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Dear Readers,

Few years back, the Steel industry experts were busy in finding new applications and emerging markets for finished steel. There was tremendous pressure on Steel producers to maximize the sale and make the project viable and in some cases, even debt free too. Now, with a boom in construction and infrastructure projects, the economies of most of the Asian countries are on upswing. China, India, Gulf region and even SE Asian countries can be cited as examples for this phenomenon.

With this change in scenario, though the pressure on sales has
reduced, there is an increasing pressure on production process
to reduce the cost of finished Steel. Secondly, now if the markets and production processes are established, it is becoming clear that whoever
controls the vital raw materials such as Iron Ore and Coke, will
succeed in long run.

Thus, to say so, the focus of Iron & Steel industry has shifted to raw materials. There is an ongoing debate in India about whether to export Iron Ore or to preserve this strategic resource for Indian steel makers. Experts have even started looking at the big heaps of Iron Ore fines lying at pithead and are finding ways to utilize these fines. The process of pelletization can surely help us to do it. Another method is to beneficiate the low grade ore to higher grade and to palletize it for usage in the furnace.

A one day seminar organized by Ministry Of Steel was very timely and discussed the technology, costing and the viability of beneficiation and pelletization units. Most of the Chinese ore is of low grade and is being beneficiated to make it suitable for blast furnace feed. They have developed relavent technologies / processes which can do it in a cost efficient manner. Think now is the time, India as well as other Asian countries should employ such processes and utilize the otherwise unused Iron ore fines and also the low grade ore. The one who does this in time will surely emerge as the winner for tomorrow!!!

 D.A.Chandekar
Editor & CEO

 

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Posco preparatory work this month 

Notwithstanding the setbacks in the form of abduction of its employees, the South Korean steel major POSCO is firm on starting ground preparatory work for its 12 million tonne, Rs. 51,000 crore steel project from the current month as scheduled. Four senior executives of the company were taken hostage and later released after six hours of ordeal by the anti-POSCO brigade at Dhinkia near Paradip, close to the proposed plant site. This is the second major incident of abduction of POSCO staff, while on a site visit, by the project opponents in last four months. In the earlier incident in May, two POSCO India executives were abducted and then released after 10 hours of captivity.
“This sort of illegal detention of our employees by the project detractors is directed at creating cheap publicity and instilling fear in the top management not to go ahead with the project. But they will not succeed in their attempt”, said a top official of the company. The company has already been handed over 193 acres of non-forest, non-encroached land and it expects to get another 300 acres land within this week. The total land requirement for the project is pegged at 4004 acres, including over 3100 acres of forest land, which is now under the process of being decategorized to be used for industrial purposes. The project site is spread over three grampanchayats, of which Dhinkia is said to be most recalcitrant in opposition to POSCO while the company claims to have significant support base in Nuagaon and Gada Kujanga panchayats.
“The land handed over to us falls under Gada Kujanga side which will be easier for us to start work”, the POSCO official said. He said, to start with, the company will initiate steps for land preparatory work this week which includes demarcation, setting up of base camp, land levelling and construction of boundary wall. The company, however, is peeved over inaction of the state administration in maintaining law and order in the project site area.

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ESSAR TO TREBLE STEEL SHOPPING CENTRES

Essar Steel, India’s third biggest private sector steelmake, has announced plans to treble its network of shopping centres for steel in the country, as well as take the concept
to other countries in Asia. The shopping centres are retail points for steel where small merchants and sometimes even householders can buy up to about 1 tonne of steel - for example, for use in their businesses or sometimes for a private construction scheme. Prashant Ruia, a director of the Essar Group - a family owned holding company that owns Essar Steel - said the idea of making lot sizes available to small businesses was rarely addressed by steel companies but that it added up to an important and expanding market.
“We want to make it as easy as possible for small businesses in India - which are extremely active as the economy expands - to buy their steel in the amounts they want rather than have to go to a conventional steel stockholder that is used to selling steel in larger quantities,” he said. Essar has recently built a chain of 90 small retail centres for steel in India and wants to expand this to 300 in the next two years, Ruia said.
This year the network of centres is in line to provide revenues of $700 million to $800 million, with most of the steel coming from Essar Steel’s own plants. Revenues from this part of the business could rise to $2 billion a year by about 2010, Ruia said. Essar was also exploring setting up similar centres in countries such as Pakistan, Sri Lanka and other parts of south-east Asia, he said. The company recently announced it was spending $3.1 billion on two acquisitions plus a programme of plant construction in the US and Canada. In its production operations - which also involve mining iron ore - the company wants to increase the amount of steel it makes from an expected 4.5 million tonnes this year to about five times this amount in five years’ time, including material from the new operations in North America.

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Line pipes export to US doubles in August

Exports of line pipes to the United States have doubled to 34,000 tonnes in August as compared with the previous month, even though overall imports of the product by the US declined significantly. “US imports of line pipe in August are showing a significant decrease in preliminary import data. At the same time, import of line pipe from India doubled from 17,000 tonnes in July to 34,000 tonnes in August,” Steel Business Briefing (SBB) reports quoting US government data. Imports of line pipes by the US has slided by 24 per cent to 1,99,000 tonnes in August from 2,63,000 tonnes in July, it said. The decline was on account of reduction in imports from China, Canada and Korea, which were the three largest sellers of pipes to the US in July. From Canada, the imports fell from 49,000 tons in July to 24,000 tons in August, SBB said.

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Three Tata firms begin CEO search

The top slots at three Tata companies — Tata Motors, Tata Steel and Tata Consultancy Services (TCS) — will be up for grabs in two years with incumbents Ravi Kant, B Muthuraman and S Ramadorai due to retire in 2009. Under the Tata group’s policy, all executive directors must retire at 65 years and all non-executive directors at 75 years. Kant, Muthuraman and Ramadorai will turn 65 in 2009.
Industry sources said the group is in the process of identifying candidates for these top jobs. The three companies account for nearly 70 per cent of the group’s global operations. The appointments are expected to take place from within the group. A Tata group spokesperson said: “The group companies have holistically practised a very sound succession policy. An announcement will be made by the respective companies at an appropriate time.” Sources said a close look at recent developments indicated that the exercise to find successors for these three extremely successful CEOs is on. They said the creation of a new post of Chief Operating Officer (COO) by Tata Steel and TCS hinted at that direction. “The COOs of Tata Steel and TCS and the only executive director of TCS are strong contenders for the top job at their respective companies,” they added.
Last month, TCS appointed four new executive directors, including a COO. They are N Chandrasekaran, S Mahalingam, S Padmanabhan and P A Vandrevala. Chandrasekaran, 44, has been appointed COO and Mahalingam, 59, continues as the chief financial officer. Chandrasekaran and Mahalingam are strong contenders for the top job, according to sources. Last month, the group appointed Tata Motors’ Executive Director Praveen Kadle managing director of its newly-formed financial services company Tata Capital. This makes the other executive director (commercial vehicles), P M Telang, 59, a strong contender for the top job.
Interestingly, Ravi Kant was executive director of the company’s commercial vehicles business before he was elevated to managing director. Similarly, Tata Steel appointed H M Nerurkar, 58, COO. He was vice-president (Kalinganagar Project and Technology). The company has a young brigade of vice presidents including Koushik Chatterjee (38), handling a key portfolio like finance at a time when the company is on an acquisition spree, Anand Sen (47) in the flat products division. A D Baijal (59) heads the global mineral resources division.

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Corus to lead Tata Group`s global safari

Corus, which was acquired by Tata Steel for £6.2 billion pounds in the beginning of this year, is eyeing global network alliances in automotive steel, as it aims to build a strong position in the international market. Corus, which has alliances in some parts of the world, is now eyeing a global alliance. Globally, there has been an increasing trend to forge partnerships among steel companies even as they compete with each other.
Earlier this year, ArcelorMittal and Nippon Steel entered into a non-binding memorandum of understanding, which entailed focusing on joint business activities in automotive steel in North Amercia. In 2002, a cooperation had been forged among Arcelor, much before it was acquired by Mittal Steel, Nippon Steel and Tata Steel for providing effective steel solutions to the Indian automotive industry. However, the agreement was not renewed. Clearly, automotive steel will be a focus area for the Tata Steel-Corus combine. Jean-Sebastien Jacques, director corporate development & strategy, Corus, said, “Corus has lined up an investment of £153 million pounds for automotive and construction market at its Ljmuiden plant. Tata Steel is also planning expansion in the downstream automotive space.” Tata Steel ranks first in the automotive segment in India, while Corus is third in Europe. In fact, Jaguar and Land Rover, being eyed by Tata Motors, happen to be customers of Corus. Currently, the combined entity of Tata Steel and Corus is going through the integration process.
The synergies that would be built between Tata Steel and Corus by the end of the third year were pegged at $450 million Philippe Varin, chief executive, Corus, said there were 20 working groups focusing on the integration, working on iron making, steel making, raw material security and rolling mills, among various other aspects, he said. The company would in the next step integrate raw materials. In iron ore, projects in the Atlantic basin were under review while in coal, projects were being explored across the globe. The combined entity had 25 per cent iron ore and 20 per cent coal security, which it plans to take to 60 and 80 per cent, respectively, he said.

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S&P forecasts Indian economic growth at 9% in 2007

India's economy is expected to grow by 9% in 2007 and 8.8% in 2008. S&P in a recent report also said that Indian interest rates are clearly peaking and the rupee is likely to end the year at 40.5 per dollar. The Reserve Bank of India forecasts the Indian economy to grow by 8.5% in 2007- 08.

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Tata Steel to up prices as auto, realty boom

Tata Steel, which acquired Corus Group Plc for $12 billion in January, will raise prices for the second straight month as construction and automobile companies in India increase orders to meet demand. Prices of long products for immediate delivery would be raised by as much as 2 per cent, or Rs 600 ($15) a tonne, from tomorrow, Deputy Managing Director T Mukherjee said in a telephone interview today. Tata was also scouting for iron ore and coal mines in Brazil, Australia, Canada and several African countries, he said.Indian steelmakers are raising prices as demand increases in China and India, the world’s fastest-growing major economies. Tata’s decision matched yesterday’s increase by Steel Authority of India, the nation’s biggest state-run steelmaker.
The price of rebar, a benchmark long product, would go up to about Rs 26,600 in the immediate delivery market, Mukherjee said. Tata, one of the lowest-cost steelmakers in the country, faces competition for raw materials as it expands overseas and prices of iron ore and coal increase. “Securing supplies is key to Tata Steel’s global plans as its own mines will mostly be used to meet its requirement in India,’’ said Sanjay Makhija, vice-president at Mumbai-based Fortune Financial Services. Tata Steel agreed to buy a stake in a Mozambique coal mine in August for $86 million. The coal would be used to produce steel at its plants in Europe, Mukherjee said.“We are looking for iron ore mines for our European operations and depending on the location of the coal mine, we will decide whether to use it for operations in India or Europe,’’ he said. Tata Steel and Corus combined produce about 25 million tonnes a year. Capacity might more than double to 56 million tonnes by 2015 after the three new plants planned in Orissa, Jharkhand and Chhattisgarh start production, Chairman Ratan Tata had sai.

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Rathi Bars to produce billets by 2008-end

In its attempt to consolidate in-house production of raw materials, Delhi-based manufacturer of steel bars, Rathi Bars Ltd is planning to begin production of ms billets by the end of 2008. The cast products used in manufacturing of steel bars will be produced at a volume of 150 tonnes per day and would help the company reduce the cost of production by 5-7 per cent. Among several varieties of steel bars, Rathi Bars Ltd. manufactures ‘Thermex’ thermo-mechanically treated (TMT) and cold twisted deformed (CTD) steel bars at its manufacturing plant in Bhiwadi in Rajasthan.
With most of its clientele including DLF, Omaxe and Parsvanath based in Delhi-NCR, the company holds a exclusive license to use the Germany-based Thermex technology in manufacturing and sale of TMT bars in the region, Anurag Rathi, director of Rathi Bars Ltd said. With an installed capacity of 80,000 metric tonnes per annum of steel bars, the company is intending to expand following a growing demand in the Rs 20,000 crore worth market in NCR for the products. To part finance the expansion, Rathi said that the company was entering the capital market with a public issue of 71,42,857 equity shares of Rs 10 each at a fixed price of Rs 35 per equity share aggregating to Rs 25 crore. Rathi added that the company hoped to increase its capacity utilisation from 75-80 per cent at present to 95 per cent by 2009. Rathi Bars earned a turnover of Rs 190 crore and a net profit of Rs 6 crore for the financial year 2006-07. Mr. Kareem said that, “As regards financial commitments, SAIL will provide the necessary support for stage-I and for the next two stages, the support will be finalized after completion of the first stage.” He said that in the first stage, production from the current level of 20,000 tonnes would be increased to 50,000 tonnes per year through optimization of process parameters and maintenance practices of electric arc furnace and billet caster without any capital investment in a six month period. He added that while stage II envisaged a capital investment of INR 3 crore in a time period of 10 months, stage III proposed installation of a rolling mill with a capital cost of INR 50 crore in duration of 18 months.

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Adhunik announces steel plant in Purulia

Adhunik Corporation Limited, a unit of Adhunik Group of Industries, has embarked upon setting up a green field project in Raghunathpur, Block 2, of Purulia district in West Bengal. The project envisages setting up an integrated Steel Plant of 1.1 million tonne per annum capacity along with a power plant of 1,000 MW and 1 million tonne per annum capacity cement plant in phases.
The company is going to sign a MoA with the government of West Bengal by the end of this month. The above plant would be set up subject to availability of raw material linkages, water availability, railway infrastructure and receipt of all approvals from the state and central government. A total of 2,400 acre of land will be required for the above three plants. While the body for land acquisitions is WBIDC, the land acquisition process has commenced. The investment plan is Rs 7200 crore and will generate employment to 5000 (direct – 2000, indirect – 3000). Located close to Rukni Rail Station on SER route, production for the first phase will begin by 2011.

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Inter-ministerial group meet on steel postponed

The meeting of the Inter Ministerial Group (IMG), set up to facilitate investments in the booming steel sector, slated tomorrow has been postponed again to October 30. IMG was formed to address various issues creating bottlenecks impeding the estimated investment of Rs 2, 76,880 crore in the sector over the next five years. The meeting had to be postponed as the Orissa government has said it would not be able to participate due to Durga Puja celebrations.
Earlier, the meeting scheduled for October 8 had to be postponed by 10 days as top officials of the Steel Ministry and SAIL Chairman Sushil Kumar Roongta was in Europe attending the International Iron and Steel Institute meeting. “We envisage an invstment of Rs 276,880 crore in the steel sector by 2011-12. The IMG, which has been constituted to delve into various issues impeding these investments, will deliberate on them when it meets on October-end,” a top Steel Ministry official told the media.
The key issues to be discussed are ensuring adequate iron ore resources to the steel utilities, including foreign steel giants like ArcelorMittal and Posco. “After a detailed scrutiny of the current steel scenario, we found that steel production by 2012 is likely to be at 12.06 million tonnes (MT) per annum. This will necessitate 198 MT of iron ore by the same period and 48 MT by 2019-20” the official pointed out.

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Australia to review plans to sell uranium to India

With India virtually putting on hold its civilian nuclear deal with US, Australia has decided to review its plans to sell uranium to New Delhi. Efforts for a US-India nuclear pact, which would open India to inspections by the International Atomic Energy Agency, paved the way for Australia's uranium deal with India. Following reports that the negotiations for operationalisation of the US-India pact appeared to have been stalled, a spokesman for Foreign Minister Alexander Downer said Australia would need to consult the Indian Government on the uranium deal with Delhi, according to media reports. Lowy Institute international security director Rory Medcalf said there was “no way” he could see Australia selling uranium to India “unless the US-India deal is finalised.” The Opposition Labour party too reiterated its objection to the Federal Government's plan to sell uranium to India when its environment spokesman Peter Garrett said: “Deal or no deal between India and the US, Labour won't support the sale of uranium to a non-NPT signatory.”
Medcalf said the US decision to work with India on nuclear issues triggered the Howard Government's policy change to also engage with India. “It was really only when the US turned around to accepting India's nuclear status, that most of the rest of the world could contemplate having a civilian nuclear relationship with India,’ he said. Medcalf said that if Labour won the federal election, the impasse in talks regarding the Indo-US nuclear pact could “forestall any possible rift in Australian-India relationship” over Labour's pledge to abandon uranium sales.

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Iron ore exports from Goa in H1 down by 15%

It reported that some miners feel that Goa’s iron ore exports might not touch last year’s figure of 40.5 million tonnes as it is down by around 15% YoY in April to September period and that the reduction in export volumes may hit the private iron ore export industry as they are already reeling under the continuing appreciation of the rupee.
The report cited a sources in the Goa Mineral Ore Exporters’ Association as saying that “This itself could mean a reduction of over 10% in export earnings, should the rupee continue to appreciate.” Industry representatives pointed out about the adverse effect of export duty on the exports of the iron ore in the beginning of this financial year, which was subsequently reduced substatially on low grade ore but many shipments between March and April were cancelled.
However, the report added that the iron ore exporters are not perturbed by the poor performance in the first part of the year, as it largely comprises the monsoon season but are really apprehensive about the congestion at the port, which could affect overall export performance as the season is about to take off. GMOEA is worried over the virtual collapse of one of the two ship loaders at the iron ore export berth at the Mormugao Port Trust, which could delay operations, resulting in increase in demurrage charges. The ship loader is expected to be back in operation by the end of November.
However, the effect of almost doubling of iron ore prices is not outlined by the exporters in this report.

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RKKR steel to double capacity of alloy steel plant in Nellore

It is reported that Chennai based RKKR Steels Limited has decided to set up an integrated alloy steel project in the country at Kolanakoduru of Manobolu mandal in Nellore.
RKKR Steel had earlier proposed to set up the integrated alloy steel project in three phases under the special purpose vehicle Special Bar Quality Steels Limited with an investment of INR 500 crore with a production capacity of 0.25 million tonnes per annum and has already acquired 151.63 acres of land for the plant.
But it has now decided to invest more than INR 1,100 crore to set up alloy steel project at Kolanakoduru in more than 500 acres of land with a production capacity of 0.5 million tonnes per annum. Besides, it will set up 60 MW thermal power project based on imported thermal coal,
SBQ Steels Limited will have sinter plant, blast furnace with down stream steel making and rolling facilities to manufacture alloy and special steel required for the automotive and engineering sectors and is expected to begin its commercial operations in September 2008.

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NHPC awards Chutak power project to BHEL

It is reported that National Hydroelectric Power Corporation has signed an agreement with Bharat Heavy Electrical Limited for execution of electrical and mechanical works package of its 44 MW Chutak hydroelectric power project in Kargil district of Jammu & Kashmir at a cost INR 227.73 crore.
The scope of work involves design, manufacture, supply, transportation to site, handling, erection, testing & commissioning works of turbines including digital type governing system, generators along with static excitation system, DVR including associated accessories and auxiliaries, generator step up transformer, bus duct, computer based control, protection and monitoring equipment and all other electrical and mechanical auxiliaries.
The Chutak project would harness the hydropower potential of river Suru in Kargil. The barrage of the project is located near village Sarzhe and the power house in near village Chutak. The project is expected to generate 212.93 million units in a 90% dependable year.

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Vesuvius India to expand Kolkata unit and set up one at Vizag

It is reported that Vesuvius India Limited is planning to expand its refractory manufacturing capacity at its Kolkata unit and also set up a new unit at Vizag to match the likely expansion of steel capacities in India and also cater to boiler linings in power sector.
As per report, the work on doubling of the capacity at Vesuvius India Limited’s refractories manufacturing facility in Kolkata will be taken up in January 2008. Estimated to cost INR 50 crore, the expansion project will be completed by 2009. Mr. Tanmay Ganguly MD of Vesuvius India Limited said that the Kolkata plant is equipped to manufacture 800 pieces of refractories daily and after expansion, this would go up to 1,600 pieces per day.
Vesuvius India Limited is also setting up another 40,000 tonnes per annum capacity refractory manufacturing unit in Vizag at an estimated investment of around INR 12 crore. According to Mr. Ganguly, while the steel industry contributes to around 70% of Vesuvius India’s revenue, it would now focus on the power sector as well.
However Mr Ganguly expressed serious concern over the steep increase in the prices of raw materials required by the refractory manufacturers and said that “We are looking
at a combination of internal efficiencies and an increase
in the prices of our product offerings..

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Vizag Port H1 cargo handling up by 17% YoY 

  Visakhapatnam Port has handled 30.61 million tonnes of cargo during April to September 2007 period up by 17% YoY as compared with the April to September 2006 period.
Out of 30.61 million tonnes of cargo handled during the period, iron ore exports stood at about 8 million tonnes, which was around 2 million tonnes more compared with 2006 period. During the April to September 2006 period, Vizag Port also handled 27,425 TEUs of container cargo as against 29,795 TEUs in April to September 2007 period.
Mr. KSD Dattu Raju, Traffic Manager of Vizag Port told that, “Iron ore accounted for half of the growth. Other cargo like fertilizers, cocking coal, thermal coal too increased significantly while container cargo registered reasonable growth. We expect to touch the 60 million tonnes mark in cargo, as the LPG cavern project in the port area is all set for commissioning and this would increase the import and export of petroleum products from the port.”
Vizag Port had emerged as the premier port in India for the 7th consecutive year by handling 56.3 million tonnes of cargo during 2006-07. However, during the first six months of the current fiscal, the Kandla port handled 30.69 million tonnes of cargo, which is about 8,000 tonnes more than the cargo handled by the Vizag port.

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RINL to engage an advertising agency soon - Report 

  Rashtriya Ispat Nigam Limited in a brief released to eight advertising agencies, has asked them to submit their credentials. The agencies will be invited to make creative and strategy presentations by the end of October 2007.
As a part of the brief, the agency will be required to assist RINL in market research to understand target groups and analyze feedback, as also develop a concept and theme for corporate and product campaigns in print, television, outdoor and in house media.
After the first round of presentations, three agencies would be short listed for the final run. Vizag Steel will also probably consider media agencies, but only after it has finalized its creative agency. As per report, RINL has planned an ad spend of INR 10 crore to INR 12 crore for 2007-08.

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Orissa CM confident of implementing POSCO project 

  It reported that Mr. Naveen Patnaik, Chief Minister of Orissa, has expressed that despite stiff opposition, which forced POSCO to withdraw staff from its Kujang office, the project would be implemented in the state. He told that, “POSCO project is important both for the centre as well as the state government. We will certainly see that the plant progresses in all ways.

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TATA Steel may build captive jetty on Haldia river front

  It is reported that TATA Steel is keen to have its own jetty on the riverfront at Haldia in West Bengal. As per report, Mr B Muthuraman MD of TATA Steel in a letter to the Chairman of Kolkata Port Trust wrote “The projected increase in our traffic calls for a dedicated berthing and handling facility captive in nature at Haldia. We will design, construct and develop our own captive riverine jetty at Haldia to meet our export import throughput requirement.”
As per report, Mr Muthuraman has expressed his desire to have the jetty commissioned on September 1st 2009. The plan is to sign the concession agreement by May 2008, start construction of the jetty and development of backup facilities by September 2008 and complete construction and installation of equipment by August 2009.
As per report, the proposed project is estimated to cost INR 100 crores. The proposed jetty will primarily handle clean cargo and have the final capacity of 2 million tonnes annually. The location of the jetty should be outside the lock gate but not far from the existing oil jetties on the riverfront. There should be an open back up storage space of 15 acres with a railway siding of 800 meters and two mobile harbor cranes. The draft of the Hooghly river at the jetty should be the same as that at present.
TATA Steel’s current throughput of export import traffic at Haldia is around 2 million tonnes with about 90% being accounted by imports of raw materials such as coking coal, limestone, coke and other materials. The raw material requirement is projected to raise many times more with the expansion plans underway

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L&T chief calls for imposing AD on Chinese imports to save Indian industry 

  It is reported that Indian engineering major Larson & Tubro feels that the rupee appreciation, combined with the Chinese artificially locking in their currency, is affecting some of the manufacturing units in the company and wants Indian government to impose anti dumping duty on China till they float yuan before Indian manufacturing is badly affected.
Mr. AM Naik CMD of L&T told BL “We are struggling. We can not give up something unless we make a full representation to the government. My appeal to the Government is impose 30% anti dumping duty on China until such time they float the currency. The day they float the currency, withdraw it.”
Mr. Naik said that “While the rupee is free floating, the Chinese currency yuan is artificially locked in at a low price. If China freely floated its currency, it would appreciate within a week and then all of L&T’s units would become competitive.”
He said that “He had taken this up with the government, including the finance and commerce ministers and highlighted that Indian industry would be wiped out, if not badly affected, by Chinese imports. If these businesses did not do well, the company would be forced to either close them down or sell the units.” He has asked Indian government to take the matter to the WTO to straighten out the issue.
As per report, L&T has a number of manufacturing units that are affected by imports from China

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9 firms reported to be in fray for Krishnapatnam UMPP

  It is reported that 9 firms are in the fray for 4,000 MW Krishnapatnam ultra mega power plants in Andhra Pradesh after 4 firms including AES China have pulled out of the race. As per reports, the list of interested bidders include Reliance Power, TATA Power, Essar Power, Sterlite Industries, Larsen & Toubro, DS Construction, Japan's Sumitomo Corp and CLP GMR combine.
Power Finance Corporation, the nodal agency for ultra mega power projects, has extended the last date for accepting bids for Krishnapatnam project to October 24th 2007. PFC has extended the last date for accepting bids several times. It had last extended the date to September 21st 2007 from August 25th 2007. The request for proposals for Krishnapatnam project, which would run on imported coal were issued in April 2007. REL and TATA Power have already bagged 1 ultra mega power project at Sasan and Mundra respectively

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Comprehensive report on Indian steel sector

The Indian steel industry is poised for massive expansion. Dramatic consumption growth over the last few years has stimulated enormous expansion plan, facilitated by unexploited iron ore raw material base. India is now being hailed as the new China, where crude steel production soared from less than 100 million tones in 1995 to over 400 million tones in 2006.
Indian crude steel output at just 38million tonnes in 2005 is starting from a much lower base, and the economic steel- consuming structure of China is substantially different from India. Nevertheless, India has recently established a long-term goal of raising crude steel production to 100 million tonnes per annum by 2020. UK based GFMS Metals Consulting in an innovative way and value for money report on Indian steel industry includes complete statistical coverage of the industry, an unbiased and frank assessment of growth expectations, a base case outlook for each steel product & the industry as a whole with a clear view of potential risks, an assessment of raw material availability and trends and production, trade and consumption forecasts out to 2011.
The report coverage includes historic production, trade & apparent consumption of carbon steel both long and flat products, raw materials, producers, economic environment, political and other risk factors.

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Dubai Steel Futures poised to emerge as strong hedging tool

It is reported that the steel rebar futures trading, which the Dubai Gold and Commodities Exchange will launch on October 29th 2007 and is expected to serve as an effective hedge against price volatility. Mr. MY Habibullah, GM of Star Steel International, said that “The futures trading in steel is very new to our region. From what we understand it will be useful to those who have relatively longer term exposure to the market such as big contractors and end-users. We are not very sure about its usefulness to traders because they in any case build their margins into their bid and offer prices in the physical market.”
Prices of steel a key metal used extensively in the region's core sectors have seen extreme volatility in recent months fuelled by fluctuations in demand and supply, sentiment, freight rates and rising costs of raw material. The high volatility in steel prices is unusual. Its severity is evident in shorter price cycles, which have fallen from 5 to 7 years in the 70s and 80s to two to three years in the 90s, further shrinking to a mere four to five months in recent months.
Mr. John Short, ED for Steel and Base Metals at DGCX, said that, “The Middle East region is one of the world's fastest growing steel markets. With the introduction of futures in steel, the physical steel supply chain would be in a better position to mitigate the negative impacts of price volatility. The price volatility can be in excess of 15% to 20% putting tremendous stress on cash flow management and project profitability.”
As DGCX offers a delivery based contract, steel industry participants believe that the futures trading will also serve as a hedge against supply constraints. However, many said the efficacy of the contract in mitigating risks related to volatility and supply will depend a great deal on the acceptance and participation from the industry.
A few physical steel traders in the market expressed fears that futures trading will allow speculators who have nothing to do with the market to influence the price. But many established players said Dubai futures prices will be significant to all market participant right along the Black Sea to Asia and China to Mediterranean region.

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Qatar steel market expected to grow by 25%

Reinforcement steel market in Qatar is expected to grow by between 20% and 25%in 2008. The report quoted Mr Fawzi Saleh GM of Madar Building Materials during the sidelines of an Iftar party organized by the firm for its customers and employees at the Sheraton said that "The Qatari market for reinforcement steel is booming and has been reporting an annual growth of 15% since 2002. He said that with cement and ready mix now readily available on the markets has fuelled demands for reinforcement steel. Mr. Saleh added that as the Qatari economy is expected to record further growth next year, Madar which has branches in Qatar, UAE, Bahrain, Sudan and Jordan, is investing heavily in the expansion of its warehouse facilities, transport fleet and workforce here in Qatar in anticipation for the steel market growth. He added that Madar is also investing in a new cut and bend steel factory in Qatar with a capacity of some 60,000 tonnes to 70,000 tons of re bars annually.
Madar Building Material's core business include distribution and imports of commercial steel mainly from Korea, Japan and China and timber from Romania, Austria and Slovenia dedicated for the local market. However, Mr. Youssef Al-Shehabi, Marketing Manager of Madar Building Materials, pointed out that with the construction industry in Qatar booming and a lot of construction projects under way there is a need for increase of reinforcement steel supply. He estimated that there is a gap of between 20% and 30% in reinforcement steel supply, noting that this gap would be filled soon as Qatar Steel its main supplier is expanding its production line.
Speaking before the Iftar, Mr. Jaber Saeed Al Rumaihi it's Chairman introduced the firm's new brand name as Madar Building Materials replacing Al Fozan Building Materials. He assured the firm's customers that the changing of the brand name and logo would not affect its joint business relationship in any way. He added that, “All business transactions will continue to be processed exactly as before, albeit at an even more enhanced levels of customer service and business support.

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Qatar Steel may raise finance in early 2008 - Report

Mr. GM Sheikh Nasser bin Hamad Al Thani, GM of Qatar Steel and Industries Qatar subsidiary said that, Qatar Steel, which has abandoned plans to borrow around USD 1.3 billion due to the ongoing global credit crunch, may in fact look to resurrect the deal in January or February. Qatar Steel is seeking the funds to refinance existing debt and also to add 1.4 million tonnes per annum capacity to a steel plant in Qatar.

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Iran will considerably increase its steel production

Iran is planning to increase the steel production till 29 million tons toward 2010. Iran produced 6.56 million tonnes of steel during the first eight months of the current year. It is only 1% more in comparison with 2006. The indexes of August increased only by 2% till 840,000 tonnes.
However, Iran can considerably increase its steel production in 2008. A new blast furnace will be built at Isfahan Steel & Works. It will rise the steel production by 1.4 million tonnes. A new sheet rolling mill will start up Khuzestan Steel Complex. The construction of the complex Zamzam 2 will be finished. Iran plans to rise the steel production till 29 million tons toward 2010. But none of these projects was not realized up to date.

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Emirates Techno Castings to set up manufacturing unit in India

It is reported that UAE based steel castings manufacturer Emirates Techno Castings FZE is in the process of evaluating the possibility of setting up of a manufacturing base in India that could potentially entail investment of about INR 200 crore.
Mr. Radhakrishna Kasani, VP of Sales & Procurement of Emirates Techno Castings, said that, “A decision to go ahead with the plant and the final location would be taken very soon and we expect to announce this and begin work on the plant by January 2008. We believe that India is at a point where significant investments are likely in the areas of oil and gas and other related areas where the company has a big market potential. And a manufacturing base will help serve it better.”
Emirates Techno, which has a JV sourcing arrangement with a Coimbatore based company, is evaluating sites in Visakhapatnam and Coimbatore. Emirates Techno has production capacity of 24,000 tonnes of steel castings and plans to step this up to 36,000 tonnes by 2008. To this, it is planning to add an Indian manufacturing base that would further step up capacity.

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Iranian steel sector needs government funding

According to Mr Mohammad Rahim Rasti MD of National Iranian Steel Company development of steel sector will be brought to a standstill if the Iranian government stops investing in steel projects. Mr Rasti told IRNA news agency that domestic investors are unable to invest IRR 3,000 billion to IRR 4,000 billion in this field. He underlined that development of steel sector is not an easy task and needs state support.
Turning to the implementation of eight steel projects in various provinces, Mr Rasti said that the projects are aimed at developing deprived areas. He said that five steel projects are being implemented in - (1) Mianeh in East Azarbaijan province
(2) Shadegan in Khuzestan province (3) Neiriz in Yazd province (4) Qaenat in South Khorasan province
(5) Chaharmahal in Bakhtiari province.
The official added that tender offers for three other projects in Sabzevar in Khorasan Razavi province, Baft in Kerman province and Bafq in Yazd province would be received until mid-October. The contracts will be signed within two to three weeks after receiving of offers.
Mr Rasti noted that steel production has not posted a significant growth in the first half of the current Iranian year to March 2008. He recalled that steel output grew by 3 - 4% during the six months. The official said that since new steel projects have not gone into production cycle from last year, the rise in steel output had been meager.
He predicted that Iran's steel production would significantly increase with the implemen-tation of Hormuzgan steel project next year. The scheme has the capacity to produce 1.5 million tons of steel per year.
Mr. Rasti said the government halted exports since early this year to regulate the domestic market.He said “We should preserve our continuous presence in international markets otherwise we can not reenter the market easily as the domestic market is moving toward equilibrium in supply and demand.

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Iran Khodro starts auto steel facility 

It is reported that IranKhodro Advanced Dies Company, Iran's very first facility for the auto industry, has commenced operation. The plant, built on 6,000 square meters of land took USD 10 million of funding to complete. The new facility will produce 40 million parts of various types for 120,000 IranKhodro automobiles every year, preventing the outflow of USD 40 million in foreign currency from the country.
The facility has the ability to process the most advanced steel sheets that were previously produced overseas at a cost of USD 35 to USD 50 per cut. IranKhodro is currently Iran's leading auto manufacturer.

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HADEED SABIC starts producing coloured coil products

The new line in the metals coating mill in the complex of the mills of the Saudi Iron and Steel Company (HADEED) in the industrial al-Jubail City had started commissioning by the end of the second quarter of this year. According to Mohd. Saleh Al Jabr, Executive Vice-President for Metal of Saudi Basic Industries Corporation (SABIC), the commercial production of the new line of coils is expected to start before the end of 2007. Setting up this mill is within the strategic plans of SABIC for the development and growth of the iron and steel industry in Saudi Arabia he added. It is worth mentioning that the production capacity of the mill is estimated by 120.000 tpy of high quality steel flat and coloured products according to the requirements of the market and that the mill will produce different sizes in mm :
- Thickness: 0.2 - 1.6, - Width: 500 -1400
- Inner diameter: 508- 610 - Outer diameter: 900 - 200.

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Thyssen Krupp aims to expand presence in China

German industrial conglomerate ThyssenKrupp announced that it aims to double its China sales to EUR 2 billion (USD 2.85 billion) in the next five years. The report quoted Dr. Ekkehard Schulz, CEO of ThyssenKrupp, at the opening of the ThyssenKrupp Technology Days in Shanghai said that ThyssenKrupp Group intends to grow further in China. He said that “In the coming years we aim to double our sales in China to two billion euros and invest half a billion euros. With our increased sales we aim to support China's economic growth quantitatively and qualitatively.”
In the fiscal year to the end of September 2007, ThyssenKrupp increased its sales to customers in China by 10%. In 2005/06 the Group achieved sales of EUR 1 billion in China, roughly EUR 400 million of which was generated by the Group's biggest company in China, Shanghai Krupp Stainless. ThyssenKrupp holds a 60% stake in this joint venture.
Mr. Schulz said that, “China is today by far the biggest steel manufacturer in the world, producing more than a third of the world's steel. Chinese steel companies are putting their faith in new, state of the art mills meeting high environmental standards 50 million tons of efficient capacity is under construction or planned. In return, outdated facilities are supposed to be closed. However this is not yet being carried out with the necessary rigor. All the measures taken by the Chinese governments to curb exports have been without effect so far.”
Mr. Schulz added that, “China is developing into a steel exporter, and Europe is the first destination outside Asia for its products” continued Schulz. Ten million tons of steel will be exported to the EU this year; last year it was only half that amount. If China wishes to avoid long running trade conflicts, the rules of the market have to be obeyed.

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Dongbu Steel orders for a new hot strip plant

South Korea Dongbu Steel Co Ltd., placed a contract with Danieli in consortium with MHI, for a new upstream production line. The new plant to be installed at the Asan Bay works by Danieli in consortium with MHI will produce up to 2.6 million tonnes per year of carbon steel grades for CR applications and HSLA grades for automobile and pipe applications.
Two of the major targets of the Dongbu Steel project were plant flexibility and low transformation costs. To this end, the Danieli's worldwide experience and knowledge of the mini mill concept and the cooperation with MHI, have been recognized.
The meltshop consists of two AC Electric Arc Furnaces, two twin Ladle Furnaces, and double-tank Vacuum Degasser. Each Electric Arc Furnace, with capacity of 160 tonnes and tap to tap time of 46 min, will be equipped with a Consteel continuous scrap charging system, chemical energy injection, and HiREG electrode digital regulation system to optimize energy consumption. The furnace can be charged with different combinations of scrap, pig iron and HBI. The casting plant consists in two independent Danieli single strand thin slab casters capable of producing 70mm to 85 mm thick slabs, 800mm to 1650 mm in width.
The Dongbu Steel casters will include all the cutting edge technologies embodied in the Danieli flexible Thin Slab Casting concept for thin slab production, such as: the patented, long-funnel Danieli H2 (High quality, High speed) mold, hydraulic oscillation, complete thermal mapping, vertical-curved design, dynamic soft reduction, and dynamic air-mist secondary cooling.
The Hot Strip Mill will produce strips 800 to 1,650 mm wide and 12.7-1.2 (0.8)-mm thick. Max coil weight will be 30 tons. The Danieli supply covers all main mechanical, electrical, and automation equipment, including a complete Level 2 automation system with mathematical models for the dynamic control of the casting operations. According to Dongbu Steel's plans, the new facility will be put in operation during Summer 2009.

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Malaysian developers seek temporary ban on steel exports

Malaysia's Real Estate and Housing Developers Association wants an immediate temporary ban on the export of cement and steel until the shortage of the materials in the local market is overcome. The report added that Malaysia ministry of domestic trade and consumer affairs to conduct an immediate investigation into the causes of the material shortages and to impose the temporary ban.
Mr. Ng Seing Liong, President of Real Estate and Housing Developers Association said that, “The ministry should ensure that supply for the local market is adequate so that the price stability of the materials can be sustained. This is particularly crucial as an excessive increase in pricing will inevitably lead to late delivery of buildings or houses.
Mr Liong was responding to the concerns of industry counterparts Building Materials Distributors Association and Master Builders Association that the cement and steel shortages have worsened and that developers are facing problems obtaining adequate supply of the materials.

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Straits acquires Indonesian coal mine

Indonesian coal mine Straits Resources Limited announced that it has signed a MoU to purchase a thermal coal mining business in Indonesia. The company advised that it entered the agreement with Vital Century Investment, Pacific Communication Corp and Mitsui Matsushima International Pty Limited, to buy the coal mining business located in East Kalimantan in Indonesia. Straits said that, it would proceed to satisfy all applicable conditions, with completion expected to occur prior to the end of 2007 and advised that it intends to finance the transaction through a combination of debt and equity.
Mr. Richard Ong, CEO of subsidiary Straits Asia, said the acquisition is already similar in scope and operation with similar coal quality to the group's Sebuku operation. He added that the business would have the opportunity to more than double its coal production and significantly expand its resource base at a time when global thermal coal supply and demand conditions are extremely favorable to coal producers. He also added that we will now focus on completing this transaction quickly so that we can deliver value to our shareholders.

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Summary of Chinese steel export prices

Chinese steel export prices continue to witness downward adjustments on concern the probable increase in export tariff rate would further dampen steel exports, which in turn would direct more cargo back to domestic markets. Export market is quiet since most steel makers and traders employ wary attitude in face of policy and market risk.
HRC - Chinese HRC prices continue to go down amid rumor of imminent increase in export tariff rate. Commercial 4.5 mm to 11.5mm*1500mm HRC are being offered at CNY 4080 per tonnes, down by CNY 130 per tonnes, 1800mm material at CNY 4450 per tonnes to CNY 4520 per tonnes. 2.75mm HRC remain at CNY 300 per tonnes a decrease of CNY 80 per tonnes to CNY 100 per tonnes.
HDG - After rebounding to CNY 5100 per tonnes from CNY 4800 per tonnes, prices for 1.0 HDG by Anshan Steel which is regarded as base are now slipping down. In Shanghai, 1.0mm HDG drop by CNY 20 per tonnes to CNY 5080 per tonnes; quotations for 0.5mm HDG by private steel mills go down by CNY 20 per tonnes to CNY 30 per tonnes to CNY 5550 per tonnes to CNY 55570 per tonnes. HDG is expected to follow the downward adjustments of HRC and CRC.
HR plate - Export offers for hot rolled steel plate offers are still on the rise in China, bolstered by robust overseas demand and firm domestic market prices. Among others, ship plate and high end plates enjoy much higher prices and they are actually the export engines.
Most tier two steel makers have raised offers for SS400/Q235 HR plate to USD 710 per tonnes to USD 730 per tonnes FOB and up in line with domestic market. But the rise has led to fewer transactions at moment. A North China based steel mill is quoting S275JR plate at USD 720 per tonnes FOB base and S335JR USD 735 per tonnes FOB base, early November shipment. The offer require equal share of the possible increase in export tariff rate. Another neighboring steel maker, who mainly produces high value added plates, is quoting at USD 20 per ton higher for the same products and also ask buyers to born all the loss if there is policy change. Traders attribute its high price to its small output of commodity grade plate.
Long products - Rebar and wire rod prices continue their downward adjustments in Chinese domestic market. In Shanghai, HRB335 20mm rebar is being offered at CNY 3840 per tonnes to CNY 3850 per tonnes, HRB400 material at CNY 4020 per tonnes down by CNY 30 per tonnes to CNY 40 per tonnes. Wire rod has also dropped to CNY 3850 per tonnes to CNY 3870 per tonnes.

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Vietnam may put cap on rebar prices

It is reported that Vietnam is likely to set a ceiling retail price for steel, in an effort to stabilize the market under a suggestion by the finance ministry of Vietnamese to the government. As per report, the ceiling price would be applied when the import price of steel billets exceeds USD 600 per tonne, steel price in the domestic market rises above USD 680 dollars. Mr. Nguyen Tien Nghi deputy chairman of the Vietnam Steel Association said that “It is very difficult to set an exact price. If the ceiling is not suitable, some private steel producers will stop production to avoid loss. If this happens, we will face a steel shortage and this is even more dangerous than a higher price.”
According to the Vietnam's General Statistics Office, Vietnam imported over 5.5 million tonnes of steel billets and finished products worth more than USD 3.4 billion dollars in January to September 2007 period up by 28.9% and 57%. According to the association steel makers in the country had a combined annual production capacity of some 6 million tons by late last year.

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Baosteel fulfilled the steel supply contract for 150,000 cube meter oilcan

It is reported that with the last batch of B610E steel for 150,000 cube meter oilcan left Baosteel to the user, Baosteel fulfilled the steel supply contract. In the tender by SinoPec's Baishawan 150,000 cube-meter oilcan project, Baosteel took the advantage of integrated operations, winning the steel supply contract for 150,000 cube meter oilcan, with marketing mix strategies and stronger ability in supply.
During the contract implement, under the coordination of manufacturing sector, Baosteel made detailed production plan to secure the delivery and kept in touch with quality checking section, sale center and research institute to solve the problems encountered quickly as possible and secure the quality, even in the critical point in of the relocation of Pugang's plate plant.

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Iron ore giant considering 30% price hike

Cia Vale do Rio Doce, Rio Tinto Group and BHP Billiton Ltd, the world's three largest iron ore exporters, may increase prices by 30% next year as demand driven by steelmakers in China outpaces growth in supply. According to the median forecast of analysts, benchmark prices for shipments from Australia will rise to a record USD 66.40 a ton next year from USD 51.47 in 2007. Sales may climb by 11% in 2007 as supplies gain by 8%, Merrill Lynch & Co estimates.
Mining companies and customers begin annual contract talks next month for shipments from April. According to research Chinese steelmakers, the biggest consumers are raising production by 15% to meet demand for cars, railroads and buildings. The increase will provide record profits for mining companies and may help Brazil's Vale double earnings from iron ore by 2009. Mr Peter Chilton who helps manage the equivalent of USD 1.4 billion at Constellation Capital Management in Sydney said that “It's a sellers' market.”
Analysts predict that, Iron ore mining companies won't expand fast enough to keep up with growth in consumption for years, so prices will rise until 2010. In one of the report it is said that prices may rise more than 50% next year because of low inventories at Chinese ports and lack of supply. CVRD, London based Rio and BHP in Melbourne account for about 75% of global iron ore exports.
According to Metal Bulletin steel makers can afford to pay more by increasing prices for their products. Coils of hot rolled steel, used in car bodies and washing machines, have risen by 11% in the past year to USD 590 a ton in Antwerp in Belgium, the highest level since April 2005. ArcelorMittal said in August that profit had risen 50% to USD 2.72 billion in the second quarter. Nippon Steel, its closest rival, expects to post a second annual record profit in 2007.
According to analysts prices for individual iron ore cargoes, which include shipping costs, have risen to USD 165 a ton. It takes 1.6 tons of ore to make a ton of steel. China overtook Japan as the largest buyer of iron ore in 2003, and last year the biggest Chinese steel maker, Baosteel, set global benchmark prices for the first time. It agreed to a 9.5% gain, the smallest increase in four years. Mr Chen Xianwen deputy director of market research at the China Iron & Steel Association said that "Baosteel has improved negotiating skills in the past years, but the price will be decided most by the supply and demand.

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China eying higher coal prices from South Korean utilities

Chinese coal producers have raised prices for South Korean utilities by 7.5% above contracts concluded in May 2007 with Japanese utilities as the supplies have become tighter. Talks between China and Korea are deadlocked after both sides met at least three times this year to try to agree on the price for 2008 supplies. Two South Korean utility officials said that sellers, including China National Coal Group, demanded USD 73 per tonne from buyers led by Korea Southern Power Co, up from USD 52.1 per tonne in the year ended June. A Korean offer to match the USD 67.9 per tonne agreed on by Japanese utilities in May 2007 was earlier rejected.
Mr. Wu Yuxiang, Director of Yanzhou Coal Mining Co., a unit of China's fourth largest coal producer said that they would not sell the fuel at prices less than USD 80 a tonne. Mr. Fang Xiu'an manager at the international division of China Coal Transport & Distribution Network, an association charged with marketing on behalf of producers said that “The delay is mainly due to the price disagreement. The Koreans would not agree on the higher prices that China wants.'’
China is increasing prices after the benchmark at Australia's Newcastle port reached a record USD 72.37 in August 2007 and Indonesian mines missed contracted shipments. Prices have doubled this year as China became a net importer for the first time in January. Buyers Japan and South Korea prefer Chinese coal, because shorter distances make it cheaper to ship than exports from Australia or Indonesia. South Korean utilities bought 6 million tonnes of coal from China in the year ended June 30. In 2006, South Korea raised imports from all sources by 4% to 80 million tonnes.

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South Korean firms invited to invest in coal in KwaZulu Natal in SA

It is reported that KwaZulu Natal province of South Africa is on the verge of reviving its coal mining industry. This emerged during Mr S'bu Ndebele's Premier of KwaZulu Natal trade visit to South Korea recently. Mr. Ndebele, was leading a provincial delegation in Korea to concretize trade partnerships between the province and that country. During the visit he urged a leading coalmining conglomerate to invest in coal mining in KwaZulu Natal.
Mr. Ndebele met Mr. Lee Won-Gul, President & CEO of Korea Electric Power Corporation in Seoul. He invited senior Kepco managers to attend the first South African International Trade and Investment Conference and Exhibition to be held in KwaZulu-Natal next month.
He said after the conference “we will take you on a tour of our coal mining towns of Dundee, Vryheid and Newcastle.” Mr. Ndebele said, “These towns have coal deposits for at least the next 40 years with a rail link to the Richards Bay Harbor which is the second largest harbor in Africa. Come and invest in our province.

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Japan steel demand to up by 1.4% YoY

Japan's ministry of economy, trade and industry announced that Japanese steel demand during October to December 2007 will increase by 1.4% YoY to 27.69 million. The demand represents 30.12 million tonnes of raw steel output, which is 0.2% YoY lower than same period of 2006 and third high as the quarter.
The raw steel output reaches record 119.48 million tonnes for 2007 topping 119.32 million tonnes in 1973.

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Russian steel industry well positioned to fend off China threat – Fitch

Fitch Ratings said that Russian steel producers are well positioned to face off the looming competition from China's steel exports to the international markets. This is because of their competitive advantages and strong Russian demand for steel, as well as the consolidation driven by the Chinese government to rationalize national steel production and restrain exports.
Fitch in a report said that “Russian steel producers are able to retain their cost competitiveness even in the face of mostly low end commodity steel exports from China. They have high self sufficiency in the main raw materials including iron ore and coking coal for steel production whereas China imports 50% of its iron ore needs and some grades of coal. Further, the Chinese steel industry remains highly fragmented, which limits its bargaining power in negotiations with major raw materials suppliers. Overall, Russian steel industry benefits from low cost production amid relatively low energy and labour costs. Although labour costs in China are low, Chinese steelmakers face relatively high and rising energy costs.”
It added that, “Russian steel producers could be shielded against any downturn in the global industry by buoyant domestic demand due to rapid construction expansion and strong industrial production growth. Steel makers in Russia also benefit from high prices as a result of the strong domestic demand and the concentrated nature of the Russian steel industry, which adds to the pricing power of its major players. Furthermore, Russian steel companies enjoy even sales diversification across domestic and international markets. In contrast to their Chinese counterparts, Russian steel makers are extending their footprint in international markets (primarily the EU and US) through acquisitions. Although competition from the Chinese steel producers could intensify in southeast Asia and the Middle East, it should be mitigated by the limited exposure of Russian steel companies to these markets.
Fitch further added that “Chinese government has sought to curb the rapid expansion of Chinese steel capacity, in light of inefficient steel operations and potential anti-dumping actions in the EU and US. Measures include reduction in steel export tax rebates and introduction of taxes on some steel product exports. In Fitch's view, the fragmentation and overcapacity in the Chinese steel industry may improve further in the coming years, although it has been slower than expected so far.”
Fitch notes that some global steel players are adopting a more disciplined approach to production to adjust output to demand changes. Finally, Russian steel producers have strong credit metrics relative to their international counterparts, including Chinese peers, which reflect their competitive advantages. The average net leverage of the largest Russian steel producers rated by Fitch amounted to 0.3x in 2006 versus an average 0.9x for the Chinese steel producers rated by the agency. At the same time the average EBITDAR margin of Russian steel companies was 32.1% in 2006, compared to 22.3% for their Chinese competitors. This provides additional financial flexibility for leading Russian steel companies to weather any industry downturn. Nonetheless, Fitch notes that Russian steel companies are rated in the 'BB' range whereas their Chinese counterparts are rated in the 'BBB' range, due to corporate governance concerns linked to the Russian domicile.
China's surging demand for steel products over the last decade has played a vital role in reviving the world steel industry. In 2006, it accounted for more than one third of the world's steel production and consumption. In the first seven months of 2007, exports of steel products amounted to 39.7 million tonnes, up 92% YoY. However, strong growth in China's steel exports has raised concerns of potential price weakness and intensifying competition in the international markets.

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ANZ helps raise capacity of Thai Nguyen steel plant

The Australia and New Zealand Banking Group has announced a USD 120 million loan to help Viet Nam raise the capacity of the Thai Nguyen Iron and Steel Corporation. According to Mr. Dam Bich Thuy eneral director of Australia and New Zealand Banking Group Vietnam the sum will be used to buy equipment and production lines to increase the TISCO's capacity to 750,000 tonnes of steel ingot a year from 250,000 tonnes at present. As a result, TISCO will be able to ensure ingot supply for steel manufacturing.
According to the Vietnam's trade ministry, the price of imported ingot is about 560 USD per tonne, while a tonne of ingot produced in the country costs only 360 USD. Over the past years, Australia and New Zealand Banking Group has funded many infrastructure projects in Viet Nam, including the Dung Quat Oil Refinery and A Vuong Hydro Power Plant. ANZ Viet Nam was established in 1993. The bank won the title “Viet Nam's best foreign bank” in 2002-2003 and 2003-2004 by the FinanceAsia magazine.

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Evraz increases its stake in Highveld to 80.9%

Russian steelmaker Evraz announced that now it owned 80.9% of South Africa's second largest steel company, Highveld Steel & Vanadium after it executed its option to buy a 24.9% stake from Credit Suisse. Evraz in a statement said that it had paid some USD 219 million (ZAR 1.5 billion) for the shares in the deal, which its board had approved in early August.
Evraz and Credit Suisse each acquired 24.9% of the South African company from diversified miner Anglo American last year. As part of the agreement with Anglo American, Evraz was given the option to buy Credit Suisse's stake. The Russian firm made a mandatory offer to minority shareholders in Highveld Steel & Vandium after its shareholding exceeded 35%. Minority shareholders with a 1.89% shareholding in the company accepted Evraz's ZAR 93 a share offer.

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Mittal Arcelor in Algeria suffers a manpower bleeding

 It is reported that most of El Hadjar steel complex workers in Annaba, favour an administrative lay off, reaching thus 1500, which led the complex administration to close down the operation, as the number exceeded the 1200 workers planned for by Mittal Arcelor by virtue of the protocol agreement sealed in August between the trade union and the complex administration.
A source said that the material motivations are behind the workers choice. The dismissed worker is prepaid for 11 months, in addition to an allowance estimated at DZD 600 000 as well as a 40% increase in each monthly salary for five additional years to be included then in the retirement allowance.
To recall, the protocol agreement included the administrative layoff of 1200 workers, to be replaced by new ones through pre employment contracts to be inserted permanently in the complex after 4 months training.

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US local steel production falls 22,000 tons

According to the American Iron and Steel Institute steel production in the Northwest Indiana/Chicago area, the US's second largest steel producing region, was 549,000 tonnes during the week ending September 22nd 2007 down from the 571,000 tons produced the week prior. Production in the Southern District, the country's largest steel producing region, was 634,000 tons during the same period. Nationally, domestic mills produced 2.1 million tons of steel last week, down by 2.1% YoY as compared to 2.15 million tons made during the same period in 2006. US steel mills operated at 88.8% capacity last week as compared to 88.2% capacity during the previous week. For the year to date, US steel mills produced 77.3 million tons of steel as compared to 81.3 million tons during the comparable 2006 period.

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West Australia government revises iron ore infrastructure plan

It is reported that plans for a new iron ore port and rail project in Western Australia have been revised with the state government proposing to split the development into three parts.
As per report, Mr Alannah MacTiernan WA's planning minister is proposing the parts be funded separately by private investment.The paper reported that Mr Eric Ripper WA's deputy premier met with representatives of Mitsubishi Corp in Japan last week to discuss the revised plan. Mr Ripper will travel to China this week to meet with five Chinese government backed organizations that have signed accords with Yilgarn Infrastructure Ltd.
Yilgarn, backed by China's Sinosteel Corp the Export Import Bank of China and Australian iron ore mining company Midwest Corp, is seeking to build the AUD 3 billion port and rail project. Japan's Mitsubishi and
mining company Murchison Metals Ltd are also seeking right to the project .

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Global coal demand to grow 3% in 2008 - Colombia

BN Americas reported that high energy demand around the world will lead exports from coal producing countries like Indonesia, Australia, South Africa and Colombia to grow by 3% through 2008.
Mr. Jairo Herrera director of Colombia's mining information website IMCPortal told BNamericas that "Exports will hit 619 million tonnes and Colombia is expected to supply nearly 64 million tonnes of that." However, Mr Herrera believes that the European Union's coal demand is uncertain because of advances in nuclear power. He added that Russia's energy policy establishes that 40% of its power will come from coal by 2020, "pushing local demand to 300 million tonnes per year which is 179 million tonnes more than in 2006.”
Colombia's transport ministry, the national highway administration, Invías and the national coal producers federation Fenalcarbon recently signed a letter of intent to develop railway infrastructure to facilitate coal exports. The agreement will allow coal to be shipped out of Boyacá, Cundinamarca, Santander and Norte de Santander departments, where some of the highest quality coal in the world is found.

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Steel Dynamics to acquire Omni Source Corporation

Steel Dynamics Inc and OmniSource Corporation have announced the execution of a definitive agreement whereby Steel Dynamics will acquire OmniSource, one of North America's largest scrap recycling companies, a privately held company based at Fort Wayne in Indiana.
Pursuant to the agreement, which has been unanimously approved by the Boards of Directors of both companies, Steel Dynamics will acquire all of the outstanding stock of OmniSource Corporation in a transaction valued at slightly more than USD 1 billion. OmniSource shareholders will receive 9.7 million shares of Steel Dynamics stock and USD 425 million in cash. The aggregate transaction value includes the assumption by SDI of certain liabilities, including net debt, which is expected to be approximately USD 210 million at closing. Completion of the transaction is subject only to regulatory approval, and is expected to close in November 2007. OmniSource will operate as a wholly owned subsidiary of Steel Dynamics and will continue its focus on the ferrous and nonferrous scrap processing, brokerage and industrial scrap management needs of its customers. SDI's existing scrap operations in Virginia and Tennessee will be consolidated into OmniSource as will its planned scrap processing facility in Indianapolis, Indiana. The acquisition is expected to result in synergies of approximately USD 15 million per year.
Mr. Danny Rifkin, current resident & CEI of OmniSource will join the SDI management team as an executive VP of SDI's newly formed recycled metals platform. He will continue to lead the OmniSource subsidiary as president & COO. Mr Rifkin will also be named to SDI's board of directors. Mr. Keith Busse, Chairman & CEO of SDI's commented that the acquisition creates a significant new business platform for SDI and represents a quantum leap as it would regard strategic expansion into the steel scrap and recycled metals sector, which is an important element of our overall growth plan. Aside from the fact that scrap is a critical resource for our steelmaking operations and Omni has historically been one of our largest suppliers, this acquisition opens the door for further profitable growth in a sector of increasing relevance on a global scale. OmniSource is one of the premier if not the premier organization in both the ferrous and non-ferrous scrap industries, and has demonstrated its ability to successfully grow its business.
Mr. Busse said, “When considered in conjunction with SDI's recently announced mining and minerals projects in the State of Minnesota, Steel Dynamics will become the only domestic steelmaker to have a significant presence in both the virgin iron ore and ferrous recycling markets. These initiatives are expected to play a significant role in SDI's future steelmaking growth.”
Mr. Danny Rifkin added, “This transaction presents a unique opportunity for all stakeholders and presents our employees with new growth opportunities. We have been associated with Steel Dynamics since its founding, and applaud the tremendous success that the company has achieved. I believe that the addition of OmniSource to the SDI family will prove to be very strategic over the long term and we look forward to continued growth and expansion in the scrap industry tied to the world-class service for which OmniSource has become known. I am personally excited to join the SDI management team, and to play a significant role in the broader scope of an integrated metals company.”
Mr. Morgan Stanley served as financial advisor to Steel Dynamics and legal advice was provided by McDermott Will & Emery and Haller & Colvin. Eastman Smith served as legal counsel for OmniSource. Steel Dynamics Inc is the fifth largest producer of carbon steel in the US producing steel from recycled steel scrap in five electric arc furnace mini mills. The company shipped 4.7 million tons in 2006 on revenues of USD 3.2 billion. Products include flat rolled steel, wide flange beams, rails, SBQ bars, merchant bars, and specialty shapes. The company also operates five plants that produce fabricated steel building products. The company operates in the eastern US and employs approximately 3,900 people.

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European steelmakers preparing AD case against China

It is reported that European steelmakers are preparing to lodge a complaint in the coming weeks against China for selling finished steel products in Europe at below cost. The source said on condition of anonymity that, “A dossier is being prepared. If the dossier is lodged, then clearly it's with a request to launch a procedure based on the complaint.”
When a dumping complaint is filed with the European Commission, the panel then has to launch an investigation to see whether the charges stand up before taking a decision on retaliation. Mr. Peter Power spokesman for Commission for trade issues stressed that the Chinese steel imports were a complex issue because there are also many European users happy with cheap Chinese products. The final consideration will take into account many elements, not exclusively those of European steel producers.
According to Eurofer, a confederation of European iron and steel makers, imports of Chinese made finished steel products into Europe are booming and are expected to double this year. That would be much faster than the roughly 20% growth that the EU has seen in overall imports of Chinese-made goods in recent years.

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