AUGUST   2008

 Steelworld Home

From the CEO's Desk

Dear Readers,

Dear Readers,
The steel prices world over have started cooling off and this will surely give a sigh of relief to all the businesses connected with iron & steel industry, especially to steel processers and users. This is also good for the steel producers as their ROI is expected to go up.
When prices go up, steel processers / users like foundries, forging units, rolling mills are caught in a trap. On one side they see the demand for their products but cannot supply due to the rising input costs. Their customer industry is also consolidated enough not to give them price rise. How can these units go on producing and how long they will survive ? A MD of one of the big forging units was saying, “If I run the plant, I incur a loss of a crore per month and if I stop producing then the loss is half a crore along with loss of face in front of the customers”. The decision is very tough. His words are representative of the sentiments prevailing amongst this community. He also requested me not to mention his name as he feared that his good relations with steel producers may get disturbed.
As per the steel producers ( and which is also a fact) the main reason for this unprecedented price surge is high cost of inputs like iron ore and met coke. Obviously the biggest customer of these commodities is China which produces almost one third of world steel output. The major reason for China ever growing steel appetite was thrust on infrastructural developments which was supposed to be partially triggered by Beijing Olympic games. Many steel experts and analysts have restrained from commenting on the post Olympic scenario in China. It is seen in the past that the economy of the country in which such big event is hosted gets flattened after the event is over. This is the reason why industry is not sure about China’s approach after Olympics. Thus, A lot of things including the world steel prices will depend on the speed with which China continues its infrastructure development programme. I think the picture will be clear in next two to three months and can also help steel prices to stabilize.
As far as rest of Asia is concerned, gulf region is leading demand curve with major thrust on construction and infrastructure development. Presently, the region is having net deficit of steel and is mainly importing rebars, structurals, billets, GI etc. A lot of steel making capacity is being created in UAE, Oman, Saudi Arabia, Iran etc. but will take some years to actually start commercial production. Thus, Middle East region will continue to import steel till atleast 2012. What will happen after that is everybody guess.

 D.A.Chandekar
Editor & CEO

Headlines

NEWS - VIEWS

Jindal steel set to commission Orissa plant by 2010

Tata Steel and Vietnam Steel ink pact for USD 5 bn project

Gujarat NRE to invest Rs 700 cr at AP units

Corus's low profit Assets on Target for Disposal

Investors queue up for land in Jharkhand

Bajaj increases stake in Mukand



GULF DIARY

ArcelorMittal Borusan JV for HSM flags cost overruns

Khuzestan Steel increase Production of steel

Gerdau eying entry in Middle East and Asia

Qatar Steel negotiating USD 1.3 billion project finance deal

India may join Medstream pipeline project

UAE construction sector grows by 25% YoY in 2007

Madar Holding announces H1 results

Al Ghurair and Ascon Star JV Concludes Ras Lanuf deal with NOC


 
SOUTH EAST ASIAN DIARY

Rio delivers record iron ore production in Q2

BHP buys massive Bowen Basin coking coal resource

ArcelorMittal to build two steel Plants in Indonesia

Meti forecasts record July-September demand

Japanese mills adding capacity in Vietna

Malaysia mills export billet

Vietnam to reduce 2008 coal exports by 38 percent

Steel consumption falls strongly in Vietnam market




CHINA CALLING


Chinese steel exports to rebound in H2 on widening price gap

US initiates sunset review on CTL plates from China

Chinese steel plate export price drop on less overseas demand

Hangzhou Steel H1 sales Revenue Reaches CNY 35.5 billion

China to launch Steel futures - CISA Official

China Oriental to acquire private steel mill in Hebei

Jinan Steel H1 net profit reach CNY 1.06 billion

Low grade CR silicon steel market has seen decreased

China Shipping H1 Profit up by 44% YoY



GLOBAL STEEL SCENARIO

Novolipetsk buys Carlyle steel unit at $3.5 bn

Kloeckner profit Jumps fivefold

ThyssenKrupp's profit declined on Brazil plant delay

Hyundai Steel may cut stainless steel prices

China July steel exports rise to record

Consolidation in Singapore Steel industry

 



 

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Jindal steel set to commission Orissa plant by 2010   

Jindal Steel and Power Ltd, the steel major, is all set to commission the first phase of its proposed 6 mtpa steel mill in Orissa's Angul district by October 2010. The company claimed that it was ahead of others in discharging corporate social responsibility (CSR). The work for the first phase of the project was progressing well. The company had already spent Rs 4,000 crore so far for it and placed order for equipment for the purpose. Of its total project cost of Rs 13,135 crore, JSPL had also spent a lot on land, construction, equipment and other activities. JSPL has a small iron ore mine at Tensa in Keonjhar district and is hopeful of getting raw material linkage to its Angul project. The company has been allotted coal block for its requirement of its captive power plant and the steel plant. The JSPL which signed a MoU with the state government for setting up a benefication plant at Deojhar in Keonjhar district and the Angul steel plant on November 11, 2005, had progressed well besides tackling local problems including resistance from local residents.

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Tata Steel and Vietnam Steel ink pact for USD 5 bn project

Tata Steel, the world's sixth largest steel maker, has joined hands with Vietnam Steel and Vietnam Cement Industries Corp for setting up a 4.5 million tonne steel plant in the south-east Asia. The estimated investment in the proposed project, for which the trio inked a joint venture agreement early August, would be USD 5 billion. The Indian steel giant, through its wholly-owned arm in Singapore - Tata Steel Global Holding Pte Ltd would hold 65 per cent stake in the joint venture while Vietnam Steel Corp (VSC) and Vietnam Cement Industries Corp would have 30 and 5 per cent stakes respectively, a statement from Tata Steel said. It added the JV would enable Tata Steel to extend an equity contribution of 30 per cent in Thach Khe Iron Ore mining project. Last year in May, Tata Steel had signed a memorandum of understanding with VSC for the proposed steel plant that would come up in Ha Tinh province of Vietnam. The feasibility study for it has already been completed. The integrated steel plant would come up in three phases and would have a cold rolling mill, which would be commissioned by 2010 end. Tata Steel, which is already in a JV with VSC in rolling mills through Singapore-based Natsteel, had earlier said, the proposed project would have significant economic impact in terms of optimisation of local resources, development of technology and earning foreign exchange.

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Gujarat NRE to invest Rs 700 cr at AP units  

India's largest metallurgical coke manufacturer, Gujarat NRE Coke will invest around Rs 700 crore in its plant in Andhra Pradesh over a period of three years. The company would invest Rs 350 crore in a one million tonne coke plant in the state. It had already acquired 200 acres of land for the purpose. The company would also spend Rs 50 crore for setting up a coal washery in Andhra Pradesh and subsequently another Rs 300 crore would be invested for setting up a waste heat recovery unit. The entire investment is proposed to be funded through a mix of debt and internal accruals. The decision to set up the plant was taken because of the presence of a strong user industry base comprising secondary steel producers. The company would import coking coal from its mines in Australia for conversion into coke in the Andhra Pradesh plant. Owing to increased prices in coke, the company had been able to earn positive cash flow this year unlike the previous financial year. The company was in the process of substantially raising the production of coking coal from its overseas mines in Australia and New Zealand from 1 million tonne and to seven million tonnes. The total investment required for ramping up production of coking coal would be $400 million to $450 million (over Rs 1,683-1894 crore).

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Corus's low profit Assets on Target for Disposal 

With the view to enhance the profitability, Tata Steel is considering disposing of some low-profit making assets of Corus, the Anglo-Dutch steel maker that it acquired for $12.9 billion last year. According to the latest annual report, “The group will pursue the optimisation of its European assets, dispose and restructure assets that are of low-profitability and pursue differentiation of products and services.” Tata Steel has set itself an ambitious target of improving the profitability of its existing assets to 30 per cent from 19 per cent at present over the next five years. This will, however, be a daunting task for the group mainly because a large portion of its raw material resources come from long-term contracts. Tata Steel, which has a combined steel making capacity of 28.1 million tonnes per annum and is the sixth largest maker of the alloy in the world, has been on the receiving end as Corus depends on long-term contracts for raw material supply, the prices of which have skyrocketed in recent times. In India, Tata Steel is self-sufficient in iron ore and has 60 per cent security for coking coal. With the acquisition of Corus, the combined security of the group stands at 22 per cent, down from 80 per cent for Tata Seel on its own. Due to flooding of the mines in Queensland, the force majeure declared by a number of US coking coal mines and increasing costs of Canadian coal, iron ore prices have jumped by 400 per cent and coking coal by 500 per cent since 2004. Tata Steel is looking for mines abroad to feed Corus and targets 100 per cent self-sufficiency for India and 50 per cent for its European operations. Interestingly, Tata Steel has inducted 800 people into its workforce, taking the total headcount to 41,900 as on March, 2008, from 41,100 during the time of acquisition on April 2, 2007. According to a top company official, the incremental profitability would be generated from better margins from the existing assets through performance improvement programmes that are currently underway, sweating of the existing capital employed in the business and efficient asset deployment in the new growth projects across the group. It will also continue towards achieving benefits through continuous improvement of processes and products through synergies from the acquisition of Corus. Tata Steel's aim of creating synergies of $450 million between Tata Steel and Corus by March 2010 has already started showing results with the company generating $76 million during the year.

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Investors queue up for land in Jharkhand  

Enthused by the recent notification of the Rehabilitation & Resettlement (R&R) Policy, leading investors which had signed memorandum of understanding (MoU) with the Jharkhand government had come forward to apply to the state government for land for setting up industries, reports said. Steel giant Arcelor-Mittal recently submitted its application for over 11,000 acres in Khunti and Gumla districts to set up its proposed steel plant, power plant and resettlement colony. Other investors like Tata Steel, Essar and Jindal also placed their land requirement before the state government recently. Some senior state government officials claimed that after publication of the gazette notification of the R&R policy extending a large number of facilities to land losers, it would be easier to acquire lands for prospective investors in Jharkhand. However, opposition parties and the NGO's working in the villages maintained that resistance would continue. As industry sources pointed out, after creation of Jharkhand through bifurcation of Bihar in 2000, not a single industrial unit could be established in the new state because land was not available owing to intense resistance from land holders. The super power project of the National Hydroelectric Power Corporation (NHPC) at Torpa, now in Khunti district, could not see the light of day because of the failure of the state government in acquiring the required lands for the project. The power utility had spent several crores of rupees for maintaining its engineers, project office, guest house and other facilities at the site for over a decade. Later, the project was shelved. The Magadh open cast mining project of the public sector Central Coalfields Limited (CCL) was had been delayed as well for several years as the local people were reluctant to provide their land for the coal project. The much-delayed Resettlement and Rehabilitation Policy (R&R Policy) of the Jharkhand government was approved by the state cabinet on July 16. Chief minister Madhu Koda claimed after the cabinet's approval of the R&R policy that the policy which his government had devised was the best not only in the history of Jharkhand but in the entire country. The state government's R& R Policy envisages a mandatory job to one family member of every family selling part or whole of its land for a development project, along with distribution of half of the two per cent of the net profit on investment among the displaced families on a pro rata basis.

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Bajaj increases stake in Mukand

Bajaj have slowly consolidated their shareholding in Mukand by increasing their stake by 2% to 43% even as their decades old partners the Shah family have reduced their equity in the specialty steel firm.Bajaj Group in a statement to the stock exchanges said that between February 15th to August 7th 2008 the group's investment firms led by Bachhraj & Company have bought 2.04% stake in Mukand through open market transactions. With this, the promoting companies stake will go up by 43% excluding the 10% stake held by Bajaj's partners, the Shah family.While the Bajajs are increasing their stake in the INR 2,200 crore company, the Shah family have reduced their stake by 2% in the last 1 year, statistics submitted to the stock exchanges show. The Shah brothers Rajesh and Suketu have reduced their stake to 4.99% each from 6% each.This change in the company's shareholding comes at a time when Mukand has made ambitious plans to increase its capacity to become a INR 3,000 crore firm by this fiscal. The company is planning to double the capacity of its Hospet plant with an investment of INR 300 crore to INR 400 crore.

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ArcelorMittal Borusan JV for HSM flags cost overruns  

ArcelorMittal and Turkish steel maker Borusan 50:50 JV is increasing to USD 850 million for building a new hot strip mill in Turkey. The plant, announced last October was at an original investment of USD 500 million. Mr Agah Ugur Group CEO of Borusan said that "The figure of USD 500 million did not take a lot of details into account. Also Chinese and European machine manufacturers have increased their prices because of the euro dollar exchange rate, which pushed up our prices.” The plant is expected to be operational by the first half of 2010 and have a capacity of 4.8 million tonnes. The joint venture will reach full capacity by 2012.

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Khuzestan Steel increase Production of steel        

BBC Monitoring Middle East reported that some 706,000 tonnes of raw steel have been produced by Khuzestan Steel Company since the beginning of the year. Mr Najmossadat MD of Khuzestan Steel Company has said that products produced by this company included various kinds of ingots, blooms, billets and slabs. He added that this amount has increased by nine per cent compared to the same period of time last year. He said that during this period of time more than 44,000 tonnes of various kinds of steel products valued 34,730,000 dollars have been exported. He said that this company has the second position in steel production in the country and added that with the operation of development projects which include Zamzam, steel wide plates and the second phase of steel development project, the production capacity of this company will be increased to 3,200,000 tonnes.

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Gerdau eying entry in Middle East and Asia       

Valor Economico newspaper reported that Gerdau SA is studying new steel projects in the Middle East, Thailand, Vietnam and other Southeast Asian countries. The paper cited Mr Andre Gerdau Johannpeter CEO of Gerdau SA as saying that the company may boost output of long steel used for construction, specialty steels or flat steel products as it seeks to expand in Europe, Asia and the Middle East. The paper said that Gerdau has been considering opportunities in China, the world's biggest producer and consumer of steel. The Gerdau Kalyani joint venture set up in India last year is the company's first stage into Asia.

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Qatar Steel negotiating USD 1.3 billion project finance deal        

MEED reported that Qatar Steel Company is holding preliminary negotiations with international banks over resurrecting a failed USD 1.3 billion project finance deal designed to refinance existing debt and fund expansion. The report said that banks including Standard Chartered Bank, HSBC and Calyon are understood to be among those that have held talks with Qatar Steel over taking on the financial advisory role for the project, which could be a precursor to the deal coming back to the market in 2009.
The company had originally appointed accountant Ernst & Young as financial adviser on the project and it began seeking bank support in September 2007. However, as the credit market deteriorated following the onset of the global credit crunch, the banks raised concerns over both the pricing on the debt and the protection available to lenders, which eventually led Qatar Steel to pull the deal from the market. It was decided shortly afterwards to replace Ernst & Young with a new adviser. Although some early talks have been held with potential new advisers, no new appointment has been made. One source close to the talks said that "We expect that an appointment of a new adviser could be made towards the end of the year, which would then mean a deal could come to the market later in 2009.” Qatar Steel hoped that by leaving the project financing until 2009, it would allow the debt market to recover and margins to improve. The existing finance package was financed at 80-100 basis points over LIBOR.

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India may join Medstream pipeline project  

It is reported that India has indicated its willingness to join the Mediterranean pipeline project, Medstream, running from Turkey through Israel. As per report, India is likely to send a team of officials to Turkey for a tripartite meeting to firm up details of the feasibility study. Energy ministers of the three countries will meet to formalize the timelines and scope of the project. The pipeline, to be built over three years is expected to carry 40 million tonnes of oil annually.

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UAE construction sector grows by 25% YoY in 2007  

According to figures released by the Central Bank of the UAE, construction industry in the UAE grew by more than 25% during 2007 to contribute AED 58.3 billion (USD 15.8 billion) to GDP. The figures show construction is the fastest growing sector of the economy. According to MEED Projects, USD 770 billion of construction projects are under way or are planned for the federation. It said that projects in Dubai have driven the sector over the last five years, and are now being joined by a raft of new projects in Abu Dhabi and the Northern Emirates.

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Madar Holding announces H1 results  

Madar Holding a subsidiary of Alfozan Group, announced its results for the first six month of 2008 showing significant growth in its building materials trading and manufacturing business.Madar Holding in a statement said that its turnover in the first six month of 2008 exceeded AED 1 billion almost double of the turnover of the same period last year.Mr Sameh Hassan CEO of Madar Holding said that “We are very pleased with our growth in the first half of 2008 which was achieved across all our markets and categories.”He said that “Our growth this year has been driven by the strong results of our current operations across the Gulf, Levant and Sudan markets. We also expanded our operations to new markets such as Oman and Kuwait which also contributed to the first half results. While the rising steel prices played a role in our turnover growth, it also presented several challenges to our operations, especially in the areas of financing the business and honoring our steel processing contracts.”He added, 'We are cautious as we approach the second half of the year given the several challenges currently facing the building materials trading and manufacturing industry. Price volatility is a key concern, but also rising inflation is significantly increasing the cost of doing business and pushing us to carefully plan our steps in the restless construction industry.' Madar trading in steel, wood, and electrical building materials grew amidst the global volatility in steel and copper markets. Such volatility directly impacts the stability of trading, especially in construction steel and electrical cables.

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Al Ghurair and Ascon Star JV Concludes Ras Lanuf deal with NOC         

The Star Consortium comprising of the Al Ghurair Investments' subsidiary TransAsia Gas International and ETA Ascon Star Group's Star Petro Energy have successfully concluded a deal with the National Oil Company of Libya to set up a JV company to own and upgrade its Ras Lanuf refinery. The companies had signed a JV framework agreement in February earlier this year confirming their intentions to form the JV Company which has now been concluded after signing of the Shareholders Agreement. The shareholder agreement was signed by Dr Shukri Ghanem chairman of National Oil Corporation of Libya and Mr Abdullah Ahmad Al Ghurair chairman of Al Ghurair Investments and Star Consortium.The proposed JV Company will be incorporated and registered in one of the free zones in Dubai with offices in Ras Lanuf, Tripoli and Dubai. The consortium is considering the DMCC among the free zones in UAE to set up the JV. The company will be a 50:50 JV between the Star Consortium and NOC. Ras Lanuf refinery produces 10 million tonnes of refined petroleum products per year which are sold locally as well as exported to America and Europe.The up gradation project which is estimated to cost USD 2 billion will take 5 years to complete and would start immediately. It will involve revamping and refurbishment of the existing plant to increase capacity and improve efficiency as well as upgrading and expansion of the refinery, using state of the art technology to improve the quality of products to meet latest international standards.Mr Abdullah Ahmad Al Ghurair chairman of Al Ghurair said that “This deal with Libyan National Oil Company is a major achievement for TransAsia Gas International, which clearly demonstrates its capacity to carry out work on large scale refinery projects. By winning this JV contract, the company has moved one step closer to becoming a fully integrated energy company. We are confident that and the Star Consortium, including TransAsia Gas International, would meet the expectations of our JV partners.”Mr Syed Salahuddin MD of ETA Ascon Star Group said that “Star Petro Energy is proud to be part of the Star Consortium in the deal with Libyan NOC to revamp one of its refineries. We will contribute our best of efforts to make this project a role model for other UAE companies seeking to spread into North African markets.”Following the Ras Lanuf deal, Al Ghurair and ETA Ascon Star Group are also pursing other investment and joint venture opportunities in Libya's Oil field services, steel and cement industries.

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Rio delivers record iron ore production in Q2

Rio Tinto Ltd, the focus of a US$153 billion (A$156.43 billion) takeover by BHP Billiton Ltd, has delivered strong output for iron ore and aluminium in its second quarter. Global iron ore production rose by 13 percent during the three months to June 30 from the same period in 2007, despite a significant gas outage caused by a fire at Apache Energy's Varanus Island processing plant. Aluminium output gained 374 percent to 1.014 million tonnes, reflecting a full quarter from the Alcan business acquired for US$38.7 billion (A$39.57 billion) last year. BHP Billiton says a merged company could provide more product, more quickly and estimates US$3.7 billion (A$3.78 billion) in synergies could be realised by a takeover of Rio Tinto.

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BHP buys massive Bowen Basin coking coal resource 

A BHP Billiton joint venture has agreed to acquire a massive coking coal deposit in Bowen Basin, Queensland Australia, for $2.4 billion, said BHP. BHP Billiton Mitsubishi Alliance (BMA), BHP's 50:50 joint venture with Mitsubishi Corp, entered the agreement with New Hope Corp to buy 100% of the New Saraji project, an undeveloped metallurgical coal resource estimated to contain 690 million tonnes of coal. “Subject to the results of further resource exploration and evaluation program to be undertaken by BMA, New Saraji has the potential to be developed into a large-scale, high-quality metallurgical coal operation. New Saraji could also potentially deliver significant synergies due to its proximity to BMA's existing Saraji mine,” said BHP coal president Dave Murray in the statement. Purchase completion is subject to certain third-party consent and normal government approvals.

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ArcelorMittal to build two steel Plants in Indonesia 

The worlds largest steel maker, ArcelorMittal, plans to build two steel factories in Indonesia with a total investment of US$6 billion, the Investment Coordinating Board (BKPM). “They have come to us and discussed a plan to build two steel factories in Pasuruan, East Java and in Banten province,” BKPM head M. Lutfi said during a hearing with the House of Representatives Commission VI overseeing trade, industry and investment affairs. Lutfi said Mittal had already purchased 100 hectares of land in Pasuruan on which to build a steel factory, and that it was still seeking an appropriate site in Banten. “Each factory is expected to produce two million metric tons of steel (per year),” he said. Lutfi said the Luxembourg based company would return next week to further discuss the plan.
Mittal had earlier proposed to buy a maximum 49 percent stake in state steel company PT Krakatau Steel with an offering of $10 billion. The proposal was opposed by Krakatau's management and workers, who said the company should instead be privatized through an initial public offering (IPO). The state ministry of state enterprises and lawmakers eventually agreed an IPO would be the best option, but have yet to decide how many shares will be made available Mittal is awaiting the governments response to its proposal to directly buy shares in the company, but has said it would also consider buying shares through the IPO. Four other global steel giants have expressed interest in acquiring stake in Krakatau, including Australian-based BlueScope Steel and Indian-based Tata Steel. Mittal has reportedly turned its attention to supplying demand in emerging markets, including increasing its investment in Indonesia, to leverage against a U.S. economic slowdown. Last year, the company booked $10.4 billion in net profit, $105.2 billion in revenue and $14.8 billion in operating income. It produced 116 million tons of steel, or equivalent to 10 percent of global steel production.

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Meti forecasts record July-September demand   

Japan's steel demand during the current July- September quarter will reach 30.56 million tonnes and make for the highest July-September quarter on record and clear the past record of 30.24m t set for the same quarter in 1973, Japan's Ministry of Economy Trade & Industry (Meti) predicted on 30 June. Ordinary steel demand is forecast to reach 21.9m t, up 2% year-on-year. Within this, domestic demand will reach 16m t, also a 2% rise from July-September last year. Total special steel demand should top 5.6m t, a 7.4% rise yearon- year, with domestic special steel demand estimated to reach 3.9m t, a 2.6% improvement year-on-year. Meti notes that private sector building demand remains weak but that steel consumption for civil engineering usually rises during July-September for seasonal reasons. Demand from manufacturing industries will also keep high. Though Meti says overall steel demand will dip 1.7% from the previous quarter, the total will remain above 30mt. The ministry forecasts a decrease because it believes the high demand in January-March was partly driven by speculation, and this created a rise in stock levels in April-June. Demand, especially from manufacturing, will remain firm this quarter but much of this will be satisfied from inventory, a Meti spokesman tells.

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Japanese mills adding capacity in Vietna 

Japan's midsize electric-furnace steelmakers and metal processors are planning to enlarge their capacity to their production bases in Vietnam. Tokyo Rope Mfg. Co is spending some 3.2 billion on its factory outside Ho Chi Minh City while Maruichi Steel Tube Ltd is investing to increase 150 percent more capacity for elevator wire rope at its base in southern Vietnam. Vietnamese domestic great steel demand and its relatively lower human costs are the most important reasons why the Japanese choose Vietnam instead of China as a base of production.

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Malaysia mills export billet 

The latest Malaysian billet producer to have its steel approved for trading by the London Metal Exchange says it will study using the LME to hedge the price of its billet sales. As Steel Business Briefing has reported, Malaysia Steel Works has joined Perwaja Steel and Ann Joo Steel as approved billet suppliers under the LME's futures contracts.
Malaysia Steel Works says that the LME registration will provide it with a wider market coverage, global acceptance of its product, and a hedge against local demand. The company has a 450,000 tonnes/year design capacity meltshop at Klang, Selangor Darul Ehsan, and a 350,000 t/y rated capacity rolling mill for deformed and round bar located at Petaling Jaya. Company sources tell that it is operating its meltshop at 385,000 t/y and the rolling mill at 250,000 t/y. Malaysia Steel Works accounts for a 10% share of the
40% of its products to markets including Singapore, Thailand, Vietnam and the Philippines. Malaysian exports of billet surged by a massive 256% to 891,000 t in calendar 2007 compared to the previous year's 250,000 t, according to the Malaysian Iron & Steel Industry Federation (Misif). Demand for billet was “fuelled by export markets,” Misif notes. Malaysian billet production rose by 22% over 2006.

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Vietnam to reduce 2008 coal exports by 38 percent 

Vietnam, China's biggest overseas coal supplier, will cut overall exports of the fuel by as much as 38 percent to 20 million metric tons this year to ensure domestic supplies. The Southeast Asian nation will reduce its 2008 shipments from more than 32 million tons last year, Nguyen Thanh Bien, Vice Minister of Industry and Trade, said at a government meeting in Hanoi . A cut in Vietnamese coal exports would force southern Chinese power producers to transport fuel from northern mines or import it from further afield. Coal accounts for about 78 percent of the nation's power generation. “We need to save the fuel for the consumption of the domestic energy industry,'' Bien said. Coal exports in the first half fell to almost 14 million tons from 16.3 million tons a year earlier, according to Bien. The government last month raised the export duty on coal to 20 percent from 15 percent to reduce shipments. Vietnam's coal production totaled more than 41 million tons last year, up 11.5 percent from 2006.

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Steel consumption falls strongly in Vietnam market  

 The Vietnam Steel Association has reported just 250,000 tonnes of steel were sold in the domestic market in June, a drop of 60,000 tonnes from the previous month, the largest decrease in a single month so far.The association attributed the reduction in demand to the halt of construction projects in the south in the rainy season as well as the government's tightened control over investment projects and bank loans.In addition, the rampant import of cheaper steel from China since the beginning of the year has been another reason behind the lower demand for locally-produced steel. At southern factories, steel currently stands at 16.6-16.7 million VND per tonne, excluding discounts and value added tax, while prices of the product at northern plants are listed 1-1.1 million VND lower.

 

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Chinese steel exports to rebound in H2 on widening price gap  

China's total steel export volume may rebound in H2 of 2008 spurred by the widening price gap between domestic and international markets. CISA official said that the government's efforts to suppress excessive steel export have already taken desirable effect. The shipment of steel products has dropped 20.35% or 6.88 million tonnes, from last year to 26.91 million tonnes in the first half of this year. Price spread for steel products between domestic market and global market has widened further in June. Statistics show the mainstream offer prices stand at USD 1,193 per tonne for HRC, USD 1,282 per tonne for CRC and USD 1.014 per tonne for rebar in the end of June in US while the comparable rates prevail at USD 870 per tonne, USD 1.058 per tonne and USD 747 per tonne respectively in China Shanghai in the review period. Mr Luo Bingsheng vice chairman of CISA said that the vigorous steel demand globally and the scarce availability might trigger an export rebound in the second half, therefore it remains a pressing issue for China to curb steel export growth and optimize the export product mix. He said that central government may go in for tougher export policy if the steel products export posts a rebound in the second half.

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US initiates sunset review on CTL plates from China    

It is reported that US Department of Commerce and International Trade Commission have decided to conduct the 2nd review concerning the antidumping duty order on cut to length carbon steel plate from China.As per report, suspension agreement on the product continued following 1st review effective September 17th 2003, but the agreement was subsequently terminated and an antidumping duty order was imposed for 5 years effective November 3rd 2003. Interested parties are requested to submit written documents within 15 days and substantial reply within 30 days to Department of Commerce and also submit reply to the announcement to ITC before September 22nd.

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Chinese steel plate export price drop on less overseas demand      

Export offers for Chinese steel plate have softened due to decrease in domestic market price and less overseas demand.Domestic plate prices have started to go down. On Shanghai market, commercial 16mm plate by Yingkou steel is being quoted at CNY 6350 per tonne commodity grade 14mm to 16mm plate by Chunye and Feida steel are tagged at CNY 5900 per tonne down by CNY 200 per tonne and CNY 160 per tonne to CNY 180 per tonne respectively from July 24th. Low alloyed 40mm plate goes at CNY 7200 per tonne down by CNY 100 per tonne from late July.Offers for commodity grade plate by tier two steel makers are USD 1120 per tonne to USD 1130 per tonne FOB by end September and early October shipment, which compares with USD 1150 per tonne to USD 1160 per tonne FOB. At the same time, a Hebei based steel maker told Mysteel that it is quoting SS400 B plate at around USD 1110 per tonne FOB which is evidently lower than that in late last month.

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Hangzhou Steel H1 sales Revenue Reaches CNY 35.5 billion      

Hangzhou Iron & Steel Group Company has achieved sales revenue of CNY 35.5 billion in H1 of 2008 including CNY 10.1 billion contributed by Banshan Iron & Steel Base, with pre tax profit of CNY 2.3 billion fulfilling the target set for the first half. The rising steel market is a contributing factor for the nice performance gained in the period. And the mill also manages to lower costs and improve efficiency in the timeframe, which save costs of CNY 260 million. As per report, in H1 of 2008, HISGC has developed 51 new steel varieties, with total output of 227,400 tonnes accounting for 11% of the mill's total production.Currently, HISGC possesses total assets of CNY 29 billion and 41 wholly owned and share holding subsidiaries. In 2006, the steel group gained sales revenue of CNY 30.4 billion, pretax profit of CNY 1.98 billion and profit of CNY 1.05 billion. At the mean time, Banshan Iron & Steel Base churned out pig iron of 2.31 million tonnes, crude steel of 3.31 million tonnes, finished products of 3.42 million tonnes and coke of 515,800 tonnes.

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China to launch Steel futures - CISA Official     

According to Mr Luo Bingsheng vice chairman of China Iron & Steel Association as a substantial result of 8 year discussion and deliberation, China will finally inaugurate steel futures trading after the Beijing Olympics and before the end of this year. He said that wire rod and rebar will be the first trading steel variety. The feasibility study on rebar and wire rod futures which is organized by the industrial division of National Development and Reform Committee was completed this May and approved later by expert team constituted by officials and experts from financial division of NDRC, CISA, Shanghai Futures Exchange and market participants. The feasibility study has commenced since last June. And it's learned that SHFE has already completed designing of wire rod and rebar futures contracts as well as the constitution of their transaction and risk control measures. Wire rod will be the first trading steel variety, industry experts unveiled lately, as the product has witnessed dramatic price fluctuations due to its wide application in domestic market. And rebar futures trading will be slated for a later startup.

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China Oriental to acquire private steel mill in Hebei      

China Oriental Group Company Limited in which ArcelorMittal owns a stake announced to buy a 71% stake in Hebei Province based Xinyi Iron and Steel Co for some CNY 532 million. After the acquisition, Xinyi Iron & Steel Co will be renamed to Tangshan Jinxi Xinyi Steel Co and enjoy supply of no less than 300,000 tonne per year imported iron ore at the market price from Jinxi Steel According to the release, Xinyi Iron and Steel Co is mainly in production and sales of steel products with registered capital of CNY 84 million and annual crude steel capacity of 1 million tonnes. As reported, it has a small and medium scale H-beam production line under construction which is slated for operating in the fourth quarter and to yield 1 million tonnes products a year. China Oriental said it aims to expand the steel capacity to 7 million tonnes by taking the stake. Last year, its production base Jinxi Steel registered 4 million tonnes to 5 million tonne crude steel output.

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Jinan Steel H1 net profit reach CNY 1.06 billion      

Shandong based Jinan Iron & Steel Co Ltd has reaped business income of CNY 22.2 billion up by 42.34% YoY, operating profit of CNY 1.47 billion up by 45.04% YoY and net profit of CNY 1.06 billion in H1 of 2008 up by 57.86% YoY respectively. The mill produced 3.99 million tonne of pig iron up by 33.8% YoY, 4.9 million tonnes of crude steel up by 46.45% and 3.83 million tonne of finished products up by 33% YoY in 2004 and respectively from the year earlier. Jinan Iron & Steel Co organized by Jinan Iron & Steel Group was founded in December 2000. At the end of 2004, their total asset is up to CNY 10.5 billion and net asset of CNY 3.44 billion.

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Low grade CR silicon steel market has seen decreased      

According to a source from Shanghai East China steel market, the low grade CR silicon steel market has seen decreased resource of the defective products. The ex-factory price of the qualified products rose substantially during the period from year start to August by CNY 1106.50 per tonne or 15.72% to CNY 8178.30 per tonne include g VAT for 50WW800, CNY 1287 per tonne or 17.35% to CNY 8704.80 per tonne for B50A800, and CNY 1380.60 per tonne or 20% to CNY 8283.6 per tonne for 50AW800. In this case, a batch of smaller enterprises has to purchase defective products instead to reduce production cost. From the third quarter, demand for silicon steel has weakened seasonally, and the price difference between qualified products and defective products thus narrowed, indicating thinner profits for trading the defective products. Moreover, the steelmakers are making less such products these two months leading to low inventory of its kind.

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China Shipping H1 Profit up by 44% YoY      

China Shipping Development Co H1 of 2008 profit uo by 44% YoY as demand for vessels to transport fuels and metals rose in the world's fastest growing major economy.
China Shipping Development Co in a statement to the Shanghai Stock Exchange said that its net income climbed to CNY 3.18 billion from a restated CNY 2.21 billion. Mr Li Shaode chairman of China Shipping Development Co said that China Shipping will spend CNY 23 billion over the next five years on new vessels to benefit from demand for cargo transport. China Shipping in the statement said that "China's expected stable economic growth may sustain shipping demand in the second half of this year, shipping rates for oil products and dry bulk cargoes may be highly volatile and are at risk of declining.

 

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Novolipetsk buys Carlyle steel unit at $3.5 bn 

Carlyle Group, the world's second- largest private-equity firm, sold US steelmaker John Maneely Co. to Russia's Novolipetsk Steel for $3.5 billion, increasing its money sevenfold in two years, reports said. The Zekelman family also sold its stake in John Maneely, which is forecast to have sales of $3 billion in fiscal 2008. It's the biggest steel industry takeover this year. Russian mills, including Severstal, are expanding in the US, where prices for steel coil used in construction and cars have doubled to $1,080 a metric tonne from last year as producers pass on higher costs. Novolipetsk, controlled by billionaire Vladimir Lisin, 52, will gain North America's biggest independent maker of steel tubes, used in plumbing, scaffolding and electrical wiring. Russia's government is encouraging the creation of ``global champions'' and rising domestic operating costs are prompting steelmakers to buy businesses overseas. Severstal, Russia's biggest steelmaker, which this month completed the $775 million purchase of Esmark Inc., has said it may study large acquisitions in the US. John Maneely, founded in 1877, was acquired by Carlyle, the buyout fund said in March 2006, without disclosing financial terms. The Wall Street Journal reported at the time that the deal would value the company at about $500 million. In the year ended June 30, John Maneely shipped 2.1 million tonnes of pipe and had earnings before interest, tax, depreciation and amortization of $485 million, it said. The acquisition is priced at 7.3 times earnings. The company, which combined with Canada's Atlas Tube Inc. in December 2006, is based in Beachwood, Ohio. Annual sales were boosted by about $800 million under Carlyle's ownership, according to the statement. About 80 percent of revenue comes from plumbing and electrical applications used in non- residential construction markets. Novolipetsk agreed in November 2007 to form a $1.6 billion joint venture with Switzerland's Duferco Group to make and distribute steel in the U.S. and Europe. Novolipetsk is targeting about $35 million a year in cost savings in North America through the combination with John Maneely. US Steel Corp., America's largest steelmaker by market value, forecast increased earnings this quarter after reporting last month that second-quarter profit more than doubled, beating analysts' estimates. US steel-sheet prices rose to a record $1,068 a tonne in July after producers took advantage of lower imports and inventories to pass on higher raw-material costs, Purchasing magazine said July 31 in a report.

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Kloeckner profit Jumps fivefold  

Kloeckner & Co. SE, the German steel trader, reported second-quarter profit jumped more than fivefold on price increases and acquisitions, prompting the company to raise its full-year forecast, according to reports. Profit before minority interests rose to 125 million euros ($186.6 million) from 23 million euros a year earlier, the Duisburg, Germany-based company said in a statement. Sales gained 16 percent to 1.92 billion euros. Steel prices have climbed to a record this year as global demand grows. Hot-rolled coil, an industry benchmark used in construction and manufacturing, advanced 22 percent in Europe in the quarter. The main drivers “of the outstanding performance are the price increases Kloeckner implemented” after steelmakers raised their own prices to counter higher commodity costs. “The underlying business development was also very positive.” The company expects full-year earnings before interest and tax, depreciation and amortization to exceed 500 million euros before non-recurring income from divestments. That compares with the 480 million-euro forecast Kloeckner gave last month. Consolidated net profit will triple to more than 500 million euros. In June that its purchase of U.S. distribution company Taylor Equipment and Machine Tool Corp., agreed two months earlier, will account for 40 percent of the sales it plans to add this year through acquisitions.

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ThyssenKrupp's profit declined on Brazil plant delay    

ThyssenKrupp AG, Germany's largest steelmaker, may say fiscal third-quarter profit fell 27 percent after costs overran at its $5 billion Brazilian plant and prices were outpaced by raw material costs. Net income probably fell to 531 million euros ($792 million) in the three months to June 30, from 729 million euros a year earlier. The project has been hampered by excessive rainfall and rising building-material costs. The steelmaker is also trying to renegotiate sales accords as it contends with record iron ore and coking coal prices. The company delays construction in Brazil which added as much as 700 million euros to the plant's cost and make it miss starting up in March 2009. The company plans to cut shipping costs by making steel slab, a raw form of the alloy, in Brazil, where Cia. Vale do Rio Doce, the world's largest supplier of iron ore is based. ThyssenKrupp currently operates one slab plant in Duisburg, Germany. The steelmaker will take a one-time charge of about 150 million euros because of delays to the Brazilian project and costs for plant closures in France. Hot-rolled steel coil, used in construction and manufacturing, has jumped 57 percent this year to 746 euros a tonne. Benchmark coking coal contract prices have tripled on booming global demand and supply disruptions. Iron-ore contract prices have increased for a sixth successive year. The steelmaker is still talking with customers to raise prices on existing contracts, company spokesman Dietmar Stamm said, reports. Carmakers will survive what is a “necessary” price increase. Contracts with automakers made up 36 percent of ThyssenKrupp's steel revenue in the last financial year.

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Hyundai Steel may cut stainless steel prices  

  Hyundai Steel Co., South Korea's second-largest steelmaker, may cut the price of its cold-rolled stainless steel products next month, following a similar move by bigger rival Posco, reports said. The price may decline by around 400,000 won ($386) a metric tonne, similar to Posco's reduction, from Sept. 1. Hyundai Steel, which earns about 10 percent of its sales from the rust-resistant metal, buys hot-rolled stainless steel from Posco and offshore suppliers to produce cold-rolled products.

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China July steel exports rise to record 

China, the world's biggest steel producer, boosted steel-product exports by 38 percent to a record in July from a month ago, fueling speculation the government would raise taxes to rein in shipments, reports said. Exports rose to 7.21 million metric tonnes last month, according to data released by the country's customs department. That's 21 percent higher from a year earlier. The Asian nation has cut rebates and raised duties on steel shipments to curb its trade surplus, leading to a bigger domestic supply. Steelmakers are raising shipments as prices in US and Europe outpace gains in China. “The gap between domestic and foreign steel prices is widening, triggering exports as domestic mills are facing the pressure of high costs. The record export figure is “a big surprise”. “It is fueling concerns of higher export taxes,” an analyst said. Prices of hot-rolled coil, a benchmark steel product, have gained 19 percent this year in China, while prices in the U.S. have more than doubled. Steel demand in China has dropped this month after the government closed construction sites in Beijing to reduce pollution for the Olympic games in the capital. In the Asia-Pacific region, construction-steel products are experiencing a slowdown on the back of credit worries and lower Chinese demand, Goldman Sachs Group said. China may further raise export tariffs on steel if shipments abroad rebound in the second half, Luo Bingsheng, vice chairman of the China Iron and Steel Association, said. Steel-product exports fell 14 percent to 39.7 million tonnes in the first seven months from a year ago, customs said. China imported 39.6 million tonnes of iron ore in July, customs said. It boosted purchases by 22 percent to 269.6 million tonnes in the first seven months from a year ago.

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Consolidation in Singapore Steel industry  

A consortium led by Singapore steel products maker HG Metal proposes to gain control of local rival BRC Asia from Britain's Acertec, the UK-based company said. The consortium agreed to buy Acertec's 70.28 percent stake in BRC for S$48.1 million ($34 million), valuing the firm at over S$68 million. BRC, a maker of steel reinforcement products for sale in Singapore and China, had a market value of $49 million. Under Singapore's listing rules, HG Metal, which mainly sells its products such as steel plates and beams in Singapore and southeast Asia, will be required to make a takeover offer for the whole of BRC because its stake in BRC will exceed 30 percent. Steel makers worldwide have been seeking partnerships and new investors to help them cope with soaring energy and iron ore prices. In February, Russia's Evraz bought 10 percent in Singapore-listed China steelmaker Delong and said it may spend up to $1.5 billion to fully acquire Delong, in its first move into China's giant steel market.

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