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Dear Readers,

Bankruptcy of Lehman Brothers and subsequent fall of share markets all over the world has really changed the mood of the business world.
Till mid of 2008, everybody was riding high on booming economy, especially in Asian region. Analysts were very confident of the future of regional economy and accordingly, many Asian companies were planning ambitious expansions, acquisitions, joint ventures etc. This was also true in case of iron & steel industry and we all are aware of such initiatives taken by Asia based steel business houses in last few years. Financial institutions also supported such moves mainly because of the rosy projections about the seamless growth of steel industry for the next few years.
But second half of 2008 had different set of ideas. Industry started worrying about China's behavior after Olympic Games and rightly so as China is the single largest factor affecting the availability and price of steel in global marketplace. The steel prices started falling since last two months and analysts started rethinking about the future prospects of steel industry. Many experts have re-discovered that steel is a cyclic industry and will have to undergo ups and downs over few years.
On this backdrop came the news about Lehman Brothers debacle. It is also said that few other financial institutions from western world will follow the same path and would at least need substantial restructuring to survive. Though the problem seems to be limited to financial world, it will surely affect the brick and mortar economy as well. If the liquidity in the market goes down drastically, it will also affect the growth of new projects especially in the infrastructure sector. The property prices, not only in the US but all over the world are falling. Many financial institutions have already started rethinking about investing in huge infrastructure projects. Can we be assured that the steel demand will continue to rise in spite of all this? We all know that the major component of steel consumption comes from infrastructure and construction sector and it is sure to go down in coming months. So, my suggestion is let us keep watching the situation, not go ahead with ambitious projects but at the same time, wait for the tide to turn upwards!!

 D.A.Chandekar
Editor & CEO

 

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ArcelorMittal Faces 50% Cost Overrun on Delays   

Land acquisition and mining lease delays may push up costs by 50 percent for ArcelorMittal in Orissa and Jharkhand. "During the last two years, costs have increased between 30 percent and 50 percent,” said L. N. Mittal ,Chairman, ArcelorMittal.
Mittal, however, could not give a final figure to the overrun. "It would all depend on the delays," he said, adding that he was optimistic on starting work next year.
"It will take around 36 months to commence production after groundbreaking," said Mittal. "In the present circumstances, we hope to begin construction in the first half of next year and when that happens, we would be able to commence production of the first phase in the second half of 2012. Work on both projects is moving simultaneously and we have put in place a 20-member team to work on them," he added.
ArcelorMittal would be setting up greenfield steel plants for the first time. Two integrated steel plants, with an annual capacity of 12 million tons each, are planned in Orissa and Jharkhand.
The memorandum of understanding for setting up the Jharkhand plant was signed in October 2005 and for Orissa in December 2006. Cost escalation since then has been almost 50 percent.

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JSW Cuts Prices by Rs 2,000/ton

JSW Steel has announced a Rs 2,000 per ton cut in prices of its products, now that pressure has eased in international markets.
However, according to president (marketing) Jayant Acharya said, "High input costs have not changed. Their impact is still high." He added that India's third-largest steel manufacturer was making every effort to deal with this.
JSW chief financial officer Seshagiri Rao said the company expected a rise in demand and price of the commodity from October.

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Danieli Corus, Tata to Build Greenfield Blast Furnace in India  

A consortium consisting of Danieli Corus BV and Tata Projects Ltd has been awarded the order for the design and construction of a fifth, greenfield Blast Furnace at Rourkela Steel Plant, owned by the Steel Authority of India Ltd (SAIL).
The current four furnaces in Rourkela produce 2 million tons of hot metal per annum. The project is part of SAIL's long term expansion plan, which envisages an increase in production for the entire company of around 85% within five years.
The formation of the consortium with Tata Projects marks a major milestone in the synergy and co–operation achieved within the Tata Group of companies. It enables the group to execute iron and steel projects in India on a turn–key basis.
After orders for greenfield Blast Furnaces in the Ukraine (2007) and USA (2008), Danieli Corus is now executing similar projects on all three major steel producing continents.

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Steel Prices may Go Down in Near future: Paswan 

Steel prices which had shot up due to ongoing slowdown in the markets and increased demand from the construction sector, would fall in near future, said Union Minister of Steel and Fertilizer Ram Vilas Paswan.
Talking to reporters after participating in a Dalit Sammalen, Paswan said, at present there is 6 percent gap in supply and demand, the demand at present being 13 percent whereas supply is 6 percent. In the past despite the downward trend in the steel market there was no adverse impact on demand of the steel, he added.
He said the delay in installation of proposed steel plant at Rajasthan's Jhunjhunu district is due to water shortage and the project would start after the Rajasthan government provides water.

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India may Impose 5% Import Duty on Steel

Indian steel minister Ram Vilas Paswan said the government would consider imposing 5 percent import duty on cheaper shipments and scrapping exports levy of up to 15 percent.
“It is a matter of survival for our steel firms. Tata, SAIL, Essar Steel and Ispat have individually met me and have suggested scrapping existing export duty and imposing 5% import duty, amid falling international steel prices. We will consider their demands when we meet them,” said Mr Paswan.
Mr Paswan conceded that domestic steel companies have cooperated with the government in containing inflation by holding their price line since May 7 this year. The government will come to their rescue to ensure there is no crisis situation, added the minister.
He said that domestic steel production may take a hit due to the slump in demand amidst the global financial crisis and added that measures to guarantee timely completion of various steel projects will be discussed in the meeting.
ASSOCHAM had last week asked the government to remove export duty on all categories of steel, besides imposing 5% import levy to ensure fair play for domestic steel makers. It had also called for re-imposition of 14% countervailing duty on imports of bars and structurals and recommended restoration of export incentives under Duty Entitlement Passbook Scheme for steel makers to make their exports viable

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Stainless Steel Production for First Half of 2008 Declines Further

Preliminary figures released by the International Stainless Steel Forum (ISSF) show that stainless steel crude steel production has decreased in the first half of 2008 by 1.8% compared to the same period of 2007. The decrease was 2.9% in the first quarter but just 0.6% in the second. All major regions have shown lower production volumes in the first half of this year.
In the Asia region, stainless steel production declined by 1.5% to 8.3 mmt in the first half of 2008. All stainless steel producing countries reduced their production except China. For individual countries, the rates of decrease range between 6 and 13%. With an increase of 10%, China is the only country in the region to increase stainless steel production to a total of 3.9 mmt in the first six months of this year.
The second largest producing area, Western Europe or Africa reported a 0.8% decrease in stainless steel production during the first six months of 2008. Total production was 4.9 mmt for the half year. In the Americas stainless crude steel production declined by 6.4% to 1.4 mmt in the first six months of 2008. Production in the Eastern Europe region showed a decrease of 4.3%, or 0.2 mmt on a low level of volume.
A quarter-by-quarter analysis shows a 2.9% decline in production in the first quarter of 2008. It should be noted that production in the first and second quarters of 2007 was extremely strong. In the second quarter of 2008 the decline is just 0.6% compared with the same period of 2007. Total world stainless crude steel production was 7.4 mmt in both the first and second quarters of 2008.

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ArcelorMittal Galati to Reduce Output by 50% on Lower Orders

ArcelorMittal Galati has announced that it would reduce production of finished products by 50% due to lower orders.
ArcelorMittal Galati officials said that "As a result of the international financial crisis, we are witnessing a drop in demand for steel products and this directly affects the operational and financial performances of all steelmakers.”
As measures to fight the global financial crisis, ArcelorMittal Galati plans to suspend deals to most subcontractors, relocate its operations or even lay off hundreds of employees

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Essar Lays Foundation of First Steel Facility in Iron Range

Essar Steel Holdings Ltd, a part of Essar Global Ltd, laid foundation of its first steel facility in Minnesota's Iron Range with an investment of USD 1.6 billion.
In 2007, Essar Steel Holdings acquired Minnesota Steel, which has more than 1.4 billion tons of iron ore resource in the Mesabi Range.
“We are excited about starting this project. This steelmaking facility is another step towards our goal of building a large presence in the steel sector in the Americas. Essar remain committed to North America with investments of over USD 4 billion in the region and currently employs more than 8,000 people here” Essar Group Chairman Shashi Ruia said.
Besides iron ore mining and production, the project will include a concentration plant, a pellet plant, a Direct-Reduced Iron (DRI) plant and steelmaking facilities.
Iron ore pellets will be produced within about two years from the start of construction. Production of DRI pellets and steel slabs is expected to begin the fifth and the sixth year onwards, respectively.
Speaking on the occasion, Madhu S Vuppuluri, President and CEO of Essar Minnesota Steel, LLC, said "We are delighted to start this mine based project in the prolific Mesabi range, which is one of the largest sources of high quality iron ore for US steelmakers. This is integral to our strategy to become an efficient global steelmaking company.

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Outokumpu to Set up Coil and Service Center in Maharashtra

Outokumpu, a Finland- based steel company, has singed an agreement with Maharashtra Government for setting up a coil and plate service center in the state with an investment of Rs 270 crore. As per agreement Outokumpu India would set up the coil and service plate service center with a combined annual processing capacity of over 50,000 tons per annum. It is expected to be operational in early 2010.
The service center would employ about 130 people. This facility would offer high-quality customized products to improve the competitiveness of Indian end users and help them create further wealth and employment.
“This would be the first kind of service in India equipped with latest equipments and machines” the company spokesperson said. The company had recently set up a similar center in China.
Outokumpu, with its head office located in Espoo, Finland, operates in 30 countries and employs more than 8,000 people.

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Vale and TATA Corus Ink 63 mt Iron Ore supply Contract

Companhia Vale do Rio Doce has signed a contract with Corus UK Ltd to supply iron ore to its plants in Europe.
Under the contract , which is one of the largest ever signed between a steel company and an iron ore supplier, Vale will supply approximately 63 million tons of iron ore to Corus's plants over the next five years.
The release said that this contract is aligned with Vale's and Corus's desire to further strengthen their relationship that started in 1942, the same year of Vale's foundation.
Additionally, it highlights Vale's unique capability as a long term reliable supplier of high quality iron ore, given its large scale operations and excellence.

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India's Steel Alloy Imports may Increase

India's steel consumption growth is outstripping production, and with mills operating at full capacity the country will import an increasing quantity of the alloy. India's steel production is expected to rise 6 percent in the year to March 2009, and demand is seen growing around 12 percent. It aims to raise its production to 124 million tons by 2012 from 58.64 million tons currently. In the five months to August, steel production growth was just 4.2 percent, below the 5.2 percent seen in 2007-08 and 12.8 percent in 2006-07. Since April, India has imported 3 million tons of steel, 50 percent more than the same period a year ago, Steel Secretary Pawan Kumar Rastogi said. The country imported 6 million tons of steel in 2007-08. Rastogi did not say how much of steel was likely to be imported by March, saying it depended on prices and demand. He however said there was a likelihood demand could come down as the real estate sector in India slowed on seven-year high interest rates and a slowing economy. Leading steel firms like South Korea's Posco and Arcelor Mittal are planning to set up steel plants in India, attracted by the growing demand and ample reserves of ore. Indian state-run Steel Authority of India Ltd and National Mineral Development Corp are also investing in steel mills. Meanwhile, steel minister Ram Vilas Paswan estimated an increase in steel output. However, India may continue to be a net importer of steel in the current fiscal following the huge demand supply mismatch, Paswan said. “Whereas the demand for steel continues to be at around 11.2 per cent, the production growth in the first half of the year has been only 5.2 per cent,” he added. During the past six months, India's steel imports have shot up by 50 per cent to about 3 million tons as compared to the corresponding period in the last fiscal. In 2007-08, the country imported about 6 million tons of steel to meet the growing requirement of the alloy. The demand for steel in India is expected to reach 109 million tons by 2012-13 whereas government has envisaged a total production of 124 million tons, excluding the proposed greenfield projects of Posco and ArcelorMittal.

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Tata Steel Not to Cut Jobs

World's sixth largest steel maker Tata Steel said that there would be no job cuts in the company following the global financial turmoil. Tata Steel would continue to be the largest producer of steel in the world. To a query about the sliding steel prices, he said it was a global phenomena. Many companies are laying off their employees as a part of cost cutting measure to weather the storm of global financial crisis. Meanwhile, its European subsidiary Corus has entered into a long-term contract with Brazilian miner Vale to secure supplies of about 63 million tons of iron ore for a period of five years. The contract would come into effect in 2009, Tata Steel said in a statement. Corus, Europe's second largest steel producer, had annual revenues in excess of 12 billion pound and produced about 20 million tons of crude steel last fiscal. Tata Steel, India's largest private steel company, has an annual capacity of 28 million tons globally. The Tata Steel Group recorded a turnover of USD 33 billion in 2007-08.

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Electrosteel to Raise Rs 160 Crore

Manufacturer of iron pipes and fittings Electrosteel Castings will raise at least Rs 160 crore from preferential issue to two non-promoter overseas companies to meet its resource and investment plans. The company would issue 4.2 crore equity shares of Re 1 at a price not less than Rs 38 each. The market value of the shares were around Rs 19, said the company in a statement. “Post issue of 4.2 crore shares would be 13.7 per cent of the expanded capital,” a company official said. The company in the recent past has concluded an External Commercial Borrowing (ECB) of USD 77.5 million and Rupee loan of Rs 350 crore. Electrosteel Castings had said these funds would be deployed for long term requirements to meet future plans towards modernisation and backward integrated projects taken up by the company. Meanwhile, the Q2 period sales of the company stood at Rs 527.66 crore as against Rs 296.06 crore during the same period last year. Net profit of ECL was Rs 42.12 crore during the period under review, as compared with Rs 28.89 crore registered in the corresponding period last year.

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JSW Steel Delays Expansion in Bellary

JSW Steel has delayed the expansion of its steel plant in Bellary, Karnataka, because of the present industry slowdown. The company is setting up a 3.8 MTPA blast furnace at its existing capacity in Bellary which was supposed to be commissioned by October. Vijayanagar Works is a fully-integrated steel plant in Bellary district, 340 kilometres from Bangalore. Its current production is 3.8 MTPA. The company had planned to achieve seven MTPA by 2008 and 10 MTPA by 2010 there. Jindal expects margins to be flat and the topline squeezed for the third quarter. Cost of raw materials have fallen more than the finished products.

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Sail, Tata, ArcelorMittal to Develop Jharia Mines

The country's leading steel makers, including Sail, JSW, Tata and ArcelorMittal, have evinced interest in reviving the Jharia coking coal mines in Jharkhand with an investment of about Rs 10,000 crore. “Steel producers want to partner with the government in rehabilitating people residing in the mine area and also restarting mining operations there,” Steel Secretary P K Rastogi said. In lieu of their endevaour, the companies would like to get some assured supply of coking coal, a vital raw material for steel making, he added. At present, the steel producers primarily meet their coking coal requirements through imports. The country imported nearly 20 million tons of the raw material last fiscal. Jharia mine, which has been burning for decades due to unscientific mining and lack of technology to douse underground fire, has a proven coking coal reserve of about seven billion tons. The indicative coking coal resources in the mine is estimated at 3.2 billion tons, while that of thermal coking coal at 6.8 billion tons. The Ministry is holding talks with steel producers to see in what form they can contribute to the expenditure to be incurred on rehabilitation of people. “We need to do more study of the area as well as number of people to be rehabilitated. Once we take stock of the things, we would write to Coal Ministry about the intention of the steel producers,” he said. Hailing the initiative of the steel industry, Coal India Chairman Partha S Bhattacharyya said the move would see things sailing fast.

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LN Mittal Elected Chairman of World Steel Association

Steel tycoon Lakshmi Niwas Mittal was elected Chairman of the World Steel Association, representing about 180 steel producers from across the globe.
The association's board of directors met in Washington to elect new office bearers for a year till October 2009, a statement from World Steel Association (worldsteel), which announced to have changed its name from erstwhile International Iron and Steel Institute, said.
Mittal was also elected as member of the worldsteel Executive Committee, while Naveen Jindal-led Jindal Steel and Power Ltd joined the association as its Associate Members in the category of steel companies producing less than 2 MT per annum.
Among the new Vice-Chairmen elected to the worldsteel were Ku-Taek Lee, Chairman and CEO, POSCO, Paolo Rocca, Chairman and CEO, Techint Group and John Surma, Chairman and CEO, US Steel. On behalf of the Board of Directors, Director General of the World Steel Association, Ian Christmas welcomed Mittal as the new chairman.
"The Board of Directors expressed their gratitude to Ku-Taek Lee as he completes his year as Chairman and gave a warm welcome to Lakshmi Mittal. We are delighted to welcome our new members on board," Christmas said.

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Steel Prices, Prod may Come Down on Global Crisis

Indian steel makers may cut prices and as also production in tandem with dip in demand in domestic market spawned by a global slowdown.
The growth targets may also have to be revised from double digit to single digit, though the long-term expansion plans of companies could remain intact, they added. "The production growth in the steel sector is likely to decline to 8-9 per cent this year from the expected 12-13 per cent due to global economic slowdown," JSW Group Chief Financial Officer Sheshagiri Rao said.
Indian steel companies would have to cut prices to survive, else domestic market will be flooded with cheaper imports, he said. Globally, steel prices have softened by about USD 350 per ton in the last couple of months, alluring large-scale consumers to go for cheaper imports from countries like China and Ukraine. "The global turmoil has affected demands and put pricing pressure in the US. These would have a ripple effect on Indian market too," an Essar Group spokesperson said. British steel giant Corus, part of Indian conglomerate Tata group, has already said it is taking steps to optimise production as per the changing demand scenario.
Even as the dynamics of global economic market continues to change, the domestic steel firms don't see its impact on their long-term expansion plans. "We have secured finances for our projects lined up till 2010. In this scenario, however, raising capital from abroad will not be easy," Rao said. India's largest steel producer SAIL too said the crisis would not affect its expansion plans as it has enough financial resources.

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JSW to Become India's Largest Pvt Sector Steel Maker by Dec

Metal and mining company JSW Steel is set to become India's largest private sector steel producer post-capacity augmentation of its plant at Vijaynagar in Karnataka by end of the calendar year.
"On commencement of the expansion project in Q3 of the FY '09, JSW Steel will be the largest steel plant in private sector in India with a total crude steel production capacity of 7.8 million tons (including one MTPA at Salem)" JSW Group Chief Financial Officer Sheshagiri Rao said. Presently, SAIL is India's largest steel producer in the public sector with annual production hovering close to 15 million tons, while in private sector Tata Steel tops the list with installed production capacity of 6.8 million tons.
Sajjan Jindal-led JSW Steel is in process of expanding its finished steel capacity at Vijaynagar plant in Karnataka to 6.8 million tons, against the present 3.8 million tons.
It has already commissioned a sinter plant and two blocks of coke-oven batteries as part of the company's Rs 5,300 crore expansion project at Vijaynagar.
The steel major has also lined up two greenfield projects of 10 million ton capacity each in West Bengal and Jharkhand with a cumulative investment of about Rs 70,000 crore.
It plans to commence construction work for its West Bengal project in November this year, while that in Jharkhand by early next year. Rao said JSW Steel intends to reach 32 million tons of steel capacity by 2020 for which the company would invest a whopping Rs 85,000 crore. “As of now, we have secured financial resources for capacity expansion at Vijaynagar plant as also adding another three million ton to it by March 2010," he said.

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AISL to Set up Rs 4,500-cr Steel Plant at Koppal

 Aaress Iron and Steel (AISL), part of iron ore mining major Baldota Group, will invest over Rs 4,500 crore to set up its first integrated steel plant at Koppal, in northern Karnataka.
The project will be implemented in two phases and the company targets to commence production by mid-2010 with an initial capacity of 1.2 mn tons annually, said director Shrenik Baldota.
The facility, spread across 1,100 acres, will produce special carbon and alloy steel grades to cater to the automobile industry and other high-value added engineering segments. “The steel plant is basically a forward integration of the existing businesses of the group.
In the first phase, we are looking at setting up a facility to produce special steels, including automotive alloys. We expect to start production by mid-2010,” Mr Baldota said . A majority of the funding for the project will be through borrowings from several banks, he added.
According to the company, the demand for special steels in India is expected to rise to six million tons annually by 2010, from the current level of 4.5-5 mn tons. This apart, the scope for raising the total consumption of steel in the country is huge, as the per capita consumption of steel is just 35 kg compared to 150 kg in the world and 250 kg in China.
Furthermore, AISL proposes to increase the annual capacity to 5 million tons by 2012. The additional capacity is for producing hot-rolled flat products. “The investment needed for the expansion is estimated at Rs 8,500 crore. We are still working out the exact details of how the required funds would be raised,” he said. The company has identified a 900-acre patch for expansion of the steel plant and said that acquisition of land is nearly complete.
According to Mr Baldota, the group's flagship firm MSPL that has operations in Karnataka, and AISL will function as separate entities. MSPL is a leading private sector iron ore mining firm in Karnataka and a majority of the ore mined is exported to China. Its output in 2007 was 5-million tons.
“Aaress Steel will have several suppliers of iron ore, including MSPL. We plan to approach other ore extraction companies for raw material,” Mr Baldota added.Mecon has been appointed as the engineering consultant to the project.

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Abu Dhabi Steel Giant Posts 135% Rise in Revenue  

Emirates Steel Industries (ESI) announced its total sales revenue reached nearly $800 million by the end of Q3, a rise of 135 percent compared to the same period last year.
The firm is predicting that demand for steel will continue to grow on the back of the UAE's real estate boom.
Hussain Al Nowais, chairman of ESI, which is wholly-owned by the government of Abu Dhabi, said its total production to the end of the third quarter of this year rose 43 percent to around 770,000 tons, up from 540,000 tons in the same period last year. ESI stepped up its annual production to1.8 million tons after it installed rolling mills as part of its first phase of expansion to meet growing demand for iron and steel in local and regional markets.
The firm is investing $4.5 billion in expansion plans as it aims to become the leading steel producer in the Gulf. Currently the domestic market consumes ESI's entire production of steel. It signed contracts last year with four international companies, including Brazilian firm Vale, to secure raw materials.
“We currently hold a significant share of the regional market as we were one of the first companies to use the latest technologies and are the only company to operate an integrated steel plant that produces steel products in a range of sizes and qualities to meet the specific needs of end users in the construction sector,” said Al Nowais, who is also chairman of Abu Dhabi Basic Industries Corporation.
Saeed Al Romaithi, assistant vice president of operations at ESI, said over the next four years ESI factories would comprise an integrated industrial complex, unique to the region.
He said it would achieve this by increasing the diversification of production of steel products by expanding beyond the production of reinforced rebar to include other types of product such as wire rod, sections and metal coil.

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Danube Building to Invest USD 5 bn in Oman Steel Industry in 2008        

The Sultanate of Oman is aiming to become one of the Gulf region's top iron and steel producer, with plans to invest USD 5 billion to boost productivity and construct new facilities as part of the government's efforts to broaden the base of its economy for the coming years.
With a clear directive to further strengthen its position in the country's fast growing construction market, Danube Building Materials Danube FZCO, the leading player in the construction, interior decoration and shop fitting industry, has announced that it will be channeling AED 50 million (USD13mn) to develop a new steel facility in Mabella, Oman which will further strengthen its position in the Sultanate.
Spanning approximately 51,000 square feet in the Mabella area, the facility will function as the logistics hub for Danube Danube Loading's operations in Oman and will facilitate the storage of all stock including deformed bars and other structured steel like angles, channels and plates. Upon completion, the facility will be ideal for all Omani construction companies to get their required supplies at highly competitive prices on account of the economies of scale generated through bulk purchasing done in Dubai. Furthermore, the manufacturer has also revealed that it will have large scale imports of steel products from Turkey, China, Taiwan, Korea, South Africa, Ukraine, Russia, India, Saudi Arabia and Iran, which will then be processed to address varying customer requirements.
Mr Rizwan Sajan chairman of Danube Building said that "The unprecedented growth of the real estate market in Oman has been fuelling intense activity in the construction scene, with the government focusing high interest into further advancing its local steel trade. We consider Oman as a key market for our high quality building materials and with more construction and real estate projects emerging within the Sultanate, this is truly the perfect time to invest significantly in expanding our operations there. This new facility will substantially increase our steel products output, thereby ensuring a steady supply of top-grade steel-based construction materials not only for the country but for the rest of our regional markets as well.

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Iranian Steel Indstry Set to Grow       

According to Mr Ali Palizdar deputy director of Iranian Mines and Mining Industries Development and Renovation Organization, the steel production capacity of the country will exceed 15 million tons by the end of the current Iranian calendar year.
According to IRINN, Mr Ali Palizdar said that the country will see a rise in its steel output capacity by the end of the next calendar year and it will hit 29 million tonnes.
Mr Palizdar said that “By the end of the current year Iran's aluminum production capacity will touch 486,000 tons and the output will surpass 250,000 tons in this period.

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Japanese Firms Eager to Invest in Bahrain        

Japanese companies are interested in setting up a base in Bahrain, says a key envoy.
A beginning has already been made with prominent Japanese steelmaker Yamato Kogyo setting up a joint collaboration with Bahrain's Gulf Industrial Investment Company (GIIC), for a steel plant in Hidd. More companies are likely to follow, says Japanese Embassy Economic and Commercial First Secretary Shoji Kudo.
"The United Steel Company will start operations in 2011 and produce 1.5 million tons of direct reduced Iron (DRI); 1.3 million tons of steel and another 1.2 million tons of rolled steel every year," he said. Not only will it be a large investment, in which the Japanese will be 49 per cent stakeholders, the project will also employ 1,000 people, most of whom would be Bahrainis.

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Gulf Firms Seek $2.4 bln for Iron, Steel Projects  

 A group of Gulf investors plans to raise about $2.45 billion to fund iron and steel projects in the Middle East to tap demand in the world's largest oil exporting region.
The Foulath consortium, which includes Industries Qatar's steel unit and National Industries Group, is in talks with two groups to finance the largest project, a $1.4 billion steel plant in Bahrain, said Khaled al-Qadeeri, head of manufacturing at co-investor Gulf Investment Corp (GIC).
Foulath is partnering a subsidiary of Japan's Yamato Kogyo Co to build the plant and expects to close financing by the end of the year despite turmoil on global financial markets, said Qadeeri.
Foulath had initially sought to finance its projects with 70 percent debt and 30 percent equity, but may revise the ratio due to the credit crisis which has stalled lending between banks.
"The terms of the loans could change. They may look at 60-40 percent debt-equity, rather than 70-30 percent, and this is because of the global crisis," Qadeeri said, adding that falling commodity prices could reduce costs.
Arab Bank, Banque Saudi Fransi, Societe Generale, Mizuho Bank, Japan Bank for International Cooperation (JBIC) and Al-Rajhi bank form one group, he said, adding that it had offered more than $1 billion for the Bahrain plant, which will produce 3.5 million tons of three types of steel.
Qadeeri declined to identify the banks in a second consortium as discussions were still at an early stage.

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Sabic Considers Buying into Steel         

Sensing an industry consolidation in the works as steel prices plummet worldwide, Saudi Basic Industries Corporation (Sabic) plans to be a buyer, not a seller.
The Saudi metals group said it would more than triple steel production capacity by 2020 to 17 million tons through acquisitions and by building new plants.
“There will be some acquisitions and mergers. We are in the market for it,” Hisham al Hamili, the general manager of Sabic, told an industry conference in Dubai yesterday.
Sabic's expansion strategy illustrates how large government-owned industrial enterprises in Middle Eastern oil producing countries are among the best positioned companies in the world to take advantage of acquisition opportunities that are opening up as a result of the world financial crisis.
The national treasuries of countries such as Saudi Arabia are awash with oil revenues, setting them up to provide financial backing to state-owned companies that are aiming to leverage global economic weakness to their own advantage.
Prior to July, when oil prices peaked, no one was talking about selling steel assets, Mr Hamili said. “Now opportunities are in the kingdom and the region,” he said.
Sabic is plotting its expansion even as its steel subsidiary, Hadeed – the largest Saudi steelmaker – has been forced to slash prices amid forecasts of weakening steel demand for the rest of this year. Hadeed announced last week it would cut prices for reinforcing steel bars by an estimated 14 to 15 per cent.

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Indonesia Steelmakers Plan to Increase Exports

Indonesia steel mills are planning to increase their exports from August to October; including Krakatau Steel Inc, Krakatau, Essar Indonesia Inc and others steelmakers.
Krakatau plans to increase export from 10,000 tons per month to 20,000 tons per month. Essar Steel said it plans to raise export from 5,000 tons to 9,000 tons per month. Gunung Garuda plans to export 40,000 tons from 35,000 tons previously.

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Malaysia's Lion Partners Vinashin in US$9.8 bln Vietnam Steel Project 

Malaysia's Lion Group will team up with Vietnam's state-owned Shipbuilding Industry Group (Vinashin) to undertake a US$9.8 billion steel mill project, according to media reports.
Lion has received an investment licence for a joint venture with Vinashin, Vietnam's largest shipbuilding company, for the project, said a spoke person of the company.
Construction of the mill with an annual capacity of 14.42 million tons of crude steel is due to begin in the first quarter of next year with the first phase of the project to be completed in 2011. The entire project, located in the south central province of Ninh Thuan, is expected to be completed by 2025.

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Southern Steel Confident it Can Weather Economic Crisis 

Southern Steel Bhd is confident it can weather a potential economic crisis due to its “well balanced” product mix and diverse export markets, said group financial controller C.B. Koay.
“Our steel products comprise construction and industrial grade steel. Thus if there is a slowdown in the construction or industrial sector, our products are well balanced to protect the group during such economic climate,” he said after the company EGM.
Koay said the group’s steel products were also exported worldwide, “Thus there is no one market that the group is solely dependent upon.”
“The group exports to Europe, the US, Russia and the Middle East,” he said, pointing out that the Middle East and the Russian markets “are still growing.” Koay added that domestic demand dipped over the past few months due to the country’s political problems. “These political problems need to be cleared before we can see any improvements on domestic demand,” he said.

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Steel Demand Plunges in Vietnam   

Vietnam Steel Association (VSA) reported that steel demand dropped fast during the past five months and there are still 400,000 tons of finished steel and 500,000 tons of billets piled up in stock.
VSA urged the government to reduce export tax on billets to 2 percent first, and then to remove it completely in time to come due to the regional steel demand having declined 10,000 and 250,000 in August and July, respectively, along with a price fall of nearly 5 dong/ton within the last four month period.
The Central Bank increased interest rates to ease inflation and shorten the state owned construction project; therefore VSA suggested that officials will need to act fast with serious tactics and measures to reduce the duty in order to move the unsold steel stocks.

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Thail and Govt. Panel Calls for Cut in Steel Price 

Traders will have to reduce the retail price of steel in line with the declining price in the world market, a government panel said. The subcommittee to consider steel prices agreed to recommend lowering the price for another round by Bt14,000 a ton.
Vatchari Vimooktayon, deputy director-general of the Internal Trade Department, said after a meeting that the world price of steel had been declining steadily.
However, the department has allowed steel traders to bring down retail prices in two periods, in the second half of October and in early November.
The reduction should be Bt7, 000 per ton. From November 1, steel rod should be quoted at Bt28, 250 per ton and steel plates at Bt30, 000 to Bt32, 000 per ton. "The world steel price is on a downward trend and since July this year has dropped by Bt14,000 per ton," she said.
As a result, the ministry must adjust the recommendation price to reflect the real cost.
It will also protect consumers from unfair price practices. The department said steel price is going down because of two factors - declining oil prices and the global financial meltdown.
Consequently, the world's steel demand has dropped in line with these factors. So far, steel cost for consumers has dropped by 50 per cent - for instance, billet price is quoted at US$660 (Bt22,500) per ton, down from a previous price of $1,250. Vatchari said steel prices would further drop, in keeping with the global economic slowdown and lower demand. However, some steelmakers have controlled supply by reducing their production capacity to stabilize prices.

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Vietnam Steel Industry Wants Iron Ore Export Banned 

The Vietnam Steel Association has asked that the government bans export of iron ore so that local companies can use it for production.
The Finance Ministry had cut export tariffs on steel products to 10 percent against the five percent proposed by the Ministry of Industry and Trade. The appeal comes as at least four companies have stopped producing steel ingots because they are sitting on huge stockpiles that remain unsold although prices are falling. The county presently has nearly one million tons of steel ingots worth US$1 billion in stock. Dinh Huy Tam, general secretary of the association, said steel prices have dropped very quickly and producers were caught between decreasing domestic demand and the government’s unreasonable tariffs.
Suggesting the ban on iron ore exports, the association said many steel producers have built blast furnaces to produce pig-iron since the demand for iron ore has increased more and more. Just three companies: Hoa Phat, Van Loi and Dinh Vu, each needs millions of tons of iron ore per annum, the association noted.

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Japan's JFe Steel Eyes $4 bn Vietnam Mill 

JFE Steel Corp, a unit of JFE Holdings Inc, has submitted a proposal to invest $4 billion in a steel mill in central Vietnam.
The mill, which will have an annual capacity of 5 million tons, would be located in Dung Quat in the central province of Quang Ngai, Vietnam Steel Association Chairman Pham Chi Cuong said
Last month, Malaysia's Lion Industries won approval to invest in a $9.8 billion steel mill joint venture with Vietnam's top shipbuilding group Vinashin.
Apart from the Malaysian venture, Hanoi has approved investments by foreign steel makers of at least $17.3 billion this year, including a $7.8 billion project by Taiwan's Formosa Heavy Industries and a $5 billion venture by India's Tata Steel.
Analysts have said most of the planned mills would serve both the domestic and export markets, especially in Southeast Asia because of strong demand from the auto and home appliance industries.

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Taiwan's Rebar Prices Set to Rebound  

 Rebar prices in Taiwan are likely to rebound in October after falling for a long time.
The rebar price has fallen for three months in a row and this week it finally stopped decreasing. The price fell from NT$32,300/ton to NT$22,000/ton. The small billet price was also reduced from NT$31,000/ton to NT$17,000. The range of the price drop is about 50%. Steel mills are expected to rally. They are worried about whether the rebar price will rebound in the future. Market-watchers point out the key is regaining upward movement of raw material and demand.

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Baosteel's Heavy Plate to be Used in Hangar Project   

Baosteel has completed the task to supply 576 tons TMCP heavy plates for high rise demanded by Eastern Airline's A380 hangar project.
As the core parts, the products will be used in the aircraft maintenance hangar with the largest monolithic area in China, which fills the blank of domestic production and application of TMCP heavy plates for high-rise.
In the past two years, in a bid to accelerate development, Eastern Airline intends to import the largest and most state of the art Airbus A380 in the world, and set out to build the maintenance hangar for such aircrafts. Eastern Airline's A380 hangar project, located in Shanghai Pudong Airport, commenced its construction in the second half of last year and is scheduled to be put into operation in the next year. Being the maintenance hangar with the largest monolithic area in China so far, the entire project covers a building area of 43,000 square meters with a span of 157 meter, equivalent to the size of 2 standard football fields, and can accommodate 3 narrow body aircrafts and 2 A380 jumbo aircrafts for maintenance at the same time.
Because of A380's huge size, according to the design requirements of the project, the core parts in the construction of the hangar such as the steel girder and steel column must be made of 80mm thick TMCP heavy plate for high-rise and each plate weights at least 18 tons.
According to the insider's introduction, TMCP heavy plate for high-rise, as one of the top products among the heavy plates for constructional structure, boasts better welding performance, tensile strength and yield strength than conventional products, but features complicated process and hard production, and the thicker the harder. Now this product has gradually become the first preference for constructional material in the developed countries, but there is no precedent of its production and application in China yet.
Ever since this year, Baosteel has followed a close track of the progress of Eastern Airline's A380 hangar project and undertaken the supply of TMCP heavy plate for high rise through technical exchange and consultation. During the trial manufacture, the Heavy Plate Product Management Department of Baosteel Co Ltd Manufacture Department and Heavy Plate Plant of Baosteel Branch and Baosteel International, etc set up a task force to seek breakthrough by utilizing the process and technological advantages of TMCP shipbuilding plates accumulated for many years and relying on Baosteel Branch's 5 million heavy plate mills. The task force formulated a set of unique process technologies within a short time after repeated optimization of steel grade composition design.

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China's Steel Exports up 50.2% in Sep    

China's steel products exports in September surged 50.2% to hit 6.67 million tons from a year earlier, according to the General Administration of Customs. However, the figure is 1.01 million tons lower than that in August this year.
For the first nine months this year, steel products exports dropped 2.1% from a year ago to 4.85 million tons, with the export value up 46.5% to US$49.83 billion.
China imported 1.27 million tons of steel products in September, down 4.54% month-on-month and 11.1% year-on-year, while imports of steel products totaled 12.32 million tons during the Jan.-Sep. period, down 5% from a year earlier.
Iron ore imports in September amounted to 39.20 million tons, representing a year-on-year increase of 17.93%, and the accumulated iron ore imports for the first nine months rose 22% to 346.11 million tons.

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China's Shougang Delays Start-up as Steel Prices Drop      

China's Shougang Group has postponed the start-up of a new steel mill on the coast of northern China as steel prices plunge below the cost of production. The company's Caofeidian mill, in Hebei province, was previously scheduled to start production on October 18 and no new date has been set.
Shougang had permanently shut some old, polluting plants in Beijing and reduced operations at others as it built a state of the art 10-million tonnes-per-year mill in Caofeidian. The new plant will be more efficient and cut costs because it is near an iron ore port.
"From a technical and engineering point of view, the plant is basically ready to go. But there are other reasons, including market factors, that have forced the delay," said Wang Zhongmin, president of Tangshan Caofeidian Industry and Development Co Ltd, which has developed the Caofeidian industrial zone.
"We would report 1,000 yuan losses for every tonne of steel output, so it's better not to produce any at all," a Shougang official quoted.
Domestic Chinese steel prices have fallen 37 percent from their summer peak, driving down the spot price for raw material iron ore by 44 percent, JP Morgan analyst Feng Zhang estimated in a report. “At current steel prices... almost all the steel makers are losing money. We expect significant production cuts going forward," he said.
As steelmills scale back loss-making production, iron ore has piled up at northern Chinese ports.
Current cuts total about 1.25 million to 1.3 million tonnes of hot-rolled steel production, feeding through to cold-rolled steel and galvanized steel, industry website Umetal estimated. Even deeper cuts are likely for construction steel, hard-hit by a slowdown in housing markets and by China's overcapacity.
In an effort to support falling steel prices, Shougang Group, Hebei Iron & Steel Group, Angang Iron & Steel and Shandong Iron & Steel agreed to cut production by 20 percent potentially through the end of this year.

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Demand for Steel Poised to Slow, Posco warns      

Posco, the world's fourth-largest steelmaker, warned of falling demand for steel products, amid growing concern that the steel industry cycle has peaked as demand from China slows and global steel prices fall.
Posco said it expected the fourth-quarter outlook to be tougher "as the global financial crisis will slow steel demand growth from the auto and construction sectors, while higher input costs and a tumbling won currency will add further pressure".
But it said third-quarter net profit rose 40 per cent to Won1,219bn ($1bn) from Won871bn a year ago, on record sales of Won8,813bn. The steelmaker has reduced production costs by more than Won570bn this year. Posco said the strong results had prompted it to raise its operating profit target for this year by 16 per cent to Won6,600bn.
However, analysts expect Posco's earnings momentum to weaken as higher raw material prices begin to affect its bottom line. The company has signed annual supply contracts for key raw materials such as iron ore and coking coal at much higher prices than last year. "Profitability will fall in the fourth quarter and next year," said Kim Kyung-jung, of Samsung Securities. "Steel prices are likely to remain under pressure until the first half of next year, despite steelmakers' move to cut output."
Posco has raised its benchmark hot-rolled coil prices by more than 60 per cent this year to cover higher raw material costs. Brazil's Vale, the world's largest iron ore miner, has asked Chinese steelmakers to pay up to 20 per cent more for ore supplies in an unprecedented move in the middle of an annual contract. Global steelmakers have come under pressure in recent months as demand has weakened due to the global economic slowdown.
Slowing demand forced ArcelorMittal, the industry leader, to say last month that it may cut output by 15 per cent and Corus to adjust production. Chinese companies are also cutting output to shore up steel prices. Posco has no plan to cut production. Separately, Posco said that it still planned to bid for Daewoo Shipbuilding and Construction on its own after its consortium partner, GS Group, withdrew from the bidding on Monday. State-run Korea Development Bank and Korea Asset Management Corp are selling their combined 50 per cent stake in the world's second-largest shipbuilder.

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Ferro China on Verge of Bankruptcy     

Five companies in Changshu city of Jiangsu Province, namely Kehong, Xingdao, Xinghai, Xingyu and Changgang all belonging to Ferro China Limited which is listed in Singapore have went on the verge of bankruptcy with operation all halted, Oriental Morning Post reported .
According to the report, the crisis is reportedly inflicted by the news that the holder of Ferro China Limited Mr Zhang Yedong have disappeared with his partner Mr She Chuntai.
The local government hoped to save the five companies from the crisis, and had granted salary to the workers October 10. But there is a much bigger problem of the companies up to CNY 5 billion loan is due based on the bulletin Ferro China Limited published on Singapore Exchange Limited.
The creditors include Construction Bank, Agricultural Bank, Bank of China, Huaxia Bank, Shanghai Pudong Development Bank, Industrial Bank, CitiBank and Citic Ka Wah Bank.

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Lingyuan Steel Carry Out 10 Cost Reducing Strategies      

Lingyuan Iron and Steel Co Ltd, converter steel making mill, has worked out ten costs reduce strategies combined with its own production experience.
As per report, the ten strategies mainly involve rely on scientific administration and expedite production to reduce the cost, and upgrades technology to avoid the waste; furthermore, to see the waste evaluation as its central work by increasing the quantity and enhancing the quality; at last, the mill is to focus on the lower consumption, contract administration and system-transformation to realize its plan.

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American HDG Prices Continue to Slide Further 

American hot dip galvanized steel price promptly plunged due to weak demand and of the fall in material price.
As per report current offer of base size is USD 1,036 to USD 1,124 per tonne. Meanwhile, China, Taiwan, India and Mexico have also cut the sales prices to American buyers, some quotations are similar to those of American domestic mills and there is still room for bargaining, especially for big buyers. However, those prices won’t attract American purchasers because the delivery time of American domestic mills will be faster than those from overseas.
This will lower the risk for American buyers in this difficult situation. Although American mills would like to adjust the price to satisfy customers, they will still be unable to gain many orders.

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Severstal To Slash Output, May Trim Outlook  

 Russia's largest steelmaker OAO Severstalsaid it is cutting October production by as much as 30% and may lower its earnings forecast for the year, as the weaker global economy darkens the prospects for Russia's commodity producers.
The steelmaker, majority owned by billionaire Alexei Mordashov, said it will cut this month's production by 25% at its main Russian plant, and by 30% at plants in the U.S. and Italy. A spokeswoman said no decision has been made on job cuts.
Steel producers in Russia -- the world's fourth-largest supplier after China, Japan and the U.S. -- have seen prices for their products halve in the past four months. Severstal's share price is now less than a quarter of its June level, amid slower global economic growth and a longer-term reduction in steel orders from construction companies and car makers.
Severstal, which has spent about $3 billion to boost capacity in the U.S., said it is now reconsidering its earnings forecast for the year. It had predicted 2008 earnings before interest, taxes, depreciation and amortization of $5.8 billion to $6.1 billion. Russian steelmaker Severstal plans to cut production in October by as much as 30%, and may lower its full-year earnings forecast.
The production cuts come after a similar move by Russian rival OAO Magnitogorsk Iron & Steel Works. Steel executives around the world are struggling to avoid excess supply and falling prices. Oversupply concerns have also prompted ArcelorMittal, the world's largest steel producer by volume, to trim production in Ukraine and Kazakhstan.
Magnitogorsk has cut output by 15%, and said it will lay off a tenth of its workforce, or about 3,000 people. Many analysts expect cuts by the Russia's other two listed producers, OAO Novolipetsk Iron & Steel Works and Evraz Group SA. Novolipetsk said it is considering cuts, while a spokeswoman for Evraz declined to comment. "By producing less, the steelmakers are losing economies of scale and their profit margins will fall, but the alternative is to see inventory stack up," says Troika analyst Sergei Donskoi. He said sales will fall faster than costs. Integrated steel producers in Russia benefit from easy access to the country's stock of coking coal and iron and inexpensive electricity, resulting in lower production costs than in China or Europe. However, analysts say that Russian producers have relatively few long-term contracts with customers, and are therefore more vulnerable to falls in market prices.

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US Steelmakers Want WTO Action On Chinese Export Restrictions    

U.S. steelmakers urged the Bush administration on to take action at the World Trade Organization against Chinese export restrictions that distort world prices for coke and other steelmaking inputs.
"There can be no doubt that the global market for coke is even more distorted by Chinese restrictions than it was in 2007," Barry Solarz, senior vice president for trade and economic policy at the American Iron and Steel Institute, said in a statement to the U.S. Trade Representative's office.
"These actions by China dictate strong U.S. actions in response, including litigation at the WTO," Solarz said in comments submitted as part of U.S. trade representative's annual review of China's compliance with its WTO obligations.
The steel group blames Chinese government subsidies and unfair trade practices for a more than doubling of Chinese steel production between 2004 and 2007 to 489 million metric tons, or about five times U.S. steel output. It successfully pushed for a U.S. policy change last year to have the Commerce Department also impose countervailing duties on unfairly priced Chinese imports, instead of just anti-dumping duties which had been the case for two decades.
The change angered China, which is still considered a "non-market economy" under U.S. trade law -- a designation that previously stopped the Commerce Department from imposing countervailing duties on Chinese goods. Beijing had filed a case at the WTO challenging the U.S. policy change.
Solarz referred in his comments to a 2007 USTR report that noted China had limited coke exports to 14 million metric tonnes and imposed a 15 percent duty on coke exports. "In August 2008, China raised this export tax again to 40 percent -- over twice as high as the tax that alarmed USTR last year," Solarz said.
"China also imposed quotas limiting the amount of coke that each Chinese firm could export, and reduced the export quota for coke from 14 million metric tonnes in 2007 to 12 million metric tonnes in 2008," Solarz said.
"Coke is not the only steel input where China has tightened its grip on exports," he said. "China recently doubled the export tax on coking coal from 5 percent to 10 percent."
China also raised the export tax on ferrochromium, ferronickel, ferromolybdenum and ferrotungsten to 20 percent in early 2008, he said.

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Steel Industry on Decline, U.S. Steel Official Says  

The steel market has come to an abrupt halt, said U.S. Steel COO John Goodish.
"Many of us have seen the last 3 to 4 years as the best in the history of steel and we've never seen it stop as it did either," Goodish said.
The chief operating officer and vice president of Pittsburgh-based U.S. Steel, Goodish was the keynote speaker at the Midwest Chapter of the Association of Iron & Steel Technology's dinner meeting attended by 750 members and guests.
Like many other steelmakers and companies dealing in commodities, U.S. Steel had record profits and sales in the first two quarters of 2008. Prices began slipping in late August as the stock market turned bearish and customer demand fell. Goodish declined to comment on his company's pricing, its production levels or the current state of its contractor relationships.
"We stay in line with current demand," added Goodish .

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SSAB's Plant Decision Nears 

 Olof Faxander, the chief executive of Swedish steel maker SSAB, that the company would choose the location of a new heat-treating mill by the end of October.
The company's Axis mill is competing with one in Montpelier, Iowa, for the $250 million project, which SSAB said would create 120 new jobs. A decision originally had been expected by the end of September. SSAB bought the mills in Axis and Iowa last year when it purchased IPSCO. The Axis mill has 400 employees and 350 on-site contractors.
Alabama and Iowa have put up competing incentive packages to lure the project. Iowa's is worth at least $81 million, while Alabama's is worth more than $29.3 million. However, Alabama may not need to offer as much because its property taxes are lower.

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US Steel Canada Plans Hamilton Blast Furnace Shutdown  

US Steel Canada is planning to shut down its Hamilton blast furnace for up to 8 weeks as the global market meltdown takes its toll on the steel sector. The shutdown would likely begin at the end of October 2008.
The move comes as steelmakers across the globe face plunging demand from customers badly battered by the credit crisis. Many large customers have been unable to borrow the money they need to buy steel. Others are struggling to contend with a slowing economy that has shrunk demand for everything from construction to appliances and cars.
In September 2008, ArcelorMittal Dofasco had announced plans to scale back production in the second half of the year with CEO Mr Juergen Schachler citing tough economic times and unexpected weakness in the North American manufacturing sector.
ArcelorMittal has said that it will slash production by 15% across its global operations. And last week, Russian steel firm OAO Severstal announced plans to slash its October production by 25% at its Russian plant and 30% at its operations in the United States and Italy. Mr Trevor Harris, spokesperson for US Steel Canada declined to comment on potential production cuts. He said that operational changes would be discussed in the company's quarterly earnings call scheduled for October 28th 2008.
He said that "As we have said in the past, we will adjust production up and down to keep pace with customer orders." It is unclear whether the cuts would result in layoffs. US Steel Canada employs about 1,700 hourly workers at its Hamilton plant.

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