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Dear Readers,


Steel industry is slowly coming back on track but again, as I had mentioned in the last article, the response from different segments is not similar. While flats segment seems to be recovering at a faster pace than the longs one. Even within longs segment, construction steel segment seems to be faster than carbon & alloy steels segment. The reason lies in the application industries for these steels. Let's go in details.
As we know, the major user sectors of steel are construction, auto and consumer durables. The construction industry was practically at halt for some months. The real estate prices slumped and there were no buyers for the houses. The big infrastructure projects were also not progressing for lack of funds from financial institutions and investors. Gradually everybody realized that what has happened is a past now and we have to move ahead as fast as possible. Further, nothing significant had happened in India and it was more of a psychological barrier than anything else. I think the construction industry is gradually coming out of the crisis, ofcourse with a price correction.
The same story applies to auto industry as well. The production and sale has started improving and along with the auto manufacturers, the auxiliary industries such as foundries, forging units, other auto component manufacturers have also given a sigh of relief. I do agree that it will take some more time before the industry achieves the production level and more importantly, the sentiment of pre meltdown period, everybody is more or less sure about the future growth.
The other user industries such as consumer durables, white goods, engineering had gone through a bad period of around six months but they are also slowly and steadily coming out of it. The buyer's mindset also plays a major role in deciding the demand pattern and if one looks back to the period from September 08 till March 09, all were absolutely unclear about the future and naturally the demand fell drastically. All this had surely affected the steel industry and pulled the steel consumption curve down.
Now, the banks and financial institutions have started turning bullish. This is the most crucial thing from the perspective of steel industry as many Greenfield and brownfield projects are ready to go ahead and are only waiting for the funds from financial institutions!!!
Is the future bright? Yes, it seems so!!!.

 D.A.Chandekar
Editor & CEO

 

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Coking coal output up 34.3% in April

India's coking coal output in April 2009 reached at 2.692 million tons (mt), up by 34.3 percent compared to 2.004 mt produced in the corresponding month of the previous year, said a report. Production for the month was also 0.455 mt higher than last month's production which stood at 2.237 mt.
April production by Coal India Ltd's (CIL) five subsidiaries was 2.011 mt, compared to 1.337 mt in the corresponding month of the previous year and 1.44 mt produced in march 2009. Bharat Coking Coal Ltd (BCCL) posted the highest quantity of coking coal during April this year, 1.14 mt, followed by Central Coalfields Ltd (CCL) which produced 0.812 mt. Private mining companies produced 0.681 mt of coking coal during the month, which was lower than the previous month's produce of 0.801 mt but higher than April 2008 production which stood at 0.667 mt.
The production of washed coking coal meant for supplies to steel plants by three subsidiaries of Coal India Ltd (CIL) fell to 0.282 mt in April compared with 0.304 mt produced in the same month of 2008, according to data available with Steel Insights. The production by BCCL during the month was down to 0.125 mt from0.148 mt last year, while that of CCL was up to 0.135 mt from 0.133 mt in April 2008. Western Coalfields produced 0.022 mt of washed coking coal, which was down from 0.023 mt produced in the same month of previous year. However, total production of coking coal during the month by five subsidiaries of CIL stood at 2.011 mt compared with 1.337 mt produced in April 2008.

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Government may sell CIL stake

The government is planning to sell up to 10 percent of its stake in Coal India Ltd (CIL), the country's largest coal producer.
"Our target is to disinvest a 10 percent stake in CIL by the end of the current year. Disinvestment in the coal sector is absolutely necessary," minister of state for coal (independent charge) Sriprakash Jaiswal said. The move is a part of a government's proposal, where proceeds from the stake sale of major public sector undertakings (PSUs) will be used to bridge the fiscal deficit.
Earlier in June, President Pratibha Patil, while addressing the joint session of the Parliament, had said, "My government will develop a roadmap for listing and people-ownership of public sector undertakings while ensuring that the government equity does not fall below 51 percent.”
The coal minister was announcing his ministry's 100-day agenda, which included securing cabinet approval for setting up a committee to look into CIL's overseas investments. Another priority of the ministry would be to introduce forward e-auctioning of coal, against spot auctioning done at present. In the mid of June, the coal minister had said that the government is not averse to limited disinvestment in CIL. The minister also said the proposed disinvestment is aimed at giving a boost to the rehabilitation and resettlement (R&R) policy of CIL by offering shares to people whose land is acquired for mining purposes.
Jaiswal had met finance minister Pranab Mukherjee and informed him about the Coal Ministry's intentions to offload a part of the government's shareholding in CIL. This would, however, require the Coal Ministry to introduce a bill for an amendment in the Coal Mines Nationalisation Act, 1973.
The coal minister had also talked about a reduction in the customs duty levied on mining equipment with the finance minister. CIL, which has an authorised capital of Rs 8,000 crore, was accorded Navratna status in October last year. The company is expected to get listed within three years ending October 2011, as per rules. It recently reported a sharp fall in its net profit at Rs 96 crore during 2008-09 from Rs 5,243 crore in the preceding year. The fall was mainly on account of an increase in the wage bill.
CIL, along with its seven subsidiaries, accounts for around 85 percent of the total domestic coal production. In the current financial year ended March 2009, the company is planning to produce around 435 million tons (mt) of the dry fuel compared to 403 mt produced in the previous year.
Meanwhile, the proposed disinvestment in CIL may meet with resistance from trade unions. The pro-CPM, Centre of Indian Trade Unions has sent a letter to the coal minister, asking him to prepare for the worst if the Government went ahead with dilution of state equity.

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JSW may raise July galvanized steel prices   

India's third- biggest producer JSW Steel Ltd plans to increase prices of galvanized products in July because of rising zinc costs.
The price of zinc, one of the key raw materials, has climbed almost 20 percent since April, Jayant Acharya, director of sales and marketing at JSW Steel, said without giving details of the price gain. “The input costs have jumped significantly, so we will have to pass on higher costs to our customers,” Acharya said.
Baoshan Iron & Steel Co, China's biggest producer, increased the July price of hot-rolled products by 500 yuan a ton and of cold-rolled products by 400 yuan a ton, according to a report. Mumbai-based JSW Steel, the biggest maker of galvanized steel, used for construction, didn't raise prices this month, Acharya said.

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Government may increase import duty  

The finance ministry is examining the steel ministry's demand to increase the import duty on flat steel products — including hot and cold-rolled coils and galvanised products — to 15 percent from the present 5 percent.
It is also considering another proposal to bring back the 15 percent export duty on iron ore that had been withdrawn in two phases in the second half of the last fiscal. There is also a demand to raise the import duty on long steel products to 10 percent.
All these proposals are meant to protect the domestic steel producers from cheap imports from countries that have built up unsold inventory and/or excess capacity.
A final decision will be taken by the FM in consultation with the prime minister, said a government official in one of the ministries. Some of the duty changes may also figure in the 2009-10 Budget proposals, the official added.
The government removed a 5 percent import duty on steel last May to counter commodity price-driven inflation but re-introduced it as part of last year's first stimulus package when steel prices started shrinking worldwide due to the meltdown. Domestic steel prices, meanwhile, have remained low since the third quarter of 2008-09.
But India's steel prices (benchmark HR prices) are currently ruling at Rs 28,000-30,000 per ton—still higher than the imports from China, Russia and a few CIS countries at Rs 24,000-25,000 per ton. The lower steel prices have already put pressure on steel companies' margins. Imports have maintained a rising trend increasing by 30-50 percent on a month-on-month basis since October 2008.
The other proposals for a steel stimulus target raw material security by hiking the cost of iron or exports. The import duty on iron ore had been introduced in 2007-08, but was cut to 8 percent and thereafter to zero after exports plummeted.

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Tata Steel raises HR, CR prices

Tata Steel, the world's sixth-largest steelmaker, hiked prices for hot-rolled and cold-rolled coils by up to 2 percent across some regions in the country.
Prices have been raised by Rs 500 to 750 per ton, based on market conditions, said the company's spokesperson.
Hot-rolled and cold-rolled coils are mainly used in automobiles and consumer durables such as refrigerators and washing machines.
The company has seen strong demand from its Indian operations, which account for about a quarter of the group's annual global capacity of 30 million tonnes.
Its Indian operations posted a 31 percent rise in sales in April, and an 18 percent increase in May.

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JSW, Essar may ramp up production in N America

Indian steel producers- JSW Steel and Essar Steel- are likely to ramp up production at mills in North America, which have been running at less than half the capacity. This follows ArcelorMittal's decision to hike US sheet prices by $80-90 a ton, with immediate effect.
Jatinder Mehra, chief executive officer, Essar Steel, said, “There appeared to be a spike in demand and, from July onwards, Essar Steel Algoma (in Canada) would be operating at 80 per cent capacity.” Essar, however, declined to comment on the capacity at which it was currently operating.
JSW Steel, which has been operating its US mills at 15-20 per cent, could also look at taking in higher volumes. Jayant Acharya, director (sales & marketing), JSW Steel, said, “The ArcelorMittal price move was good for us. We can look at restarting and taking in higher volumes.”
JSW completed the takeover of its US mills in 2007-08. On the back of a booming oil and gas sector in the US, JSW's plants under JSW Steel (USA) Inc reported an EBIDTA (earning before interest, depreciation, taxation and amortisation) of $74.63 million from April 1, 2008, to September 30, 2008.
As the US economy was affected by the financial crisis, JSW Steel (USA) had to cut its production from October 2008. The company has prepared a conservative business plan for fiscal 2010, factoring the slow recovery in the US.
Essar Steel acquired Algoma in 2007. However, owing to the downturn, the production of Algoma had to be adjusted to suit market demand and staffing levels were also adjusted to meet production requirement. Algoma's current production is at 3.2 million tons, but Essar is committed to taking it to four million tons.
Essar sources said, “We remain bullish on the long term. We will weather this cycle and emerge favourably poised to capitalise on the market upturn. We maintain a continued emphasis on quality and on-time delivery, actively servicing our current customer base, while seeking new opportunities in Europe and Asia.” Essar Steel Algoma recently started a new 70 Mw cogeneration facility.
However, unlike the global steel makers, the domestic producers operating in North America can only consider normalising production and are not exploring the possibility of raising prices.

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India's steel demand may climb 10% on infrastructure 

India's steel demand may gain as much as 10 percent this fiscal year, almost double the pace previously estimated, as the government spends more on infrastructure, Steel Secretary Pramod Rastogi said.
“Based on the economic factors, it will not be a surprise to see a surge in consumption,” Rastogi said in an interview. Demand, which almost disappeared last year, rose 6 percent in the past two months, he said.
Prime Minister Manmohan Singh's administration, which returned to power last month, is expanding state projects and a rural jobs program that's lifting demand in villages and towns. The government plans to spend $8.95 billion this fiscal year to build networks of roads, telephones, electricity and irrigation.
“There are many positive indications for the steel sector and the government's strategy to increase investments in infrastructure will only increase steel intake,” said an analyst at Sundaram BNP Paribas Mutual Fund in Chennai. “Also, the power plants that are being put up across the country are steel intensive.”
“There's considerable scope to increase public expenditure, particularly on infrastructure projects and that would not lead to inflation,” Singh said. “That is the right way to deal with the international slowdown.”
As demand grows, Indian steelmakers are expected to double their combined capacity in the next three years, Rastogi said. Capacity is expected to increase to as much as 124 million metric tons by 2012 or at least 100 million tons in the “worst-case scenario,” he said. “The steel companies have started speaking a positive language as they are seeing a rise in demand,” Rastogi said.
India produced 56.4 million metric tons of steel in the year ended March 31, little changed from 56.1 million tons the previous year, according to the data provided by the Joint Plant Committee, a data dissemination body under the steel ministry.
Imports of steel rose 21 percent to 528,000 metric tons last month from a year earlier, Rastogi said. Some countries are offering prices lower than those in India, which is leading to the spurt in imports, he said, without identifying the nations.
China's move to offer a rebate on steel exports will also hinder the Indian steelmakers, he said. Coking coal contract prices, which surged to a record $300 a ton last year, have declined 60 percent since April. Steelmakers in Japan and Rio Tinto Group, the world's third- largest mining company, agreed to a 33 percent cut in iron ore prices, settling for 97 cents a dry metric ton unit.
India's government last month rejected a plea by Steel Authority of India Ltd., the nation's second-biggest producer, JSW and rivals to impose a 25 percent so called safeguard duty on imports in addition to the existing 5 percent import tax.
“We are watching, though from the data it's clear that China is not a threat at the moment because very little steel is coming from there,” Rastogi said. “Also, Indian companies are trying to lower costs to be more competitive.”
A venture formed by state-owned steelmakers is scouting for coal mines in the U.S., Canada, Australia and Mozambique to secure supplies for Indian companies, he said.

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Ennore Coke bags coking coal deals with Rio, BHP

Ennore Coke Ltd, a domestic maker of coking coal, has finalised the annual coking coal contracts starting April 1 this year with its international suppliers Rio Tinto and BHP Billiton Mitsubishi Alliance (BMA), a joint venture of BHP Billiton and Mitsubishi Development Pty Limited.
The company clinched the coking coal contract for 2009-10 at $128 per ton for hard coking coal and $100-118 a ton for soft and semi-soft varieties of coking coal.
“We have finalised coking coal contracts with Rio Tinto and BMA and expect to sign formal agreements with these firms soon. Ennore Coke will import about 400,000 tonnes of coking coal, of which around 300,000 tonnes will be from BMA and the remaining will be provided by Rio Tinto,” Ganesan Natarajan, president and chief executive officer, Ennore Coke Ltd told Business Standard.
Out of the 400,000 tons of coking coal to be imported by the firm, 50 percent would be hard coking coal while the remaining would be a mix of soft and semi-soft varieties.
Ennore Coke was aiming to secure raw material supplies to meet its capacity expansion plans. The firm has reserves of about 0.4 million tonnes of low ash coking coal imported from the USA and it needed around 30,000 tons of coking coal per month to meet its requirements through 2009-10.
Ennore Coke's move to finalise coking coal contracts has come close on the heels of the BMA announcing a 58 per cent cut in contract prices of coking coal compared to last fiscal for the Japanese steel makers like Nippon Steel and JFE Holdings.
Following the price cut, Nippon Steel and JFE Holdings would pay $128 per ton of coking coal for 2009-10. BHP announced a cut in coking coal prices following the slackening of demand for the raw material in the wake of the economic downturn.
The average price of coking coal in the international market jumped from $96 a ton in 2007 to an all-time high of $300 in 2008. Australia-based Macquarie Group Limited, a global provider of banking, financial and advisory services has forecast a benchmark price of coking coal at $110 per ton for 2009.
However, there is no possibility of a cut in the coking coal prices in the domestic market despite the softening of prices of the raw material in the international market.
Coal India Limited (CIL) has ruled out any cut in coking coal prices as the navratna felt that the domestic prices of coking coal were reasonably lower than the prevailing international prices.
“Steel Authority of India Limited (SAIL) had indicated a slash in coking coal prices during their negotiations with CIL but we have ruled out any price cuts. Any downward revision in coking coal prices by CIL is out of question at a time when the coal PSU is thinking of a price hike across all grades of coal,” said a senior official of CIL.

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NMDC to acquire majority stake in Kudremukh

NMDC Ltd., India's largest iron-ore producer, will acquire a majority stake in Kudremukh Iron Ore Co Ltd (KIOCL), the union steel minister Virbhadra Singh said. This partnership acquisition will ensure continuous supply of iron ore to KIOCL from NMDC. KIOCL will also acquire a stake in NMDC, he said. Meanwhile, NMDC will begin construction work on its Rs 160 billion steel plant ($3.3 billion) this fiscal year started April 1. The 3 million tonne mill will be built in Chhattisgarh. NMDC and Steel Authority of India Ltd., the nation's second-biggest producer, may get approval for new iron-ore mines in three months.

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Turkey's Erdemir ordered to end Arcelor partnership    

Erdemir, Turkey's largest steelmaker, was fined 20.12 million lira ($13 million) for violating competition rules and was ordered to end its partnership with ArcelorMittal.
Erdemir said in a statement it would appeal the decision by the government's Competition Board.
The Ankara-based board said Erdemir's purchase of a 25 percent stake in ArcelorMittal Ambalaj Celigi, a Turkish unit, was illegal.
It also ordered Erdemir to terminate its stake in Borcelik, a Turkish flat-steel producer, that is also owned by ArcelorMittal, the world's largest steelmaker, and Istanbul-based Borusan Holding. Erdemir said in September it was ending its partnership with ArcelorMittal in Borcelik, a flat-steel producer.

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Emirates Steel to spend $1.6bn for expansion         

State-owned Emirates Steel Industries is set to invest Dh6 billion ($1.63 billion) for the second phase of its UAE plant expansion, the company's chairman said.
Phase II of the expansion will boost the plant's capacity to 3 million tons per annum by 2011, Hussain Al Nowais said. The firm has just completed its Dh3 billion phase one expansion, he said.
"The first phase of the...expansion will lift our production from 650,000 tons per year to two million tons (per year)," Nowais said. Emirates Steel is looking to further boost its capacity to 6.5 million tons annually by 2013-2014 through capacity expansions and acquisitions, Nowais said.
Abu Dhabi, cushioned by oil wealth, has felt the impact of the global slowdown less than Dubai. Abu Dhabi, leader of the seven-member UAE, holds 90 per cent of the UAE's oil reserves and pumps most of the oil from the world's third-largest exporter. 

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RAK Steel to invest $165mln to raise capacity by 50%         

RAK Steel, the second largest steel manufacturer in the UAE, plans to invest $165 million to increase its capacity by 50 percent to 7,50,000 tons by the end of 2009, its Chief Executive Officer Ajay Aggarwal said.
The increase in production capacity is expected to further boost RAK Steel's market presence as it currently holds the distinction of being the second largest producer of steel rebars in the UAE.
Emirates Steel is the largest producer of steel products in the country, which recently expanded its capacity. “There is still significant imports of steel products in the country after Emirates Steel expansion,” Aggarwal said.
“The UAE mostly depends on the import of steel products, but the increase in production will reduce country's dependence on imports,” Aggarwal said.
RAK Steel, a joint venture with Ras Al Khaimah Investment Authority, or RAKIA, produces 500,000 tons of deformed steel reinforcement bars annually. “There are four other steel mills in the country, but their annual production is not more than our monthly output.” RAK steel produces round 35,000 tons per month, he said.
Steel prices have come down to $500 per ton compared to $1,500 per ton in the last quarter of 2008.
RAK Steel exports contribute 15 per cent of its production while rest of the output is being consumed in the country. “The UAE is currently RAK Steel's primary market, while we also export products to Oman, Saudi, Bahrain, Qatar and Iran,” Aggarwal said.
“While several other companies follow obsolete standards, RAK Steel is one of the few worldwide that have adopted the latest BS specifications, an important factor that will further reinforce RAK Steel's premium-quality brand in the market, he said.
“There has been a gradual resurgence in construction activities across the UAE, buoyed by the continued growth in tourism and residential development projects in all emirates. RAK Steel has accordingly received a marked increase in demand and now we are running to full capacity; this has been a key factor that has motivated us to push through with our expansion initiatives,” he said.
“Furthermore, we believe that the entire country has managed to limit the impact of the global financial crisis through proactive government intervention and various forms of stimulus packages. In about two years, we expect the construction market to get back to pre-2008 levels and thereafter maintain a growth trend of around 5 per cent.”
“Our expansion initiatives are part of RAKIA's grand design to cope with the present and future demand of the construction sector and ultimately complement the development initiatives across different industries, providing the backbone for a truly diversified and robust economy,” Aggarwal said.
The continued growth of RAK Steel is a manifestation of RAKIA's success in transforming Ras Al Khaimah into an investment magnet. Thecompany has has attracted so far over $2.2 billion in foreign capital from global companies that have set up businesses in the emirate. RAK Steel produces deformed reinforcement bars with diameter ranging from 8mm to 40mm in variable lengths of 6 to 18 metres in British and American standards.

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Egyptian steel imports may expand 10 fold in 2009         

El Ezz Steel Rebars, Egypt’s largest steel producer, said that Egypt's steel imports may expand 10 fold to 3 million tons this year because of stronger demand spurred by government spending.
George Matta marketing director said that imports will probably include 2.5 million tons of rebar, used to reinforce concrete. Demand for rebar rose 62 percent YoY in April to 2.6 million tons. He said, “The driving force behind the growth for rebar is due to the housing boom, particularly from private builders.”
Powered by expansion in construction, telecommunications and transportation, the economy of the most populous Arab country grew an annual 4.3 percent in the Q1 up from 4.1 percent in the previous 3 months.
Rachid Mohamed Rachid trade & industry minister of Egypt said that Egypt has spent almost 75percent of the EGP 15 billion stimulus package that was announced in November.

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South steel receives USD 160 bln loan for new steel project    

Saudi Arabian steelmaker South Steel Company has received a SAR 600 million loan from the Saudi government's investment body, Saudi Industrial Development Fund in an effort to partially fund its new steel project worth SAR 1.35 billion.
The new plant in question will be located in Jizan Economic City, one of 4 new economic centers planned by Saudi Arabia to boost its oil based economy and creates news jobs. Jizan Economic City is situated on the southern Red Sea coast, close to the main trade routes to Europe, the Far East and the Gulf.
SSC'S Jizan plant is expected to have an annual production capacity of 1 million ton of plate and 500,000 tons of reinforced bars. SSC began the construction of the plant in January 2009. Steel production is scheduled to start in 2011.
The SIDF loan received by SSC is one of the largest granted to the steel industry. The French-Saudi JV Banque Saudi Fransi will provide the remainder of the financing.
Suleiman al-Harbi chairman of SSC said that "The plant will eventually be expanded to bring the overall investment in the project to about SAR 10 billion." He added that once expanded, the plant would cover Saudi Arabia's domestic steel plate needs and would export any surplus.

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Iran’s two-month crude steel output up 7% yr/yr            

Iran produced about 1.9 million tons of crude steel in the first two months of the current calendar year (began March 21, 2009), showing a 7 percent rise compared to the figure for the same period last year.
According to IRNA, some 1.48 million tons of steel products including beams, round bars, and sheets were produced in the two-month period. The total crude steel output of Iran hit 10.5 million tons last (calendar) year.

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Nippon Steel sees 30% rise in Q3 output

Nippon Steel Corp, the world's second-biggest steelmaker, said demand for steel has been improving but the recovery lacks strength, despite some bright signs that Japanese manufacturers are gearing up production. Nippon Steel said its crude steel output will likely increase to nearly 6 million tonnes in July-September, up some 30 percent from the current quarter, when crumbling steel demand on the global market is forcing it to operate plants at 55-60 percent capacity. The tempo of the recovery has been slower than what the company expected at the end of April for sectors like construction and manufacturing, including autos. Shipbuilders are slowing down construction and export markets are shifting into a lower gear than its expectations. Growing signs that the economy appears to be over the worst of its slump and that automakers and some electronics makers are gearing up production have boosted shares in the steel sector. Toyota, the world's biggest carmaker, and Honda Motor Co have reported strong demand for their hybrid cars, helped by government subsidies, while Toshiba Corp was reported late last month to be ready to reverse some chip output cuts. The company expects the capacity utilisation rate to rise to nearly 70 percent in July-September.

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South Korean steelmakers oppose BHP, Rio venture    

South Korean steelmakers opposed Rio Tinto Group and BHP Billiton Ltd.'s plan to combine iron-ore assets in Australia, fearing the venture will hinder competition.
The joint venture may bring forth aggravated oligopoly in the iron ore market and therefore entail adverse effect.
The association includes Posco, Asia's third-largest steelmaker, and Hyundai Steel Co. South Korea joins China, the world's biggest steelmaker, and other global rivals in voicing opposition after BHP said that it would pay Rio Tinto $5.8 billion to create the venture.
Western Australia, a state that provides 18 percent of the world's iron ore, said the BHP-Rio Tinto accord will require legislative changes that may take about a year. The global steel industry does not view the proposed tie-up “positively,” Chung Joon Yang, Posco's chief executive officer, said.

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Global Steel Philippines seeks import protection  

Global Steel Philippines Inc is seeking safeguards and tariff protection from the government as it struggles to keep its operations in Iligan City afloat amid the sluggish demand and mounting debts.
A highly placed source said that the technical working committee on Tariff and Related Matters would discuss the steel manufacturer's request in a meeting. It added that it was now up to the company to prove injury to merit the safeguards it asked from the government.
A safeguard is a provisional measure that the trade secretary may impose on certain imports to provide temporary relief to the local industry pending findings of the Tariff Commission.
The Tariff Commission can either sustain the Trade secretary's ruling or revert the decision like in the case of the cement sector, where former Trade secretary now Senator Manuel Roxas II imposed safeguards.

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JFE agrees BHP's iron ore price cut  

Japan's steelmaker JFE has agreed with Australia's BHP Billiton to cut fine iron ore prices by 33 percent, matching a benchmark deal already reached by miner Rio Tinto and non-Chinese Asian customers. BHP signed the deal with the world's No.3 steelmaker but other Asian steelmakers including Nippon, South Korea's Posco and Chinese firms are still negotiating. JFE also agreed with BHP to cut iron ore lump prices by 44.47 percent. BHP declined to comment, saying it will only release information on its iron ore settlements when the bulk of agreements were reached. Steelmakers in Japan and South Korea are concluding their annual pricing talks by agreeing to a 33 percent cut with Rio Tinto and 28 percent with Brazil's Vale. But China, the world's largest steel producer, has been holding out for an at least 40 percent cut to 2007 levels, putting increasing strain on a 40-year-old benchmark system for ore prices that is facing heavy criticism for being obsolete. China toughened its position by threatening to drop annual negotiations and reduce steel output.

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Japanese crude steel output in May down by 39% YoY  

Japan Iron & Steel Federation said that Japan's crude steel output in May 2009 fell by 38.5 percent YoY to 6.49 million tonnes, falling for the 8th straight month. But it was up by rose by 13.1 percent MoM as demand from carmakers and household electronics makers inched up thanks to a run down in their stock levels. It was the first MoM rise in 2 months.
An official of JISF said that "Drastic output cuts at steelmakers have run their course. There is a slight rise in demand from carmakers and household electronics maker thanks to progress in inventory adjustments, while a run down in steel stocks helped."Japan's top two steelmakers, Nippon Steel Corporation and JFE Holdings Inc, have been operating at 55 percent to 66 percent capacity in the face of an economic slump that has forced automakers and other customers to cut orders.

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China Steel to raise domestic prices  

China Steel Corp., Taiwan's largest maker of the metal, will increase domestic prices for the first time this year as demand improves.
Prices will rise by an average of 7 percent in July, the Kaohsiung-based company said. The mill last increased prices for Taiwan customers in the fourth quarter last year.
Spending on public works and other infrastructure projects by nations including China, Taiwan's biggest overseas market, is lifting steel demand. The global recession had curbed consumption of the metal by builders and carmakers.
“We're less pessimistic now,” Executive Vice President Chung Le-min said. “It was really bad in March and April.”
Prices of hot-rolled coil, a benchmark product, will rise by an average NT$1,727 a metric ton in July and remain at that level through August, the company said in the statement.
The company will raise plate prices by an average NT$209 a ton, bar and wire rods by NT$500 and cold-rolled steel by NT$1,465, according to the statement. It will raise electro- galvanized sheets by NT$1,750 a ton, electrical sheets by NT$1,000, and hot-dipped zinc-galvanized sheets by NT$2,150.
China Steel may cut supplies as the mill is still selling products at a loss, Chung said. The mill plans to shut its No. 1 blast furnace late this year for as long as six months for repairs after restarting the No. 3 plant in September, he said.
The mill runs four furnaces with a total annual capacity of 10 million tons, including the No. 1 plant's almost 2 million tons. The No. 3 plant, with a 2.8-million ton capacity, was shut in April for maintenance.

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Japanese steel majors may cut wire rod export prices 

Japanese integrated steel makers are in negotiation of wire rod export price with transplants of Japanese automobile industry for July to September quarter, said JMB.
It said that the price level could decrease by around USD 150 per ton from April to June quarter as the makers reduced the annual contract price by JPY 15,000 for parts materials of Toyota Motor to reflect lower raw materials cost.

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CISA rejects Rio-Nippon pact

China Iron and Steel Association said that Chinese steel companies have refused to accept the iron ore price cut reached between Rio Tinto and Japan's Nippon Steel Corp.
CISA in a statement on its website said that “The price cut failed to reflect the real supply and demand situation on the international market and would lead to overall losses for Chinese steel companies.”
CISA said that "This does not represent the mutually beneficial relationship between steel producers and iron ore suppliers.” It categorically said that "Chinese steel companies will not accept or follow the price cut." CISA has insisted that the iron ore price should fall back to 2007 levels, which meant a price cut of more than 40 percent in the annual contracts of iron ore.

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China remains net steel importer in May    

China, the world's largest steel producer and consumer, remained a net steel importer in May, while loading 53.46 million tons of overseas iron ore, down slightly from a record 57 million tonnes in April, the General Administration of Customs said.
Customs data showed China was a net importer of around 1 million tons of crude steel in May, marking the third month running that inflows have exceeded outflows for the country, which had been a net steel exporter since 2005.
Steel product exports in May were at 1.35 million tons, down 60,000 tons from April and marking the lowest monthly level since the second half of 2004, while imports were at 1.65 million tons, the Customs said.
China imported 700,000 tons of steel billets in May but there were no exports, it said.
China, the only major producer with steel output higher than last year, is enjoying a flood of iron ore imports, thanks to a collapse in world prices, cheap shipping, and its uniquely buoyant steel sector.
In another development, the high iron ore imports reflected slowing domestic output due to the high cost of production compared with mines in places like Australia, Brazil and India.
Chinese steel mills have been relying on the spot market to source the feedstocks for their blast furnaces due to their failing to afford the term prices last year as the global financial crisis and a residential housing slump cut consumption and pulled down steel prices.
China has demanded a 40 to 45 percent cut in iron ore prices from Australian miners Rio Tinto and BHP Billiton for the 2009/10 term year, rejecting a 33 percent reduction already accepted by several other major Asian mills, including Japan's Nippon Steel and JFE Holdings and South Korea's POSCO.
Brazilian miner Vale said on it cut fine ore prices to Japan and South Korea by 28.2 percent from 2008 levels, less than the cut offered by Rio Tinto and far short of the reduction China is seeking.

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China's coal imports up and exports down      

China's coal import hit a new monthly high in May, while coal export slumped to a 11-year low.
The latest statistics from the General Administration of Customs showed China's coal import reached 9.43 million tons in May, more than double that in the same period of last year. China's coal import and export amounted to 32.20 million and 10.53 million tons respectively in the January–May period, or a net import of some 22 million tons.
Industry insiders predicted a net import of more than 30 million tons of coal for the whole year of 2009. China imported 10.02 million tons of anthracite, one of the main types of coal imported by China, in the first four months of this year, up 19.5 percent year-on-year. The import of coking coal also surged to 6.27 million tons in the same period. Coal demand of steelmakers and metallurgy enterprises was the main driving force behind the increase of coal import, some analysts said. The deadlock between coal suppliers and power producers is also responsible for the rise of China's coal import. Key power generators preferring to purchase overseas coal with a lower price drove up the coal import, according to the customs.

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China daily steel output 1.5 mln T in early June        

China's daily crude steel production stood at 1.498 million tons in the first 10 days of June, according to data from the China Iron and Steel Association.
The figure is equivalent to annual output of 547 million tons of crude steel, according to a report, compared with around 500 million tons in 2008.
China has been trying to rein in steel producers with the aim of capping total output at 460 million tons this year. However, a campaign to curb "blind expansion" at small steel mills has not been successful, with May output at 46.46 million tons, up 7 percent compared with 2008.

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Anshan Steel joins World Auto Steel

Anshan Iron & Steel Group Corp joined World Auto Steel, the automotive group of World Steel Association, which would help the new member pick up the research and development in auto steel. The steelmaker sent its application to World Auto Steel at the start of this year and received the official nod reply in May. As one of members, Anshan Steel's entitled to approach the group's industrial news, reports and technologies, which would lead the steelmaker up to the world advanced technologies.
According to Anshan Steel, the company would dispatch some delegates to join in the annual meeting of World Auto Steel in Holland. In the past years, Anshan Steel developed its capacity to chase after the fast-growing auto industry and after upgrades in technologies grew to provide quality auto steel like beam steel, IF steel and high strength TRIP steel sheet.

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Steel overcapacity in China likely to last for two years 

The steel overcapacity would be prolonged in the following two years on account of the insufficient inside and outside demands and disordered released capacity, and the domestic steel apparent consumption was predicted to go at 0.47 billion tons in 2009, said Wu Dongying, President of Economic & Managerial Institute of Baosteel Group.
He said that the national CNY 4 trillion economic stimulus packages have deepened the pattern of industrial oversupply, which is a result of the discrepancy between products and demands mix adjustments. The demands of top grade products are too fragile while the middle-and-low demands are easily pulled by the governments.
Wu unveiled, “The outputs of primary products, like wire rods and long products have been increased during January to April this year and the large quantity of the products will be oversupplied after the economic resumption.

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Jinan Steel expand BF and converter capacity       

Jinan Steel has increased the sizes of its under construction BF No.4 furnace from 1750 cubic meters to 3200 cubic meters and converter No 4 from 1.2 to 2.1 million tons per year. Meanwhile, the mill is still building a 1.8 million tons per year 4300mm heavy plate production line and all the projects are expected to put into productions in the second half of this year. After commissioning, the mill's capacity would be up to 10 million tons per year largely surpassing the government scheduled limit of 5.6 million tons per year under its parent company Shandong Steel's regrouping plan.
Shandong Province projected to transfer the steelmaking capacity to the coastal area to upgrade industrial cost since 2006, which was emphasized for many times in Govs' files. Inland steelmakers like Jinan Steel and Laiwu Steel were asked to reduce production and wash out obsolete facilities. But, Jinan Steel yawed out of the given cause. Insiders from Jinan Steel expressed Govs should adjust policies according to market moves, like that mills expand capacity when prices and demands go up.
As to Shandong Steel, the regroup seemed uncertain. Zou Zhongzeng chairman of Shandong Steel noted at the beginning of this year that the company had mapped out the regrouping schemes between Jinan Steel and Laiwu Steel in fields of international trades, purchasing & selling, finance and mines.

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BHP agrees to cut 2009 coking coal prices 58% 

BHP Billiton Ltd., the world's largest mining company, agreed to about a 58 percent cut in annual coking coal contract prices after demand for the steelmaking material declined. A “significant portion” of supply contracts have been settled with “key global customers,” the Melbourne-based company said. BHP and Mitsubishi Corp.'s alliance is the world's biggest exporter of coking coal. Nippon Steel Corp. and JFE Holdings Ltd., Asia's two largest steelmakers, won a 57 percent cut in prices to between $128 and $129 a tonne in talks with BHP, two industry executives with knowledge of the deal said in March. Global mills have slashed raw material orders as the worst recession since World War II curbs demand from builders and carmakers. BHP's production of coking coal may be 10 percent to 15 percent less than current capacity this year because of lower demand, BHP said in April. Sales of the coal accounted for 6.7 percent of BHP's revenue in the year ended June 30, 2008. The annual contracts cover sales running from April 1 to March 31. Coking coal prices tripled in the year ending March 31 as flooding disrupted supply from Australia's Queensland state and rising demand from China fueled a surge in commodity prices. Contract prices with Japanese mills were about $50 a tonne during most of the 1990s, according to Nippon Steel. Japan's steel output tumbled 44 percent in April to 5.72 million tonnes, the Tokyo-based Japan Iron & Steel Federation said last month. Production was 10.15 million tonnes last year, and the percentage drop for April is near the March record decline.

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EU and US to take action against China     

The European Union and the United States plan to take action against China at the World Trade Organisation over export restrictions on around 20 industrial raw materials, EU and industry sources said. The EU and United States say China has continued to restrict exports of raw materials used in steel, semiconductors, aircraft and other products despite Beijing's pledge to eliminate taxes and charges on exports when it joined the WTO in 2001. Included in the materials expected to be covered by the case is a range of strategic minor metals, used in applications such as alloys, ceramics, mobile phones and light bulbs. Some of these metals come from a limited range of sources and their supply can be vulnerable to interruption. Antimony is used in making paints, ceramics and enamels, and also to fireproof fibres and plastics. China produces about 90 percent of the world's antimony. Fluorspar is a mineral composed of calcium fluoride, or fluorite which is used to manufacture products such as aluminium, gasoline, insulating foams, refrigerants, steel and uranium fuel. Indium is used in making flat-panel LCD screens, also in alloys to make transistors, rectifiers, thermistors and photoconductors. It can be plated onto metal and evaporated onto glass, forming a mirror as good as those made with silver. As an alloy, it can also be used in solders. Molybdenum is used as a strengthening and anti-corrosion agent in steel. As a pure metal, molybdenum is used because of its high melting temperatures as filament supports in light bulbs, metal-working dies and furnace parts.

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ArcelorMittal to raise Algerian ore production    

ArcelorMittal, the world's largest steelmaker, and an Algerian partner are to spend $110 million building a facility to produce iron and zinc. The facility, to be owned by ArcelorMittal and Algerian mines and iron company Somifer, a subsidiary of Ferphos group, will enrich iron and produce zinc. It will also include an iron ore quarry. The plant will be in Algeria's eastern province of Tebessa and will produce between 1,000 and 2,500 tonnes of iron and 400 tonnes of aggregate a day. ArcelorMittal and Ferphos currently produce between 4.5 and 5 million tonnes of raw iron per year from their Ouenza and Boukhadr facilities in Tebessa province.

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Magnitogorsk posts second quarterly loss   

Magnitogorsk Iron & Steel, Russia's third-largest steelmaker, posted a second consecutive quarterly loss after demand dropped and the ruble depreciated. The company lost $110 million in the first quarter compared with net income of $271 million a year earlier, Magnitogorsk, which is based in the Ural Mountains city of the same name. Sales dropped 55 percent to $965 billion. Magnitogorsk sells most of its steel in Russia for rubles while reporting earnings in dollars. Its production fell 43 percent to 2.07 million metric tons as demand shrank in Russia, a steeper decline than those posted by competitors Novolipetsk Steel, Severstal and Evraz Group SA. Full-year output will decline 10 percent to 20 percent. Russian steel demand will fall 22 percent in 2009, according to the World Steel Association. Magnitogorsk's margin on earnings before interest, tax, depreciation and amortization, a measure Russian steel analysts follow, was 10.3 percent. That missed the 17 percent forecast by George Buzhenitsa, an analyst at UniCredit SpA in Moscow. The company said its total debt of $1.69 billion as of March 31.

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Vale cuts iron ore prices for ArcelorMittal 

Brazilian miner Vale cut prices for iron ore to ArcelorMittal, the world's largest steelmaker, as the global slowdown reduces demand for the key steel ingredient.
Vale said in a statement it lowered the prices of iron fines by 28.2 percent, iron lumps by 44.5 percent and iron pellets by 48.3 percent -- the same percentages as its recent cuts to Japanese and Korean steelmakers.
Iron prices are set through a benchmarking system in which steelmakers hold annual talks with the world's three principal miners - Vale, BHP Billiton and Rio Tinto - to establish the price.
The system has come under increasing strain due to growing volatility in commodities prices and a trend toward swaps, futures and spot market sales.
Chinese steelmakers are seeking a cut in prices of at least 40 percent over last year's prices that were set at the height of a five-year commodities boom -- though analysts expect they will settle for considerably less.
China, the world's largest imports of iron ore, is the only steel market in the world set to grow this year.

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Corus to continue Redcar plant until August

Steelmaker Corus will continue to produce steel at its threatened Redcar plant until at least August 2009 after bosses secured new orders. The news means further breathing space for those hoping to save the plant from closure.
It may be noted that a 90 day consultation with workers and their union representatives at the plant began in May over its possible mothballing after a consortium of four foreign steel slab buyers pulled out halfway through a 10 year agreement to take nearly 78 percent of the plant's output.
A total of 3,000 workers are employed by the plant, and thousands more work in jobs that are directly or indirectly connected to it. Corus Response Group, which is aiming to persuade the international consortium to return to the negotiating table, said that new internal orders from Corus had enabled the plant to keep operating until August 2009.
Jon Bolton managing director at Teesside Cast Products said that "These new orders from Corus will ensure we continue to manufacture steel at TCP for the duration of the 90 day consultation period. We have also identified sales opportunities with slab buyers around the world which we are urgently pursuing. The new orders are essential to enable us to keep operating. They also give us time during the consultation period to look at opportunities which could secure the longer-term future of the plant.

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