FEBRUARY  2008

 Steelworld Home

From the CEO's Desk

Dear Readers,

The steel consumption and hence the demand in Asian region is growing rapidly supporting the higher production levels. Along with this positive phenomenon, steel prices are also rising very fast and have now entered 'unaffordable' zone. I understand that iron ore prices have gone up from Rs.2750 to Rs.4000, met coke has rose from US$350 to US$500, all ferro alloys have seen an increase of more than 50 % due to shortage of manganese and chrome ore and so on. This sudden rise in raw material prices has naturally affected the price of the finished steel. It is important to note that the prices of all these items are governed by international markets or rather demand supply scenario and individual steel company will have no control over them.
The reasons attributed to this price rise are many. It is believed that Chinese demand has started rising triggering the shortage coupled with price increase in raw material sector. It is also perceived that the slowdown in the US economy has also contributed to this trend. I think the optimism prevailing in the industry about a year back has lost its shine and steel community is fearing that the US slowdown will very soon hit Asian markets.
In any case, the fact remains that steel prices have gone over the roof and now the customer industries have started protesting. Steel manufacturers have to understand that with these astronomical prices, a lot of projects can go on hold and as such the pace of infrastructural developments can reduce. Will this not affect the steel demand and the consumption ? Also, if cars, tractors, refrigerators, washing machines become costly, will the steel demand curve still continue rising ? In short, excessive increase in price is sure to backfire.
In this liberated economy, government has very little role to play in such situations but still it can have a dialogue with atleast govt owned steel plants and urge them to control their pricing structure. Also, it should understand that Indian economy in general and steel industry in particular still needs some control and protection and its fate can not be left to the dynamics of global market. I hope this sentiment is reflected in forthcoming union budget which is just round the corner !!!

 D.A.Chandekar
Editor & CEO

Headlines

NEWS - VIEWS

Durable makers test alloy to replace steel

Key steel input costs headed north

JSW to eye profitability of US units

Karnataka sees Rs 1,450 crore investment coming in steel

Land panel to vet steel plans in West Bengal

Big investors eye minor port development

Merchants get more mines than steel firms

Tata Steel's performance improves in Dec quarter

SAIL board approves new CR mill at BSL

Mr. A.K. Mukherji Takes Over as ED-Raigarh Plant of JSPL

Lakshmi Mittal sees conditions ‘favourable' for steel in 2008


GULF DIARY

Bekaert to acquire full ownership of Beksa in Turkey

Iran may sell oil in roubles to break dollar dominance

Saudi Arabia to set up first ever car plant in Dammam

Arcelor to invest 1 bn in Egypt

Qatar Petroleum plans IPO of services firm


 
SOUTH EAST ASIAN DIARY

Indonesia’s Krakatau Steel to cut steel exports in 2008

POSCO targets output of 33mt in ‘08

Firm trend in ship plate prices continues in Singapore

Taiwan may implement new export policy on rebar

BlueScope opens new steel plant in Dong Nai

Vietnamese Steel demand expands by sizzling 43%

POSCO buys Malaysian steel maker for $15.6 mln



GLOBAL STEEL SCENARIO

Usiminas to spend $750 mn on iron-ore output

Angang, Maanshan Steel shares gain as China rebuilds after snow

Kumba iron ore full-year profit declines 8.3% on asset sales

Intex may partner with steel traders to develop Philippine mine

Steel Tube first-half profit falls 42%

Gerdau Ameristeel profit more than doubles; shares surge

Arcelor-Mittal south Africa profit climbs, prices rise

ThyssenKrupp drops after first-quarter profit falls

Posco to raise stainless steel prices to cover costs

 



 

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Durable makers test alloy to replace steel  

Sharp rise in prices of steel and copper forces LG, Godrej to search for an effective alternative. Sometime next year, South Korea-based consumer durables maker LG Electronics hopes to have a new alloy that will be able to substitute steel. Steel, which comprises about 35 per cent of the raw material that goes into the making of ACs, refrigerators and washing machines, has become 11 per cent costlier in the past 12 months. It's customary for manufacturers to pass on the increased costs to consumers. The option is to cut costs, which is why some of them are working on an alternative to steel. They are working on composites based on strength, malleability, sturdiness and such parameters. The company's research and development wing is testing the feasibility of metals and composites. “We should come out with a solution by 2009,” a senior executive of LG's India operations said. Like LG, Godrej Appliances too is looking at alternatives. “Our R&D division is looking at a number of composites to replace steel. The composite will be finalised on the basis of strength, malleability, sturdiness and other such parameters,” says Kamal Nandi, vice-president, sales and marketing, appliance division, Godrej & Boyce. If LG or Godrej succeeds, the invention will be a breakthrough, the result of a sharp rise in steel prices. Steel, which comprises about 35 per cent of the raw material that goes into the making of air conditioners, refrigerators and washing machines, has become 11 per cent costlier in the past 12 months. To add to the woes of consumer durables makers, copper too has become more expensive. Copper, a major component in compressors for air conditioners and refrigerators (that accounts for over 10 per cent of the input materials), has become nearly 25 per cent costlier from January last year. The presence of a large number of companies and intense competition has already grated the margins on consumer durables, which has compelled manufacturers to pass on some of the rise in costs. According to industry experts, price hikes for inputs are absorbed by manufacturers initially. But ultimately, some of the cost has to be passed on to the customer. The margins may not be a worry for manufacturers till stocks purchased earlier at lower prices last. However, they will have no alternative but to increase prices in the long run. Which is why some durables manufacturers are exploring ways to cut costs.

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Key steel input costs headed north

Steel companies such as the Steel Authority of India (SAIL) and Tata Steel could see an increase in their operational costs with the price of imported coking coal, a key input, rising over the last few days. For instance, the spot price of coking coal has currently reached about $270 a tonne, a rise of $70 a tonne since the second half of January 2008, say analysts. Indian steel companies import a significant requirement of their coking on the basis of spot prices. This development comes at a time when the central government has been pressuring steel companies to reconsider their price hikes, which were announced in the first week of February 2008 ranging between Rs 1,000-2,500 a tonne. The fresh rise in coking coal prices is attributed to floods in key producing areas in Australia. Several senior officials of domestic steel companies, while reporting their December 2007 quarter results, had highlighted the difficulties they were facing, given the rising price of this key input, coke. Steel companies convert coking coal to coal, which is then used along with other inputs to make steel grade products. For an integrated steel producer, whose cost of production is estimated at $300 a tonne, analysts say coking coal adds significantly to costs. Steel manufacturers such as SAIL are expected to grapple with a 50 per cent rise in their long-term contract for coking coal when they come up for renewal later in the year, add analysts.

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JSW to eye profitability of US units

JSW Steel is focussing on improving the efficiency and profitability levels of the three companies it acquired recently in Texas, US. The company's senior management said is aiming to achieve an aggregate EBITDA (earnings before interest, tax, depreciation and amortisation) of $30 million (Rs 120 crore) in the March 2008 quarter from the companies. When the acquisitions were announced, the three companies reported a collective EBITDA of $75 million (Rs 300 crore) on a turnover of $510 million, between July 2006 and June 2007. The companies had low operating margins due to erratic supply of key inputs and low utilisation levels, said analysts. To achieve the planned efficiency during the March quarter, JSW Steel has started supplying slabs from its facilities in India. The slabs are then converted into higher value products such as plates and pipes for the US oil and gas industry. At its pipe mill in the US, the company has ramped up utilisation levels to about 51 per cent post-acquisition, compared with 39 per cent during the 12-month period between July 2006 and June 2007. The acquisitions were for an enterprise value of approximately $900 million. Meanwhile, in its domestic operations, the company is focussed on increasing its captive supply of key raw materials such as iron ore and coal. As part of the strategy, JSW Steel recently entered into a joint venture with Chile-based Minera Santa to develop iron ore mines and other projects in South America, including Chile. JSW Steel holds 70 per cent stake in the joint venture.

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Karnataka sees Rs 1,450 crore investment coming in steel

With the demand for steel increasing in the domestic market, iron ore exporters in the state are turning to steel production. Three large iron ore exporters have lined up steel projects for an estimated investment of Rs 1,450 crore in the state. The steel plants are coming up in the iron ore-rich Bellary-Hospet-Sandur region as well as south interior Karnataka like Hassan and Chitradurga. The largest investment is being made by the Bangalore-based Mineral Enterprises Ltd (MEL), a private firm. MEL has obtained all clearances from the Centre to set up an integrated steel plant (350,000 tonne) near Hassan with an investment of Rs 700 crore. “We intend to produce pig iron as well as sponge iron. The project includes an iron ore processing plant, a cintering plant to use iron ore fines for making steel and a power plant. We are in the process of acquiring 250 acres for the project,” MEL MD Basant Poddar said. The company is roping in an established player in the steel sector for the project as a partner. MEL produces 2 million tonnes of iron ore every year. “We will be needing at least 60 per cent of our production for the steel plant. We expect the plant to become operational by 2009,” he added. Bellary-based Hothur Steels, which produces sponge iron apart from exporting iron ore, is also planning to set up an integrated steel plant. The plant is likely to come up in the Bellary region. Another Bellary district-based iron ore exporter Kariganur Mineral Mining Industry Ltd (KMML) plans to invest Rs 750 crore in Hospet on various projects. It intends to set up a sponge iron plant – 120,000 tonnes per annum (Rs 60 crore); mini steel plant – 125,000 tonnes per annum (Rs 135 crore); iron ore beneficiation plant – 3 million tonnes per annum (Rs 180 crore); iron ore pelletisation plant – 1.2 million tonnes per annum (Rs 250 crore) and a power plant – 25 Mw (Rs 125 crore). All these projects are expected to be commissioned through 2010. KMML, which exports iron ore to China, Japan and Pakistan, has set up a subsidiary -- Kariganur Iron & Steel Pvt Ltd -- for its steel production venture. At present, the company is producing sponge iron for the domestic market. Apart from these, proposals from other iron ore exporters in the state to set up steel plants (with an estimated investment of Rs 550 crore) are awaiting government approval. Karnataka saw the highest investment in the steel sector in 2006 when proposals worth Rs 30,600 crore were cleared. The north Karnataka districts of Bellary, Raichur and Koppal, rich in iron ore deposits, have been preferred by the investors. The region holds 80 per cent of the estimated iron ore reserves (3.44 billion tonnes) in the state. According to state government officials, the projects are on. "None of the proposals has been withdrawn. They are at various stages of implementation," they added.

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Land panel to vet steel plans in West Bengal 

The large number of proposals to set up steel plants in West Bengal has made the state government apprehensive on their economic viability. “We are getting many proposals and this is a growing concern for us as a steel plant requires a huge amount of land and we don't want scarce land to be locked up in industries which have questionable viability,” said Sabyasachi Sen, principal secretary of the department of commerce and industries of West Bengal. The state government was setting up a committee of experts to study the viability of proposed steel plants and advise on land required for setting up a typical 1 million ton steel plant. “There is a general tendency among industrialists to ask for more land than actually required - the committee would scrutinise the land requirements of the proposals,” Sen added. Commenting on strikes in the state, Sen said all political parties could arrive at a common solution so that strikes were the last type of protest rather than the only one. Talking at the Indian Chamber of Commerce, Sen said that the land controversy had to be resolved as soon as possible as several projects were stalled because of land shortage. “We cannot move on with projects like the proposed highway from Barasat to Raichak following protests from the general public. The basic problem lies in the fact that people are not sure how industry would be beneficial but there is no choice but to get peoples' support,” he added. Around a dozen proposed steel plants with capacity of 37-38 million ton were awaiting approval. Another concern of the state government was that most raw materials apart from coal would come from other states.

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Big investors eye minor port development 

With its 480-km long coastline, Orissa is attracting large corporate houses to set up ports to cater to projected increase in traffic from the state and its hinterland. Aspirants include Mittal Steel, IL&FS, Adhunik Metallicks, SPI Infrastructure, SSL Energy, Future Metal and the Maytas Group. Official sources said three companies had evinced interest to develop a port in the Barunei muhan in Kendarapada districts. These are Mittal Steel, Adhunik Metallicks and Chennai- based SPI Infrastructure. These companies have made a formal presentation to the state commerce and transport department officials and would make detailed presentations to the chief minister Naveen Patnaik shortly. Similarly, IL&FS and SSL Energy evinced interest to develop a port at Inchudi in the Balasore district. Bangalore-based Future Metal proposed to develop a port at Palur in Ganjam district and Maytas Group at Bahuda muhana in Sonepur district.
However, these proposals were at a preliminary stage and investment details were yet to be worked out. According to the projections of the state government, there is need for 76 million tonne finished product handling capacity by 2015-16 in Orissa. It entails raw material movement to the tune of 200-250 million tonnes. In addition, the new ports will cater to the cargo movement of states like Chhatishgarh, Bihar and Jharkhand. The Kolkata-based Shyam group and Century Plyboards (India) have proposed to develop an all-weather port in JV at Bali Harchandi in Puri district at an investment of Rs 1,900 crore.

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Merchants get more mines than steel firms  

Merchant miners have got almost double the number of iron ore mines than steel makers between 2001 and 2007, which the metal manufacturers think is not in the national interest. Out of 260 iron ore mines, for which the ministry has approved mineral concessions during the period, 172 went to merchant miners, according to information available on the website of the Ministry of Mines. Merchant miners were acquiring these mines mainly for export purposes, without adding value. Iron ore, an important raw material for making steel, is being increasingly exported to other countries, mainly to China. India exports about 94 million tonnes of iron ore a year and of that 85 per cent goes to China alone. India's iron ore exports have gone up to 78 million tonnes in 2004-05 and further to 89 million tonnes from just 65 million tonnes in 2003-04. This trend has continued and official figures show during April to December, 2007, the ministry had given mineral concession approval totalling to 45 mines and 34 of them were to the merchant miners. “All countries with limited sources conserve their iron ore for the long-term assured supply for developing domestic industry through fiscal and physical means,” Indian Steel Alliance President Moosa Raza had said in a letter to the prime minister recently. In addition to that, an export cess of Rs 300 levied on per tonne of iron ore is virtually nothing compared to the rise in spot market iron ore prices. “Spot market prices of iron ore, which was about $62-70 in February-March 2007, have now crossed $140 per tonne. This itself is acting as a grade incentive to the exporters,” Raza said. He suggests the need to protect and conserve iron ore reserve in the country by levying a reasonable level of export cess on ad-valorem basis. It requires 1.6 tonnes of iron ore with 64 per cent FE content to make one tonne of steel.

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Tata Steel's performance improves in Dec quarter 

Thanks to its focus on the value-added steel market, Tata Steel reported an improved performance in the December 2007 quarter with its standalone operating profit up 17.6 per cent y-o-y to Rs 2096.6 crore, while net sales improved 11.3 per cent to Rs 4973.9 crore. Operating profit margin also improved 230 basis points y-o-y to 42.2 per cent in the third quarter. Rival SAIL's operating profit margin also improved 280 basis points y-o-y to 31.3 per cent. Meanwhile, Tata Steel's sales were 1.24 million tonne in the December 2007 quarter, a 0.7 per cent rise y-o-y. But its realisations were estimated at nearly Rs 40,000 per tonne during the period, an increase of 10.5 per cent y-o-y. Besides higher realisations, Tata Steel also benefited from keeping a tight check on its operating costs - its adjusted raw material costs as a percentage of net sales declined 70 basis points y-o-y to 17.5 per cent. SAIL's realisations were estimated at Rs 31,777 per tonne in the December 2007 quarter. Tata Steel was able to get better realisations better than Sail in the last quarter, given its focus on the higher margin auto-grade steel products, point out analysts. In the European markets, however, where Tata Steel's recently acquired UK-based Corus derives a significant portion of its revenues, there have been signs of a demand slowdown in the December quarter, analysts said. This was attributed to excess stock levels at service centres, at a time when demand from the user industry is sluggish. It is understood that Corus sells nearly 70 per cent of its output on the spot market. Also, Corus is likely to grapple with significant cost pressures in CY08, given the impending global rise in contract iron ore and other key raw material prices. The Tata Steel stock has declined 11 per cent over the past three months compared to 8.4 per cent fall in the Sensex. Meanwhile, steel companies have hiked domestic prices by Rs 1,000-2,500 per tonne, due to the price hike in raw materials and other operational costs faced by the company. At Rs 750, the stock trades at 10.3 times estimated FY08 and 9 times FY09 earnings.

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SAIL board approves new CR mill at BSL 

Ranchi Express, citing public relations department of Bokaro Steel Plant, reported that the board of directors of Steel Authority of India Limited has granted final approval for setting up a 1.2 million tonne Greenfield cold rolling mill at the BSL at an investment of INR 2,500 crore as part of the modernization and expansion plans. The project will be completed by 2010. This scheme was approved by SAIL board in principle on December 6th 2006. According to the BSL, public relations department, the new CRM has been on the anvil for around 10 years, but could not be executed due to various reasons. The new state of the art mill will incorporate the advancements made in cold rolling technology in the past decade.

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Mr. A.K. Mukherji Takes Over as ED-Raigarh Plant of JSPL  

Mr. A.K. Mukherji, presently working as Executive Director (Steel) in Jindal Steel & Power Ltd (JSPL) Raigarh has been redesignated as Executive Director (ED) - Raigarh Plant of JSPL. He will be incharge for operation of the plant apart from overseeing the 6 MTPA Steel Plant expansions, Cement Plant Project and Raipur Machinery Division.
Mr. Mukherji has graduated with an Honour's Degree in Electrical Engineering from Banaras Hindu University in 1968. He did his Post Graduate Diploma in Metallurgy from Jamshedpur Technical Institute, Jamshedpur (Tata Steel).He started his career from Tata Steel as a Graduate Trainee and has served Tata Steel for more than 28 years. He has over 38 years of experience in steel & allied industries. Before joining JSPL, he was associated with Thai Special Steel Industries, Reyong, Thailand.

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Lakshmi Mittal sees conditions ‘favourable' for steel in 2008 

Conditions will be 'favourable' for the steel industry in 2008, Lakshmi Mittal, chairman of ArcelorMittal, said at the presentation in Luxembourg of the steel giant's full year results. Mittal said, The industry is experiencing favourable conditions and this will be the case throughout 2008 despite the potential recession in the US and the sub-prime crisis, Demand remains strong even if all economists foresee economic uncertainties and the sector faces pressure from sharply higher raw materials costs.
The slowdown in the growth of Chinese steel production is 'very good news', The ArcelorMittal head believes the proposed listing of steel futures contracts on the London Metal Exchange 'is not the solution' for producers of the metal. LME plans to launch electronic trading of steel and open outcry on April 28.This 'doesn't help the industry' and listing has not helped other products, nothing that there has been volatility in non-ferrous metals. The solution for the global steel industry is consolidation and becoming more global.

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Bekaert to acquire full ownership of Beksa in Turkey

Belgian steel cord and wire manufacturer Bekaert announced that it has signed a letter of intent with Haci Ömer Sabanci Holding AS for the acquisition of 50% of the shares in Turkey's Beksa Celik Kord Sanayi ve Ticaret AS. As a result Bekaert will acquire full ownership of Beksa in which it already has a 50% stake. The purchase price related to this transaction is estimated at EUR 40.3 million.The transfer of shares will be executed after receiving approvals from the respective authorities.
Located in Izmit, Beksa manufactures steel cord products and Dramix® metal fibres for a variety of industrial applications, amongst others in the automotive and building industry. Beksa employs about 330 people and recorded € 80 million sales in 2006.Mr Marc Vandecasteele group executive vice president of Bekaert said that “This agreement allows us to fully integrate Beksa in Bekaert's global manufacturing portfolio. Beksa will be further developed both as a key supplier to the growing domestic tire market and as an export base. Along with our local management we will pursue our business strategy to deliver high quality products to our customers. We will also maintain the good relationships we have built up with Sabanci throughout the years.”
Mr Turgut Uzer president Tire, Tire Reinforcement Materials & Automotive of Sabanci Holding said “With the increasing internationalization of Beksa's client portfolio Sabanci had become less aligned with the long term strategy for the company. We have come to a good agreement with our longstanding partner Bekaert on the sale of our share in Beksa. We thank them for twenty years of excellent collaboration in the joint venture and wish them a successful continuation of the business.

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Iran may sell oil in roubles to break dollar dominance  

Mr Gholamreza Ansari Iranian ambassador to Moscow said that it may use the Russian rouble in trading on its new oil exchange. He added that ''Big energy producers like Iran and Russia should try to free the world of dollar slavery.''Mr Ansari said that Iran plans to trade oil in more currencies than in its own rial to offer diversity. Iran has planned to open the exchange since 2005. He added that ''I don't think it would have any impact on the oil market at all. I think it's more political than related to oil market prices or dynamics.''
Mr Ansari further added that Russia and other natural gas producing countries should also form a group to coordinate production and sales of the fuel as soon as possible. Iran a year ago proposed to set up a gas cartel similar to the OPEC.Mr Dmitry Medvedev Russian first deputy prime minister said that the ruble should be used as a regional reserve currency. He added that ''The role of key reserve currencies is being reconsidered. We must take advantage of this.''Russia and Iran already cooperate in nuclear energy and may start closer coordination of natural gas production. Russia holds the world's largest gas reserves, followed by Iran, and together they produce of almost a fifth of the world's oil. The two share the goal of finding alternatives to a weakened US dollar.

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Saudi Arabia to set up first ever car plant in Dammam  

The first car manufacturing plant in Saudi Arabia is to be set up with a capital of SAR 375 million in Dammam. In the first phase, the factory will have a capacity of 15,000 cars, which will grow to 300,000 cars. An agreement for the purpose has been signed by the Saudi Authority for Industrial Cities & Technological Regions with the Gulf Automobile Manufacturing Company. Mr Toufique Al Rabeea director general of SACTR said that there is good prospect for car manufacturing factories in the Kingdom which currently imports vehicles worth more than SAR 22 billion annually. Car sales in 2008 are expected to rise by 27% YoY compared to last year.
Mr Al Rabeea said that "We import parts from well known international companies. This year we want to produce 3,000 cars at our Abu Dhabi plant. A long journey begins with the first step. We have to achieve quality and make innovative designs, matching with world standards. It is not impossible if we have the will and ready to work hard."He expected the opening of several car manufacturing companies in the Kingdom within the next 10 years to meet requirements of the country's fast growing population. Stressing the authority's plan to promote strategic industries in the Kingdom, he said investment in car industry is no more a dream in the light of modern economic trends.He further added that industries play a big role in boosting the Kingdom's economy and supporting its diversification drive, thus reducing dependence on oil resources. He said many essential parts required by the automobile industry are now available in the Kingdom. These include light systems, breaks, wind screens, batteries, engine oils and exhaust pipes.
Mr Nasser Al Hajri chairman of Gulf Automobile Manufacturing Company said that the authority has offered all incentives to establish the factory and added that he was holding talks with four Saudi investors to establish the plant in Dammam. He added that "We selected the Saudi Kingdom for our expansion plan considering the availability of young and talented Saudi technicians in the field .We'll provide Saudis with intensive training."Gulf Automobile Manufacturing Company currently employs 300 workers including technicians. The number will reach 50,000 in the coming 10 years.

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Arcelor to invest 1 bn in Egypt   

Arcelor Mittal, the world's largest steelmaker, said it would invest up to $1 billion in Egypt after winning a licence to build direct reduced iron (DRI) and billet steel factories.ArcelorMittal, which will pay 340 million Egyptian pounds ($61.2 million) for the licence, beat India's Essar Global and Al-Ghurair of the United Arab Emirates in the auction."The bid was intense. It was about 81 rounds," Arcelor Mittal executive vice president Sudhir Maheshawri told Reuters."The project will cost between $800 million to $1 billion," he said, adding it would take up to four years for production to start.Under the agreement, the production capacity of the factories is be 1.6 million tonnes per year of DRI steel and 1.4 million tonnes of billet steel. The firm has the right to increase production by up to 30 percent.
Kuwait's Al-Kharafi group also won a licence for pelletising factories for 105 million Egyptian pounds, and Saudi Arabia's Al-Tuwairqi Group won a similar licence for 64 million pounds."The point of these licences is to lower steel prices in Egypt and boost the backward integration of the industry," Amr Assal, the head of the Industrial Development Authority, told a news conference after the auction.Egypt, the Arab world's most populous country, went from importing 2 million tonnes of steel annually less than 10 years ago to becoming an exporter of 900,000 tonnes in 2006, the trade and industry ministry has said. The Industrial Development Authority said Egypt's 2006 steel production stood at 5.4 million tonnes. The International Iron & Steel Institute (IISI) said Egypt's crude steel output was 6 million tonnes in 2006.

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Qatar Petroleum plans IPO of services firm   

The Peninsula reported that another arm of Qatar Petroleum is launching an initial public offering, further opening the state controlled petroleum sector to the Qatari public.Mr Abdullah bin Hamad Al Attiyah deputy premier and minister of energy & industry of Qatar announced the date of the IPO of Gulf International Services, a newly established holding company with an authorized capital of QAR 10 billion.Mr Al Attiyah, who is also chairman of Gulf International Services, said that "The oil and gas sector continues to be of vital importance to Qatar and the development of our society. In making this initial public offering we are allowing citizens to participate in the wealth and prosperity of our petroleum industries, while generating funding that will enable Qatar Petroleum to continue to work in wisely harnessing our natural resources."He said Gulf International Services has been created to maximize the potential revenue opportunity from the provision of services to the national and international oil and gas industryGIS comprises Al Koot Insurance and Reinsurance Company, Gulf Drilling International Limited and Gulf Helicopter Company. The total value of the IPO is QAR 1.72 billion with 86.005 million total shares being offered to Qatari public. The share price has been set at QAR 21 per offered share, with offering costs of QAR 0.6. Qatar Petroleum will continue to hold 30% of the GIS available share capital, with 4.2% being made available to selected institutions and 65.8% being made available to the public. Individual investors will be able to apply for a minimum allocation of 250 shares with multiples of 50 shares thereafter.The financial adviser and lead manager for the IPO is HSBC Bank Middle East Limited, with Norton Rose and Law Offices of Gebran Majdalany acting as legal counsel. Qatar National Bank has been appointed as lead receivingbank.
Currently 3 portfolio companies are held under GIS Al Koot which provides a range of insurance and reinsurance services to Qatar Petroleum and the Qatar Petroleum Group across operations, onshore or offshore and marine sectors, GDI which provides drilling related services to the QP Group and international co ventures and GHC, the sole provider of helicopter transportation services in Qatar.

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Indonesia’s Krakatau Steel to cut steel exports in 2008

Indonesian state steel firm PT Krakatau Steel plans to cut exports of hot-rolled coil and cold-rolled coil by 50 percent this year to meet rising domestic demand, a company official said. Krakatau Steel plans to export 125,000 tonnes hot-rolled coil and cold-rolled coil combined this year, compared with 250,000 tonnes in 2007, said Irvan Kamal Hakim, Krakatau Steel's marketing director. “We may cut steel exports by half this year because domestic demand is rising.” He said the rise in local demand will come from a number of national projects such as power plants and shipbuilding projects.
Hot-rolled coil is used in construction, ship building, and oil and gas pipelines while cold-rolled coil is often used in products such as automobiles and pipelines. Hakim said the company planned to increase production capacity to 5 million tonnes a year in 2010, from 3.1 million tonnes. Lack of raw material at home has forced the company to import iron pellets from South America and it plans to import pellets from India and Australia in 2010, Hakim said. Iron ore pellets, spherical lumps formed by crushing iron ore into powder, are fed into blast furnaces to make molten iron, the first stage of steel making.

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POSCO targets output of 33mt in ‘08

Posco aims to produce 32.9 million tonnes of raw steel this year, up from last year's total of 31.1m t, the Korean integrated mill has announced. Both figures are far higher than those recently projected for Posco by the Korea Iron & Steel Association (Kosa), at 29.7m t for 2008 and 27.5m t for 2007, as Steel Business Briefing reported. When raw steel output of its two subsidiaries is included – Posco Specialty Steel (Poscoss, the former Changwon Specialty Steel) and Zhangjiagang Pohang Stainless Steel (ZPSS), the majority Posco-owned stainless integrated mill in eastern China – Posco's consolidated raw steel total came to 32.8m t last year, and should touch 34.7m t in 2008.
Posco anticipates a rise in its parent-only output because its new 1.5m tonnes/year Finex iron-making plant at Pohang, which started last May, will be at full capacity. More importantly, Posco restarted its No.3 blast furnace in Gwangyang in late November after a reline that lifted inner volume by 21% to 4,600 cu metres. The expansion will allow the unit to produce an extra 650,000 t/y of pig iron, as SBB has reported. Increases are also anticipated at Posco subsidiaries where output at ZPSS and Poscoss will each climb to about 1mt, up from 780,000 and 936,000 tonnes respectively in 2007.

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Firm trend in ship plate prices continues in Singapore 

Recent bookings in Singapore at $850/t cfr confirm that ship plate prices in the city state are still rising, in a market where demand is described as “still strong.” Trading sources tell that they have heard that Ukrainianand Chinese-origin material was sold at this price in the past ten days. This compares with transacted prices of around $825/t cfr in the first week of January for Chinese
ship plate and around $780-785/t cfr for Ukrainian material last month.
In addition to strong demand in international markets, market supply is tight because some mills are holding back material in anticipation of more price gains. Traders expect new offers from Ukraine and China to rise by another $20-30/t, SBB is told. “We are looking for ship plate but there are not many offers,” a Singapore trader tells on sourcing material from Ukraine. He has heard of offers from China at highs of $850/t fob. Another says that the offer of Chinese ship plate at $880-890/t cfr he recently received is “unworkable” for the Singapore market.

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Taiwan may implement new export policy on rebar   

Taiwan might execute export policy to control debar export, according to Taiwan Industrial Development Bureau. World raw material prices have been continuously increasing, Taiwan debar export price is higher than domestic market price, it is facing short of supply in Taiwan.
However, to keep domestic market price low will also hurt their import. Since global market price is stable at a high position, they hope Taiwan's producers supply domestic market as their first priority. Taiwan needs to import 4 million tons of steel products per year, it might not be good to keep domestic market much lower than global market price. However, shortage in supply would be more serious or even worse than price soaring. Therefore, the export control policy will carefully go through a series evaluation.

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BlueScope opens new steel plant in Dong Nai 

BlueScope Buildings Vietnam announced the opening of a steel fabrication facility in Bien Hoa Industrial Zone in the southern province of Dong Nai in order to meet the growing demand for pre-engineered steel. The plant, which will have an initial capacity of approximately 12,000 tonnes per year, brings the company's total number of factories in Vietnam to three. The Australian-invested firm said the new plant employs an integration of AutoCAD drawings and High Definition Plasma steel cutting systems to ensure top quality.

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Vietnamese Steel demand expands by sizzling 43% 

Consumption of finished steel in Vietnam rose by an unprecedented 43% to 10.2m tonnes in 2007, up from 7.16m tonnes in 2006, according to the Vietnam Steel Association (VSA). A senior VSA executive tells Steel Business Briefing that this jump surprised everyone because both local and foreign steel industry sources had underestimated the strength of Vietnamese steel demand.
The VSA had forecast a growth rate of 10-13% in early 2007. “Domestic demand is very, very strong,” the VSA official says. Propelling demand was the inflow of foreign investment and a parallel flurry of construction and infrastructure projects, he adds.
The Vietnamese market, in its high dependence on imports of raw materials, semis and finished steel, has to pay international prices. SBB understands that last year, Vietnam produced only 400,000 tonnes of CRC/coated steel products while importing more than 4m tonnes of flat products. This will only change with the start-up of new HRC rolling facilities in the next two years, SBB hears. Strong demand has also driven steel prices up, and in part, this has led to Vietnam's market being the region's highest-paying for certain steel imports. Offers last week for billet imports were prevailing at $720/t cfr and HRC offers are at similar levels. Domestic re-rollers are forced to charge more for their long products. Construction debar and wire rod prices now prevail at around VND 13-14m/tonne ($814-876) ex-works (inclusive of taxes), up from under VND 12m/t for most of last year. Local producers can meet only 40% of billet demand – or around 2m tonnes in 2007 – prompting consumers to turn to imports, which topped 2.2m t last year. However, Vietnam has more than enough rolling capacity for longs, with industry utilisation running at only around 65%.

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POSCO buys Malaysian steel maker for $15.6 mln  

POSCO said it will buy a 60 percent stake in a Malaysian steel maker for $15.6 million, marking the South Korean steel maker’s first acquisition of a foreign steel company. MEGS, an electrolytic galvanized coil maker, is located in Klang, near Kuala Lumpur, and has a capacity of 120,000 tonnes a year. “The investment will help POSCO to secure the fastgrowing Southeast Asian market,” the world’s fourth-largest steel maker said in a statement. “We will keep actively seeking the merger and acquisition of firms abroad to increase our competitiveness in the global market.” POSCO has been looking for opportunities to enter the Southeast Asian market, one of the world’s largest steel importers. The company has already committed to invest in $1.13 billion in Vietnam for steel plants by 2012.

 

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Usiminas to spend $750 mn on iron-ore output 

Usinas Siderurgicas de Minas Gerais SA, a Brazilian steelmaker seeking to limit rising raw-material costs, plans to invest $750 million over five years to more than quadruple iron-ore output at its Mineracao J. Mendes Ltda. unit. J. Mendes's output will rise to 29 million metric tons by 2013 from 6 million tons now, Belo Horizonte, Brazil-based Usiminas said today in a statement. Usiminas is seeking to produce enough iron-ore to supply its own steelmaking operations and cut costs after iron-ore prices more than doubled in the past three years, Chief Executive Officer Rinaldo Soares said. The price of the raw material used to make steel will probably rise in the next three to four years as demand exceeds supply, he said. Usiminas said it will invest $150 million to expand an existing mine's production to 13 million tons from 6 million tons now. The remaining $600 million will be used to build a new 16 million-ton mine, expected to start operating by 2013. Usiminas, Brazil's second-biggest steelmaker bought iron-ore mining companies J. Mendes, SOMISA Siderurgica Oeste de Minas Ltda. and Global Mineracao Ltda. in southeastern Brazil for $925 million. Usiminas shares rose 25 centavos, or 0.3 percent, to 93.75 reais in Sao Paulo trading.

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Angang, Maanshan Steel shares gain as China rebuilds after snow 

Angang Steel Co., China's second- biggest steelmaker by market value, and rival Maanshan Iron & Steel Co. rose in Hong Kong trading on expectations demand would gain as China rebuilds after the worst snowstorms in 50 years. The snowstorms, lashing central and southern provinces, caused direct economic losses of 111 billion yuan ($15 billion), and destroyed or damaged more than 1.7 million homes, according to the Ministry of Civil Affairs. ``Steel and cement companies will benefit as China will undergo reconstruction,'' Luo Wei, a Shanghai-based analyst at China International Capital Corp., said. ``Steel prices are rising pretty fast these days on the good demand outlook, more than offsetting the rise in raw material prices.'' Hot-rolled coil prices, the industry benchmark, have risen 1.6 percent to 4,919 yuan a metric ton this year in China, according to research company Beijing Antaike Information Development Co. Angang Steel rose as much as 11 percent to HK$16.52 in Hong Kong, trading at HK$16.38 at the 12:30 p.m. local time break. Maanshan Steel, China's second-largest Hong Kong-listed steelmaker, rose 4.3 percent to HK$4.41.

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Kumba iron ore full-year profit declines 8.3% on asset sales  

Anglo American Plc's Kumba Iron Ore Ltd., Africa's biggest producer of the steelmaking raw material, said full-year earnings fell 8.3 percent after asset sales boosted profit in 2006. Net income dropped to 3.1 billion rand ($404.6 million), or 9.70 rand a share, from 3.38 billion rand, or 10.60 rand, a year earlier, the Johannesburg-based company said today in a statement. Kumba was formed in November 2006 when Anglo's Kumba Resources Ltd. split its iron-ore mines from its coal, zinc and titanium assets. Stripping out the one-time gain of 1.57 billion rand from those asset sales in 2006, profit jumped last year as iron-ore prices climbed for a fifth year and output at the company's Sishen mine in South Africa rose.

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Intex may partner with steel traders to develop Philippine mine

  Intex Resources ASA, developing a $2 billion Philippine nickel mine, has opened talks with steel traders to help complete the project after rejecting offers of partnerships from mining companies, including BHP Billiton Ltd. “Traders in stainless-steel market are the more interesting partners,'' Intex Executive Vice President Jon Steen Petersen said, without naming them. ``They're interested in the product, not necessarily in having a high price.'' Intex plans to complete a feasibility study of the Mindoro project by the end of this year. The Oslo-based company may become a takeover target for metals companies seeking nickel assets, according to Martin Molsaeter, an analyst at Oslo-based First Securities ASA in a report. “BHP has approached us earlier,'' Petersen said in an interview yesterday in Manila, adding that Brazil's Cia Vale do Rio Doce had also made an approach. BHP spokeswoman Samantha Evans declined to comment. “Based on the size of the project and significant M&A activity among the big nickel and steel players, the company should be able to secure a good deal in the first half of 2009,'' Molsaeter wrote in the report. “It may be that potential predators will not wait that long and strike a deal or buy the company ahead of the final study.” Intex had declined partnership offers for Mindoro from nickel producers because they couldn't guarantee they would develop the mine immediately, Petersen said. The Norwegian mining company has also looked at the option of developing the project with financing from banks, he said. Stainless-steel makers use nickel to make their product resistant to rust. Mindoro has an estimated resource of 2 million tons of nickel equivalent and may produce 40,000 tons of the metal a year, Petersen said. Intex estimated Mindoro's development costs at $2.05 billion, according to a statement. The Philippine mine may produce nickel at a cost of between $3 to $3.60 per pound, and developing the mine would be ``economically viable'' even if nickel dropped to $5 a pound, Petersen said in the interview.

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Steel Tube first-half profit falls 42%

Steel & Tube Holdings Ltd., a New Zealand distributor of wire, reinforcing steel and roofing iron to the building industry, said first-half profit fell 42 percent as a rising currency crimps margins. Net income fell to NZ$8.6 million ($6.7 million), or 9.7 cents a share, in the six months ending Dec. 31 from NZ$14.8 million, or 16.7 cents, a year earlier, the Wellington-based company said in a statement sent to the stock exchange. First- half sales rose 7 percent to NZ$246 million. Demand for steel products is slowing as record-high interest rates curb the housing market while a 13 percent gain by the New Zealand dollar the past year crimp exports, affecting manufacturers and farmers, the company said. The New Zealand economy is ``under significant risk in the year ahead,'' said Chief Executive Officer Nick Calavrias. Exports may also decline if global growth slows, he said. Still, provided the economy doesn't slow further, Steel & Tube expects second half profit will match the year-earlier period, he said. First-half profit included a NZ$1.6 million charge after restructuring at the company's Hurricane wire unit. Excluding the charge, earnings met the company's November guidance, Calavrias said.

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Gerdau Ameristeel profit more than doubles; shares surge 

Gerdau Ameristeel Corp., the U.S. unit of Brazilian steelmaker Gerdau SA, said fourth-quarter profit more than doubled as acquisitions boosted sales. The shares rose the most in more than two years. Net income rose to $141.4 million, or 37 cents a share, from $66.7 million, or 22 cents, a year earlier, Tampa, Florida-based Gerdau Ameristeel said today in a statement distributed by PR Newswire. Sales increased 66 percent to $1.73 billion. Finished steel shipments in the quarter rose 46 percent to 2.2 million tons, ``primarily as a result of the acquisition of Chaparral Steel Co.,'' the company said. Gerdau Ameristeel bought Chaparral for $4.2 billion last year.”

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Arcelor-Mittal south Africa profit climbs, prices rise  

ArcelorMittal South Africa Ltd., Africa's biggest steelmaker, said full-year profit increased 22 percent as prices of its products rose. Net income climbed to 5.72 billion rand ($745 million), or 12.79 rand a share, from 4.7 billion rand, or 10.52 rand, a year earlier, the company said in a statement. Production fell 10 percent to 6.37 million tons after furnace maintenance at Vanderbijlpark took longer than planned, while power cuts sweeping the nation may curb output this quarter, it said. “Higher prices, a bigger domestic sales proportion and a weaker rand helped make up for lower production,” Anwar Wagner at Old Mutual Asset Management, said by phone from Cape Town. Local sales are more profitable than export sales, he said. The Vanderbijlpark, South Africa-based company, owned 52 percent by ArcelorMittal, the world's biggest steelmaker, closed down 4.80 rand, or 2.8 percent, at 165 rand in Johannesburg, giving it a market value of 73.5 billion rand. South African steel sales were at a near-record 5.33 million metric tons last year as a government program to improve road, rail, ports and other infrastructure fueled a building boom in Africa's largest economy. ArcelorMittal South Africa plans to increase its output to 9.5 million tons a year in about three years. The world export price of benchmark hot-rolled coil has gained 18 percent since February last year, according to data from Metal Bulletin Plc. The South African steelmaker bases its prices on a basket of those in other countries including Germany, the U.S. and Russia. ArcelorMittal South Africa will spend more than 1.2 billion rand on a power plant at its Vanderbijlpark mill to overcome a national electricity shortage that is curbing steel production. The shortage will probably cost Africa's biggest steelmaker about 300,000 tons this year, Chief Executive Officer Rick Reato told reporters in Johannesburg today. With plants operating at 90 percent of normal power use, 2008 output will be ``slightly'' higher than last year's 6.37 million tons, he added. Electricity shortages have become a ``major risk,'' Reato said. The company is also considering building a power plant at its Newcastle mill, he added. The Vanderbijlpark power plant would be fired with gas the company currently flares. ArcelorMittal South Africa was fined a record 691.8 million rand by South Africa's Competition Tribunal in September for ``excessive pricing.'' It is challenging the fine. The company also expects to conclude arbitration with Kumba Iron Ore Ltd. this year over its right to take part in Kumba's planned iron-ore mine expansion. The steelmaker now buys iron ore, a raw material, from Kumba at cost plus 3 percent. Controlling shareholder ArcelorMittal today said its fourth-quarter profit rose 2.7 percent to $2.44 billion on higher prices and increased Latin American production.

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ThyssenKrupp drops after first-quarter profit falls  

ThyssenKrupp AG, Germany's largest steelmaker, fell the most in three weeks in Frankfurt trading after saying fiscal first-quarter profit dropped 35 percent, more than analysts had expected. Net income fell to 414 million euros ($603 million) in the three months ended Dec. 31, from 641 million euros a year earlier, the Dusseldorf-based company said in a statement. That missed the 482.5 million-euro. Customers bought less stainless steel and ran down stocks after prices were buoyed by gains in nickel, a raw material used to make the alloy. Growth in steel demand in the European Union will slow to 2.8 percent this year, from an estimated 5.3 percent last year, according to the European Confederation of Iron and Steel Industries. “The operating performance in the first quarter was a bit disappointing,'' Christian Obst, an analyst at UniCredit Markets & Investment Banking in Munich with a ``hold'' rating on the shares, said. ``Stainless was weaker, a trend we hope will improve over the course of the year.'' ThyssenKrupp fell 1.22 euros, or 3.5 percent, to 33.78 euros as of 3:53 p.m. in Frankfurt. The stock earlier dropped as much as 5.5 percent, the largest intraday decline since Jan. 23. ``The prior-year quarter was boosted by exceptionally strong demand and very high base prices for stainless steel, which were both absent in the reporting quarter,'' the company said in its statement. ThyssenKrupp aims to raise steel prices by 100 euros a ton at the beginning of April, Chief Financial Officer Ulrich Middelmann said in a conference call. He said he expects to gain a ``clear view'' of the outcome of negotiations with iron-ore suppliers by the end of March. Arcelor Mittal, the world's largest steelmaker, said that profit in the same period rose 2.7 percent to $2.44 billion. ThyssenKrupp reiterated that it expects full-year sales of 53 billion euros and earnings before tax and nonrecurring items to exceed 3 billion euros.

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Posco to raise stainless steel prices to cover costs  

Posco, Asia's third-biggest steelmaker, will raise prices of its 400-series stainless steel products by as much as 11 percent to cover higher material costs. The price of hot-rolled stainless steel coil will increase by 150,000 won ($159) a metric ton to 1.49 million won from Feb. 18, Ko Min Jin, a spokeswoman for the Pohang, South Korea-based company said. “We decided to increase the prices because prices of chrome, a key raw material for the products, rose,” Ko said. Power cuts in South Africa, which accounts for more than half of global ferrochrome output, disrupted mines and smelters, forcing Samancor Chrome Ltd. and Xstrata Plc to slash production. Posco and rivals are pushing a series of price increases after higher costs reduced profits last year. Posco closed 1,000 won, or 0.2 percent lower, at 495,000 won in Seoul trading, while the benchmark stock index Kospi lost 0.7 percent. Stainless steel accounts for about 20 percent of the company's sales. The price of cold-rolled stainless steel coil will also gain by 150,000 won a ton to 1.87 million won, Ko said. The steelmaker didn't raise prices for its 300-series products, she said. The 300-series, which uses nickel to make the products rust-resistant, accounted for about 60 percent of Posco's stainless steel output of 1.6 million tons last year, and the 400-series accounted for the rest. Ferrochrome contract prices may rise to $1.50 a pound or more in the second quarter, up at least 24 percent from $1.21 a pound in the prior quarter, Samancor said.

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