this situation offers neighboring areas a tremendous trade opportunity. Given the friendly logistics between India and SE Asia, there is a vast potential for growth of steel trade between the two regions. Mr.Ashok Pandit, MD, Tata Sponge Ltd., said that the sponge iron industry is gearing up for the expansion and he was quite confident that the SI industry can satisfy the growing demand of metallics in steel production. Dr.A.K.Chattopadhyaya, ED, Tata Refractories also expressed similar feelings as regards Indian refractory producing industry. The conference also covered topics like 'Technology', 'Financing of Iron & Steel Projects', 'International Trade', 'Raw Materials' etc. The opening debate on 'Asian iron & Steel Industry - Vision 2010' was quite absorbing and was participated actively by panelists as well as delegates. The exposition alongside the conference displayed international technologies and products related to iron & steel sector. The event was sponsored by Essar Steel Ltd. and Thermo Electron Corporation. D.A.Chandekar
|
|
|
Vizag Steel wins CII National award The Visakhapatnam Steel Plant (Vizag Steel) has bagged the Confederation of India (CII) ‘National award for excellence in energy management for 2005´. In the meet conducted recently by the CII in Chennai, VSP was adjudged as an excellent energy efficient unit for the sixth national award for excellence in energy management. The award was presented by R. Viswanathan, Minister for Electricity and Transport, Tamilnadu, and received by C. S. Gupta, General Manager (Energy & Environment), on behalf of VSP. |
|
|
Mittal Steel plans mega Indian steel plant Mittal Steel Co. , the world´s top steel maker, signed an agreement to build a 12 mt steel plant in eastern India. Under the agreement, Mittal Steel will invest about 400 billion rupees ($9 billion) to mine iron ore and build the steel plant in Jharkhand. The project would be developed in two phases of six mt each with the first phase expected to be completed within 48 months of the agreement. The second phase would be completed within 54 months after the completion of the first. The agreement was signed by the state chief secretary P.P. Sharma and the London-based founder and chairman, Lakshmi Mittal. The plant will be Mittal’s first in India, his birthplace. ‘Mittal Steel now intends to undertake a detailed project report to identify the location (of the plant), iron ore and coal mines and water resources’. The company will also study the possibility of setting up of power plant of 2500 megawatts to provide electricity to the steel plant. Steel-making and mining firms have been drawn to India’s steel industry because of its affordable labour and the world’s third-largest deposits of coal and iron ore. Mittal is the second foreign steel maker to sign a deal in India to turn its iron ore reserves into steel, demand for which is expected to boom with India’s economy, Asia’s third-largest, growing at about 7 per cent a year. ‘Steel consumption in India is said to experience considerable growth in the next decade and it is therefore a natural market for Mittal Steel to build a production presence’. In June, South Korea’s Posco signed a deal for a $12 billion steel project in Orissa, a record foreign direct investment for India. Jharkhand, with estimated iron ore reserves of 3.61 billion tonnes, has already signed steel project proposals with Tata Steel Ltd., India’s second-largest steel firm, and smaller companies such as Essar Steel Ltd. and Jindal Stainless Ltd. |
|
|
Orissa asks Posco to tag local ally The Orissa government has thrust on Pohang Steel Company (Posco) India a clause of inducting an Indian company for mining. Although unwritten clause is not part of the memorandum of understanding (MoU), the state government has asked Posco to rope in an Indian company for partnering its mining project. Tae-Hyun Jeong, deputy managing director and head of Posco’s India project, said the Orissa government has said that the company would have to partner with an Indian company, adding, that this was the reason why Posco could not enter into a joint venture with Australian mining major, BHP Billiton. Posco, Jeong said, was in the process of shortlisting potential partners for mining at the site and in fact had zeroed in on BHP Billiton when the state government’s clause was intimated to the company. He said, there were 7-8 companies in mind, many of which were were interested in the project. The mining project entailed acquisition of 600 million tonne of mining leases for captive use. Jeong clarified, that it was at the insistence of the state government and not the central government. Accordingly Jeong was chalking out plans for the mining venture. The estimated investment cost was around $500 million for the first stage. Posco would enter into joint venture for the exploration. The company had applied for prospecting license would then acquire exploration licence. The final stage would the mining lease stage. The 12 million tonne project was estimated to cost $12 billion. Jeong said, the company was not expecting any returns in the first 15 years. He said, the company decided to invest in India as it believed that it was a high-growth market. Initially the company would focus on manufacturing of slabs. |
|
|
Mittal may change steel pricing equation The entry of Mittal Steel, the world’s largest steel maker, could change the equations in steel pricing in the country. The UK-based steel major, which signed an MoU with the Jharkhand government for setting up a 12 million tonne steel plant in the state, has already begun the exercise to further lower the cost of producing steel in India. The move could provide much needed relief to steel consumers in the country who have been harried by the regular price increases over the last couple of years. Of course, Mittal Steel’s arrival would also be a wake-up call for domestic steel majors who till now have claimed to be one of cheapest producers of steel globally. Speaking to press, Mittal Steel chairman Lakshmi Nivas Mittal claimed the company produced steel at the lowest rate in over 15 countries where it operated and India would be no different. ‘Wherever we operate a steel plant, we are the lowest cost producers. The advantage that Mittal Steel provides is that low cost does not compromise on quality. All company owned plants use modern technology to increase productivity and bring out high quality products. All these characteristics would also form part of our Indian steel plant,’. While not referring to Tata Steel, an acknowledged low-cost steel producer, Mittal said the Indian market needed much more than what it was currently getting. On the issue of iron ore exports, Mittal said that it is not an issue that delayed the signing of the MoU. ‘We want to vertically integrate all our steel making processes and in this regard already 50-60 per cent of the company’s iron ore requirements were now coming from its captive reserves’. |
|
|
Auto cos pass on steel price cuts Softening steel prices have turned into margin mania for a section of the automobile industry though not everyone is cheering just yet. For some companies, particularly in the 2-wheeler segment, the current let up in steel input costs has given enough elbow room to roll out some aggressive discounts and subventions during the festival season. Pawan Kant Munjal, MD, Hero Honda, says: ‘With the softening of steel prices things are looking better than what they were at the beginning of the year. So, we can end the year more happily than we would have expected. Hence, we have managed to give a Rs 1,001 benefit on our models. It’s necessary to get to our 3m unit annual target.’ Not everyone has actually reaped that steel benefit though. For some companies the current price downturn has been neutralised by longer-term contracts. Says Venu Srinivasan, MD, TVS Motor, ‘For us steel prices haven’t really softened because Tata Steel has maintained the price line for a while. When prices went up, they didn’t raise and now that it has softened we don’t expect any benefit either.’ That’s true of most car companies too where annual contracts — that neutralised some of the spurts last year and early this calendar — will now even out the spikes as well. Indeed, car makers have been raising prices in an attempt to cut down current discounts in the market and balance some pressure from steel inputs costs. Hot rolled coil (HRC) prices, which had been steadily rising and ruling at about Rs 28,000 a tonne by April ’05, started softening since May this year. HR prices had come down to about Rs 24,000-25,000 per tonne in August. September saw a trend reversal with HRC makers hiking rates by about Rs 1000 a tonne. Since then, prices have been stable. Steel makers say prices are expected to stabilise at this level for some time. |
|
|
Crude steel output up 13.9 per cent Domestic crude steel production was up 13.9 per cent at 3.17 million tonne this September compared with 2.782 million tonne in same month last year. However, mirroring the international trend, the output slowed down in September in comparison with August this year, which saw a hike of 39.6 per cent increase in crude steel production on a y-o-y basis. For the first nine months the total steel production was 27.466 million tonne as against 23.969 million tonne, registering an increase of 14.6 per cent. In China, production grew by 22.3 per cent in September as against a 26.8 per cent increase in August this year. The total steel produced in the first 9-m of was 255.286 million tonne in comparison with 200.397 million tonne in the same period '04. |
|
|
China´s steel-production growth may slow starting in 2006 if the government follows through on a decision to close plants that fail to meet the nation´s new industry guidelines. Thats the view of analyst Jim Lennon at Macquarie Bank´s London office, who believes China will be successful in closing down hundreds of small producers with a combined annual capacity of 55 million metric tonnes. The government has been trying to curb expansion in the industry after steel output doubled in the past four years, driving up global prices of iron ore and coal to record highs and fueling home-country inflation. The country announced a policy in July that will shut small, polluting mills and force industry mergers. The expected shutdowns suggest ‘the phenomenal growth rates we have recently seen in China’s steel output should begin to slow significantly next year,’ the Macquarie report says. China is expected to boost steel output by 13 per cent to 390 mt in 2006 after a 26 per cent increase to 345 mt this year, the report forecasts. The International Iron and Steel Institute says total crude-steel production in China of 193.8 million metric tonnes the first seven months of 2005 is a rise of 28.1 per cent on the same period of 2004. The expanded output this year is contributing to an 8 per cent decline in prices since December. The average price for steel products in China was $603 a metric ton at the end of July, according to the State-Owned Assets Supervision and Administration Commission. China’s steelmaking capacity is between 400 million metric tonnes (estimated by the country’s top economic planning agency) and 419 million metric tonnes (estimated by the China Iron and Steel Association). The uncertainty exists because while 22 per cent of steelmaking plants are owned by the state and 34 per cent are held by publicly traded companies, the other 37 per cent are controlled by private companies. Lennon says many smaller private operations have never reported accurate steelmaking capacity. Atop all that, another 119 million metric tons of annual capacity is planned or under construction through to 2008, including 71 million set to start operation by end-2006. The Macquarie report suggests that 36 million metric tons of that capacity is unlikely to receive approval under the new steel industry policy guidelines. |
|
|
Nucor says China holds key to world steel prices Global steel prices will depend largely on China´s success in tackling overcapacity that threatens to flood markets in other parts of the world, the head of U.S. steel maker Nucor Corp. said. Nucor President and Chief Executive Daniel DiMicco called on China, the world’s largest steel producer and consumer, to curb excessive growth and said steel makers worldwide should focus on improving efficiency rather than adding capacity. Steel prices have soared in the last two years, pushing some steel company stocks to record highs. China’s industrial growth is seen boosting world demand by 4-5 percent annually to 2006, data released by the International Iron and Steel Institute showed, but prices have retreated from highs early this year on rising supply. DiMicco, attending the IISI’s annual meeting in Seoul, also expressed concern about the high price of raw materials. ‘Scrap prices are extremely high and it is a tremendous concern in the industry,” he said.’This could squeeze the profit margins of U.S. steel companies, which still have excess capacity even though they’re working off excess inventories successfully.” Charlotte, North Carolina-based Nucor, the world’s tenth-largest steel producer, makes steel from scrap metal. The company said in July the average scrap and scrap substitute cost per ton used increased 8 percent to $246 in the second quarter from a year ago. |
|
|
Russia’s MMK eyes bid for Pakistan Steel Russia´s MMK steel works may bid in the privatisation of Pakistan Steel, following other Russian steel majors in making its first foray abroad, reports said. Pakistan last month invited expressions of interest in the sale of up to 74 per cent in Pakistan Steel Mills Corp, which is the country’s largest and only integrated steel operation. ‘The Pakistani market is very promising. In addition, the assets are interesting they are not far from a port,’ Vedomosti quoted an MMK official as saying. Russian analysts estimate Pakistan Steel is worth $600-$700 million, meaning the strategic stake on offer of 51-74 per cent could fetch $300-$500 million. |
|
|
CVRD considering to switch from FOB to CFR Brazilian iron ore miner CVRD is looking to change their prices from FOB to CFR. According to company CEO Roger Agnelli, it is still too early to forecast next years price, but in order to be more competitive in the Asian market they are planning to make the switch. Currently, between 90 and 92 percent of shipments exported uses FOB, resulting in a lack of competitiveness in Asia. Europe and Latin America’s iron ore is currently keeping stable and the price from Japan is improving. China’s consumption and demand rate is increasing. Agnelli said Japan’s steel mills will leading Asian’s iron ore price negotiation. |
|
|
Morgan commissions rod mill for Yuzhong Steel Works Ltd Morgan Construction Co. successfully commissioned a rod mill for Yuzhong Steel Works Ltd. at Lanzhou, China. Morgan designed, built, and installed the single-strand line for the Jisco Group operation in in Gansu Province. Fan Li, Morgan’s project manager, described the mill as having two two-stand Vee pre-finishing mills; an eight-stand No-Twist mill; Morgan’s reducing/sizing mill; water boxes before and after the NTM; pinch rolls; a high-speed laying head, and a Stelmor conveyor with reform tub and coil transfer car. ‘In addition,’ he said, ‘the mill is equipped with the Morgan Enhanced Temperature Control System for the enhancement of the mill’s processing.’ The new mill will produce coils weighing 2060 to 2200 kg, at an annual rate of 550,000 metric tonnes. It is expected to reach its designed capacity within the first three months of operation. Li was on hand for the commissioning and signing of the final acceptance test certificate, and he reports that the mill was completed and commissioned on time. |
|
|
KSC exports 489,000 mt steel products Khouzestan Steel Company wholly owned by NISCO, affiliated to the Ministry of Mines and Industries. K.S.C established in 1989 on 3.8 sq KM in Ahwaz and is the first Iron and steel Complex in Iran with direct reduction arc furnace route. According to figures 489,000 mt steel products exported by KSC was nearly half of total produced products during last 6 months. And this steel mill ranks in 2nd position according to Iranian Steel Mills export figures. KSC has exported billet, bloom and slab to Korea, Japan, India, Germany, Thailand, Kuwait, Indonesia, Taiwan, Singapore, Saudi Arabia, and Greece and still is planning to expand exports. New project of producing wide width sizes sheet (to 4.5 meter width) with capacity of 1,050,000MT/Year and establishing a sponge iron plant based on D.R.I called ZAMZAM project with capacity of 800,000 t/year are part of plans to expand production and to increase capability of company to export more products in near future. |
|
|
Stainless steel market to remain soft in Q4 The global stainless steel market will remain soft in the fourth quarter of this year. In the European market, the base price of 304 2mm/2B continued decreasing, falling by £30-50/mt last month. Manufactures are still cutting the base price due to overstock and weak demand. In the Asian market, mills continue to reduce the output in the fourth quarter. In the Chinese market, the price of 304 2mm/2B and 430 2mm/2B in September is lower than in August by US$81/mt and US$88/mt respectively. In the American market the stock has been reduced. The market is expected to reactivate in the near future. |
|
|
Arcelor to make dent into India Arcelor, the world’s second largest steel maker, has decided to invest in India. Alain Davezac, vice-president of Arcelor’s international business, said the company was yet to decide on the structure of investment but had taken a decision in-principle to invest in India. Investment details are likely to be finalised over the next 2-3 months. Arcelor’s will be the third foreign direct investment (FDI) in India, after investments by South Korea’s Posco and Mittal Steel. India has been identified as a high-growth market and a potentially competitive region with major iron ore reserves. He also said, though India benefited from iron ore reserves and low-cost labour, the country had costly freight and lacked coking coal. Davezac also said India was reasonably open to FDI in steel business. |
|
|
Steel firms Arcelor, Posco interested in Erdemir The world´s number-two steelmaker, Arcelor, and South Korean giant Posco are interested in partnering with OYAK in Turkey´s biggest steel company, Erdemir. The two firms contacted OYAK with the partnership suggestion after the Turkish conglomerate won a tender for Erdemir’s publicly held 46.12 percent share. OYAK signaled it would be open to new partners in its steel venture. Luxembourg-based Arcelor also participated in the tender but withdrew in the first round when the price went up to $2.67 billion (2.2 billion euros). Mittal, the world’s top steelmaker, was eliminated before getting to the auction stage. OYAK, a large business group representing the Turkish army’s pension fund, won with a bid of $2.77 billion. Posco had pre-qualified for the tender but pulled out before final bidding stage. Unidentified sources said that Arcelor would have priority in possible partnership talks with OYAK, as the two companies already have business ties, with Arcelor supplying steel to a Turkey-based joint venture between OYAK and French group Renault. Erdemir’s sale to OYAK will formally go ahead after Turkey’s Competition Board and the Privatization Administration (OIB) approve the auction results. |
|
|
Mittal wins Ukrainian mill bid Mittal Group, the world’s biggest steel producer, won a feverish auction to secure control of Ukraine’s giant Kryvorizhstal steel mill in a sale touted by President Viktor Yushchenko as key to reform plans. Mittal’s bid of 24.2 billion hryvnias ($4.79 billion) proved the winner after nearly an hour of fast-moving bidding with Industrial Group, controlled by Arcelor. The winning price far exceeded the $3 billion that Yushchenko’s liberal administration had hoped to fetch in the second attempt to sell the plant, ordered after the courts struck down last year’s original sell-off for $800 million. A third entrant, Ukrainian LLC Smart Group, with Russian links, dropped out of the bidding as prices spiralled upward. The proceedings were conducted in a small room in the presence of high-profile guests, and were broadcast live on television. Industrial Group had started off the bidding with a sealed submission of about $2.5 billion—against $2.08 billion for the other two entrants. Authorities had set a starting price of about $2 billion. The auction was seen as a key event in defining the reformist agenda of the administration propelled to power by last year’s “Orange Revolution” rallies. It was also touted as a chance to coax back Western investors made wary by the chaotic first eight months of the liberal administration under now sacked Prime Minister Yulia Tymoshenko. Throughout the long campaign that ultimately led to his victory, Yushchenko denounced as “theft” the plant’s original sell-off in June 2004 for $800 million, below other offers. |
|
|
Mittal Steel acquires 36 pc of Chinese Steel Co. Mittal Steel has received final approval relating to its acquisition of 36.67 per cent of Hunan Valin Steel Tube & Wire Company for a total consideration of US$338 million. According to a dispatch, all conditions precedent have been met and the transaction has now closed. The transfer of share is expected to take place very soon. Hunan Valin is one of the largest steelmakers in China with annual steel production capacity of 8.5 mt. It is listed on the Shenzhen Stock Exchange. Commenting on the approval, Mittal Steel’s chairman and chief executive officer), Lakshmi N. Mittal said. ‘This is a key strategy transaction for Mittal Steel as it marks our first step into China, the world’s fastest growing steel market. We are much looking forward to our collaboration with Hunan Valin, and are confident that we can help the company further improve on its market position by providing marketing, procurement and technological knowledge and expertise.’ Mittal Steel recently signed a US$900 million agreement with the NTGL to take over the operations of the former LAMCO in Yekepa, Nimba County. According to the agreement, the former workers of LAMCO would be given preference for initial employment based on experience, training and education. |
|
| This
is a compilation of news from various dailies, magazines, trade publications
and Press Releases. To unsubscribe send mail to office@steelworld.com. Type Unsubscribe <your email address> in the subject line. |
|
